Earthquake safety legislation could hit renters hard

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Pending legislation that would require seismic retrofitting of thousands of properties at the building owners' expense could hit renters harder than anyone, causing evictions and increasing rents by up to 10 percent, impacts that tenant advocates are trying to get the Mayor’s Office and sponsoring Supervisors David Chiu and Scott Wiener to address.  

As stated in the Earthquake Safety Implementation Program (ESIP) Workplan, retrofit costs are expected to range from $10,000 to $20,000 per dwelling unit. In a five-unit building, this could add up to as much as $100,000. According to a public statement by Mayor Ed Lee, before the first retrofit is required, they will “develop financial incentives and assistance programs to help defray costs for property owners.”

But with apartment owners allowed to pass the cost of the work on to their tenants -- a class of San Franciscans already being hit with rising rents, a wave of evictions, and legislation that would encourage more conversation of apartments into condos -- this earthquake safety measure could make their situation even worse.

“We have concerns about this, mainly that landlords will be able to pass on the costs to tenants and that landlords will use it as a pretext to evict long-term tenants with affordable rents, so we’ll be working to increase tenant protections in this plan,” says Ted Gullicksen from the San Francisco Tenants Union.

According to the San Francisco Rent Board (SFRB) website, for seismic work that is required by law, 100 percent of the capital improvement cost may be passed through to the tenants, regardless of property size, over a period of 20 years. The increases are subject to an annual limitation of 10 percent of the tenant’s base rent. Gullicksen says that rent increases will be up to $100 a month for many tenants, which is on top of the annual 1.9 percent increase landlords are allowed to impose in rent-controlled apartments.

Another worry for long-term tenants is the possibility of eviction. The SFRB also states some of the just cause evictions these landlords could use would be “…non-payment or habitual late payment of rent… to perform capital improvements which will make the unit temporarily uninhabitable while the work is being done, and… to perform substantial rehabilitation of a building that is at least 50 years old, provided that the cost of the proposed work is at least 75 percent of the cost of new construction.” This would mean rent increases and nearly any construction could be the reason a long-term tenant would be evicted.

This seismic retrofitting could drive up rent prices around the city and be one more obstacle tenants have to face. As Gullicksen said, “I think the mayor and sponsors don’t understand the impact this will have on tenants, so we will look to educate them and press for amendments to lower the rent increases.”

Comments

were deliberately put into rent control by it's supporters in order to deter any attack on rent control on constitutional grounds i.e. that a LL would otherwise be not allowed to make a "reasonable return".

So it is not clear how these passthru's could be mitigated. The city has tod ecide between 3 alternatives:

1) Don't require the upgrades
2) The city pays for the work
3) The LL pays and does a passthru

Obviously it will not be (2) which just leaves the other two.

Also, expect a lot if temporary evictions which are allowed for works like this

Posted by Guest on Feb. 13, 2013 @ 5:11 pm

Can a landlord raise rents to market rate after completing "substantial rehabilitation" of an older building?

Posted by Guest on Feb. 13, 2013 @ 5:33 pm

the old rent, but can add the passthru's which would be substantial.

Many tenants do not go back after a temporary eviction, and then the rent can be raised to market.

Posted by Guest on Feb. 13, 2013 @ 6:52 pm

end of story.

Posted by Lucretia Snapples on Feb. 13, 2013 @ 5:57 pm

What will the impact of NOT retrofitting be on the renter if their apt is uninhabitable ?

Posted by Greg on Feb. 13, 2013 @ 6:12 pm

So they have an interest in the work being done as soon as their temporary eviction starts.

Posted by Guest on Feb. 13, 2013 @ 6:53 pm

but as written, the legislation certainly has some flaws. 100% passthrough is just ridiculously unfair.

Posted by Greg on Feb. 13, 2013 @ 9:54 pm

agreed to rent the place, or at least you should have done.

Posted by Guest on Feb. 14, 2013 @ 6:39 am

This from a guy who complains if his favorite dessert isn't on the menu.

We warned weeks ago when this was under discussion that it would negatively impact renters because of both the pass thru and the attending temporary evictions yet you were gleefully screeching for its passage, thinking this could REALLY be a chance to stick it to landlords. Well guess who REALLY got screwed?

No way around it other than the city helps pay but unfortunately we just don't have the money. So renters are gonna have to pony up!

Posted by Lucretia Snapples on Feb. 14, 2013 @ 11:57 am

Making a building safer from expected earthquate dangers increases the value of the building far more than the cost of the earthquake retrofit. In a smart world landlords would pay all of the cost since the repairs significantly enhance the building value and they get the long-term benefit since they own the building. Providing a safe building is 100% the responsibility of landlords under state law so I'm not sure why the city thinks tenants should pay for any of the safety improvements, other than SF tenants seem to be an easy target for politicians these days.

If the city requires current tenants to pay some part of the cost, the fairest would be 20% tenant and 40% landlord, because the remaining 40-45% of the cost is paid indirectly by the federal and state government since repair costs are fully tax deductible. After the federal and state government pay the first 45%, a 2:1 ratio of cost sharing between landlord and tenant on the remaining 55% of the net cost seems least egregious considering the landlord gets a large increase in the building's value by making the repairs.

Since the building improvements generally will last as long as the building - a very long time - the tenants should pay the cost over a 50 year amortization period as this would best match the expected useful life of the building.

No one will be happy with this sharing of the cost, but since the work needs to be done, and since both the current tenants and landlord benefit (although the landlords benefit much more because of the increased building values), some sharing of the cost over a 50 year period seems a decent compromise, with tenants responsible for 20% of the cost and landlords about 40% and the remainder subsidized by federal and state tax write-offs.

Posted by Guest on Feb. 14, 2013 @ 2:50 pm

No one gives a shit about shear walls and bolted foundations when buying a property in San Francisco - other than inspectors and contractors who make money off doing the work. In a crazed multiple offer situation like the one nearly every property is in all the buyer cares about is getting into a condo or home - bragging about installing a sheer wall means absolutely nothing and does not result in any kind of immediate increase in value.

And FYI - some of the city's recommendations, like bolted foundations, are of very little value in an earthquake considering the type of faults most likely to impact this area in an earthquake. Shear walls yes but some of the other shit isn't going to make a big difference. And if liquefaction occurs - well, nothing is going to help that structure unless its foundations have been driven down into bedrock.

Posted by Lucretia Snapples on Feb. 14, 2013 @ 3:00 pm

"No one gives a shit about shear walls and bolted foundations when buying a property in San Francisco - other than inspectors and contractors who make money off doing the work."

Yes, that's the way a lobotomized snapples would think. I've worked with contractors and with real estate liars and the fact is that bolting and shear walls can keep the building from collapsing on a person in a severe earthquake. But pleb, if you don't care, we certainly don't care whether you live in a safe building or not so stay in the dump you're in and don't worry about those shear walls and bolts, pleb.

Also, if I were you (I can't image what that would be like!) I would never wear a helmet while riding a motorcycle nor would I wear a seat belt while a vehicle is in motion. Please.

International Troll Society Member #12360969212

Posted by International Troll Society Member #12360969212 on Feb. 14, 2013 @ 7:03 pm

As Gullicksen said, “I think the mayor and sponsors don’t understand the impact this will have on tenants, so we will look to educate them and press for amendments to lower the rent increases.”

Ted, there is not a lack of education. This is about an agenda to make San Francisco a conservative-right wing City of and for the 1% and wealthy only. (With a few lingering residual poor people who we try to hide and keep out of sight with various bans).

Someone even wrote as much on another forum the other day: They wrote: We need more homeowners to make the city more conservative and thereby getting rid of "liberal" politicians.

The conservatives-right wing must be having wet dreams about now. For years they have wanted to take over this city and they are in the process of doing it now using word manipulation (among other tactics). They've made their agenda very clear and it's best to see it and acknowledge it in order to appropriately respond to it. Refusing to see their agenda for what it is (and pretending they need education in this regard...oh please!)...what will that accomplish...what will that do?

International Troll Society Member #12360969212

Posted by International Troll Society Member #12360969212 on Feb. 13, 2013 @ 9:17 pm

There quite simply aren't enough members of the 1% to fill a city this size because, well, they are only 1%.

Besides, rich people need lots of minimum wage types like you to serve them.

Posted by Guest on Feb. 14, 2013 @ 6:41 am

Pleb, I've been meaning to ask you: Do they use incense in your liturgies in the Church of Lee? (You know, like in the High Anglican). Do you use incense? And I heard that Rose Brown and Willie Pak are acolytes. Is that true, pleb? Do kindly get back to me before visiting hours end there in your ward, pleb.

International Troll Society Member #12360969212

Posted by International Troll Society Member #12360969212 on Feb. 14, 2013 @ 2:00 pm

is your position:
a- "screw it, we don't do any seismic upgrades"
b-"screw them, make the property owners responsible for 100%"
c-"have the owners pay half, have half passed through (or some type of split)"
d-"let the city pay for this"

this legislation being an intentional attack on renters is a pretty tough pill to swallow, IMHO.

Posted by Guest on Feb. 14, 2013 @ 7:24 am

So why should they get that for free? It seems only fair that, if your home is improved, then your rent goes up. Indeed, it is exactly that principle that explains why the Rent Ordinance has pass-thru's for capital improvements.

Posted by Guest on Feb. 14, 2013 @ 8:27 am

Sure, why should we expect to fork over a huge portion of our hard-earned income for a habitation that's actually safe? Why should I expect the food I eat in a restaurant to be safe? The nerve of me!

The landlords benefit massively. They get a marketable structure that's still standing after the Big One.

Duh.

Posted by Carl Russo on Feb. 15, 2013 @ 12:04 am

is to just try and force landlords to swallow mandated capital improvements without allowing a pass through to recoup their costs. That's called an unconstitutional "taking" of property - just see how quickly that causes rent control in SF to be struck down. Keep pushing - push harder. We're all waiting for to happen.

Posted by Lucretia Snapples on Feb. 15, 2013 @ 12:25 am

"this legislation being an intentional attack on renters is a pretty tough pill to swallow, IMHO."

I agree.

International Troll Society Member #12360969212

Posted by International Troll Society Member #12360969212 on Feb. 14, 2013 @ 2:02 pm

Shhh, don't tell anyone! Once we get the city safely retrofitted, we will set up internment camps to place the likes of you radicals. The final solution is almost here----we are no longer just dreaming about it, we are putting it into action!

Of course, at our weekly meetings, I always argue for a quicker fix, like just rounding the riff-raff up and shooting them--but then who would clean up the mess?

Oh wait, we can use the army of robots we have been keeping in storage. There problem solved!

Posted by Chartin on Feb. 14, 2013 @ 3:14 pm

DId anyone believe the phenomenal attack on renters would happen while a former tenant activist attorney was mayor?

I fully believed it from day one.

The way the Ed Lee became mayor to begin with, the way he was re-elected, who funds his campaigns....Ed Lee fits a certain profile. A pathological profile.

Posted by Guest on Feb. 13, 2013 @ 9:48 pm

Requiring seismic upgrades is clearly an attack on tenants.

Posted by Guest on Feb. 14, 2013 @ 12:39 am

If this law passes, I'd be worried if I was a rent-controlled tenant living in a building on the (long) list of buildings needing the upgrade. Landlords can use this a mechanism to get tenants out the door.

And I don't really think you can do away with a pass-through mechanism to tenants. You can't really tell a property owner "surprise! You need to spend $100,000 on your building and can't recoup the cost." Property owners would sue, and even if they lost, the City would be drowning in litigation for years.

Posted by The Commish on Feb. 14, 2013 @ 9:10 am

Lest it grow by what it feeds upon."

A quote the rent control crowd, always looking for a way to stick it to landlords, should take to heart when it sees the devastation this legislation will bring to rent controlled housing in San Francisco. And to think - they put all that time and energy into fighting poor TIC owners while this was sneaking in, right under their noses...

Posted by Lucretia Snapples on Feb. 14, 2013 @ 12:03 pm

I'd be worried if I were a rent-controlled tentant living in one of these buildings.
If that building collapses and is then rebuilt, it won't be rent controlled anymore.

How all of this gets funded is one question, but the need for this work to be performed really strikes me as a no-brainer

Posted by guestD on Feb. 14, 2013 @ 3:16 pm

Why not mandate it for EVERY property, single-family or not, in San Francisco? That'd be a way to increase the housing stock in this city - if the owner can't pay then take their home away and put it into a lottery controlled by one of our non-profits - we could house all our poor and homeless this way while ensuring they would survive the coming terrible earthquake. It'd also ensure a steady supply of work for our city's small businesses like most contractors - everyone wins!!

Posted by Lucretia Snapples on Feb. 14, 2013 @ 3:43 pm

And from Scott Wiener's newsletter today, "Moreover, when the buildings are replaced with new construction, the units will no longer be rent-controlled."

Posted by Gary on Feb. 14, 2013 @ 2:43 pm

Yes, if you actually tear down a building and build new units, then the new units are not rent controlled and that is and has always been the law.

However, that has nothing to do with retrofitting an existing building.

Posted by Chris on Feb. 14, 2013 @ 3:16 pm

Why spend up to 70% of the value of a building rehabbing it when for 100%, you can build new units that are RC-exempt?

Posted by Guest on Feb. 15, 2013 @ 9:04 am

Because you have to get approval to tear down a residential property. Then, you have to get approval to construct a new residential property. You also don't collect any rent until your new building is built and rented out.

So, unless you have several years of your life to spare, and you can go for years without collecting rent until your new building is approved (IF it is approved), and you have millions and millions of dollars to spend on city approvals, appeals, and the inevitable court battles that occur with just about any development in this city, then it is considerably cheaper to spend 70% of a property's value retrofitting it then it is to try to tear it down an existing RC building and build a new one.

Otherwise, all the current RC buildings would have been torn down years ago and replaced with new buildings.

Posted by Chris on Feb. 15, 2013 @ 11:29 am

Bribes.

I never met a DBI guy who didn't take them.

Posted by Guest on Feb. 15, 2013 @ 2:34 pm

And you say you have nothing to hide from drone surveillance.

A jail cell is the type of box where you belong.

Posted by Eddie on Feb. 15, 2013 @ 7:48 pm

I do residential quake preparedness consultations (I'm not a retrofitter), and one thing I think needs to be clarified: retrofits do NOT make a building uninhabitable. The city seems to be most concerned about the "soft story" situation created by living space being above garage door openings. This is expensive procedure, requiring a moment frame or column in most cases. QuakePrepare dot com. There would be no evictions to have this work done.

Posted by Guest Larry on Feb. 15, 2013 @ 11:17 am

I do residential quake preparedness consultations (I'm not a retrofitter), and one thing I think needs to be clarified: retrofits do NOT make a building uninhabitable. The city seems to be most concerned about the "soft story" situation created by living space being above garage door openings. This is expensive procedure, requiring a moment frame or column in most cases. QuakePrepare dot com. There would be no evictions to have this work done.

Posted by Guest Larry on Feb. 15, 2013 @ 11:19 am

Within a few months after the 1989 quake the landlady added bolts and sheer walls to the garage. It took a few days for a 2-car tandem garage. None of the tenants in the two units had to move out, but we did have to leave the cars outside during the day while the work was being done. Big whoop.

The landlady didn't even pass-through the costs since the cost wasn't that high and she was already getting over $2,000 a month rent from the two units combined. (She bought the Noe builidng for $39,000 in 1979, so she was already getting over 50% of her original purchase price in rent every year.)

The only reason this is a big issue now is that landlords are looking to get free money from the city and/or tenants and they view this SAFETY requirement as a way to stuff their pockets at the expense of tenants and/or city funds. That's what private landlords are suppposed to do - get as much rent money from tenants as possible. This is what landlords have been doing forever, and what they will continue to do, until private landlording is outlawed as a cruel and inhumane practice, just as slavery has been eliminated from many places around the globe.

The more the landlord trolls whine about how making their building SAFE will "bankrupt" them, you know the tears they are shedding are of the crocodile variety.

Posted by Guest on Feb. 15, 2013 @ 12:20 pm

FORCE the owners to do the improvements without allowing a pass thru. That'll show 'em. Are we mice or are we cis/trans in San Francisco? Shove this onto the landlords, tell them to talk to the hand and let the pieces fall where they may!

Posted by Lucretia Snapples on Feb. 15, 2013 @ 12:41 pm

I agree. There are probably a few dozen really cheap, mean landlords who have not added basic earthquake protections to their buildings, putting their tenants at risk of severe injury or even death when the next big earthquake occurs.

Now we understand why sometimes governments have to carry a big stick to force the pure profit maximizer landlords to maintain basic safety levels since there are always a few bad economic exploiters out there trying to take advantage of the economic system and put their tenants at grave risk.

You'd think the state law that requires a landlord to provide a habitable structure would naturally include being reasonably safe too, but tenants about as far down the economic food chain as one can go, and landlords are up near the top near the big business owners, powerful bondholders, and the politicians who make the beautiful system work.

Posted by Guest on Feb. 15, 2013 @ 3:53 pm

them safer. But as always, the issue is who pays for it. The tenants are the ones who gain the most from these improvements, and the law rightly acknowledges that by allowing passthru's, but spreading those out over twenty (20!) years.

Posted by Guest on Feb. 15, 2013 @ 4:09 pm

insist on the move-out anyway

Once they are out, there are a million ways of making sure they stay out.

Posted by Guest on Feb. 15, 2013 @ 2:36 pm

takes seriously boasts and allegations of bribery and will investigate reports posted on this website.

Posted by SFDA on Feb. 19, 2013 @ 8:26 am

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Posted by Guest on Feb. 21, 2013 @ 12:54 pm