Board of Supervisors passes new rental unit registry law

Landlords in San Francisco are already subjected to the most complex regulatory regime anywhere, but for some lawmakers, it’s not enough. Resilient tenants’ advocates have been calling for a citywide rent registry for years, and in time for the holidays, they finally got their gift.

With no dissent, the Board of Supervisors voted to create a rent registry. Retiring Supervisor Sandra Fewer was the chief architect of the new law designed to “more vigorously enforce rent control and eviction protections by requiring landlords to report information about their rental units annually to the Rent Board.”

The Rent Board has new fangs

Fewer is convinced that the city needs more transparency in its housing stock. Herself a small landlord, she told the San Francisco Examiner that added protections were needed to “track landlord-tenant relationships, inspect and investigate housing services and rents, and better administer the Rent Ordinance.”

Responding to widespread criticism from housing providers, the supervisor said that filling out a form on an annual basis is not onerous and will not deter anyone from owning property or leaving the rental business. “This is not a punishment for landlords or an invasion of privacy,” she said. Rather, it is inventory that merely collects information about housing units, not about the people who live in them.

Many small property owners like Noni Richen, president of SPOSFI, will take exception. She told the San Francisco Examiner that the proposal “makes no sense in California, where vacancy control is forbidden

What information is peeled back?

Reams of information that would be entered into the database include how much rent tenants are paying, the square footage of the units and number of bedrooms and bathrooms, what utilities are included, and the date when the units became vacant or occupied. The reporting will be an online process.

An exercise in redundancy?

The Rent Registry law was sold to voters as a mechanism to handle claims when a landlord imposes a bad-faith rent increase in order to coerce a tenant to vacate, despite the fact that existing regulations clearly prohibit exorbitant rent increases. There are many layers of protection at the state and local level for tenants faced with an unlawful rent increase. A phalanx of tenants’ attorneys are only too happy to prosecute such cases. Indeed, tenants’ attorneys are salivating at the opportunity to sue landlords. It becomes unclear, then, why overlapping rules are needed. Renters already have plenty of recourse to air and redress their grievances in front of a sympathetic Rent Board or the courts.

“Misinformed tenants need to be apprised of their rights under the law” is the other argument being made by registry advocates. The underlying assumption is that tenants can’t fend for themselves, they are bamboozled, or somehow ignorant of their rights. In fact, tenants are savvier than ever. Renters are a point and click away from a vast network of organizations and lawyers dedicated to preventing abuses and correcting wrongs. Rest assured, tenants are well informed of their rights, especially during the pandemic and eviction moratoria. Tenants are not babes in the woods.

Playing devil’s advocate

There just might be good reason for a city to keep track of rental data if vacancy control exists, but it does not. Vacancy control is when someone in a rent-controlled apartment moves out, a new tenant gets the welcome mat, and the city—not the owner—sets the new tenant’s rent. A rent registry is required to make such a scheme effective.

Courtesy of the CostaHawkins Rental Housing Act of 1995, however, we don’t have vacancy control. Californians have twice rejected attempts to repeal this bedrock law at the ballot box. Voters seemed to recognize that the strictest form of rent control would inevitably lead to a drop in property values and stifle the construction of desperately needed housing. Undoubtedly, many landlords will simply throw up their hands and get out of the rental business altogether.

Two drubbings at the ballot box does not mean that tenant advocates will not try a third time to repeal Costa-Hawkins and make vacancy control a reality. Could this be the real motivation behind a massive database —setting the stage for the future?

No simple task

One of the most compelling arguments against rent registries is the herculean task of creating and maintaining a reliable database. Regulators do not deny this. In its report “Creating a Rental Registry in San Francisco,” the Budget and Legislative Analyst’s Office, recognizes the complexity and cost of the task.

The study notes that San Francisco’s city government does not have a single repository of data that includes the location and ownership of all rent-stabilized units. The Assessor-Recorder’ Office collects information on multi-unit residential buildings by size category, year of construction, and number of units. Conceivably, whether they fall under the Rent Ordinance can be deduced from this data, but cannot be confirmed conclusively. The Planning Department’s Information Management database will likely be tapped to aggregate information from different governmental sources, including the San Francisco Treasurer and Tax Collector’s business registration data.

The bottom line: it’s going to be a colossal, expensive project that will require the hiring of dozens of new full-time Rent Board employees with an ongoing budget of up to $4.37 million, depending on the number of rental units covered and other factors.

Looking into the future

The timing of the rent registry’s approval could not have been better. The ink has hardly dried on new tenant protection laws and regulations before rental property owners have to navigate yet another set of rules. As landlord attorneys, even we have gotten indigestion trying to keep track of new guidelines and can only imagine how difficult it is for everyone else.

The only good news we can report is that San Francisco landlords won’t have to peel back their books just yet; the rent registry doesn’t kick in until March 1, 2023 for owners of properties with 10 units or fewer. Those with more than 10 units have until July 1, 2022 to register their rentals in this vast list.

We can only hope that by then the vaccinations are effective and widely administered. Once the beast is slayed, we will have fewer concerns in managing landlord-tenant relationships because the courts will be firing on all cylinders, and employment will be restored to a great many renters who have not had the means to pay rent. Once the pandemic ends and everyone is safe, we can deal with a rent registry, but let’s get over this hump first.

In the meantime, we all have more pressing concerns.