Letters to the Editor: City should consider tax rebate to protect renters

Letters to the Editor: City should consider tax rebate to protect renters

Letters to the Editor

It puzzles me that tenant activists should push for private enterprise to subsidize housing through the support of rent controls, and "just cause termination" laws. Housing is a "very basic human right," tenant activists argue, a "human service" fulfilling a vital societal need. Aren't those just the sort of vital services we expect government to provide? Air traffic control, for example, is something so important that we entrust it only to the government. Public health services are another example. It's no wonder that landlords push back when asked to subsidize this basic human right. They don't see that there's anything in it for them.

Indeed, the government today does play a role in providing housing, through public housing projects, and Section 8 housing vouchers. Again, I call on the City of Alameda to better market Section 8 to landlords, to induce more to participate, and I call on tenant activists to invest some of their energy in pressing for an expansion of Section 8 programs, the better to serve more people.

But what about "middle income" tenants, you ask? Those who are feeling the pinch of rising market rents yet earn too much to qualify for Section 8 vouchers, even if the program was expanded. There is really no incentive for landlords to go along with rent control and the other government-intervention proposals I have heard to date. So I am proposing a solution that might provide incentive.

I suspect few people realize that landlords pay business taxes to the City of Alameda, based on their rental income. Some $217,000 in 2014, according to the City of Alameda. Further, 18 cents of every property tax dollar in Alameda County is redirected to cities. I'm sure many landlords would say they pay a lot of taxes.

I propose that the City of Alameda enacts an ordinance that would provide a tax rebate to landlords that stipulate a "just cause termination" addendum to their tenant lease agreements. Perhaps, to sweeten the deal, we make "just cause terminations" mutual - tenants have to have a good reason, like loss of a job, if they want to break a lease early, which costs landlords money. The City of Alameda can draft a standard addendum form, with standard language, that landlords must use, if they want the rebate. The annual business tax license return can be modified for landlords to include an exemption claim check box and require the landlord to provide a copy of the addendum signed by both landlord and tenant. Perhaps the addendum needs to be re-signed every year for the landlord to claim the exemption.

Savvy landlords would quickly learn that participating in the program provides a tax rebate, and gives them an edge in marketing their properties over landlords that don't participate. Savvy tenants would quickly learn to work only with landlords that participate. There would be some administrative costs on the landlord side, but tying it to their annual business tax license return should minimize that.

Critics will no doubt balk at the prospect of providing tax rebates to landlords, but it's actually a tenant subsidy, not a landlord subsidy. And besides, we already use public funds for public housing, Section 8 vouchers, and to build low-income housing. Anyone who believes that housing is a basic human right that society needs to fulfill would surely have no problem using public funds to motivate the desired behavior on the part of landlords.

David Howard

Comments

Submitted by Angela Hockabout (not verified) on Wed, May 27, 2015

I'm impressed that landlords are thinking in innovative ways. I hope that the writer works with the upcoming Alameda Tenant Landlord alliance to encourage his fellow landlords along these lines. We could get the support of city council with renters and landlords working together to support the idea of a tax rebate in exchange for just-cause oriented lease agreements. It is a breath of fresh air to see these kinds of ideas and one of the reasons that I personally believe in the community of landlords in Alameda. I can't wait to see what other solutions can come from collaboration between landlords and tenants.

Submitted by JB (not verified) on Wed, May 27, 2015

Tax rebates or any other incentives are cool. Affordable housing needs to happen BY ANY MEANS NECESSARY! Housing is a basic human right, and providing housing is not just like any other business as it involves a basic human right. The idea that people's housing needs should be subject to some free market that benefits those on the top at the expense of those below them is ridiculous, and perhaps even a bit evil.

Submitted by Ehirshberg (not verified) on Wed, May 27, 2015

Don't discount the free market. It has done more good for more people than anything else devised by mankind. It has also lifted more people out of poverty by far, than all other social programs put together.

Submitted by Neil (not verified) on Wed, May 27, 2015

In common with rent control, this does not address the underlying problem of restricted supply. And I'm not convinced all the benefit goes to the tenant--the share of the benefit between tenant and landlord (I think) depends on what's called in economics the "incidence" of the subsidy.

Submitted by David (not verified) on Wed, May 27, 2015

I believe there is too much demand to live in California, and the Bay Area, in general, to ever provide "enough" supply...

http://www.sfexaminer.com/sanfrancisco/san-francisco-vacancy-remains-low...

And when one looks to other cities, one finds that San Francisco's vacancy rates aren't much different than other major cities in the U.S. They all can't have "restricted supply"

http://www.freddiemac.com/blog/rental_housing/20150303_1_apartment_vacan...

Submitted by Neil (not verified) on Thu, May 28, 2015

Re. the latter point: There will always be some level of frictional vacancies, so I'm not sure the conclusion follows from the premise.

And, re. the former point: I guess I have more faith in markets. I don't think there is such a thing as "enough" supply; I don't know how to define it. I'm talking about a market-clearing level, which relies on people being able to respond to demand in determining how to use land.

Submitted by David (not verified) on Thu, May 28, 2015

Neil,

I'm guessing by "restricted supply" in Alameda you are referring to Measure A. (Correct me if I'm wrong.)

If I understand the "high-rent" crisis that we are talking about today, it is something that has blossomed just in the past 12 to 18 months or so. Measure A has been in place since the early '70s.

If anything, housing supply has increased in the past 18 months. And housing supply would have been lower just a few years ago when rents were more manageable.

There is a clearly a lot more going on in our local economy beyond just "restricted supply" that is affecting median rents. Increase in job creation, the types of jobs (salary, overall compensation), composition of residents (do we have more high-paid Google tech workers in Alameda now) and so on.

I know it's convenient, but it's also simplistic, to blame everything on "restricted supply" to the exclusion of the many other factors at work.

Submitted by Neil (not verified) on Thu, May 28, 2015

I hadn't thought of Measure A here, actually. It's not something I think about much. I'm saying something rather simple here. There are demand factors (some of which you identify). Rents will go up and down as demand ebbs and flows. If you restrict supply, these changes will be much larger. I'm not sure to whom that is convenient; certainly not to renters. And something's being simple does not make it simplistic.