Rents Blog: Who owns Alameda?

Rents Blog: Who owns Alameda?

Michele Ellson

Rising rents and a spate of termination and eviction notices have prompted speculation about who owns the thousands of rental units that populate the Island. So we decided to look into who owns property here, what’s changed hands over the past year – and who is responsible for rent increases that have been challenged by residents as excessive.

To answer these questions, The Alamedan consulted a list of public records sources, primarily the Alameda County Assessor’s property assessment roll, which lists the address, value, owner and use of every parcel on the Island as of November 2014.

When companies or partnerships were named as owners, we checked the California Secretary of State’s business entity database, Alameda County’s public records database and business directory websites in an effort to determine whether the companies’ owners are local or off-Island.

We also cross-referenced the data with publicly available listings of properties sold over the past year, and we took a look at the Rent Review Advisory Committee’s 2014 cases to find out if the owners of the properties at the heart of those disputes are local, or, as local property managers have said, from out of town.

From the assessor’s rolls, we pulled and examined the types of property we anticipated would most likely be rented out as dwellings: Residential buildings with five or more units, residential high-rise buildings (there’s just one in Alameda – Marina View Towers, purchased by a San Francisco firm in 2013) and properties with between two and four residential units – about 2,300 properties in all.

We omitted single-family homes from this analysis, because the assessor’s data don’t say whether they are occupied by homeowners or renters.

This isn’t a perfect analysis, and it doesn’t answer all the questions people have about rental properties in Alameda. The assessor’s rolls, for example, don’t tell us how many dwellings properties with five or more units hold, and online sales data is also an imperfect information source in that it is not an official record of sales. We’re offering the data and our findings as a starting point, to give readers an idea about who owns rental properties in Alameda.

Here’s what we found.

Most of the Island’s multifamily properties are owned by Alameda residents and investors. Most of the multi-unit residential properties in Alameda are owned by people who are based right here on the Island, including about half of the properties with five or more units and about three-quarters of those containing two, three or four dwelling units.

Most of the rest of the properties are owned by investors based in the Bay Area. A very small number of the properties we looked at – fewer than five dozen of the roughly 2,300 we surveyed – are owned by people or entities that are in other states. None was owned by a foreign resident or entity.

Many of the properties are legally owned by trusts, limited partnerships or limited liability companies, which are forms of ownership that can be seen as conferring certain tax benefits or legal protections. Most of those entities are owned by people who live or do business in Alameda or elsewhere in the Bay Area; in a handful of instances, we were unable to identify the people who owned properties here.

The assessor listed the Bank of America as the owner of one Island property – an address containing two units on the 1500 block of Pacific Avenue. None of the properties was directly owned by a large investor, and none of the trusts, partnerships or limited liability corporations that own property appeared to be owned by one. (An Alamedan reader commented on an earlier post about private equity giant Blackstone Group’s U.S. homebuying binge.)

Only a few dozen multifamily properties appear to have changed hands in 2014, and most of those were bought by locals. Online records obtained from the RealtyTrac website show that 64 multifamily residential buildings sold in Alameda in 2014, most of them five units or less. For the 25 properties with five units or less for whom new owner data were available, 19 were bought by people who live in Alameda and another two were purchased by people who do business on the Island, the assessor’s rolls show.

Three were purchased by people who live in East Bay cities – Berkeley, Piedmont and Brentwood – while a pair of Los Angeles residents are listed as the owners of a fourth, the rolls show. (Several other sales took place after the rolls were updated, so the new owners’ names weren’t listed on the assessor’s rolls.)

We checked in with a real estate broker friend about sales of larger buildings, and he spotted seven transfers of buildings with 10 units or more in 2014 in the records he has access to, two of them sales. One was to a Berkeley owner, while the other went to a limited liability corporation with a local address.

While most of the rental property we examined is locally owned, a majority of the rent cases the city’s Rent Review Advisory Committee heard last year involve off-Island owners. Local property managers have said that out of town owners, and not those based on the Island, are responsible for the big rent increases some tenants say they are experiencing. And at least one data source appears to back them up.

Alameda’s Rent Review Advisory Committee, which mediates rent disputes between owners and renters, considered 14 excessive rent complaints in 2014 (others were resolved before the committee was scheduled to hear them). Eleven of the 14 cases the committee heard involved out of town property owners.

Of the three properties whose owners list an Alameda address in public records, one involved a property that changed hands in 2014, though it’s not clear whether the property’s current or prior owners were involved in the case. Another involved owners with an office in Harbor Bay Landing Shopping Center; the listed owners’ address is in Sacramento, California Secretary of State records show.

Comments

Submitted by C. (not verified) on Thu, Jan 15, 2015

I remain concerned about the rapid increase in rents of single family homes when they turn over. One has only to look at the rental listings in the local newspapers to see that homes that were renting a couple years ago for $2,000 to $2,500 a month are now listed for $3,000 to $3,600 a month and in some cases as much as $4,700 a month. What existing Alameda renters can say they've gotten that large a pay raise in the last couple years? I'm guessing few, if any. What is to stop landlords from finding ways to oust existing tenants so they can throw a coat of paint on the place and rent it out for significantly more? That sense of vulnerability is a constant for renters and is amplified by the current market conditions.

Submitted by David (not verified) on Thu, Jan 15, 2015

We should simply nationalize the rental housing market and set everyone's rent to exactly 33% of their gross income, adjusted monthly.

Submitted by luczai (not verified) on Thu, Jan 15, 2015

In most cases, the new owner of a rental property is facing a much greater tax burden than the previous owner did, thanks to Prop 13. If the new owner does not raise the rent, he or she will not make a similar profit from the enterprise to that which the previous owner did. These are investments intended to make the owner money, not just to break even. As new owners, they are often faced with additional costs such as maintenance that was neglected. It is easy to see why a new owner would feel raising the rent to be a necessity.

Submitted by David (not verified) on Thu, Jan 15, 2015

The Alameda County Tax Assessor report has a breakdown of Prop. 13 property base years. The overwhelming majority of property in Alameda County has a base year within the past 20 years, indicating that property has turned over and new assessed base values have been levied.

http://www.acgov.org/assessor/documents/2014-15_Annual_Report.pdf

Submitted by Mary Jensen (not verified) on Thu, Jan 15, 2015

I agree with luczai...makes a lot of sense. The previous owner probably had low mortgage or none at all cause purchased decades ago was much cheaper to buy then than now, therefore, payment on loan would be much higher and property tax higher too. Not to mention the maintenance and repairs. So new owners are forced to increase the tenants rents.

Submitted by Chris (not verified) on Thu, Jan 15, 2015

This shows that the owners of the rental properties are small scale landlords and fellow Alameda citizens. They own the property and should have the constitutional right to do with it as they please. Why should we impose on them the burden of subsidizing tenants?

I just do not understand why people are willing to pay $3k in rent instead of buying a starter house in Alameda or somewhere else in the Bay. I bought a small starter house in Alameda in 2012, and my mortgage payment is less than 2.4k (I put less than 20% down). I do the repairs and improvements on it by myself. I certainly would have considered to buy a large house in Marin or Palo Alto, but guess what... it is not affordable for me, and I am perfectly fine with that reality. And of course, I love Alameda...

We are grown ups, and therefore should be responsible for our own decisions. Renting and owning is not the same, each has advantages and disadvantages. If you made a bad decision by renting, why do you expect someone else should pay for your mistake? When the housing prices crashed in 2008, did the Alameda tenants share their income with Alameda homeowners who were underwater?

I am concerned for Alameda, as any type of rent control measure could reduce quality of life, create blight and buildings in disrepair.

Submitted by neil (not verified) on Fri, Jan 16, 2015

David: What you type doesn't give us enough data to assess what the tax implications of a shift to current appraisals are. It's only vaguely illustrative. And re. your little point about 33%: I find it odd when libertarians (a) dislike rent control and similar because they interfere with markets, and (b) are okay with restrictions on property owners' right to build whatever housing they want on their own property. It's a little bit intellectually inconsistent, and inconsistent in a way that hurts non-homeowners.

Submitted by neil (not verified) on Fri, Jan 16, 2015

PS interesting data, Michelle.

Submitted by Kristen (not verified) on Fri, Jan 16, 2015

And yet, not all landlords are new buyers paying high property taxes. But that doesn't stop them from hopping on the bandwagon. A friend of mine living in a crapshack had her rent raised quite a bit; owner of building (rundown Victorian split into three units, two legal, one of dubious legality) has had it forever; not well maintained at all; etc. Her case is not an isolated one, not by a long shot. But hey, all we want in Alameda is people who are rich, or on on their way there, so who cares, right?

Submitted by David (not verified) on Fri, Jan 16, 2015

Neil: I think the problem is with the Alameda County tax assessor's office, which produces the limited data I cited. My only point is that the data shows in Alameda County is that there is property turnover that triggers re-assessment, and, contrary to popular belief, there is not within Alameda County a majority of property held at low assessed values under Prop. 13.

Regarding nationalizing the rental housing market, I was being facetious. I find it odd when people in Alameda want to introduce market interfering policies (like rent control) but then complain about Measure A, which is a market interference, for a cause that some people consider good, just, and sensical.

I'll repeat it over and over again: Since 1979, Measure A has not prevented affordable housing from being built, because that was the year that the State legislature introduced the density bonus law, which allows developers that genuinely want to build affordable housing to sidestep Measure A and laws like it, when they commit to building the requisite number of units.

Not until the Collins Boatworks project a few years ago has any developer - so far that I'm aware - tried to apply for the density bonus in Alameda.

That so many people keep harping on Measure A in the name of "affordable housing" while continuing to ignore the density bonus only makes me question if they really are advocating for affordable housing, or just trying to profit from market rate housing.

Submitted by David (not verified) on Fri, Jan 16, 2015

Kristen: So raising rents is ok if they take care of deferred maintenance?

Submitted by Kristen (not verified) on Fri, Jan 16, 2015

Sure, David, if that is what they are actually doing with the money. However there *should* be something that protects the renter from sudden, huge increases. Increases should be pegged to a percentage, not just "whatever the landlord feels like." That is what we have now in Alameda; and as commenter "C." put it, "What existing Alameda renters can say they've gotten that large a pay raise in the last couple years?" Wages have been stagnant for most workers since at least 2007-- Google it. I do think we all have to take a look at what we want Alameda to look like. Should it only be for those households earning over $150K/year? Or is there a way we can keep teachers, office clerks, maintenance workers, etc. in our community?

Submitted by b. (not verified) on Sat, Jan 17, 2015

I guess what I don't "get" is that everyone purports to want to keep Alameda the quaint, friendly "small town" place that it is. But jacking up rents by insane amounts of money is by default going to CHANGE THAT UTTERLY AND COMPLETELY. Alameda is what it is because of all the PEOPLE who live in it.

What the "landlord has every right to ask the moon" people aren't even allowing into their consciousness is that by making formerly affordable houses and apartments un-affordable by those who currently live in them, they are going to forever ALTER THE VERY FABRIC OF THIS COMMUNITY!

Once all the "olds' and all the "poors" can no longer call Alameda home, all you're going to have are self-absorbed rich people who don't care about you, or your "small-town atmosphere" or your "community"...and it's going to destroy the very essence of what "ALAMEDA" means and has meant for so long.

Are you willing to have that? Really? All for the sake of the almighty dollar? You're willing to "get rid" of all the parents and kids and grandparents who attend your PTA meetings and city council meetings, the people who say "hi" to as you walk your dog? You're willing to get rid of YOUR NEIGHBORS to make a buck?

Submitted by Michele H. (not verified) on Sat, Jan 17, 2015

Chris, You may not "understand why people are willing to pay $3k in rent instead of buying a starter house in Alameda or somewhere else in the Bay," but those of us who pay $3K to rent do. Like many people all over the country, at this point thanks to jobs that still pay fairly well, we *can* afford $3K. But we do not have the ability to save $180,000 to make a standard 20 percent down payment on a home in the Bay Area. And we never will. If there are "starter homes" here in Alameda, I would like to see one. The common 2 bedroom/1 bath that would be "starter" in size in most regions is a 2nd or 3rd home in price as those little houses are being sold in this overheated market for upwards of $800K and higher. Many of us do make pretty good money, enough to pay $3,000 a month for rent. But we do not have the salaries of the Silicon Valley crowd -- many of whom live here and commute to their jobs in the mega-Google and Facebook buses that rumble down our streets in the a.m. -- who can outbid any of us on homes for sale and they do so regularly, easily and quickly. Also, there is the standard consideration of whether you can buy a home for the amount of money you pay in rent. It is possible to rent a nice unit/house/townhouse in Alameda for $3K a month, but a mortgage payment would run around $6K for a house of any size. So it is a matter of "doing the math" for many of us.

Submitted by David (not verified) on Sat, Jan 17, 2015

Kristen: what if the landlord has a sudden huge increase in cost? Should they also not be allowed to pass that along to the tenant? Or *should* the landlord eat the cost?

For just one example, property taxes are permitted to rise at any amount - above Prop 13 limits - when property values are recovering from lowered assessments, as they have been doing in the past few years.

What if something breaks and needs an expensive repair?

Tenants *should* be protected from sudden huge increases because...why? Because landlords are the "haves" and the tenants are the "have-nots" ?

(I think at its core, this debate is really a classic have/have-not struggle.)

Jon Spangler's picture
Submitted by Jon Spangler on Sat, Jan 17, 2015

Commenters like luczai, Mary Jensen, and Chris are describing an idealized "new owner" who faces higher property taxes, deferred maintenance, and other costs. Those kinds of landlords may exist, I suppose. But what about the many long-time landlords who have deferred basic health and safety upgrades for years (leaving tenants with mold, substandard wiring and plumbing, no smoke alarms, no heat, etc.) who are raising rents by 20-30 percent without doing anything to improve their rentals (I hear about cases like this about once a week these days.)

New owners get to start afresh with depreciation and amortization schedules, too, so landlords charging their tenants of the full costs of building upgrades following a purchase are, in a sense, "double-dipping" on the backs of renters. New owners should not be able to pull off a "leveraged buyout" by financing the *entire* cost of purchasing a building solely on the backs of tenants.

Chris seems to think that the average renter in Alameda pays $3000/ month in rent--or can afford to pay that much. Many rentals in Alameda have been far lower than that, permitting many Alameda renters to live here (successfully) on fixed incomes for years--at least until the latest greed-driven spike in rent increases 20-30 percent just so landlords can collect higher "market rate" rents on substandard units without upgrading them. That is unjustifiable greed.

Reasonable and fair stabilization of housing prices should not hurt the landlords who are already being fair to their tenants. Nor will it "reduce quality of life, create blight...(or cause) buildings in disrepair." (Injustice, poverty, substandard housing, poor schools, or bad government can cause the first; the second and third are caused by poor or inadequate property management.)

Renters need more rental housing to be available in the market, not less, so it is in their best interest to support and work with landlords who are similarly reasonable. (This is what the Alameda enters Coalition is doing right now--working with cooperative landlords and property managers to find common ground.)

The excessive greed of landlords--especially from out-of-town, apparently--needs to be reigned in. (These are the landlords who are *only* looking at profits and knowingly raise rents 20-30 percent on tenants who are on fixed or low incomes--without justification or any comparable investment in improvements or increases in real costs.) If reasonable landlords and property managers do not join in the effort to protect vulnerable low-income renters from abuse and the crisis of skyrocketing rents worsens, Alameda will indeed be "blighted"--from losing some of its best citizens, parents, school students, and community members.

Renters are not asking for a free ride--only for justice. They want and need protection from exorbitant and unjustified rent increases, substandard conditions, unjust evictions, and tenant harassment.

Those are not unreasonable requests.

Submitted by David (not verified) on Sun, Jan 18, 2015

Seems to be a lot of "landlords should not..." in this discussion, without any explanation of why they "should not."

There also seems to be a lot of "The food is terrible! And the portions so small!" going on. If you are a renter, and you are living in a place with deferred health and safety upgrades, why are you still living there? Why don't you move? Vacate the substandard units and leave them empty, and leave the landlord without income from the property.

(If better alternatives are more expensive, it probably means that the costs to maintain those alternatives are higher too. Is that what the renters coalition is saying? "Properly maintained units are too expensive, and sub-standard units are seeing rent increases to match property maintained units!" ?)

Or why don't you make the needed repairs, and deduct it from your rent? California law has provisions for doing just that.

And, yes, landlords get a depreciation expense, which is NOT cash income on a month-to-month basis to help pay the bills, but a paper-accrual that gets reconciled once a year at tax time.

That depreciation expense helps pay for the "normal wear and tear" of the property that gets "used up" by tenants, and cannot, by law, be recovered through the security deposit.

I think, in some ways, some renters *are* asking for a free ride, but not in a way that's obvious. They don't want to have to move from substandard units or when rent goes up, so they want a 'free ride' from legislative protection that allows them to stay. They don't want to have to learn how existing law works that allows them to make necessary repairs and deduct the cost from the rent, so they want a legislative 'free ride' that obviates their need to do that. And so on.

Submitted by Steven C (not verified) on Sun, Jan 18, 2015

All this is - That most basic of economic concepts that I learned on the first day of my first college economics course: Supply and Demand. The bay area economy is producing good paying jobs. And we are not producing enough housing supply. The way to address it is to build more housing. End of story.

Submitted by st (not verified) on Sun, Jan 18, 2015

Alameda rentals have become so sky high that it is pricing the average middle income individuals out. Many rental property management agencies have expectations that are unreal for the normal individual working adult. Why is no one helping renters in Alameda, and large rental firms are refusing to renew lease in order to force tenants to move. Its unfair and I believe the local politicians need to know.