John F. Kennedy University Top Minds: Professor Ora Prochovnick

Housing Tenants Rights

Professor Ora Prochovnick teaches in the College of Law, JD Program at JFKU. In this video Professor Ora discusses Landlord Tenants rights.

I’m Ora Prochovnick, professor at the College of Law, and Director of Clinical and Public Interest Law Programs. Landlord tenant rights are a really compelling issue right now, in that there’s really a very short list of basic human necessities, what we need to survive as people. We need food, we need clothing, and we need shelter. You take that basic human need of having housing and shelter, and you combine that with what’s going on right now in the San Francisco Bay Area, which is a shortage. There’s a sever lack of affordability, which, unfortunately, can sometimes create a strong profit motive incentive on the one side of the relationship, and an inability to access affordable basic need on the other side. It creates a tension in the landlord tenant relationship that otherwise would not need to be there. That’s what comes up a lot in the law.

 

So doing work in this area is very meaningful, and the landlord is providing an essential human service, and could feel very good about what they’re providing. But sometimes that ability to make a profit way beyond what the landlord might need to might compel different sorts of behaviors. One of the interesting challenges in this market is that, in our economic system we rely on the rules of supply and demand as theoretically leveling things out. And those rules just don’t work in the context of the housing market, particularly in an environment like what we have here in the Bay Area.

 

Basic rules of economy say that if you want to buy bread and the price of bread gets too high, you’ll say, “Okay, I’m not gonna buy bread anymore. I’m not gonna pay $10 for a loaf of bread, I’ll switch and get rice instead.” Then when the demand goes down, the price comes down, and it starts to level off. That’s how our economic system is supposed to work. That’s skewed by what’s going on in the housing market. What’s happening right now in our housing market is, first of all we have an extremely high demand. That high demand is fed by what’s going on in Silicon Valley, where, quite honestly, you have people who make more money than common sense.

 

Logically you maybe wouldn’t pay $4,000 for a one bedroom place in the Mission District in San Francisco. You would think that those prices wouldn’t last, but there are people who so badly want to live there and have such a high income that they’re willing to do that, and that skews the market. It’s a high desirable area. It’s a beautiful place with a lot of tolerance, and a lot of diversity, and a lot of access to things that we all want, so the demand is extremely high. The concept is that eventually the price will get so high that the demand will stop. That can’t happen in the housing context, because we all need to live somewhere.

 

So when you take this fundamentally need like housing, it will never respond to the laws of supply and demand, you can’t switch. What you could do is move out of the area. We have people who have been born and raised in the Bay Area who go away to college and can’t come back and live where they grew up. Or get priced out of their home, or are evicted, and can’t relocated within the area. The solution is not to lose our community. The whole reason we have this high demand is because of the tolerance and the diversity, and if we price the long-time residents out of this community, the very thing that’s driving that demand is gonna go away. It’s that we all want to live here, but we’re not gonna want to live here if our neighbors are not artists, and young people, and old people, and students.

 

We clearly as a community need to address this concern and try to do something about it. It’s not addressed by the simple rules of people will stop paying too much, that’s just clearly not working. There’s various tools and ideas, one of which is, for the first time in about 30 years there’s suddenly a rise in interest and rent control. We’re seeing that, historically we’ve had rent control in San Francisco, Berkeley and Oakland have very strong rent control laws, and they’ve been in place since the late 70s, early 80s. In some surrounding areas, San Jose, East Palo Alto, Hayward, Fremont, have rent control laws. But for the first time we’re seeing other communities start to adapt.

 

Here in Contra Costa, Richmond just passed a rent control law for the first time that went into effect as of January of this year. Alameda is now implementing rent control. Mountain View, in the middle of Silicon Valley, is taking on rent control, Santa Rosa. so we’re seeing that this community interest in trying to do something to preserve affordable housing stocks, which means preserving the diversity of the community. Rent control also has its challenges and its problems, and there’s a lot of disputes in the community about whether that’s the right solution. Because one of the ways that rent control skews the market is related to the form of rent control that we have here in California.

 

We have something known as vacancy decontrol. Essentially how vacancy decontrol works is, as long as the original tenant remains housed in the unit, the rent will be stabilized with very small annual rent increases tied to inflation. The concept is, the landlord can get a reasonable return on their investment and get regular increases, so they aren’t gonna make as much they possibly could make, but they’ll make a reasonable return on their investment. And the tenant will maintain affordable rent. But as soon as that original tenant vacates, the rent can rise to market rate. As we’ve seen right now, market rent is extremely high.

 

What this does is it creates a very strong incentive to evict. So you take a long-term tenant who has lived in their home 20 years, and let’s place that long-term tenant in Iowa. They’ve paid their rent on time, they get along with their neighbors, they take good care of the place, and they’ve had a mishap at work, a work-related injury, and they get behind in the rent. That landlord is gonna wanna work with their tenant. They’re gonna say, “Hey, you’ve been a good guy. I like having you around. I’m gonna give you a slack for a couple of months to catch up, and we’ll keep you as a tenant.”

 

You move that same person to a rent control situation in the Bay Area and put them in Berkeley, Oakland, or San Francisco and they get behind in their rent, the landlord is gonna say, “Finally I have an excuse to get rid of this long-term tenant, because once they’re gone I’m gonna triple the rent.” It completely skews the market, it harms what otherwise could be a very amicable landlord tenant relationship to creating a lot more tension because a landlord who normally would want to keep their long-term tenant wants to get rid of them because of the mix of profit and greed.

 

There’s various potential political solutions to this. We have a state-wide law called Costa-Hawkins that mandates that cities have vacancy decontrol, and no local city could change that. Even if Oakland wanted to implement vacancy control, they can’t. It would require a change at the state level in Sacramento. There’s some people right now working to try to do that. Just this week, busloads of both tenants and landlords, advocates on both sides, went to Sacramento to speak with their legislators about the pros and cons of keeping Costa-Hawkins in place. I think what I would suggest and advocate for is that it makes more sense for the local community to be able to put in place the rent laws that make sense for that community, rather than having Sacramento implement them in the state-wide way this way, where what works for Fresno might not be what works for Pleasant Hill, and to let local areas change that.

 

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