maniakes: California’s Anti-Kelo Initiatives

Eric (

maniakes) wrote,
@ 2008-06-02 11:31:00

California’s Anti-Kelo Initiatives
California is holding a primary election tomorrow (Tuesday, June 3). Among the initiatives on the ballot are two amendments to the state constitution which would provide protection against Kelo-style takings (where Eminent Domain is used to force the sale of property to another private entity, nominally to foster economic development). If you’re registered to vote in California, I urge you to vote for Prop 98 and against Prop 99. If both propositions get a majority, only the one with the larger majority will go into effect, and Prop 98 offers much better protections than Prop 99.

The key differences are:

Prop 98 protects all private property against Kelo-style takings, including farms, small businesses, and rental property. Prop 99 protects only owner-occupied primary residences.
Prop 98 guarantees strong procedural protections for people whose property is taken for public use (a jury trial to settle contested claims as to the proper level of compensation, and prompt payment of compensation). Prop 99 does not.
Prop 98 would abolish rent control, which is a textbook example of a government program which just plain doesn’t work. Rent control was intended to guarantee affordable housing, and instead it causes the supply of rental housing to dry up, and it degrades the quality of what rental property remains. It says a lot when Paul Krugman and Milton Friedman agree that a program is a terrible economic idea.

Anti-Prop 98 groups have been spreading FUD that Prop 98 includes language which would require compensation for regulatory takings (i.e. require the state to compensate people who are unable to fully use their property due to environmental or land-use regulations). I’ve read the full text of the proposition and see nothing of the sort there. Neither did the judge who heard the case when Prop 98 opponents argued that the ballot summary was misleading. If Prop 98 restricts regulatory takings, then so does the Fifth Amendment.

More on the need for Prop 98's protections in this LA Times editorial by Ilya Somin.

Conflict-of-interests disclosure: I will be moving back to California later this month, albeit too late to vote on these initiatives. I plan on renting.

[Cross-posted at Indignant Desert Birds]

[Cross-posted at Dean's World]

(Post a new comment)

herufeanor
2008-06-02 08:29 pm UTC (link)

I've been trying to unravel these two propositions myself, and I have been leaning towards 99, based primarily on who supports it. Both bill's supports claim that their's is the "real" reform, while the other is a red herring, and their claims are very similar.

Looking at the provisions in the bills, I'm a little dubious about BOTH of them. Prop 98 appears to do too much. It goes well above and beyond just reforming that one abuse of Eminent Domain. Prop 99, however, appears to do too little, only protecting against one aspect of that abuse.

On the whole, I'd rather pass a bill which does too little, and leave it open for one that does a little bit more next time, then pass one that includes a whole pile of other reforms with much more far-reaching, possibly negative implications.

This is a larger analysis of the two bills.

The part that worries me most about 98 is not it's abolition of rent control (which is a practice I'm not 100% sure I support, though I'm also not sure I DON'T support), but the fact that it's language threatens many other renter protections, such as fair return of deposits and ample notification of eviction.

There is so much mud flying in both directions, and so much of it, from both sides, seems poorly founded, that I'm still not certain.

(Reply to this) (Thread)

maniakes
2008-06-02 09:14 pm UTC (link)

This analysis of the possible effects of Prop 98 on tenant laws (written by a group opposed to Prop 98) doesn't say anything about fair return of deposits, and most of the other changes appear to apply on to month-to-month leases (where California places much stricter restrictions on what landlords can do than most other juristictions) -- if you have a multi-period lease (which you really should if you would suffer significantly from needing to move next month), then nothing changes. Washington has much less strict tenant rights regulations than California, but the standard leases are pretty much the same.

I'd rather have seperate initiatives for the anti-Kelo provisions of Prop 98 and the anti-rent-control provisions, so I could vote for both but the former weren't held hostage to the latter. But we go to the polls with the propostions we have, not the propositions we want.

(Reply to this) (Parent)(Thread)

herufeanor
2008-06-02 11:07 pm UTC (link)

Funny, I could have sworn I already wrote a reply to this, but I just noticed that reply isn't there. Either LJ is glitching, or my brain is.

See section 10, on page 14, second paragraph. It goes over a big list of protections that could be eliminated, and "detailed requirements regarding residential security deposits" is one of them. It glosses over it pretty quickly, though. I had to look pretty hard to find it.

Another point which bothers me, which didn't occur to me until I read through this document, is that the way they eliminate rent control ALSO eliminates limitations on the rates at which rents can be raised. Currently, you can only raise the rent on current renters by a certain percentage over a certain time period. I'm not sure of the precise numbers, but it's enough that landlords should always be able to keep up with current market prices. What it prevents is massive rent increases for the sole purpose of driving a current renter out of their apartment, circumventing eviction laws.

Basically, if this passed, then if your landlord decided they didn't like you, or wanted to move somebody else in right away, or whatnot, and doesn't want to deal with the normal eviction process, they can just declare that your rent will go from $1500 to $10,000 a month, effective immediately. Then as soon as you're out, they drop the rent back down to $1500 for the new tenant.

This proposition seems to me like reckless deregulation, and this document you pointed to really illustrates why, showing all of the potential side-effects which may, or may not, come to pass, depending on various potential court rulings, because it's language is so broad that it has a TON of complex legal implications.

So, unless I can be offered a VERY compelling reason, I'm going to be voting no on 98. I will probably also vote yes on 99, because I can see no BAD effects of that, and it will decrease the odds of 98 going into effect.

(Reply to this) (Parent)(Thread)

maniakes
2008-06-02 11:35 pm UTC (link)

Basically, if this passed, then if your landlord decided they didn't like you, or wanted to move somebody else in right away, or whatnot, and doesn't want to deal with the normal eviction process, they can just declare that your rent will go from $1500 to $10,000 a month, effective immediately. Then as soon as you're out, they drop the rent back down to $1500 for the new tenant.

Something similar is already the law in Washington (no limits on how much rent can go up, and the notification requirement is very short and is the same as the notice-to-vacate requirement), but I've never heard about it happening. Frankly, most of the tenant rights regulations (especially when coupled with rent control) strike me as attempts to confiscate the use of property from the landlord and transfer them to the tenant at below-market rates, which differs only in degree from Kelo-style takings that almost everyone hates.

Again, that only affects informal month-to-month leases, where either party has the right to terminate the lease next month (and even then there's an agreement rent a month at a time, so the landlord can't raise your rent until the end of the month). If you have a term lease, your rent is locked in for the full term of the lease, and you have plenty of time to negotiate an extention in advance.

Tenant protections may be necessary when there's a rent-control induced shortage and landlords are trying to chissel back on terms and conditions what the lose on rent, but where there's a free market in rental property landlords offer reasonable terms and conditions and are willing to negotiate the terms of the lease because every day a unit stands vacant is a day they're losing money.

If there would be massive problems without aggressive tenants rights laws, we would see those massive problems in places with lassee-faire leasing laws. In fact, we only see major problems with landlord-tenant relations in places with aggressive rent control.

As a side note, I'm intrigued at how Prop 98 seems to be making all of my liberal friends suddenly terrified of judicial activism :P

(Reply to this) (Parent)(Thread)

herufeanor
2008-06-02 11:59 pm UTC (link)

I'm not terrified of judicial activism. I'm worried that the proposition, as written, will have far-reaching and complex legal implications. In many cases, it's a bit vague whether the law effects a particular regulation, and the courts will have to pass down a ruling. Given that the intent of the law seems to be to reduce regulation, in general, then taken in context, it would be perfectly valid, and probably correct, to rule in favor of deregulation. It would probably honestly be more activist, in that case, to vote in favor of keeping the regulation. So, in such a case, I wouldn't be annoyed with the judge, I would be annoyed with the proposition that the judge based it off of. Which is why I intend to vote against that proposition.

Now, correct me if I'm wrong, but it sounds to be like you're basing your assessment of the level of abuse of renters primarily on hearsay. I would guess that you, and most of your friends and coworkers, are probably in pretty high-end rental situations, and thus aren't dealing with the types of landlords most likely to abuse the system. Do you have, or can you find, any statistics to back up your claim?

(In all honesty, I think this legislation would be slightly to my advantage, as it would likely result in a small drop in overall rental prices, and the type of rental situation I'm in is not likely to be subject to the sorts of abuses which these regulations prevent. However, it would be really selfish of me to vote for Prop 98 on that basis.)

(Reply to this) (Parent)(Thread)

maniakes
2008-06-03 12:09 am UTC (link)

I was thinking more of a commenter on

punning_pundit's lj who chided me for arguing based on the letter and original intent of the law rather than looking at how judges might contort it.

I am basing my arguments on hearsay, although I suspect even in my situation hearsay would dredge up plenty of examples of suffering low-end renters because newspapers love a good sob story. I have no idea how to even start looking for them, so I'll merely point at the newspapers as the dog that didn't bark.

I'll also make a cheesy attempt to shift the burden of proof. We agree that government power is coersive, and from that I think it stands to reason that there's a burden on the person arguing for coersion to prove that it's needed, not on the person arguing against coersion to prove that it isn't. Where are the statistics showing large amounts of rental abuse in states with lassee-faire leasing laws?

(Reply to this) (Parent)

maniakes
2008-06-03 12:20 am UTC (link)

I forgot to mention in the comment you're replying to that the harm of Prop 99 is that it creates the illusion that Kelo has been fixed and split the coaliton for true Kelo reform, while actually only about 20% of the problem would have been fixed.

I also want to point out that the dire consequences being called out by Prop 98 opponents are in the form of "maybe, if the courts interpret it very broadly, and if market forces completely fail to protect consumers" the dire consequences just might come to pass. If that does in fact happen, we can always pass another proposition next election to clarify Prop 98 to a more narrow anti-Kelo measure.

On the other hand, the dire consequences of rent control and Kelo-style takings are happening right now. Check out the Krugman article and the Somin editorial in the original post. In the former in particular, bear in mind that Krugman is considered a left-wing economist, and would generally be the last person to jump on a libertarian bandwagon.

(Reply to this) (Parent)(Thread)

herufeanor
2008-06-03 05:47 pm UTC (link)

The document you linked to included three sections: Things that will definitely happen, things that will probably happen, and things that might happen, but aren't necessarily likely. Most of the things that I take serious issue with fall under the "probably" section.

Now, I think that it's very odd to assume that removing rent control will remove nearly all instances of other abuses that require rental laws, and also rather odd to assume that it's not happening because you aren't seeing sensationalized stories about it in the local newspaper. The media is painfully inconsistent about these sorts of things, and quite often when they come out with these sensationalized stories, they're reporting on things that have been going unreported for decades.

Now, rent controlled apartments will tend to have the most abuses, because they need to cut whatever corners they can to pull a profit. This is true. However, when you eliminate rent control, the supply increases, because new housing is constructed, and ultimately, SOMEBODY still fills the low-end apartment niche (cause, after all, the low-income households need to live somewhere), and how, exactly, do they make a profit without cutting corners, when the old rent-control landlords couldn't make a profit without cutting corners? Slumlords will exist with or without rent control.

Note that this is NOT an argument in favor of rent control, but rather an argument that rental abuses happen regardless of whether or not you have rent control, and the laws that deal with those abuses are still just as necessary.

(Reply to this) (Parent)(Thread)

maniakes
2008-06-03 06:02 pm UTC (link)

Most of the things that I take serious issue with fall under the "probably" section.

True, but I'm applying a discount factor to their probabilities because it's a political document put out by a group that opposes Prop 98 in order to persuade other to oppose it. The reason I cited it was to use it as an upper-limit estimate of the effect of Prop 98 on rental laws, not to endorse it as an accurate prediction.

It's certainly possible that there are real problems the local media is ignoring, but the burden of proof that the problems exist is still on those advocating coersive solutions to those problems.

Now, rent controlled apartments will tend to have the most abuses, because they need to cut whatever corners they can to pull a profit.

Rent controlled apartments cut corners for two reasons. The cost-driven motive you cite is the lesser or the two. The second reason is because they can. When there's a rent control induced shortage, tenants lose their negotiating leverage. If you push back in the slightest before signing a lease, there's a line around the block ready to sign in your place. If you threaten to leave your apartment because your landlord is misbehaving, his response will be "don't let the door hit you one the way out" because he knows he can rent the place out to someone else the next day. If you insist on a long-term lease to lock in your rent and terms, what's in it for the landlord to agree to this, as filling vacancies isn't a problem?

In a functional housing market without a rent-control induced shortage, landlords are forced to be reasonable because filling vacancies takes time. If you move out and the apartment stands vacant for a month before he finds someone to move in, that's $1500 out of your landlord's pocket. Without rent control, landlords are reasonable because being reasonable is good business sense.

(Reply to this) (Parent)(Thread)

herufeanor
2008-06-03 06:32 pm UTC (link)

It's certainly possible that there are real problems the local media is ignoring, but the burden of proof that the problems exist is still on those advocating coersive solutions to those problems.

There would be some merit to this if I were proposing enacting new laws. However, I'm arguing against retracting existing laws. That's a key difference.

I looked anyway, and I can't find any statistics about this. I tried a few obvious searches, and they all came back with completely the wrong results (lots of stuff about drug abuse in apartments). I'm not even sure what to search for.

Now, I think our difference on the predictions of how much landlords will abuse their tenants is based on differing assumptions about how smart the average low-income tenant will be about their rental unit. Basically, you're assuming that they will ask for all of these things, rather then just taking the terms that are offered them. As usual, a really well informed, smart, assertive operator will do better in an environment with fewer regulations, but that isn't most people. So while you may hit your landlord with all of these requests and requirements, and they may capitulate for exactly the reasons you give, most people will suffer because it doesn't occur to them that they CAN get better service, or it's too much of a production for them to move, or any of a pile of other reasons.

As such, I think a lot of landlords, particularly in low-income housing, will still tend to be pretty abusive, because they still can be, to any tenants that aren't assertive and informed enough.

(Reply to this) (Parent)(Thread)

maniakes
2008-06-03 07:01 pm UTC (link)

There would be some merit to this if I were proposing enacting new laws. However, I'm arguing against retracting existing laws. That's a key difference.

My theory is that tenant protections are a hack put in to address problems caused by rent control. Remove the underlying problem, and you don't need the hack. My evidences for this is that the relatively lassee-faire Uniform The Uniform Residential Landlord and Tenant Act was adopted in 15 states, which seem happy with the results, while the states with rent control (California, New York, New Jersey, and until recently Massachusets) have felt the need for much more strict tenant protections. My theory predicts that the non-rent-controlled states which haven't adopted URLTA also have relatively lassee-faire tenancy laws, but a quick googling fails to turn up evidence either way, and I'm too lazy to read and assess each state's tenancy laws individually.

I looked anyway, and I can't find any statistics about this. I tried a few obvious searches, and they all came back with completely the wrong results (lots of stuff about drug abuse in apartments). I'm not even sure what to search for.

That was my experience as well.

As such, I think a lot of landlords, particularly in low-income housing, will still tend to be pretty abusive, because they still can be, to any tenants that aren't assertive and informed enough.

You're probably right that the poor will be less inclined to sit down and negotiate, but I think they're sophisticated enough to move if their landlords are abusive (they can determine this by comparing their landlords' behavior to the behavior of their friends' landlords), and they can still tell their friends that Landord X is a jerk. I think that would be enough to keep landlords on their toes in a functioning rental market.

(Reply to this) (Parent)

	stride 2008-06-03 03:08 am UTC (link)
	I can tell you that the non-rent control is happening with my apartment community. When it was bought out three years ago, the prices raised by 150% the first year alone. (Reply to this) (Parent)(Thread)

maniakes
2008-06-03 03:12 am UTC (link)

My understanding is that SF has rent control, but most of the penninsula suburbs don't. It's a pretty common side effect of rent control that non-controlled rental units within commuting distance of the rent controlled area get way more expensive, because there aren't any apartments to be had in the rent controlled area, and because developers are reluctant to build new units in places where rent control might be coming soon.

(Reply to this) (Parent)(Thread)

	stride 2008-06-03 04:09 am UTC (link)
	That is true. However, there is nothing stopping rent from going up - especially in a place where housing $700,000 and no one qualifies for a loan. People have to live somewhere. (Reply to this) (Parent)(Thread)

	maniakes 2008-06-03 04:16 am UTC (link)
	True. That's part of why I want to see rent control go away, and why I want land use and zoning policies reconsidered in order to permit the building of more places to live. (Reply to this) (Parent)(Thread)

	maniakes 2008-06-03 04:32 am UTC (link)
	I see the Bay Area's housing prices as a supply-side issue. It's a very desirable area to live, but zoning and land use laws make it very hard to build more places to live, and San Francisco's rent control laws discourage building more places to live in the city itself. The result is that one way or another, a lot of people who want to live there get squeezed out. (Reply to this) (Parent)

	herufeanor 2008-06-02 08:41 pm UTC (link)
	P.S. When did you actually start Indignant Desert Birds? I remember you posting that you were considering using that name, but I never saw a post saying you'd actually started it. Also, the page is being almost completely unresponsive right now. I'm trying to respond to Punning Pundit's latest post, and it's consistently timing out. (Reply to this) (Thread)

	maniakes 2008-06-02 08:59 pm UTC (link)
	It went online yesterday. We aren't pimping it much yet, as it's still in the shakedown period. (Reply to this) (Parent)

	punning_pundit 2008-06-02 09:44 pm UTC (link)
	Good to know that it's timing out. grumble I'll talk to a friend of mine who set up the joint. Odd that it's timing out for you: I've been really impressed with how fast the site is... (Reply to this) (Parent)(Thread)

	maniakes 2008-06-02 09:47 pm UTC (link)
	It was slow for me for a little while, about the time herufeanor complained, but it's been fine since then. (Reply to this) (Parent)

	herufeanor 2008-06-02 09:56 pm UTC (link)
	Yea. As you can see, I did eventually make the reply (twice, in fact, because when I realized it was awaiting moderator approval, I went and made an actual account and re-posted it). (Reply to this) (Parent)(Thread)

	punning_pundit 2008-06-02 10:01 pm UTC (link)
	I see that, and glad to have you commenting. I recommend adding us to your RSS reader of choice, so that you never miss a word. It also wouldn't hurt to tell all your friend and family about us. I know someone who did, and he got a million dollars. I know someone who didn't, and she died. It was very tragic. (Reply to this) (Parent)(Thread)

	herufeanor 2008-06-02 10:11 pm UTC (link)
	I might do that, if I can figure out how to make LJ's aggregater pick it up. All the LJ RSS feeds I've joined in the past have been by finding somebody else who had subscribed to the feed, and joining it through them. (Also, I can't figure out how to REMOVE an RSS feed from my LJ account, which makes me slightly hesitant to add more of them.) (Reply to this) (Parent)(Thread)

	punning_pundit 2008-06-02 10:11 pm UTC (link)
	Yeah, I don't even know where to begin with LJ RSS. If you're using Gmail, though, Google Reader is _fantastic_ (Reply to this) (Parent)(Thread)

	herufeanor 2008-06-02 11:09 pm UTC (link)
	Well, I may set that up when I start my new job, on June 23rd. (I'm gonna be a game programmer for Cryptic Studios. Yes, you should be jealous. :-) ). My current job blocks access to all major webmail providers, due to paranoia about viruses. (Reply to this) (Parent)(Thread)

	punning_pundit 2008-06-02 11:11 pm UTC (link)
	That's just a little bit awesome. Are you working on Star Trek Online, or another project? (Reply to this) (Parent)(Thread)

	herufeanor 2008-06-02 11:24 pm UTC (link)
	I see what you did there. Nice try. :-) I'm working on the general MMO engine will go into Champions Online, and their other two, unannounced projects. I don't know yet precisely which systems I'll be working on, but it sounds like I'll have a lot of freedom to work on the parts that interest me. (Reply to this) (Parent)

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