COLUMN RIGHT / TOM BETHELL : By Protecting Landlords, We Protect Tenants : Berkeley rent control means newcomers are often out of luck.
The Berkeley Property Owners Assn. held a victory celebration Wednesday night. Since landlords have been among our less-celebrated minorities, I decided to go and meet some of them for myself. About 200 owners, as ethnically diverse as any civil-rights commission could wish, showed up for dinner at an unfashionable location.
Since 1980, when the city enacted a rent-control law comparable in strictness to Santa Monica’s, Berkeley has been subjected to radical government. Its rental-property owners (there are about 4,000 in a city of 102,000) have been barraged with fees, fines and special assessments, and have been obliged to rent their apartments for about half what the free market would fetch.
But California’s courts have been more sympathetic, and an appeals court ruled that owners are entitled to rent increases that keep pace with the cost of living. Berkeley responded with a ballot measure that would rescind this increase. On June 2, the measure was defeated, meaning that rent increases averaging 28% will now go into effect. Hence the celebration.
Kurt Schoeneman, former president of the association, told me that the great majority of members own four rental units or fewer and that they are overwhelmingly Democrats. They tend to be average-income earners who invested savings in a single apartment building, counting on rents for retirement income. Several hundred are black. “Often, they are stuck with tenant activists who pay, say, $300 a month for apartments worth $600,” Schoeneman said. “If they complain to the rent board, they will be confronted by hearing examiners with law degrees.”
Jim Smith of the Black Property Owners Assn., a postal mail handler, told me what an embittering experience it has been for black owners to have made this investment, only to find themselves unable to evict tenants, perhaps fined for failing to “register” their units on time and in general ensnared in radical politics.
Since rent control was enacted, the demographics of the city have been changing. The number of available apartments has declined by several thousand, and Berkeley’s population has dropped as well. University students now find it much harder to rent in Berkeley, and many must commute from outlying areas. On the other hand, the law has made it easy for holdover activists from the 1970s to maintain low-rent pieds-a-terre in Berkeley. Schoeneman told of receiving rental checks from New York money-market accounts.
Parts of Berkeley now have the rundown look of the Third World states that radicals so admire. City Hall keeps up with the times, though. “We have a sister city that’s in the Brazilian rain forest but no one can find it on a map,” said Fred Collignon, one of the three “moderate” City Council members. They are consistently outvoted by a radical bloc. Collignon is “active in the Clinton campaign” but is plainly a conservative by Berkeley standards.
In general, the property owners are in an optimistic mood, because they feel that the climate of opinion in the city has been slowly tilting in their favor. The elected rent board is now moderately on their side. But the owners face more ballot measures in November as well as opponents in City Hall willing to continue spending revenue on a crusade for “social change.”
Landlords have been vilified throughout history, often as “absentees.” In the name of land reform, the U.S. government has waged arrogant campaigns against such owners in country after country, destabilizing governments and winning the well-deserved enmity of foreigners. In the Philippines, for example, it turned out that the “absentee landlords” from whom we encouraged Marcos to expropriate property were people much like the Berkeley owners--small businessmen and minor officials who had bought themselves a small stake in the countryside as a retirement hedge.
The truth is that when property rights are insecure, attacked by governments that should be defending them, life becomes immeasurably more difficult for almost everyone. All such societies will also become impoverished in short order. Hernando De Soto of the Institute for Liberty and Democracy in Peru told me that because of leftist governments, there is no rental market at all in Lima. You don’t rent to tenants in the first place if you fear that they might end up evicting you. On the other hand, in Switzerland, where property rights are secure, about two-thirds of the population are renters rather than owners, De Soto said.
The paradox is that tenants are best served by laws that give strong protection to owners. That way there will be a competitive rental market and there will be “for rent” signs galore: something you will not see in Berkeley until the rent-control law is repealed.
