John M. Lee: What is Proposition F?

I normally write a column on how various propositions impact real estate during the election months of June and November. However, with the shift towards more and more absentee voting, I feel like I need to cover the issues earlier, and provide voters time to analyze the measures.

On June 8, if passed, Proposition F would allow renters to file a petition claiming financial hardship at any time with respect to any rent increase. Payment of the rent increase would be on hold for a period of 60 days from the date of filing or until a hearing is held and a decision issued by an administrative law judge.

In determining whether the renter's claim of financial hardship is to be granted, the Rent Board and the administrative law judge would base their decision on:
• Whether a tenant in a household is either unemployed or has had wages reduced by 20 percent or more compared to the 12 months prior, or whose sole income consists of government benefits, such as Social Security or similar benefits, and has not received a cost-of-living increase in the past 12 months;
• Whether the rent, including the increase, comprises or will comprise 33 percent or more of the tenant's gross income;
• The renter's assets are also to be considered in making the determination.

Upon a finding that the tenant has financial hardship, the administrative law judge will order that the rent increase not go into effect for a specific period of time, based on the tenant's circumstances, and schedule a review at the end of that period. If the rent increase is later allowed, it will take effect as of the date the tenant's income or assets changed to permit the increase.

Supervisor Chris Daly put this proposition on the ballot. At first reading, it does not sound too bad. Why should we not help tenants who are in need? Why should we not be Good Samaritans and help those who are down and out?

It was not until I start analyzing the numbers that Prop. F didn't make sense. The allowable rent increase this year is .1 percent. This means that if your rent is $3,000, the maximum rent increase is $3 per month! If three roommates are splitting that rent, that means $1 per person, per month.

So, what is the real effect of this change in the Rent Control Ordinance?

If a tenant petitions the rent board, it will have a hearing to save a miniscule amount of money. The time and effort spent will be more than the savings and costs for the tenants, owners and the City. If a tenant really cannot afford a few dollars per month they should be able to work out that difference with the owner?

With the City facing close to a $500 million budget deficit, is it wise to spend money and resources conducting hearings that have no real impact? I think not, and have no idea what Daly is thinking by putting this on the ballot, and why some of our other supervisors are supporting this measure.

One consequence of Prop. F passing will be that many property owners will only rent to the most qualified individuals so they do not have to deal with tenant hardship, making it much harder for some tenants to rent.

Lastly, if our society wants to help people who are in need, shouldn't the responsibility be spread throughout our community as a whole rather than placing the financial burden on one class of the population in this case, rental property owners? This is bad legislation and will have a negative impact on everyone and our City.

I urge you to vote "no" on Prop. F.

John M. Lee is the president of the San Francisco Association of Realtors. For questions regarding real estate, call him at (415) 447-6231 or send an e-mail to johnlee@isellsf.com.