John M. Lee: Pros and Cons of Prop. H

Proposition H on the November ballot once again seeks to strengthen rent control and to provide more compensation to tenants, in terms of giving money for legal tenant relocations.

Currently, relocation assistance of $1,000 per tenant is required when there is an owner or relative move-in; demolishing a building, temporarily regaining possession to make improvements; or when converting a unit into a condominium.

Prop. H seeks to increase that amount if the tenants have been renting the unit for 12 or more months to $4,500 per tenant, with a limit of $13,500 per unit. In addition, an additional payment of $3,000 would be made for each protected tenant and/or household who has a child under 18 years of age living in the unit.

Those in favor of Prop. H argue that the relocation assistance of $1,000 is not enough for tenants to even afford the first and last month's rent and security deposit for a new rental. And, that we are losing diversity in the City as the people who are displaced have no options except to move to lower rent areas outside San Francisco.

They also argue that the tenants did nothing wrong, but they are being evicted and highly inconvenienced by this event and should get compensated for the consequences they have to go through.

The people who oppose Prop. H make the argument that the proposal makes no distinction between payments to wealthy or poor tenants and that some tenants who are well off are also entitled to the relocation assistance payments, whether they need it or not, contrary to the intention of Prop. H. They also argue that this burden of payment will fall mostly on small property owners who need to occupy the property themselves, or need the property vacant for other purposes. They may not be able to afford the extra payments.

I can see both sides of the argument. We do need to protect the tenants who provide diversity in this great city of ours. We do need to provide affordable housing for our middle and lower income workers so that they can live and work in the City. However, the burden to do this should not be put upon a certain group, such as property owners. The responsibility belongs to the government and the financial burden should be carried by all who live in the community.

The financial assistance of $13,500 plus $3,000 per additional person living at the site could add up to more than a year's rent. So, is it fair for the property owner, because of rent control, to subsidize the rent through rent control for a long period of time, and then have to pay more than a year's rent to recover the premise for his own use?

There is something wrong with that picture.

A better course of action by the government would be to encourage the construction of higher density housing, ease up on planning requirements, thus increasing housing supply to meet demand, rather than imposing penalties and punishing a certain group of individuals.

By imposing higher monetary assistance, this can discourage owners from renting out their properties, further limiting supply and increasing rents.

Another effect will be that landlords will want higher rents to compensate them for possible future relocation expenses, thus also acting to drive the rents up. Both results run contrary to the intent of Prop. H. That's why I am voting "no" on Prop. H. But whatever you decide, don't forget to vote Nov. 7.

John Lee is a broker at Pacific Union. If you have any questions concerning real estate, call him at (415) 447-6231.