SAN FRANCISCO BAY AREA | August 1, 2012, 4:06 p.m. ET
By BOBBY WHITE
BERKELEY—A powerful city agency that regulates some rental rates and intervenes in disputes is facing calls for an overhaul after a highly critical grand jury report in June labeled it “a self-sustaining bureaucracy.”
Berkeley’s Rent Stabilization Board, a nine-member group of elected officials established in 1980, came under scrutiny last year by the Alameda County Superior Court after two agency employees petitioned the court to investigate alleged unfair hiring practices.
The resulting grand jury report found the agency to be a “bureaucracy that operates without effective oversight and accountability.” The report said the board heavily favored tenants by hiring a lobbyist for pro-tenant issues and contracting with local nonprofits to help tenants fight eviction. The board has raised rental-unit registration fees paid by landlords from $22 at the beginning of rent control in 1980 to $194 today.
Rent Stabilization Board members are elected to serve for four years and are limited to two terms. Members run in contested elections and can solicit contributions from residents, tenants and property owners.
The average rent for a one-bedroom apartment in Berkeley is $1,885, a 21% increase from just five years ago, according to RealFacts LLC, a local firm that tracks rental rates in the Bay Area. In comparison, average rent for a one-bedroom in San Francisco is $2,632, up 32% from five years ago, according to RealFacts.
At least 68% of Berkeley’s rental stock is governed by current rent-stabilization laws, down from 100% in 1980, according to board records. After a longtime tenant moves out, however, a landlord whose property falls under rent-stabilization laws has discretion to increase the rent without restrictions initially.
The board is grappling with the grand jury’s recommendations, which include reducing the rental-unit registration fee and submitting to audits by Berkeley’s Human Resources Department. The board must tell the court by Sept. 24 whether it intends to embark on changes or potentially face further action from Alameda County prosecutors such as a civil or criminal lawsuit.
Some Berkeley landlords and property owners are also calling for a revamp of the agency. “We’ve been complaining for years about how the board has operated and it has fallen on deaf ears,” says Jon Vicars, who owns 33 rental units in Berkeley and is vice president of the Berkeley Property Association. Mr. Vicars says he and other landlords want to scale back salaries for board workers—particularly the executive director, who makes about 5% of the agency’s $4 million budget, according to the grand jury report—and to ultimately bring the agency under the control of the City Council.
Lisa Stephens, chair of the Rent Stabilization Board, says the grand jury report’s findings are unfounded and that the board serves an important community role, including handling about 6,000 queries from landlords. “What the grand jury report said at every level is just plain wrong,” she says, adding that the board welcomes challenges from the public.
Ms. Stephens says she will recommend the board accept some of the grand jury’s recommendations—such as doing performance reviews for the executive director and working closer with the city’s human resources department. But she says it is unclear if the board will accept the recommendations because in most instances they are either “factually inaccurate or misunderstand what we do.” She says most of the suggested changes would create a “different kind of rent control and that’s up to the residents of Berkeley, not the grand jury.”
Rent-control practices have been eroding across California for years. Sixteen cities in the state have rent-control laws, including Oakland and San Francisco, down from more than 20 in the mid-1990s, according to the state Department of Consumer Affairs.
Berkeley, in particular, once had some of the nation’s most comprehensive and far-reaching rent-control laws, which restricted the ability of landlords to raise rents, evict tenants and even sell property. In contrast, many other rent-control ordinances in other municipalities simply capped how much existing tenants pay for rent.
But over time, more of Berkeley’s housing stock began falling outside the rent stabilization laws. Greg McConnell, a former executive director of the board, says the city’s rent ordinances began faltering in 1999 when then-Gov. Gray Davis restricted rent control, allowing landlords to charge higher rent after longtime tenants moved out.
Even so, Berkeley’s rent-control board retains clout. In the early 1980s, residents voted to make it an independent entity that operates outside the oversight of city leadership.
Landlords say they know any effort to change how the board operates would be an uphill fight. Francine Leonard, who operates a four-unit apartment building in South Berkeley, says she asked the board to intervene after one tenant withheld rent payments of about $2,000 a month for three months last fall. But Ms. Leonard says much of the board’s assistance went to the tenant, including recommendations on lawyers, advice on tenant rights and procedures for how to prolong an eviction process.
Ms. Stephens disputes Ms. Leonard’s account of the dispute and denied that most of the board’s services cater to tenants. She says the agency often sponsors workshops for landlords—including on how to properly evict tenants—and assists landlords with tenant disputes. She also said counselors with the rental board discussed the issue with Ms. Leonard on numerous occasions, providing advice on how to resolve the dispute.
Ms. Leonard says she hired a lawyer in June and that it will likely take seven months before she can proceed on an eviction.
Some tenants say the board has been effective in resolving disputes. B. Soffer, a tenant in a rent-controlled six-unit apartment in South Berkeley, says he faced eviction after a landlord alleged that he violated a rental contract by feeding more than a dozen feral cats on the premises. The board mediated between Mr. Soffer and the landlord, resulting in a settlement and preventing a protracted legal battle.
“The rent-control board isn’t the villain in this drama,” Mr. Soffer says.