OP-ED: The 800-Pound Gorilla in the City is Housing
Let’s get this out of the way. This is not an attack on renters but on policies that encourage rentals and discourage ownership. Policies that put renters at the mercy of corporations who are only concerned about their bottom-line and NOT the welfare of longtime residents. Decisions that have put the ownership of much of Emeryville’s housing stock under corporate control. I personally came to Emeryville through their Affordable Home buying program and it’s been one of the better decisions I’ve made. If I’ve mis-portrayed or offended anyone in the city that chooses to rent, this was not my intent.
Here are some startling figures about Emeryville:
- Every significant planned development is slated for 100% rental (Theoretically as many as 2,000 more renters).
- 56% of Emeryville housing are single-occupied residences.
- There’s a 75% turnover in residents every 8 years.
Emeryville has a big problem. A rental problem. While 62% of US residents own their own home (down from a peak of 72% before the housing bubble in 2007 according to this gallup poll).
63% of Emeryville households are Renter-Occupied.
The root of the problem is not renters … it’s on the collective policies that this city has implemented (whether consciously or not) that have created a civic mess of our city. This didn’t exactly happen overnight. Did our leaders really not see this coming? Does Emeryville not want you to own … or are people with more vagabond tendencies drawn to Emeryville? It’s a bit of a chicken or egg dilemma. I haven’t read the City’s general Plan cover-to-cover but is there a chapter dedicated to promoting corporate ownership of housing? To create a city of renters? Was this the vision of the last two decades of City Council?
A “Rentership” Society?
SF Business Times reporter Blanca Torres has posted a series of PR-pieces on Emeryville’s housing boom as of late. This piece in particular lists the slate pending projects. What wasn’t mentioned in the piece is that every one of them except one is 100% rental. Companies like:
- Essex Property Trust (Public Market) – Real estate investment trust based in Palo Alto
- Equity Residential (Parkside) – Real estate investment trust based in Chicago
- AvalonBay (Nady Building) – Real estate investment trust headquartered in Arlington, VA
Wealthy corporate investors are turning Emeryville and other cities into what Wall Street calls the “rentership society”. A society where home-ownership opportunities are diminishing. Where renters are forced to interface with faceless corporate entities.
The Mayor’s Perspective
It’s ironic that the mayor of our city up until recently was amongst this statistic. Mayor Jacqueline Asher rented in Emeryville for 5 years before she found a home that met her family’s needs.
“I believe that there are many people who want to own, but they can’t get the means to do so, so they rent. I see this at the school–families can’t even afford the rent in Emeryville, much less the dream of buying. They start out here, and then get priced out and start commuting from Richmond to keep their kids around their friends and around the teachers that they trust.
Renters can be painted as people who choose to be transient, but for many, they are subject to ever-increasing rent that will eventually price them out and move them along. We have no rent control in Emeryville. take a look on Craigslist and see what a 2 or 3 bd is going for right now. Since buying my own house, a multiplex near me was sold and two families were priced out of what was previously affordable rent. They didn’t participate on committees or come to meetings, but their kids go to school here, one of the adults works at a local restaurant, and another woman, a young student, was a frequent babysitter for parents in the neighborhood. Their participation in community takes a different form, but it’s part of the day-to-day stuff that doesn’t get registered when we’re in council chambers. They were connected to this neighborhood, and now those connections have changed through no fault of their own.”
If you are a renter, your living situation will be dictated by rent increases and this will be out of your control. Even affordable units are pegged at levels that will continue to increase. We have very few tools to help us keep housing truly affordable. I’d like to suggest that people trying to pay the rents in Emeryville will be working a lot–their ability to have leisure and free time may not be a result of not caring, but it may be a matter of keeping your head above water. If you’re not wealthy, that translates into working a lot and giving up leisure time; for those with means, it may mean the same thing, even though the consequences absolutely differ in terms of severity and strain.
It would be a mistake, I think, to draw a connection between. people who have ‘investments’ grounded in property value and civic participation. There may be, for example, people who are very “invested” in Emeryville because they look at their properties here as translating to cash. That’s fine, but let’s not make that ‘interest’ a proxy for the kind of interest that wants to invest to schools, donates to our local causes, watches politics and is concerned that our City sticks around as a just and working entity for the next 117 years. Their “investment” may be a transactional one, not a civic-minded one. People may own property here, and that person may not give a fig about the things that you or I think are important in this City. Ownership and the ‘skin-in-the-game’ logic of investment does not necessarily equal concerned/engaged citizen. And some people could be getting very little return on investment and have a lot to give.
For example, the co-ops that we have in town may actually offer very little in comparison to the kind of eventual financial gains that other ownership scenarios offer. But these folks are outsized in terms of their representation on committees, on Council, on the school board, their ability to muckrake, their willingness to forge a culture and community in town, etc. What we may be looking at is, how a balance between affordable ownership housing produces civic engagement because it affords people the space and support to do that work.
It will be up to Council to direct staff to push back on this rental trend. It’s sobering for me to see the numbers you’ve cited, not because I believe that renters are bad, but because I know I can’t do a damned thing to control rents right now. Ownership properties may turn over less, and seem to offer people the promise of an eventual return/increase on investment. It offers people a kind of predictability that rent does not. It makes it easier to navigate other aspects of your life when that’s secure, but it’s a heck of a wealth barrier right now to get there. If we’re interested in ownership, I’d still say we have an affordability issue to contend with in order to keep and bring more people toward the resources and community of Emeryville. I’ve been clear with developers — I want more ownership housing for our town. But it’s not necessarily because I perceive renters as not caring.”
An observation from a recent city council special study meeting on the Sherwin-Williams development: While Artist Co-op and Emeryville Warehouse lofts residents came out in droves and spoke during the public comment period, not one speaker identified themselves as an Icon resident. Icon is the second largest development in the neighborhood (Managed by the ominous sounding Prometheus Property Management group). And why would they? If this development negatively impacts their neighborhood, they can pack up & move along. It’s not so easy for us whom have vested in this neighborhood. Those that have waited out the transition it’s gone through (or are even underwater in our mortgages).
Meanwhile on the other side of town, another massive development looms. This one by AvalonBay, an investment trust headquartered in Arlington, VA. During a similar study session, not one soul besides myself spoke up against the project during community comment period (59:45 in):
Brian Donahue, editor of the Emeryville Tattler, who has been advocating for residents for decades had this to say: “There are impacts that aren’t being acknowledged when a city skews towards rental units as the lion’s share of housing. Renters have been demonstrated to be less civically minded and more transient than owners. They tend to put less value on the public commons and community (there are outliers to this axiom of course). We should be having a debate about what is the proper mix of rental vs ownership housing in Emeryville instead of simply allowing external market forces dictate how we evolve. We should plan development in our city rather than throwing over the town to developers chasing real estate market vagaries.”
Simply put, the fewer people there are that are vested in our town, the fewer people there are to put up a fight against projects that negatively impact us. Fewer people to demand community benefits from projects. (and read articles encouraging them to do so).
Is it time for rent control?
There are plenty of reasons that people choose to rent (Some people see ownership as a burden as it limits your freedom!). The sad fact of the matter is that we live in one of the most expensive regions in the country and dual incomes are almost mandatory just to make ends meet. Neighbors at Icon on Park have endured two successive years of double-digit rent increases with absolutely no recourse. Some neighbors I’ve spoken with have had enough and are moving on. If the moving van that is parked outside daily is any indication (generally blocking two-way traffic), the exodus has begun. I reached out for comment from Icon but they have not returned my call. What are the reasons for this massive rent increase? Apparently it is “what the market will bear” and they are determined to get every dollar of that. Residents aren’t the only casualties of this helplessness as our beloved Cafe Aquarius was a victim of a 25% rent increase without any recourse.
Kevin Laven from community services had his own insight on the subject: “San Francisco (and Berkeley to a degree) has a dense rental market, but its strong rent stabilization controls have helped people who don’t yearn for or can’t afford home ownership continue to be residents in the atypical boom/bust climate of the Bay Area. It’s not a fix-all by any means, but I’ve heard a number of residents who have been priced out of Emeryville in the boom times because their rent keeps increasing that may have stayed residents if they weren’t priced out to outlying cities/suburbs. I personally think it would be a great thing for Emeryville’s residents, especially given the large number of rental units about to come onboard in the next several years.”
There HAS to be a compromise between Policies so restrictive it discourages owning a rental unit (Berkeley/SF) … and what we have now (no controls whatsoever). I guess we have to determine what is “fair” here. I’m no economist, but this article has a pretty thorough pros & cons breakdown of Rent Control.
A Developers Perspective
Holliday Development, who are developing the Maz building on San Pablo, have a long track record of building high-density, for-sale condominiums but have slated this development exclusively for rentals (with plans to map these for eventual condominium sales). I reached out to Greg Pasquali on the reasons why and if the development could be at least partially for sale units. “There is a market perception issue around that, but more importantly there is a financing reason why you can’t really. Because of the way the government guarantees bank loans, very few banks take the risk of lending to a homeowner buying into a property that is part rental and part ownership – it’s a tough slog for projects turning from rental to ownership and it costs homeowners in terms of having a limited selection of banks that will lend on the properties and at typically higher rates. Why rental at 3800 has to do with a variety of factors. The main one is that we want to build a thriving commercial hub of activity that benefits this whole part of the City, and we think a rental population will better support the commercial, and that the building we’ve designed to support the commercial is a more renter-oriented building.”
Conversations with Sherwin developer Joe Ernst have also indicated that collecting capital for condominium projects is more difficult and that condominiums haven’t completely recovered from the economic downturn “Timing is important and currently the capital is flowing toward rental.”
According to Charlie Bryant, Emeryville’s Planning & Building Director, the city has little recourse besides encouraging developers to lean toward condominiums “We have no way of requiring developers to build condos instead of rental, although we always tell developers that there is a preference for ownership housing in Emeryville. In response, some developers will record a condominium map on their projects so that the units can be sold in the future, even though they intend to operate them as rental projects initially.”
“Mapping for condominiums” seems like a strategy for developers to time the market to optimize their profits and avoid liabilities. But does “condo-mapping” work? Bridgewater (Originally called Emery Bay Club and Apartments) was built in 1988 with a condo map but was rental for 20+ years prior selling the units. The Oak Walk project at 40th AND the forthcoming Sherwin-Williams are other projects that has opted for condo-mapping but are resistant to establishing a timeline for doing so. Are these developers just teasing us or do they need to soak every drop of profit possible before they convert? It seems if we expect developers to convert these into condo’s eventually, than we need to get it in writing.
Civic Engagement & Pride
So statistically speaking, renters:
- Vote Less
- Volunteer less
- Stay for shorter durations
Building community takes a prolonged, concerted effort. Not having any continuity amongst residents works against this. Kevin Laven has worked in the community services department for 6 years and has been tasked with helping build this. Doing so in a town with a majority of renters has been an uphill battle. “I think high density rental markets like Emeryville are a complicated matter when it comes to civic engagement and community advocacy/pride. I think the driving factor for civic engagement/advocacy/pride in people who rent (and own) is creating a livable, desirable community to engage in. A number of factors have been improving in Emeryville from my point of few over the last six years that will increase the chances of those people renting (or owning) to engage people and places in their own community. These factors include new and rehabbed parks/open spaces, a steep improvement in the elementary school test scores (attracting more families with children to relocate or stay in Emeryville), more non-chain, locally owned/serving (and quality!) restaurants, bars, and cafes, and a more walk-able/bike-able infrastructure to name a few. I think the more Emeryville and its community creates welcoming spaces, places, and ways to traverse the city on foot/bike, the more people will be attracted to Emeryville who desire to be a part of the community and not just have a bedroom here to live/work in other parts of the Bay Area.”
Are Renters drawn to Emeryville?
Jason Crouch has been involved in the Emeryville Real Estate since 2000. He founded “All Emeryville Properties” (Since changed to All East Bay Properties) in 2005 and knows quite a bit about the patterns of Emeryville Residents. “I see a lot of folks move to Emeryville at the very beginning of their adulthood, as well as a good number of folks moving here for their retirement years – largely for very similar reasons: great, central location; lots of stuff to do, shopping, dining, etc. with much of it within either walking distance or a very short drive; good pubic transportation and then there’s the whole safety factor – Emeryville is a safe place to live. There are plenty of folks in between, but I definitely can attest that those two trends have been prevalent during the time that I’ve been in the real estate business around here.”
The impact of “The Great Recession”
The housing bubble hit condominium owners especially hard. More than a few of my neighbors were casualties of this massive loss of equity. Units that were selling for $550K were suddenly valued at half that. Many had to walk away from their mortgages. More perspective from Jason Crouch:
“The real estate downturn frankly trapped a bunch of folks in the properties and their lives changed – they had to move for whatever reason, and couldn’t sell their properties. There were plenty of folks out there who wouldn’t or couldn’t do a short sale or foreclosure, so they hung on. They rented out their units and waited. These folks did not intend to be landlords, let me be clear on that – they had no other choice. As the sales prices return to former heights, and these folks see that they can sell the property and pay off their loan, they are doing so. Many of the folks purchasing these properties are doing so to live in them. Many of the transactions I have performed over the last 6 – 9 months, nay most, are exactly that – units formerly occupied by tenants, converting back to owner occupied units. I really think that we will see a shift in the percentages over the course of the next couple of years or so.”
City Manager Sabrina Landreth’s perspective
First year City Manager Sabrina Landreth has inherited a mess but is relatively powerless in her role unless she is directed by a majority of council to change these policies. “I have very strong opinions on this issue” she stated through email “and agree with all that it is important for cities to consider, especially in light of recent housing market fallout, growing gap between those who are thriving & those struggling to get by, changing federal programs, increasing rents, etc., what tools the City has available to dictate certain housing parameters in development. But, as I said, my personal opinion is not what dictates policy.”
I think a majority of us have a dream of home ownership, but the city has to stack the deck in favor of those that want to pursue a piece of “The American Dream” … instead of subsidizing indentured servitude to wealthy corporate investors. I clearly don’t have the answers and there are too many facets to completely breakdown here but it’s an important conversation that I wanted to initiate. It’s time for this city to figure out what it wants to be when it grows up!
Further Reading & Resources:
The Rise of the New Land Lords | EBX
Developments reshape Emeryville with 1,200 units | SF Business Times
The pros and cons of rent control | globalpropertyguide.com
U.S. Moves Toward Home ‘Rentership Society’ | Bloomberg.com
How Rent Control Subsidizes San Francisco’s Super-Rich | Bay Citizen
Housing sparks new boom in Emeryville | SF Business Times