![]() ![]() Here is our rebuttal as published in the July 20th Courier. Kevin Davis is a real estate broker specializing in multifamily apartment buildings he himself is a longtime owner and operator of apartments here in Beverly Hills including two of the larger apartment buildings in the city, 432 N Palm and 303 N Swall. Presumably he knows something about the apartment leasing business. Davis does want to talk about his businesses and instead wants to talk about the residents who rent. How they take advantage of landlords and how they get a break from rent stabilization despite “six-digit household incomes.” But for the two-thirds of families who rent and can’t meet that household income bar he shows little sympathy: “Move to a more modest community.”Īs he says in his July 2018 letter to the Courier, the city should subsidize those tenants rather than limit the price he charges tenants. We note that public policy subsidizes landlords like David plenty. Check out his letter and then read our rebuttal below. Then scroll down for more about the taxpayer subsidies that pad the margin of residential rental property owners. Property owner Kevin Davis has a bone to pick with rent control! He believes that City Council should no have a say about rents or tenant ‘protections’ (his scare quotes) because it’s not fair to landlords. Three-quarters of economists agree, he says, and I’m sure that’s true. ![]() Many economists like a ‘free market’ (my scare quotes).But Beverly Hills hasn’t had a free market for rental housing in four decades. For lower-rent households it tied rent increases to consumer costs and protected those tenants from eviction.Ĭity Council adopted Chapter 5 rent stabilization in 1978. In 1986 Council capped increases at 10% for the rest of us (but allowed no-just-cause evictions). Rent stabilization was the law of the land in Beverly Hills when Mr. Davis formed his real estate investment firms. (Incidentally his businesses are located not in Beverly Hills but Los Angeles.) He has continued to own rental property here ever since. State codes have regulated residential tenancies for much, much longer. Both the legislature and City Council understood that rental housing was categorically different from other commercial asset classes in that providing housing comes with a social responsibility. A landlord who doesn’t appreciate the importance of tenant protections should invest in non-residential commercial real estate where no rent control applies. Davis owns two large rental properties (24 and 36 units) and so could add something to the policy discussion. Just 6% of rental buildings in the city are as large. So unlike mom-and-pop operators that landlords like to push to the foreground, Mr. Davis has operations numbers that accurately describe market conditions. He could talk about net operating income, change in expenses, trends in asking rents, rates of tenant turnover and most significant but rarely mentioned by property owners, residential real estate asset appreciation. Davis instead wants to talk about tenants. The figures he provided suggest that many families in Beverly Hills aren’t doing as well as we want to think. Given the high cost of living – particularly housing – in Southern California, the one-third of families that fall under $50,000 in household income would actually qualify for federal and local assistance programs. That includes free legal assistance, free home repair and other services from our city’s human services providers. Many of the two-thirds of families with household incomes below $100,000 would qualify too: the County sets the assistance threshold at about $70,000 for a family of four. As for those most-advantaged among us, the households earning over $250,000 in combined income represent just 1% of renting households – an outlier by any definition. Davis’s philosophical concern may be with price controls, he knows that any landlord’s margin is in tenant turnover. The key is asking rents (not paid rent) because a vacant apartment is leased at a market rent. So if his figures are accurate, and indeed 22% of tenants moved house in the past two years, perhaps nearly a quarter of his units are at or near the market rent. And asking rents have been climbing by double-digits in recent years. Davis about tenants but not a word about his business. Davis reserves some of his scorn for the city’s consultant, HR&A Advisors. That’s a head-scratcher: the firm is completing (at city expense) precisely the kind of economic analysis that landlords were preparing to fund themselves. ![]()
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