L.A. Times Fake "Debate" Over Rent Control
By Walter Moore, Candidate for Mayor of Los Angeles, MooreIsBetter.com.Yesterday the L.A. Times purported to publish a written "debate" on the pro's and con's of rent control. One little problem: they forgot to invite anyone to represent the "con" side. Instead, they published the thoughts of two writers, each of whom defended rent control.
Here's what one guy -- our own beloved writer, Joseph Mailander -- said about rent control: "Make no mistake about it: The city of Los Angeles needs to protect its tenants from unduly high rents. That is something it does very well." Mailander took the position that rent control can promote the public interest if structured properly: "In truth, rent control is a lot like collective bargaining; while it has the potential to do some good, it also has the potential to harm."
The other guy, a politics professor at Occidental -- because why would you invite an economics professor, after all? -- let Mailander have it right between the eyes with this zinger: "The heroes in this story, who organize for affordable housing, are ACORN, the Coalition for Economic Survival, Coalition LA, LA Voice, LA Metro, LA Community Action Network, UNITE/HERE, SEIU, People Organized for Westside Renewal (POWER) and other grassroots activist groups, including the LA Coalition End Hunger and Homelessness, which is sponsoring tomorrow's Tent City rally at City Hall."
Wow! Now that's a debate!
Next week's topic is whether Miller beer is the best beer ever because it tastes great, or because it's less filling? Week after that: Certs-- candy mint or breath mint?
Oh well. Let's just be glad they didn't quote faux economist Jack Keyser.
Labels: SEIU
Posted by Walter Moore @ 4/12/2007 06:27:00 AM
17 Comments:
Rent control is bad. That's why it was repealed in Santa Monica, Beverly Hills, West Hollywood and San Francisco. I owned buildings that ended up in rent control. It hurts the economy and communities. Let the market dictate the rent. Why should someone be able to live in Beverly Hills for $300 a month? They should move to an area they can afford. The value of a building is devalued because of rent control. Value is based on income. The landlord has no incentive to keep it looking nice. The landlord ends up hating the tenants. They end up converting the buildings to condos and you lose more rental units. This is America, not old communist Russia. We have capitalism here. Rent control doesn't even help poor renters. You end up with smart renters who know how to work the system, and they're not poor. Rent control is the stupidest thing Santa Monica ever did.
Do you also want the ability for banks to charge usurious loans, Walter?
Tastes Great!
Less filling!
joseph mailander,
You're way off point. Banks charge market rates. The rates aren't set by government but by the market. Pawn shops are legal and they charge huge rates, as do car loan places. It's market rate and legal. Banks can offer and charge any interest rate they like. If they offer or charge too little or too much, customers may go elsewhere. That's capitalism.
Banks are also banks. They are generally not a small investment owned by one person like an apartment building is. Why should one guy who slaved and saved his entire life to buy a little buildling to support his retirement have to subsidize poor renters? If the City wants to subsidize renters, they should do it themselves, not force small investors to do it for them.
Banks can offer and charge any interest rate they like.
Really? Where can they do that? The Cayman Islands?
Aren't interest rates at banks capped by either State laws or capped against the Fed discount rate?
Banks can charge or offer any interest rate they like. Most banks tie their lending rate to the prime rate. Some charge +1%, some +3%. Banks try to be competitive with other banks in order to attract business.
Yes, there are usury laws. I think the maximum is like 15% interest per month. That is usury. If you have a pawnbroker's license, you can charge some high rates but never above the maximum usury rates.
Here are the usury limits. There are a ton of loopholes depending upon type of lender, i.e. state bank, national bank, credit card company, car loan company, pawn shop... and purpose of the loan. The market still sets what banks charge or offer. If every bank charged the maximum usury limit, other banks would charge less to get their business. Capitalism.
Many state's laws provide that you cannot lend money at an interest rate
in excess of a certain statutory maximum. This is a "usury limit."
Unless Otherwise Stated, The Rates Are Simple, Not Compound Interest.
Further We Are Stating The **Present** Limits, the ones applicable at
the time that this research was completed. Many states have had lower
limits in the past.Further, in most states a late charge or other fee
exacted from someone who owes another money is also counted as interest.
"But my car loan is higher than that"; "But I'm paying way more than
that on my credit cards." That's right! Banks have separate rules. In
fact, due to high inflation, in 1980, the federal government passed a
special law which allowed national banks (the ones that have the word
"national" or the term "N.A." in their name, and savings banks that are
federally chartered) to ignore state usury limits and pegged the rate of
interest at a certain number of points above the federal reserve
discount rate. In addition, specially chartered organizations like small
loan companies and installment plan sellers (like car financing
companies) have their own rules.
The usury limit which is stated as the general usury limit is the rate
that can be charged by one person or corporation to another, in other
words, if you lend your next door neighbor $ 100.00, the rate stated is
the limit. To charge more you must get a banking, pawnbroking, or
whatever license. This also means that special kinds of loans, like
those from pawnbrokers or small loan companies are not stated.
In some states we also have a "legal rate." In such states, as a general
rule, if you have a contractual obligation that provides simply for
interest without a specific term, or "interest at the highest legal
rate" then the "legal rate" what applies. In other instances we have
stated a "judgment rate." That's the rate that final judgments bear. In
states without a usury limit, there still may be a federally imposed
limit because at certain astronomical rates of interest "loan sharking"
will be inferred by the federal government.
CALIFORNIA, the legal rate of interest is 10% for consumers; the
general usury limit for non-consumers is more than 5% greater than
the Federal Reserve Bank of San Francisco's rate.
It is important to remember, as this "debate" moves on, that LA doesn't have rent control. It purposely didn't adopt a system as they have or had in SF, San Monica, and elsewhere. LA has rent stabilization. It was designed to protect renters for excessive rent hikes while they stay in their unit. Once they move, the landlord can charge what the market permits.
I'm with Walter on this one. Its just common sense, you can't artificially prop things up forever.
The lesson is: don't rely on the Mayor to get you your education. Plan your future, get a good job, and then you can 'afford' to live wherever you want. Other than that 'tough tittie', so they say.
Owners have to adhere to the market too, if you charge too much, then property will remain vacant. Good points about property maintenance as well. wheres the reward now if you bought well in a good area, but you're hamstrung with rent control. oh wait, now you sell and have to pay 9 and 17? or does the new owner pay if he evicts and redevelops?
and then you don't get the fair sale price because the building doesn't generate the appropriate income that it should.
I think America is about property ownership first, and the rights which go with that, and even as a renter, I still adhere to the homeowner comes first theory.
Rent control appears to me to be an infringement of those rights.
So, are the government interests still significant in keeping rent control? that's the lawsuit. someone file it, and rent control may be over.
obviously the stabilization is unchallenged. But if your property value is up double over 10 years, but the same renter resides, how much per year can you raise rent. 2 or 3 % per year? tell us.
3%. See the LAHD website.
Usurious loans! Man, dust off the history books for that one! Banks already do it via credit cards. And yes, I believe in freedom of contract re prices, including the price of borrowing money.
Oh yes, rent "stabilization" is MUCH better than mere rent "control." Not.
People stay in rent-controlled / rent-"stabilized" apartments until they leave feet first.
And the rent is "stabilized" even if the tenant makes more money and has more wealth than the landlord. There is no needs-based test, and even if there were, why should the LANDLORD get stuck with the tab?
Let's help the poor with Section 8, and quit screwing around with the free market system, shall we?
Now go borrow some money at 17% and buy a condo would you, you big lugs?
April 12, 2007 1:42 PM
Rent stabilization is rent control. Euphemisms, semantics. A landlord can raise the rent of a tenant 3% a year if they pay utilities or 4% if the landlord pays utilities. Some years utilities and other costs go up by more than 3%.
Now what if you were a sweet landlord and didn't raise your rents ever when rent control came into effect? You'd be stuck with low rents that you can now still only raise 3% a year. Trust me, that tenant will NEVER move. You'll never get it to market rent.
Then tenants try to squeeze other people in there to keep the rent low. They say they're still living there when they're actually illegally subletting it to someone else and making the difference. If you file a 30 day notice on them, the guy comes back for two days and you're back at square one.
Here's another thing you may not know. Apartment buildings main value is based on income. This is for 5+ units. Let's say the Gross Rent Multiplier is 10x. You take your gross annual rent multiply it by 10 and that's what it will sell for, generally. If your rents are only 50% of market, your building is worth half market. You're screwed. Your $1,000,000 building is now worth $500,000 because of rent control. You just lost $500,000! Is that fair to the property owner? It could just be an old guy and that is all he owns in the world. He saved and slaved and now he's subsidizing rent for his tenants.
The best thing you can do is just offer your tenant cash to move on their own, then rent it for market.
I am not surprised that the LA times conducted such a lopsided debate. They are a mouthpiece for the Democratic party who hasn't met a business that they don't want to control to death.
I can't wait until the new owner of the LA Times takes a broom to that staff of writers. He needs to clean house and get those bleeding hearts out of there. I will smile and laugh when that happens.
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