Fire destroys low-income resident’s apartment. Archaic rent control forces her to leave City.

mission district fire

The Chronicle has a touching and well-written article about the aftermath of the Mission District fire that completely destroyed a 30-unit apartment building Monday evening.

Central to the article is the story of Griselda Paleo. Ms. Paleo is 59 and lived alone in a studio apartment in the building. Her apartment was tied to an 18-year old rent controlled price of $698. Her income is $850 from a federal disability program. How can Ms. Paleo relocate in the City? Short answer: she can’t.

Studios in the City start at $1,000 per month, it’s hard to find a decent quality one at $1,200. Even sharing an apartment will likely use her entire income stream.

Since rent control regulations tie the stabilized apartment price to that particular apartment, if that apartment is destroyed, transferred to a live-in owner, etc, the tenant loses that price control. That is what happened with Ms. Paleo.

Ms. Paleo’s case shows that tying price controls to a particular property is a critical failure of rent control policies as implemented in San Francisco and some other big cities, notably New York City.

Rent control is a form of welfare paid to tenants regardless of income and paid solely by rental property owners. Welfare for low-income residents to live in our City is good. But, offering housing welfare to all residents regardless of income, supported only by property owners is silly.

Instead, the City should offer a rent SUBSIDY program, financed by all City residents that stabilizes rental unit prices for low-income tenants. Among other benefits, this would not tie a tenant to a particular property as in Ms. Paleo’s case.

A rent subsidy program in place of rent control offers a number of benefits:

  • Ms. Paleo would be free to move to any apartment in the City, whether displaced by natural disaster as in this case, or by her own choosing if she wants to move to a new neighborhood.
  • Tenants who do not need assistance will not be eligible. Ms. Paleo obviously needs rental assistance, but an investment banker with an income of >$100K should not be eligible for rent assistance. With the current system there is no way to differentiate the investment banker from Ms. Paleo. This is silly.
  • The cost of the program would be borne by all City residents, not just rental property owners. This is important. Since rent control is a significant tax on property owners that choose to rent their property, this significantly limits the number of properties put on the rental market. By removing the rent control tax and instead spreading the cost of rent subsidies to the entire population, we allow the rental property market to operate much more smoothly.

Our Supervisors and Mayor wouldn’t touch the idea of changing the rent control structure with a ten foot pole.

City leaders, your inaction has forced Ms. Paleo to leave our City.

Links

PS. Rent control is better than nothing. It’s a good start, but it’s just not the most effective solution we can come up with.

Hugo Gonzalez and Griselda Pal
Hugo Gonzalez and Griselda Paleo walk through the patio at a Red Cross shelter set up at the recreation center on Harrison Street. Chronicle photo by Kurt Rogers.

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