Tag: San Francisco

Luxury Mobile-Home Parks Don’t Need Rent Control

Contempo Marin isn’t your stereotypical mobile-home park. The park sits two miles from San Francisco Bay and offers tenants a pool, spa, clubhouse, and lagoon. Because of the location and amenities, these mobile homes—some of which offer vaulted ceilings, gas fireplaces, walk-in closets, and jetted tubs—can sell for over $300,000. That’s what makes the rent- and vacancy-control ordinance imposed on the park by the City of San Rafael in the name of “affordable housing” so outrageous.

The ordinance caps the amount that MHC Financing, the owner of Contempo Marin, may charge its tenants—who own their mobile homes but rent the land underneath—and mandates that the land be rented at the same price to each homeowner. The result isn’t lower costs for incoming tenants, but a redistribution of the value from the below-market rent directly to the mobile-home owners, whose homes now sell at a premium of nearly $100,000 above their pre-existing value. Thus far, the ordinance has transferred more than $95 million from MHC to its tenants.

MHC challenged the ordinance in federal court as an unconstitutional taking. The district court ruled in MHC’s favor, finding that the alleged public purpose of the ordinance—“affordable housing”—was merely a pretext, such that the ordinance violated the Fifth Amendment’s mandate that property only be taken for a “public use.” As Justice Kennedy clarified in Kelo v. City of New London (2005), “transfers intended to confer benefits on particular, favored private entities and with only incidental or pretextual public benefits, are forbidden by the Public Use Clause.”

The U.S. Court of Appeals for the Ninth Circuit, however, reversed the district court, holding that rent control generally, rather than the specific rent-control scheme at issue here, is “rationally related to a conceivable public purpose” and thus automatically meets the public-use requirement. MHC is now asking the Supreme Court to review that ruling and Cato has filed a supporting amicus brief, encouraging the Court to clarify the standard of review applied to pretextual takings claims and to confirm that the Takings Clause isn’t rendered inoperative when property is transferred.

The Ninth Circuit’s approach essentially bars future pretextual takings claims; any regulatory scheme viewed at its broadest theoretical level could have some “conceivable public purpose.” This evisceration of the Public Use Clause leaves the appropriate standard for determining if a government’s public-use justification is mere pretext in desperate need of Supreme Court clarification. The Ninth Circuit also undermined the Fifth Amendment by finding that no taking had even occurred because MHC had bought Contempo Marin after the rent- and vacancy-control provision had been enacted and therefore could have no investment-backed expectation as to the property value taken by the city. This decision directly conflicts with Palazzolo v. Rhode Island (2001), in which the Supreme Court held that buying property with knowledge of a regulation doesn’t preclude a takings challenge. The Ninth Circuit ignored the same precedent in Guggenheim v. City of Goleta in 2011—a case in which Cato also filed a brief supporting a petition for review—and the lower court’s continued misapplication of the law here reiterates the need for the Supreme Court to reaffirm that the Takings Clause has no “expiration date.” 

The Court will decide whether to take the case of MHC Financing LP v. City of San Rafael later this fall.

This blogpost was co-authored by Cato legal associate Lauren Barlow.

Labor Unions Against the Public Interest

The folly of monopoly unionism (“collective bargaining”) in government is most evident when labor unions strike. Hundreds of thousands of San Francisco area residents are currently having their lives disrupted by union actions against the Bay Area Rapid Transit (BART) system. BART’s unions want higher wages:

The unions, which represent nearly 2,400 train operators, station agents, mechanics, maintenance workers and professional staff, want a 5 percent raise each year over the next three years. BART said train operators and station agents in the unions average about $71,000 in base salary and $11,000 in overtime annually.

Bloomberg says that BART workers receive annual benefits averaging $50,800, so these folks are well-paid. It is true that every worker in America would like higher pay. The difference is that most of us don’t have special government-created powers to cause city-wide damage when we ask for a raise.

Most Americans compete in the marketplace, which limits their power and encourages the provision of low-cost, high-quality services. But most government services are enforced monopolies, which breed inefficiency. Monopoly unions compound the inefficiencies, and lead to the sort of selfish, anti-consumer behavior this strike represents. By the way, the same thing happened to BART in 1997 “when a six-day shutdown jammed freeways and saddled workers with lengthier commutes.” 

Strikes are not the only problem caused by unions in government. Unions push up operating costs and generally reduce service quality. A Washington Post editor yesterday discussed union problems in D.C.’s Metro system after a conversation with the system’s manager, Richard Sarles:

If I had my druthers,’ [Sarles] said, he would hire station managers based on ‘the ability to operate in a customer-friendly way.’ But, Sarles said, Metro’s collective bargaining agreement requires him to promote bus drivers to train operators and station managers. In fact, his spokesman said, mediocre bus drivers may get promoted more quickly because ‘we need to get you from behind the wheel.’ And if someone does a great job as station manager, ‘I can’t recognize that financially,’ Sarles said. 

So here’s the “manager” of a government agency who doesn’t even have the authority to manage his own workforce. It is ironic that Metro and BART are called “public services,” but managers of private businesses are better able to actually serve the public. 

Here’s another curious thing: liberals and environmentalists are eager to get Americans out of their cars and into mass transit, but their left-of-center friends—the unions—work against those goals. Unions push up the costs of transit and reduce service quality, which encourages people to stay in their cars. Furthermore, cars won’t go on strike against commuters like government workers will. 

About the current strike, BART spokesman Rick Rice said: “About 400,000 commuters use BART every day in the San Francisco Bay area … The public doesn’t deserve to be punished.” He’s right, but citizens are being punished everyday in cities across the nation because of the misguided idea of union-dominated, government-run transit. 

You may be interested to know that before the 1960s, most urban rail and bus transit in America was provided by the private sector. So we certainly don’t need labor unions in mass transit—and we may not even need the government. 

Further reading:

San Francisco’s Self-Inflicted Housing Problem

Housing is expensive and hard to find in beautiful San Francisco. In today’s New York Times, one would-be housing provider explains why. Scott James writes:

[A]fter renting out a one-bedroom apartment in my home for several years, I will never do it again. San Francisco’s anti-landlord housing laws and political climate make it untenable….

[A] complex legal structure has been created to make evictions for just cause extraordinarily difficult.

At first many of these rules governed only apartment complexes and larger properties with many units. But in 1994 the city applied the regulations to homes if they included just one rental on the property. In other cities, including New York City, such small-time landlords have far more rights over their own homes.

As he goes on to describe his experience with the last tenant in his downstairs apartment—a story featuring a sledgehammer, a flooded apartment, and a plugged-in appliance in an overflowing sink—I was reminded of the 1990 movie Pacific Heights, not coincidentally set in San Francisco.

It’s a thriller that is almost a documentary on the horrors of landlord-tenant law—and that is confirmed by today’s story. A young couple buys a big house in San Francisco and rents an apartment to a young man. He never pays them, and they can’t get him out, and then things get really scary. The lawyer lectures the couple—and the audience—on how “of course you’re right, but you’ll never win.” When I saw it, I just knew this happened to someone—maybe the screenwriter or someone he knew. Sure enough, when Cato published William Tucker’s book Rent Control, Zoning, and Affordable Housing, and I asked Pacific Heights director John Schlesinger for a jacket blurb, he readily agreed to say, “If you thought Pacific Heights was fiction, you need to read this book”; and he told me that the screenwriter had a relative who had gone through a tenant nightmare.

Want to instantly create 10,600 rental units in San Francisco? Reform landlord-tenant law so that small landlords come back to the market. In the meantime, watch Pacific Heights.

Surveillance, San Francisco-Style

San Francisco’s Entertainment Commission will soon be considering a jaw-dropping attack on privacy and free assembly. Here are some of the rules the Commission may adopt for any gathering of people expected to reach 100 or more:

3. All occupants of the premises shall be ID Scanned (including patrons, promoters, and performers, etc.). ID scanning data shall be maintained on a data storage system for no less than 15 days and shall be made available to local law enforcement upon request.

4. High visibility cameras shall be located at each entrance and exit point of the premises. Said cameras shall maintain a recorded data base for no less than fifteen (15 days) and made available to local law enforcement upon request.

Would you recognize a police state if you lived in one? How about a police city? The First Amendment right to peaceably assemble takes a big step back when your identity data and appearance are captured for law enforcement to use at whim simply because you showed up. (ht: PrivacyActivism.org)

Consumer Group Sues McDonald’s Over Happy Meals

The Center for Science in the Public Interest (CSPI), which has long agitated for wider government intervention in food and nutritional matters, has filed a lawsuit charging that McDonald’s is violating California consumer laws by marketing Happy Meals with toys. It wants to force the burger chain either to drop the toy, or to replace the meals’ food components with something more whole-grain-and-vegetable-y. The New York Daily News invited me to have my say on the controversy, and I did. I pointed out that the lawsuit seemed to be aimed at an end run around the reality of individual choice:

No one forced [named plaintiff Monet] Parham to take her daughters to McDonald’s, buy them that particular menu item, and sit by as they ate every last French fry in the bag (if they did).

No, she’s suing because when she said no, her kids became disagreeable and “pouted” – for which she wants class action status. If she gets it, McDonald’s isn’t the only company that should worry. Other kids pout because parents won’t get them 800-piece Lego sets, Madame Alexander dolls and Disney World vacations. Are those companies going to be liable too?

The center’s [CSPI’s] longtime shtick is to complain that businesses like McDonald’s, rather than our own choices, are to blame for rising obesity. So let’s take Happy Meals as an example. When you buy one, you get a string of choices. Milk or soda? (Is that really a hard choice for a parent worried about nutrition?) You can swap out the fattening French fries for “apple dippers” with caramel sauce and plenty of kid appeal. But your choices do not end there. If you think the scoop of fries is too big for a kid serving, you can tell the kid to share it with the grownup on hand, namely you. (You’re the grownup. You make the rules.) You can even, shocking as this sounds, toss the surplus French fries into the disposal bin.

…[I]t’s unlikely that even California courts will approve this suit. But in the mean time, the Center for Science in the Public Interest will fatten off the publicity, unattractively.

You can read the whole thing here. As I’ve noted at my website Overlawyered, the case is one element in a wider campaign that includes newly enacted bans on Happy Meals in San Francisco and nearby Marin County. In June, California blogger Bruce Nye predicted that CSPI would try to build on a 1983 California Supreme Court precedent, Committee on Children’s Television, Inc. v. General Foods Corp., that invites suits over advertising to kids that is purportedly “predatory,” but that they’d run into trouble proving (as the law has required since California voters passed Prop 64 in 2004) that its client, Ms. Parham, is “a person who has suffered injury in fact and has lost money or property” owing to the advertising. Even under California law, having to say “no” to one’s kids is not a legal injury.

More about the Calorie Police

It’s nice to get quoted in the Los Angeles Times, even if the author obviously didn’t understand what I was getting at. I’ll try to clear up the confusion here.

Karen Caplan writes:

Does Kuznicki (or anyone else) really think that the goal of a healthy diet is simply to minimize the total number of calories consumed? (Perhaps these are the same folks who swear by Taco Bell’s Drive-Thru Diet.)

A 12-ounce serving of whole milk contains 12 grams of protein, along with 45% of the calcium and 36% of the vitamin D you need each day. The same amount of soy milk also has 12 grams of protein and 14% of the daily recommended intake of iron.

Care to guess how many vitamins and minerals are in a can of Coke?

I certainly don’t think that a healthy diet means only reducing one’s calorie intake. I do, however, believe that the stated goal of the policy was not to improve overall health, but to reduce obesity. And for that, which one do you pick?

a) consume fewer calories

or

b) get more calcium and vitamin D.

Does anyone seriously suggest that (b) is the right choice? Is this what passes for nutritional advice at the Los Angeles Times? Eat whatever you want, and as long as you take your vitamins, you won’t get fat?

The policy we’re talking about was not intended to make sure that people get all their vitamins and minerals. It was intended to curb obesity. And for that purpose it will do essentially nothing, as I noted, I still think correctly, in the original post.

New York State Should Cut Property Taxes

The New York Times editorialists are at it again.  June 12th’s lead editorial, “The Latest Work Dodge: A Shutdown,” frets over the specter of the New York state government being shut down because Albany’s legislators can’t agree on a budget.  Well, the Times must have breathed a collective sigh of relief late Monday (June 14th).  That’s when the State Senate passed Governor Paterson’s 11th temporary budget extender, which allowed state offices to hang out “open for business” signs on Tuesday.

But, the Times wants a final state budget and claims that more taxing and borrowing and maybe some cuts in school aid will do the trick.  One item that the Times wants off the table in Albany is property taxes.  According to the Times, Democratic state senators outside New York City should stop pushing for restrictions on the rate of growth of property taxes.  I agree.  Instead, the legislators should start pushing for sharp cuts in New York’s oppressive property taxes.  When every U.S. county is ranked according to its average property-tax bill, as a percent of home values, 14 of the highest 15 are in New York state.

As Prof. Steve Walters and I concluded in “A Property Tax Cut Could Help Save Buffalo” (Wall Street Journal, December 6, 2008),  New York should follow California and Massachusetts and cut property taxes.  Voters capped property taxes in California at 1% of market value with Proposition 13 in 1978. That forced San Francisco to cut its rate by 57% overnight and brought forth a tidal wave of investment, even amidst a recession. By 1982, inflation-adjusted city revenues were two-thirds higher than they had been before Prop. 13. Massachusetts voters passed Prop 2 ½ in 1980, forcing Boston’s property tax rate down by an estimated 75% within two years. Massive reinvestment, repopulation and urban renewal followed.