Berkeley wrestles over rent control University town sizzles over equal access vs. fair investment

RENT control can be a hot issue in any city. But in this teeming university town, where politics is both pastime and passion, rent control positively sizzles. Little wonder, then, that Berkeley has generated what could be a far-reaching legal test of the practice. On one side of the case are landowners who see the city's rent-control law depriving them of a fair return on their investment. On the other are tenants and local politicians who see rent control as crucial to keeping Berkeley accessible to people of all economic levels.

As both sides prepare to argue their case before the nation's highest court in Washington, the grass-roots issues of rent control -- rent adjustments and eviction procedures -- continue to be hammered out here.

One man at the center of that often-contentious process is Gregory McConnell, who became executive director of the city's Rent Stabilization Program less than a year ago, leaving a post with the District of Columbia housing authority. Seated in his rather Spartan city hall office, Mr. McConnell chuckles as he observes that one rent board meeting here will turn out as many concerned citizens as an agency in the East might see in a year.

``I still find myself surprised at the intensity of citizen activity,'' McConnell says.

The city's present rent-control law took effect in 1980, after a local referendum on the measure. An earlier attempt to control rents was rebuffed by the state Supreme Court in 1972.

What the '72 decision gave the city, however, was some clear guidance on how to write a rent-control ordinance that could stand up to legal challenge, according to Fred Bray, a senior attorney with the city. Notwithstanding, litigation continues to be familiar fare. ``We get sued quite a lot,'' observes John Brauer, chairman of the elected Rent Stabilization Board, matter-of-factly.

McConnell says his primary goal is to make rent control here less of a battlefield and more of a cooperative effort. It won't be easy, he acknowledges, since the skirmish lines have long been drawn. But he argues that if the present system could be made to work ``fairly and equitably'' for all concerned, ``the lawsuits would fall away.''

The issue, as he sees it, is not whether rent control is needed. Berkeley, with its periodic influx of students, is an extremely tight rental market. Vacancy rates of 1 percent are common. Without control, McConnell says, rents and property values would skyrocket, and the moderately priced ``cute little two-family bungalows'' that characterize many Berkeley neighborhoods would soon give place to high-rises.

McConnell perceives little difference between Berkeley's law and those in other communities in the United States. But how the law is administered -- that's another matter. On that score, he allows, the city's landowners may have a point.

Over the years, he explains, enforcement of the ordinance has tended to become ``very punitive'' toward any property owner who is not in ``absolute compliance.''

For instance, landlords have to register, separately, each apartment unit they own. In one case McConnell knows of, an individual was sent forms for only two of his three units. So he typed the required information about the third unit on a plain piece of paper but neglected to add the line ``signed under penalty of perjury.''

Some years later a tenant discovered the oversight and petitioned the rent board to roll back all rent increases that had been granted since the mistake was made. The law says that an error in registration of any unit means that all units owned by that individual will be deemed unregistered and hence not entitled to rent adjustments.

That, says McConnell, is an example of how the ordinance could have been unfairly applied. The landlord involved, he says, was clearly in ``substantial compliance'' with the law -- which is what McConnell ruled administratively. ``I have no problem closing a landlord down if it's warranted . . . but I don't enjoy being the bully and being unfair and unreasonable,'' he says.

But the more conciliatory approach to rent control advocated by McConnell won't in itself allay the apprehensions of Berkeley's landowners. Michael St. John, a landlord and director of the California Housing Research Institute, a small think tank formed by property owners and managers, says the central flaw with rent control in Berkeley is that landlords are unable to increase their ``net operating income'' -- the profits used to ``pay mortgages and pay themselves'' -- in proportion to the inflation ra te. Rent adjustments are allowed only on the basis of increased operating expenses, such as utility or insurance increases, and for improvements to the units. What this means, in Mr. St. John's view, is that property-owners' income is unable to increase as the cost of living increases.

The inevitable result will be marginally maintained properties and a steadily decreasing number of apartments in the city.

St. John sees rent control in Berkeley as a ``very interesting problem politically.'' As he analyzes it, the local citizenry, a large majority of whom are tenants, have voted in a law that ``exploits'' an unpopular minority -- landlords. What redress is there, he asks, since the courts are loath to undo a measure approved by the people?

The city, however, would argue it's simply carrying out the majority's wish that it remain a diverse community accessible to people of all incomes and backgrounds.

Whichever way the US Supreme Court rules, it's likely that rent control in some form will continue to fan the flames of controversy in this most political of California cities for some years to come.