Thursday, May 10, 2012
Flyers arrive daily in mailboxes, presenting so-called “facts” for and against Proposition E. That’s the June ballot measure that would phase out rent control in Oceanside’s 17 mobile home parks. The latest flyer has the headline: “An Independent Study Shows Proposition E Will Save Oceanside Taxpayers Millions!”
Oceanside voters are being flooded with flyers presenting so-called “facts” for and against Proposition E. There is reason to question whether those “facts” are true.
City Councilman Jerry Kern, who supports the measure, said it’s a fact that rent control is costing the city dearly.
“Rent control has cost us, in the last 10 years, about $8 million,” he said, “and if we keep going this way, it’s going to cost us another $8 million.“
Those figures come from a report produced for the North County Association of Realtors by Scott Barnett of Taxpayeradvocate.org. Barnett hypothesizes that without rent control, the city would earn $4 million more in property taxes over the next 10 years and save $4 million in administrative and legal expenses.
The report assumes property values would rise tenfold without rent control. Under that assumption, the $45,000 a year in property taxes the city earns from the mobile home parks would grow to $450,000, an increase of more than $400,000 a year. Under this scenario, Barnett argues, the city would lose $4 million extra in property taxes over the next 10 years if rent control remains in place.
However, Mark Miller of the County Assessor’s Office points out that under Prop 13, which limits property tax increases, the taxes could only increase that much if the mobile home parks were sold. This is something park owners arguing for Prop E say they have no interest in doing.
Rising rents, which would also increase the value of the land to the park owners, might triple or quadruple without rent control, (for example, from about $300 a month to $900 or $1200), but increasing the land value tenfold is unlikely without changing the land use altogether. Park owners consistently argue they have no intention of selling their land for redevelopment.
Oceanside city staff dispute the report’s assumptions about the cost to administer the rent control program. They say fees the parks owners and mobile home owners pay to the city cover most of the administrative costs.
A Rent Control Fund financial statement does show about half a million dollars has been transferred from the city’s General Fund since 2005 to meet expenses not covered by those fees. But staff say fees have been increased recently to recover those costs.
Some of those costs have been incurred fighting lawsuits filed by park owners against the city to try to lift the strict rent control limits. City Councilman Jerry Kern could not say how much of the costs to the city were generated by those suits.
Barnett said he had to make assumptions about what rent control costs the city because the city has not tracked the costs of administering the program closely enough.
“Trying to predict the future, especially when the city doesn’t actually track the numbers is difficult,” he said. “This is my best conservative estimate.”
Barnett said he based his assumption of land value increasing tenfold on a county protocol for selling bonds that increase property values 5 percent annually.
Ernie Cowan of the Realtors Association that commissioned the study said he could not guarantee the accuracy of the report and said it was intended to stimulate discussion of the issues.
“If those numbers are incorrect or invalid then we would welcome someone to bring forth a more comprehensive, valid number,” he said. “The problem is everyone is using assumptions or emotional arguments and there have been no facts developed.”
In the meantime, both sides of the debate continue to send out flyers telling voters to look at “The Facts!”
A flyer opposing Prop E says “FACT: Under Oceanside’s rent control ordinance, mobile homes provide affordable housing without cost to taxpayers.”
This is also difficult to prove since the equation is more complex than simply comparing the park fees with the administrative costs. Since there is no means to test for those who live in the mobile home parks, they may or may not be eligible for subsidized housing. On the other hand, low rents benefit the city because residents have more money left over to spend on other things that generate sales taxes.
Voters will have to sift though the facts to find some grains of truth.