“Tomas Vargas, his wife and their 18-year-old son and 20-year-old daughter have lived in a studio apartment in National City for two years.
But the family won’t call the studio home for much longer. On Sept. 11, all tenants at the nine-unit apartment complex where the Vargas family lives were handed 60-day notices to move out.
The reason? The property owner plans to sell the apartment complex on C Avenue, as well as two other National City properties, where tenants also received 60-day notices to vacate.
The property owner’s attorney said her client’s decision to walk away from the rental business in National City — a legal right — is largely based on financial concerns triggered by a push to enact rent control in the city just south of downtown San Diego.
The situation illustrates both property owners’ unease over rent control and tenants’ concerns about possible evictions and rent increases in the absence of rent caps and other protections for renters.
National City voters will consider in November a ballot measure that would limit rent increases to 5 percent and only allow evictions under specific circumstances. At the same time, voters across the state will decide on Proposition 10, which would allow cities to impose rent control on units built after 1995 and on single-family homes.
Rachael Callahan, an evictions attorney who represents landlords and property owners, said Measure W and Prop. 10 have created panic among property owners who are concerned about the future of their investments in National City. She said she has been consulted on a weekly basis by owners who are contemplating putting properties up for sale.
The units where tenants received the 60-day notices are owned by Sterling Investment Group. Callahan represents CEO Nick Davison.
She said “it was never his desire to displace” the tenants.
“From a financial standpoint,” she said of the decision to sell the properties, “it’s now or never for him.”
She said Davison is concerned other investors will not be inclined to purchase the properties if and when rent control is enacted.
“From an investor’s perspective, the passage of (Measure W and Prop. 10) really creates a limitation on the investor’s ability to utilize their investment,” she said.
If a property owner wants or needs to make upgrades, for example, “all of a sudden they can’t recoup the costs because they’re limited by the 5 percent cap,” she said.
Proponents of rent control in National City argue Measure W is fair to both tenants and landlords. They say landlords and property owners are entitled to a favorable return on investment under the measure.
Measure W allows a landlord to petition a rent control board — created by the measure — for rent increases beyond 5 percent.
“If landlords feels they are going to lose money, then the fact of the matter is that they are guaranteed a fair rate of return,” said Shanti Singh, development and communications coordinator for Tenants Together, a statewide renters’ rights group. “No rent control (ordinance) says there’s no way you can’t go beyond capped rent if you feel there is a hardship or burden.”
Property owners, however, take issue with the proposed rent control board — which they see as a layer of government — having a say in the way they manage their investment. They argue the five-member board, which would have three seats reserved for tenants, would side with renters over landlords or property owners.
Whitney Benzian, vice president of public affairs for the California Apartment Association, said his organization has heard from concerned “mom-and-pop” owners whose livelihoods or retirement depend on the revenue from their rental properties.
For tenant groups, the 60-day notices highlight the lack of protections for tenants. They say forcing out tenants, through no fault of their own, is unfair. To make matters worse, evictions may leave tenants susceptible to higher rents elsewhere, tenant advocates say.
“Right now it really is the wild west still,” Singh said. “It’s an incredibly adverse environment to be a tenant.”
Without adequate protections such as guards against unmerited evictions, tenants don’t have the legal rights to fight an eviction in court, Singh said.
“The cards are really stacked up the moment that (eviction) notice shows up,” she said.
The 60-day notice that the Vargas family received has left them in limbo as they scramble to find a new home. They’ve applied to five or so apartments and have been told to expect to be wait-listed for at least six months, Thomas Vargas said.
“Even though one feels bad and can’t find something, we have to accept it,” he said. “What else can we do?”
His family moved from Tijuana to National City three years ago in search of better treatment options for his disabled son. They moved into the studio two years ago and have paid $1,000 a month.
One option on the table if the family is unsuccessful in finding a new home is to return to Tijuana, Vargas said reluctantly.
“We’ll have to wait and see what happens,” he said.
Callahan, the evictions attorney, said it’s unfair to both sides when a landlord decides to remove a property from the rental market because of financial concerns.
“It’s not fair to the tenants and it’s not fair to the owners,” she said.
“There needs to be a solution to help tenants without sacrificing, and substantially infringing, on ownership rights,” Davidson said in a statement. “Proposition 10, and (Measure) W are short-sighted and will cause more harm then good. Although the upcoming propositions are not the only influence on my decision to sell my building, they are a strong influence nonetheless.”
Davidson plans to begin minor upgrades so the properties are in “prime salable condition,” then put them up for sale, as soon as tenants move out, Callahan said.
She said some tenants who have been renting for less than a year were entitled to 30-day notices under state law, but Davidson gave all tenants 60-day notices. The notices, which mark the first step in the eviction process, are precursors to court orders to vacate.”