NEW GRADUATE STUDENT HOUSING COMES TO MY NEIGHBORHOOD.

The apartment house at 2711 Shattuck Avenue is nearing completion and will be ready for occupancy soon. The entire building has been rented to the university, which will sublease individual units to individual graduate students. The apartments are all 310 square feet, which is very small. These apartments were built in China and arrived at the Port of Oakland in standard 8′ x 40′ shipping containers. The apartments came fully furnished and ready to move in. Each studio apartment will rent for $2180 a month and are all single occupancy (one student per apartment). This apartment house has no amenities aside from a coin-operated laundry room on each floor. There is no lobby, no yard, and no elevator. That means that if you live on the 4th floor of this building and have 4 or 5 bags of groceries, you have to shlep them up 4 flights of stairs as best you can. There is only one parking space (that’s not one parking space per unit. It’s one parking space for the whole building.) Pre-fab apartments from China are popping up in San Francisco and more are planned for Berkeley. Try to imagine what it would be like to live in an apartment that is only 8 feet wide.

BEDROOM INFLATION.

The single most important factor in determining the market rent of an apartment is the number of bedrooms. People will pay additional rent for additional bedrooms, but little else. An apartment with a separate dining room will rent for the same amount as an apartment without a dining room. Therefore, landlords always try to maximize the number of bedrooms in an apartment that they are getting ready to rent. Sometimes, that isn’t hard to do. With just a little remodeling, like moving a wall or adding a door, a dining room can become a perfectly acceptable bedroom. (I’ve done that myself.) On the other hand, landlords sometimes call rooms ‘bedrooms’ that is just plain fraud.  ‘Bedroom inflation’ is a term I created to describe the practice of inflating the number of bedrooms in a Craigslist apartment listing. Some landlords think that if you can put a bed in a room, then you can call it a bedroom, but that isn’t true. There are laws that define the minimum standards for a bedroom. Take a look at this listing photo. The owner of this apartment counted this room as one of the bedrooms in his listing. It is, in fact, just a walk-in closet. Yes, it is a room, and the landlord has put a bed in it, but that doesn’t make it a bedroom. I tell landlords not to engage in this sort of deception. This isn’t going to fool anyone. Nobody is really going to think that this walk-in closet is actually a bedroom just because there’s a bed in it. This is just going to make prospective tenants angry. Everybody hates the feeling that someone is trying to play him for a sucker. The most common form of bedroom inflation is counting a living room as a bedroom. Because of the high rent and housing shortage here in Berkeley, a growing number of college students are sleeping on living room couches. However, just because somebody is sleeping on a futon in a living room doesn’t make that room a bedroom. A living room with somebody sleeping in it is still a living room. I always advise landlords to tell the truth. Its OK for a landlord to brag about the features in his apartment that will make it look more desirable to prospective tenants. I do that. All rational landlords do that. But that’s different than lying or trying to play prospective tenants for suckers. (As you can tell, bedroom inflation is one of my pet peeves.)

32 MARIJUANA STORES IN BERKELEY?

I have long believed that in order to get elected to public office Berkeley, you have to have delusions of grandeur. The Berkeley city council is now considering how many marijuana stores to license. Most council mayors, including the mayor, support capping the number at 32, but that is opposed by the Berkeley Cannabis Commission, which wants a much higher number on the grounds that limiting the number of marijuana stores in Berkeley to 32 would ‘stifle innovation.” To put this into perspective, Berkeley has 1 Trader Joe’s, 2 Target stores, 3 Safeways, 6 Starbucks, 6 Walgreens, and 11 ice cream and frozen yogurt stores. All these stores added together still doesn’t get you up to 32. The idea of 32 marijuana stores in a city the size of Berkeley is insane.

Executing Drug Dealers? On the other side of drug madness, President Trump is proposing executing drug dealers, citing southeast Asian countries, where such executions are common. Trump isn’t the only politician advocating executing drug dealers, but this idea overlooks the fact that most Americans who are addicted to opiates don’t get their drugs on the black market.  In movies and TV shows, addicts usually get their drugs from sleazy criminals working for the Mafia or a Mexican drug cartel, but the reality is that most opioid addicts in the United States get their drugs at Walgreens or CVS with prescriptions. Unfortunately, there are a lot of doctors and dentists in this country who dole out prescriptions for opiates like they were Tic Tacs. I am sure that those doctors and dentists are not the people who President Trump is talking about executing. About 5% of the world’s population live in the United States, but we consume 80% of the world’s opiates. We are not going to get control over our nation’s opioid epidemic until the government makes it much, much harder for doctors to prescribe these drugs.

“WHY CAN’T I PAY MY RENT WITH A CREDIT CARD?”

Every now and then, a tenant will ask me if he can pay his rent with a credit card. My answer is No. All of my leases state that the rent must be paid by check or money order. I don’t accept credit cards. Why? It’s the bank fees. Most of the new apartment houses in Berkeley and San Francisco allow tenants to pay their rent with credit cards, but that’s because credit card fees are an insignificant expense for them. A 2 bedroom apartment in a new building in downtown Berkeley rents for $4,000 to $5,000 a month, but I’ve seen some that are over $6,000 a month. If I was getting that kind of rent, I would accept credit cards too!

BITCOIN.

A growing number of landlords are allowing their tenants to pay their rent with Bitcoin. I really, really don’t understand that. Cryptocurrencies like Bitcoin are not currencies, they are not money, and they are not legal tender. I don’t know what they are, but I do know that I can’t pay my property taxes, garbage bills, fire insurance, etc. with Bitcoin. I can’t buy cocoa beans with Bitcoin either. I think some businessmen accept Bitcoin because they think it’s tax-free income; however, income that you don’t report on your tax return is not tax-free income. That’s called income tax evasion, not tax-free income. You don’t need to be a CPA to know there’s a difference. Supposedly, Bitcoin transactions and transfers are completely secret and untraceable, but I wonder if that’s really true. I suspect that the IRS has figured out how to crack Bitcoin’s computer codes.

Military Grade Encryption. People tell me that there is no way the U.S. government can get into Bitcoin computer records because they use military grade encryption. But what does that mean? Does ‘military grade encryption’ mean ‘unbreakable’? As you know, I teach history, and history tells me to be very suspicious of unbreakable military codes. For over 5,000 years, governments have been trying to create unbreakable military codes, but without much success. During World War 2, the Germans thought they had an unbreakable military code, but Winston Churchill and Franklin Roosevelt got decoded copies of Hitler’s most secret coded messages to his generals before the generals to whom they were addressed got their decoded copies! That went on all through the war too. During World War 2, the U.S. also broke the Soviet diplomatic code and several Japanese codes.

The Battle of Midway. The biggest naval battle of World War 2 was the Battle of Midway. There will never be another naval battle like that again. The Japanese were hoping to win a decisive victory that would knock the U.S. out of the war. The Japanese thought they were going to catch the U.S. fleet by surprise; however, the U.S. Navy had broken the Japanese naval code, so they knew where and when the Japanese were coming. Instead of ambushing the U.S. Navy, it was the Japanese that got ambushed instead. The U.S. Navy sank all the Japanese aircraft carriers at Midway. As a result, Japan also lost hundreds of their best pilots. After all the Japanese aircraft carriers were sunk, Japanese pilots had no place to land. When they ran out of fuel, Japanese pilots crashed their planes into the sea and drowned. Midway was a disastrous defeat for Japan from which they never recovered. Prior to Midway, Japan was always on the attack. After Midway, they were always on the defense. OK you say, that was then, but what about now? Now we have military grade computer encryption. Well Yes, we do have that, but you know, Vladimir Putin didn’t seem to have much difficulty getting past U.S. computer encryption during the 2016 presidential election. I think that people who do business in Bitcoin in the belief that they are fooling the IRS may actually just be fooling themselves instead.

THE WAR ON COLLEGE EDUCATION.

In 2007, Congress changed the federal bankruptcy law to exclude student loans from the debts that are discharged in bankruptcy. As a result, if you run up $200,000 in debt to become a doctor (and that is not hard to do) and declare bankruptcy, you will leave the bankruptcy court still owing the full $200,000. However, if you run up $200,000 in credit card debt traveling around the world and declare bankruptcy, that debt will be wiped out completely.

Last month, the House of Representatives passed a tax bill that made college tuition waivers taxable income. Senate leaders removed this provision from the final draft of the tax law just after strong national public uproar against this provision. Had this provision remained in the final law, tens of thousands of graduate students would have been forced to drop out of college because they would not be able to pay this new tax. The tax on tuition waivers would have taxed the discount graduate students receive for working in labs and teaching classes. The problem is that you can’t pay income tax if you have no income, and a discount is not income. The House bill would have eliminated the deduction for interest on student loans as well, but this too was eliminated in the final law due to public outcry.

All over the country, state legislatures are passing laws designed to make college education less affordable. Did you know that in a lot of states, if you don’t pay your student loans on time, you can lose your job? For example, if you are a physical therapist and you get behind in your student loans payments, your license to work can be revoked in 20 states. If you default on a student loan, you can be fired as a schoolteacher in 11 states. And in South Dakota, Iowa, and Oklahoma; if you don’t make your student loan payments on time, the state can take away your driver’s license. In other words, if you went to college and are not making your student loan payments on time, the state can take away your ability to work in your profession. Then how do you repay your student loans?

SOUTH DAKOTA. South Dakota has perhaps the most punitive student loan default laws. If you default on a student loan in South Dakota, they can take away your driver’s license. However, if you default on your mortgage on a multi-million dollar mansion overlooking Mount Rushmore – well – that’s OK. The state’s DMV can’t take away your driver’s license for just that. Taking away a person’s driver’s license, and in a largely rural state like South Dakota, for failing to repay a student loan on time seems just plain mean-spirited to me. Also, in South Dakota, if you get behind in repaying your student loans, you can also lose your license to work as a registered nurse, a physical therapist, or a speech pathologist; and if you are employed as a public schoolteacher in South Dakota, you can be immediately fired. Plus, at last count, about 1,500 people living in South Dakota were denied hunting and fishing licenses for failing to repay student loans on time. So, if you are behind in your student loan payments in South Dakota and you work in a licensed occupation, not only are you barred from working in your profession, but in addition, you can’t legally hunt or fish for your dinner. You can legally eat vegetables that you grow in your backyard. Sounds ridiculous, doesn’t it?

HATS OFF TO MONTANA. Things are getting better in one state. Montana used to have the harshest student loan laws in the country. Not only could you lose your job and your driver’s license for failure to repay student loans on time, you could also go to prison for it! However, in 2015, the Montana legislature passed a law with rare bipartisan support that decriminalized failure to repay student loans. The new law also allows Montana residents to keep their driver’s licenses and their jobs when they are behind in their student loan payments. The argument for the new law was that it doesn’t make any sense to punish a person for failing to repay a loan on time by taking away his ability to earn a living. That just makes it more unlikely that the person will ever repay the loan. Unfortunately, Montana seems to be the only state moving in a more enlightened direction on this issue.

BERKELEY. Here in Berkeley, the main driver of college student debt is the cost of housing. A 2 bedroom apartment in a new building near campus costs $4,000 to $5,000 a month, but I’ve seen some that cost over $6,000 a month. Everyone in Berkeley city government is aware of this, but no one seems to be concerned about it. Quite the opposite. The mayor and Berkeley city council are constantly passing new laws and regulations designed to raise, not lower, the cost of building new apartments near campus. For example, a permit to build a new apartment house in Berkeley near campus now costs between $100,000 and $200,000 per apartment – and the council is planning to raise the price of permits next year. Now – who do you suppose ultimately pays for these astronomically expensive building permits? It’s just who you think it is! It’s the tenants who live in these buildings.

College students all over the U.S. are graduating with more and more student debt, and the cost of repaying that debt keeps rising. Every American should be very concerned about this. If a college education becomes just a privilege of the rich, as it was in Colonial times, we are in serious trouble as a nation. An industrialized society that does not value higher education is doomed to poverty and becoming a third rate and third world nation.

PARTY MYTHS

There are 2 widely-held myths about parties in college towns everywhere that I regularly have to speak to my tenants about.

#1. THERE IS NO ‘RIGHT TO PARTY.’ A lot of tenants (not just college students) think that as an American citizen, you have a legal right to have parties in your apartment, but that is not true. There is nothing in the Constitution about a ‘right to party.’ It’s not in any state or local law either. Lots of leases contain provisions prohibiting tenants from having parties of any kind on the premises or that limit the number of people who can attend a party or that set limits on the dates and hours of parties. Lease clauses restricting and prohibiting parties are legal and enforceable in every state.

#2. YOUR NEIGHBORS HAVE A LEGAL RIGHT TO GO TO SLEEP AT A REASONABLE HOUR EVERY NIGHT. Disturbing the peace is illegal. You can be cited and fined for it, and in some cases even arrested. You are not being considerate or courteous to your neighbors by telling them in advance that you are going to have a party that will prevent them from sleeping. It is legally useless and could be dangerous for you.

Robbing Bank of America. Simply announcing in advance that you intend to do something that is illegal does not give you the right to do it. For example, it is not O.K. to rob a bank providing that you tell the bank in advance that you intend to rob them. Somebody actually did that here in Berkeley. There used to be a Bank of America on Ashby Avenue across the street from the Ashby BART station, 2 blocks from my house. It was where I did my banking. A man once robbed that bank with a gun. He didn’t wear a mask because he didn’t see any surveillance cameras in the bank, and so he assumed that there weren’t any, but he was wrong. This guy wasn’t very smart and was quickly caught. At his trial, the bank robber compounded his folly by acting as his own lawyer. He thought he had an airtight defense that was going to get him off. The bank robber told the jury that that he mailed a letter to the manager of the bank a week before the robbery stating that he intended to rob the bank. He included the date of his planned robbery in the letter. The manager of the bank testified that he received the letter but did nothing about it. He thought the letter was a practical joke or a fraternity initiation prank. The judge told the jury that simply informing the manager of the bank in advance that the defendant intended to rob the bank was not a defense. The bank robber went to prison. Surprisingly, this happens fairly often – that a criminal informs his victim in advance of the crime that he intends to commit in the belief that by doing so, it will give him some sort of legal cover if he is caught. That doesn’t work. As I often tell people – playing amateur lawyer is dangerous.

The idea that it is O.K. to have a loud party late at night providing that you told the neighbors in advance is an urban legend that gets college students into trouble all the time. Berkeley has one of the toughest noise pollution laws in the United States, and they enforce it. Berkeley policeman have decibel meters in their patrol cars. People having loud parties late at night in Berkeley are regularly issued large fines. Also, it can be dangerous to tell your neighbors in advance about your parties. Some people will interpret your notice as an invitation to come to your party, which can lead to awkward situations. Even worse, dishonest neighbors may come to your party to rob your place. Yes, that does happen.

THE HOMELESS EXPLOSION EXPLAINED.

 
30 years ago, there were no huge homeless encampments in Berkeley, Oakland, or San Francisco. Now, thousands of people live in them, and they are getting bigger all the time. A lot of people are baffled by this, but the explanation seems obvious to me. The number of extremely poor people in the U.S. has exploded over the past 30 years. The real inflation-adjusted income of the average American has been declining since the 1970s. The minimum wage adjusted for inflation has fallen by over 25% since 1970. For reasons that I don’t understand, very few people make a mental connection between the declining income of poor and middle class Americans and the rise in homelessness.

In 1960, the largest private employer in the United States was General Motors. The average non-managerial employee at GM made $25.00 an hour, adjusted for inflation. Like most unionized industrial workers of the time, GM employees also got a generous fringe benefits package.

Today, in 2017, the largest private employer in the United States is Walmart. The average non-managerial employee at Walmart makes $9.15 an hour, and with relatively few fringe benefits.

When I see people working at Starbucks and Walgreens here in Berkeley, I sometimes wonder: “Where do these people live?” These people make $11 to $14 an hour, and a 1 bedroom apartment in Berkeley costs $2,000 to $3,000 a month. So where do these people live? In a city where the average 1 bedroom apartment costs over $2,000 a month, where can a person who makes $13 an hour live besides a tent, a friend’s garage, or the back seat of a car? What I can’t understand is why so few politicians and TV commentators see any connection at all between rising poverty and rising homelessness. The connection seems very obvious to me. What am I missing?

$70 TO GET INTO YOSEMITE NATIONAL PARK?

Here’s an example of how the lives of poor people are becoming even poorer in America. Our national parks were intended to be places that anyone could go to. The poor as well as the rich could visit a national park. Things were different in Europe, where the most beautiful places and scenic vistas were made royal estates, available only to aristocrats and their friends. Last week, Interior Secretary Ryan Zinke announced that the price of admission to Yosemite, Grand Canyon, Glacier, Yellowstone, and many other national parks will be going up from $25 now to $70 next year. This story didn’t get a lot of publicity, but I think it should have. For a lot of people, $70 is a lot of money. $70 is more than a whole day’s take-home pay for somebody working at minimum wage. Obviously, far fewer poor people will be able to go to a national park once it costs $70 to get in. I think that’s sad. Don’t you?

WORST APPLICATION EVER.

“I Have a Jack Daniels Terrier.” I recently rented a big house here in Berkeley. I once got an application for this house from a woman that immediately aroused my suspicion, but as my sister Bonnie says, I have a suspicious nature. Why, I asked myself, would a single woman want to rent a 5 bedroom house by herself? Of course that’s legal, but it’s not normal. After reviewing her application form, I said: “I see you have a pet. You wrote down that your pet is a Jack Daniels Terrier. Don’t you mean a Jack Russell Terrier?” She seemed annoyed by my question. She said: “No. I meant what I said. I have a Jack Daniels Terrier.” I said: “Uh, you own a dog, right?” She said: “Yes, you know I do,” sounding increasingly annoyed. I said: “Well, I’ve never heard of a Jack Daniels Terrier before. Are you sure you don’t mean a Jack Russell Terrier?” Then she blew a gasket! She said angrily: “I’ve told you 3 times now that I own a Jack Daniels Terrier. You’re one of them, aren’t you?” I didn’t reply to that question. I didn’t know what she meant. Then she stood up and gathered up her stuff and said as she left: “I know you’re one of them.” She said that several times, but she never explained what she meant by that. When I went home, I looked up ‘Jack Daniels Terrier’ on Google, just to make sure that there really is no such breed, and as I suspected, there isn’t. I decided not to rent my house to that woman – or her Jack Daniels Terrier. I rented the house to a nice bunch of U.C. Berkeley chemistry grad students instead. Here is a photo of a Jack Russell Terrier. Notice the distinctive upturned tail, a characteristic of this breed. I wonder what a Jack Daniels Terrier might look like.

San Francisco Rental Ad From 1970.

Below is a section of the For Rent ads from the San Francisco Chronicle in 1970. Look at the prices. Although it may seem hard to believe, back in those days, San Francisco and Berkeley were considered cheap places to live, that is, compared to big cities back East like New York and Boston. One of the main reasons why the hippies came to San Francisco and Berkeley in the 1960s was because they could find cheap housing here. Counter-culture people in every generation move to places where they can find cheap housing. Then they move elsewhere when housing gets expensive. That is something that never changes. Tourists, mostly from foreign countries, still go to the Haight Ashbury district in San Francisco expecting to see hippies and ‘flower children’, but there aren’t any. A 1 bedroom apartment in the Haight Ashbury district now rents for $3,000 to $4,000 a month. Of course, a portion of the increase in rents in the Bay Area can be attributed to inflation, but only a portion. When I arrived in Berkeley in 1972, I rented an apartment downtown for $80 a month, and I knew people who were paying much less than that.

What Is A Luxury Apartment in Berkeley?

I went to campus on Cal Day, April 22. Several of the new apartment houses in Berkeley near campus had booths there. There was one thing that these booths all had in common. They all claimed that they were renting luxury apartments, and only luxury apartments. The word ‘luxury’ was on everything. It was on the sales literature, the promotional giveaways, and the clothes that the sales agents were wearing. See the photo below of a shopping bag that I picked up on Cal Day. I asked a man working at one of these booths: “Your literature says that all your apartments are luxury apartments. What does that mean? I toured your building last week. I walked through a couple of 2 bedroom apartments. (One apartment was $4,500 a month. The other, which had a better view, was $4,800. a month including a parking space). They weren’t very big, and they didn’t seem to have anything luxurious about them, you know, like fine woodwork or marble floors, drapes, etc. In fact, neither of them even had a separate living room. What makes them luxury apartments?” The man working at this booth had an answer for me. I could see that he had been asked this question before. He said: “By luxury, we mean that our apartments are luxury priced.” AHA! So now I know what the word ‘luxury’ means, at least in Berkeley! ‘Luxury’ just means very EXPENSIVE! It tells you nothing about the apartment. Now frankly, I don’t think that ‘expensive’ is a reasonable definition of the word ‘luxury.’ Do you?