SAN JOSE — City leaders bombarded by increasing outcry over sky-high rents are poised Tuesday to reduce how much landlords of some 44,000 units can raise rent each year — but how far they go will be the subject of a heated debate.
The move is sparking backlash from property owners and landlords, who say it will hurt their ability to maintain buildings and make a living. But city leaders are hearing cries from residents who say rent spikes are pushing them out of the city and, in some cases, onto the streets.
The City Council on Tuesday will decide how to modify the 8 percent maximum rent increases allowed under San Jose’s 40-year-old rent control law. But a reduction seems inevitable with five council members already endorsing the idea.
San Jose’s rent control ordinance covers units built before 1979 and excludes duplexes. Housing built after 1995 is exempt from rent control under the state’s Costa-Hawkins Rental Housing Act. The city last year chose not to explore including units built from 1979 to 1995 under rent control, saying it would be too legally challenging.
The city’s head of housing proposes rent increases be tied to inflation, which has been less than 3 percent over the past six years.
City housing officials also suggest eliminating a program that allowed landlords to pass off debt service to renters, as well as open their books and show their operating incomes before passing capital improvement costs to renters. Housing Director Jacky Morales-Ferrand is also asking to study policies to protect renters if a landlord of rent-controlled units goes out of business or converts to condos.
But a host of other proposals are flying out the council offices on City Hall’s top floor. Councilman Donald Rocha, for example, wants to explore expanding rent control to include duplexes. That would bring an additional 11,000 units under the city’s rent control.
“The high cost of housing is causing great suffering in San Jose,” Rocha wrote in his proposal. “Our current rent ordinance applies to only one slice of the rental market — the bigger we can make that slice the more stability we can provide for tenants.”
While rent control today covers just one-third of the city’s apartments, a city study showed those renters are some of the most vulnerable: A third of them are not citizens, and about half are Hispanic.
Rocha also urges his colleagues to consider a fee on new commercial developments to fund affordable housing projects. The city charges a fee on new residential projects, but the council last year declined to study a commercial fee, saying it would kill economic development.
“What we can’t do, however, is exempt any one group from pitching in,” Rocha said.
Meanwhile, Councilman Chappie Jones is recommending reducing the rent control cap to 5 percent, a compromise he thinks will satisfy both sides. Mayor Sam Liccardo has yet to signal his ideas on rent control changes, but he previously said he supports a fixed amount because it’s more stable than inflation, which changes each year.
Jones also proposes relocation benefits for displaced tenants if an apartment complex under rent control closes. This is important, housing advocates argue, because as City Hall tightens rent control, some landlords are threatening to go out of business. Jones suggests offering tenants three months’ market-rate rent, security deposit refunds and $3,000 for elderly and disabled renters.
This is already happening in Jones’ district. The rent-restricted Reserve Apartments will be razed next year to build market-rate housing, but the developer there recently offered residents in about 215 units the relocation benefits outlined in Jones’ plan.
Councilman Johnny Khamis, a vocal opponent of rent control, wanted no changes to the rules but eventually recommended a 6 percent rent increase cap, and allowing landlords to “bank” increases in years they don’t use them. His plan won support from Vice Mayor Rose Herrera and Councilman Manh Nguyen.
Khamis, Herrera and Nguyen suggest dropping plans to explore a “just cause” ordinance that advocates say will safeguard against unfair evictions and to not study policies to protect tenants if a landlord goes out of business.
The trio wants to continue allowing landlords to pass off debt from acquiring an apartment complex and capital improvement costs to renters.
Joshua Howard, the California Apartment Association’s senior vice president of local public affairs, said his group continues to oppose changes to San Jose’s rent control ordinance, including the proposals put forward by the City Council.
“None of these proposals truly address the real issue facing San Jose, and that’s the need for more housing,” said Howard, adding that if changes are inevitable, landlords prefer a fixed rate — not tying it to inflation — for more predictability.
Contact Ramona Giwargis at 408-920-5705. Follow her at Twitter.com/ramonagiwargis.
competing rent control proposals
The San Jose City Council will meet at 1:30 p.m. Tuesday at City Hall, 200 E. Santa Clara St. in San Jose, to consider changes to rent control.
