Landlords See Revised Rules Imposed at Council

Landlords See Revised Rules Imposed at Council

The City Council voted in favor of changing the city’s rent ordinance regarding rent increases and other provisions at its July 16 meeting. The Council voted 4-1 to include an annual general adjustment to determine rent increase limits for landlords. Councilmember Tony Daysog was the only Councilmember to oppose the new stipulation. 

The annual general adjustment sets the cap on rent increases at 70 percent of the percentage increase to the San Francisco Bay Area Consumer Price Index (CPI) for the 12-month period ending in April of each year. However, yearly rent increases cannot be lower than one percent or higher than five percent.

CPI is a measure that examines the average of prices of consumer goods and services, such as transportation, food and medical care. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them. The San Francisco Area CPI increased by 4 percent between April 2018 and 2019. Therefore, landlords are stipulated to cap rent increases at 2.8 percent. The new ordinance will take effect on Sunday, Sept. 1. 
Several public speakers, who were property owners, opposed using the CPI as the barometer to set rent increases.

“CPI does not cover most of the costs that landlords incur in a year,” said Marilyn Shumacher, who owns five units in Alameda. “Our regular monthly costs — water, garbage, insurance and taxes — are not covered by CPI.” 

Councilmember Malia Vella said CPI is a suitable tool to use because many employers base wage increases on CPI. Nonetheless, Daysog opposed the new rent control aspect to the city’s ordinance.

“I see this as incredible government overreach,” said Daysog. “The type of rent control that we’re adopting was rejected by the citizens of Alameda when they overwhelmingly defeated M1. M1 was an effort to impose a hard cap.”

Daysog believes the city would be better off with mediation-based rent control. 

Councilmember Jim Oddie said it is important the city protects lower-wage earners in the city. 

“The pressure we have on the lower wage earners in our city is tremendous,” he said. “People cannot afford double-digit rent increases.”

Other provisions to the ordinance include a rent registry. Landlords must submit annually to the rent program a registration statement for each rental unit on a form approved by the program administrator. The administrator will use that to determine the maximum allowable rent increase. Also, landlords can roll over, or bank, increases to the following year. For example, if the maximum rent increase in year one is 2 percent, but the landlord keeps the rent flat, they can increase the rent by the compound increase percentage of year one and two. However, landlords cannot raise rents by more than the current year’s annual general adjust plus three percent.

Community Development Director Debbie Potter said the city’s rent staff will hold workshops to further educate renters and landlords.