1 RENT
STABILIZATION UPDATE
Rules Committee
Housing Services Division/Community Development Department March 26, 2025
2 Agenda
1) Updates
2) Policy Considerations
a) Rent Stabilization
b) Costs Impacts
3) Next Steps
2 3
Updates
4 City Council Direction
• On March 17, City Council directed staff to prioritize and move forward with developing a Rent Stabilization Ordinance* *There are various technical definitions for “Rent Stabilization” vs. “Rent Control”, but the terms are commonly used interchangeably to mean any limit on a landlord’s ability to raise rent annually. 4 5
Alameda County Cities with Rent Stabilization
5 Rent Cap
Alameda
(2019)
Lower of:
70% change in CPI
(min 1%- max 5%)
Berkeley
(1980)
65% change in CPI
(max 5%)
Hayward
(1983) 5%
Oakland
(1980)
Lower of:
60% change in CPI
OR
3%
6 Policy Considerations
7 Costa Hawkins Rental Housing Act (1995): Impacts
on Local Rent Stabilization Ordinances
• Limits a local jurisdiction’s ability to regulate rents on:
• Units built after February 1, 1995
• Units that can be separately sold (single family homes, condos, townhomes) • Prohibits “vacancy control”/allows “vacancy decontrol” • Vacancy control: regulating initial rent charged by housing providers. • Vacancy decontrol: allowing initial rent charged to be market rate by housing providers • Example:
Rental Unit A, which has been subject to a city’s rent stabilization ordinance, is voluntarily vacated and the most recent restricted rent was $2,000. The housing provider cannot be required to restrict the initial rent of the new tenant (vacancy control) to $2,000. Instead, the housing provider can set the new rent to $3,000, which is the current market rate (vacancy decontrol) and is now the base rent for future rent stabilization annual rent caps for the new tenant. 7 8
AB 1482 Tenant Protection Act (2019): Impacts on
Local Rent Stabilization Ordinances
• Set statewide rent cap in a 12 month period
• 5% + Consumer Price Index (CPI) with a 10% max
• Sunsets on January 1, 2030
• Has similar exempted units as Costa Hawkins, but also exempts:
• Deed-restricted affordable rental housing
• Owner-occupied duplexes
• Accessory dwelling units (ADU)
• Single family homes owned by a corporation, real estate trust or limited liability company 8 Eligible Units
Unit Type
Eligible for Rent
Stabilization Total Units
Single-Unit 19,108
Duplex 1,288 1,298
Triplex 393 417
Fourplex 532 532
5-8 Units 815 815
9-19 Units 792 808
20+ Units 3,873 3,873
Multi-Family Restricted 2,094
Mobile Home Spaces 855
Condos/Townhomes 3,040
Total 7,693 32,840
• There are an estimated 7,693 units
that may fall under a City Rent
Stabilization Ordinance
• Mobile home spaces excluded as
they fall under City Mobile Home
Space Rent Stabilization Ordinance
9 Source: City parcel data
10 Rent Stabilization: Issues to Consider
• Purpose
• Provides rent stability for renters impacted by affordable rental housing crisis • Prevents arbitrary displacement of renters
• Provides fair return to housing providers
• Any other purposes?
• Rent limit threshold levels
• Typically, rent caps set as percentage, percentage of Consumer Price Index (CPI) or CPI increase • Per Council Annual Planning Session on February 1, 2025, rent cap options included:
o Lower of 2.5% to 5% or 75% of current Consumer Price Index (CPI) o Cap based on an index that increases by a reasonable percentage 10 11
Rent Stabilization: Issues to Consider
• Process for Ensuring “Just and Reasonable Return” for Landlords • Also known as “fair return”
• Constitutional requirement for rent stabilization ordinances • Capital Improvement Costs
• What percentage of CIP cost may landlord pass through? • If costs can’t be passed through, “fair return” applications may increase • Approval/Appeal process
• What entity/individual will be decisionmaker (neutral hearing officer with expertise)? • Remedies/Enforcement
• Penalty and remedy options
• Units Covered Under an Ordinance
• Should there be rental housing types exempted from a rent stabilization ordinance? 11 12
Cost Impact Issues
• Fee criteria
• Pass through impacts to renters
• Sufficient, self-sustaining revenue for administration (staff, overhead) • Staffing Costs
• Assess adequate staffing levels
• Other Administrative Costs
• Marketing/outreach costs
• Public information/website
• Legal support, consultants
12 13
Rent Stabilization Program Cost Comparisons
by City (FY 2021-22)
13 Source: Management Partners, “Objective Analysis of a Ballot Measure, Titled “The Pasadena Fair and Equitable Charter Amendment," August 2022. 14 Typical Rent Stabilization Program Costs Covered
By Fees
• Personnel (staff salaries/benefits) directly administering program • Consulting/Professional Services (e.g., outreach, administration) • Legal (for enforcement/litigation)
• Outreach/translation/education
• Indirect costs (insurance, information technology)
14 Implementation - Budget/Staffing
Impacts
Increased
Enforcement
Additional
Staffing for Rent
Stabilization
Program**
Legal Support
Current Staff
Rental Units Impacted & Level of Enforcement
Implementation Costs*
*costs may be passed through to landlords and tenants
** additional staffing include new City staff and/or consultants 15 STAFFING/BUDGET
16 Next Steps
17 Next Steps
1) Establish workplan/timeline in April
2) Return to Rules Committee to evaluate and provide direction on rent stabilization policy options
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For more information
sanleandro.org/SLhousingprotections
[email protected]
(510) 577-6006
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