1 RENT
STABILIZATION UPDATE:
POLICY OPTIONS & PROPOSED
TIMELINE
Rules Committee
Housing Services Division/Community Development Department May 28, 2025
2 Agenda
1) Background
2) Policy Option Considerations
a) Rent cap
b) Capital Improvement Pass Through
3) Work Plan Timeline
4) Next Steps
2 3
Background
4 Updates
• On March 17, City Council directed staff to prioritize and move forward with developing a Rent Stabilization Ordinance
o Other housing protections including amending the Mobile Home Space Rent Stabilization Ordinance have been deferred until the Rent Stabilization process is completed • At March 26 Rules Committee, staff indicated it would return to May 28 Rules Committee:
o present key rent stabilization policy options for consideration o recommend work plan/timeline for public process and ordinance 4 5
Rent Stabilization Basics
• Costa Hawkins Rental Housing Act (1995) prohibits City from regulating initial rent charged to a new tenant
• Rent stabilization regulates percentage rent can increase annually • Property owners are entitled to a “fair and reasonable return on their investment”
o also entitled to impose a greater rent increase if necessary to achieve a “fair return” 5 6
What is a Fair Return?
• Presumed that an owner is receiving a fair return if their net operating income, adjusted for inflation, is same amount (or greater) that they received in the year rent control was enacted
• Ordinance defines what revenues and expenses are taken into account when determining net operating income
• Owners have ability to demonstrate that revenues or expenses in base year were unusual
6 7,693 Eligible Units Under Proposed Rent
Stabilization in San Leandro
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 existing City Mobile
Home Space Rent Stabilization
Ordinance
7 Source: City parcel data
8 Exempted Units Under Costa Hawkins Rental
Housing Act (1995)
• Limits a local jurisdiction’s ability to regulate rents on:
o Units built after February 1, 1995
o Units that can be separately sold
Detached single family homes
Condos
townhomes
• Cities can choose, but are not required, to exempt additional units 8 9
Exempted Units Typically Under Rent Stabilization
Ordinances in Other Jurisdictions
• Motels, hotels, inns and boarding houses
• Nonprofit cooperative units owned or occupied by most of the owners • Deed restricted affordable rental housing
• Hospitals, care facilities and convalescent homes
• Transitional and emergency housing
• Short-term rental of 30 days or less
• Home sharing (i.e., room rentals with shared kitchen/bath) • Mobile homes or mobile home lots
Note: Some jurisdictions also exempt “Golden Duplexes”, where the owner occupies one of the units
9 10
Rent Cap Options
11 Alameda County Cities with Rent Stabilization
11 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%
12 Contra Costa County Cities with Rent Stabilization
12 Rent Cap
Antioch
(2022)
Lower of:
60% change in CPI or 3%
Concord
(2024)
5%
(amended cap from 3% to 5% in February 2025)
Richmond
(2016)
Lower of:
60% change in CPI or 3%
• Which rent cap threshold does Rules Committee recommend? 13 Capital Improvement
Project (CIP) Options
14 What is a Capital Improvement?
• “Substantive” capital improvement is defined typically as improvements that:
o Increasing value of the property
o Extends life of property
• Examples of capital improvements include:
o Seismic upgrades
o Roof replacement
o Excludes repairs necessary due to deferred maintenance • Improvements must benefit housing provider and tenant 14 15
How Can Capital Improvements Be Handled
• Capital Improvement Pass Through
o Additional cost charged to tenants to cover “substantive” capital improvements separate from allowed annual rent increase
o May be capped as percent of total costs that can be part of pass-through o May be capped as percent of tenant’s rent
o Pass through costs amortized - typically not permanent • Recovered through fair return application
o Capital improvement costs considered along with all costs and revenues to determine if rent increase is necessary for a fair return
o Fair return increases generally permanent
• Some cities have mix of approaches depending on size of building 15 16
CIP Pass Through Caps in Alameda County
16 Yes
Alameda Berkeley Hayward Oakland
Pass Through Cap to
Tenant
2-4 units = 100
5-15 units = 75%
16-24 units = 50%
(>25 units processed thru
fair return process)
- Cost increase per unit
adjusted by 1)
improvement type rate
and 2) vacancy rent
offset
50% 70%
Pass Through Cap
as % of Current Rent 5%
15%
(No increase if within 1 year
of initial rent)
10% No
• Which capital improvement pass through cap option does Rules Committee recommend?
17 Work Plan/Timeline
18 Proposed Council Priority Work Plan/Timeline*
• Rules Committee – Draft Ordinance for public review (July 2025) • Public Review/Comment of Draft Ordinance (August-October 2025) o 45 day Public Review Period of Draft Ordinance
o 2 community Meetings (1 in person/1 online)
o 2 small group meetings with key stakeholders
• Rules Committee - Draft Ordinance (October 2025)
• Council Work Session (December 2025)
• City Council - Ordinance 1st Reading (January 2026)
• City Council - Ordinance 2nd Reading (February 2026)
*dates may be subject to change
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Next Steps
20 Questions for Rules Committee:
1) Which rent cap threshold do you recommend?
2) Which capital improvement pass through cap option do you recommend?
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Next Steps
1) Return to July Rules Committee with a Rent Stabilization Ordinance for public review in Summer 2025
Note: Staff to have more updates on proposed Rent Stabilization Ordinance/Program costs to Rules Committee in Fall 2025
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For more information
sanleandro.org/SLhousingprotections
[email protected]
(510) 577-6006
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