City Council Work Session
December 15, 2025
Community Development Department
Proposed Rent Stabilization Program
Budget and Draft Residential Rent
Stabilization Ordinance
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Background
1 AGENDA
Next Steps
5 2 of 19 City Council December 15, 2025
Draft Ordinance
Key Changes
City Council
Direction
3 4
Program Budget
2 Background
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Background
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• April 21, 2025: City Council adopted Rental Registry Ordinance (effective January 2026) • June 16, 2025: City Council adopted Biennial Budget FY 26-27 • General Fund $648k/annually to Rent Registry Program, including 2 new FTE staff • General Fund will cover program costs until program becomes cost-recoverable • July 17, 2025: Rules Committee, Draft Rent Stabilization Ordinance • July – September 2025: Community Outreach (60-day Public Review) • October 20, 2025: City Council amended Rent Registry Ordinance (effective July 2026) • October 13, 2025: City Council Work Session, Draft Residential Rent Stabilization Ordinance and related cost options
• December 15, 2025: City Council presentation
• Proposed Rent Registry & Rent Stabilization (Rent Program) Budget • Updated Draft Residential Rent Stabilization Ordinance City Council Direction: Oct. 13 Work Session
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1. Maximum allowable annual rent increase: 65% of CPI, with a cap of 3% - 3.75%
2. No capital improvements pass through process; property owners may use fair return petition process
3. No banking
4. No exemptions for smaller rental properties
5. Maintain exemption for “Golden Duplexes”
Proposed Rent Registry &
Rent Stabilization
(Rent Program) Budget
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Challenges: Budget and Implications for New Rent Program 7 of 19 City Council December 15, 2025
Biennial Budget FY 26-27 (adopted June 2025)
• General Fund revenues have not kept pace with rising expenditures • General Fund is in deficit and reliant on reserves
• Council provided direction to return with a balanced budget for FY 27 • City Departments are preparing for a $15 million mid-cycle budget cut Implications for New Rent Program
• Any new program requiring General Fund support must be weighed against ongoing deficit pressures
• Council will need to evaluate budget implications of new program costs • General Fund loan to fund program until it is cost recoverable (approx. 3-6 years) Rent Program Service Level & Estimated Budget
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Rent Stabilization
(Passive Enforcement) 0-2 FTE Repeal Rent Registry Rent Stabilization + Passive Enforcement 6,500-7,500 July 1, 2026 $500 - $750K Focused Rent Registry +
Rent Stabilization
(Basic Enforcement)
4 FTE
Amend Rent Registry
Rent-Stabilized Units
Only / Additional
Units
Rent Stabilization + Basic
Outreach & Enforcement 6,500-7,500 January 1, 2027 $1-$1.5M Program Option Staffing Rent Registry Rent Stabilization Eligible Units Proposed
Implementation
Timeline
One-Time Startup
Funding Need
(approximate)
Rent Registry + Rent
Stabilization
(Enhanced
Enforcement)
6 FTE All Rental Units
Rent Stabilization +
Enhanced Outreach &
Enforcement
9,000-10,000 January 1, 2027 $1.3 - $2.2M
Additional Program Options
Assumptions for Full Cost-Recovery Program
• Initial General Fund Loan to Newly Established Special Revenue Fund:
o ~$1.3 - $2.2M loan repaid with interest in approx. 3-6 years • Eligible Units (per County parcel data):
o Partially Regulated: 2,500 – 3,500
o Fully Regulated: 6,500 – 7,600
• Tiered Annual Fee Structure Estimate (fee study pending):
o Partially Regulated Units: $125 - $175 / unit
o Fully Regulated Units: $250- $300 / unit
• Enforcement:
o Late Penalty: 60-100%
o Annual Special Assessments imposed for fully regulated unit fees not collected • Staffing and Program Cost Considerations:
o Salaries, benefits, and indirect service costs
o Services and supplies (outreach, legal, tenant/landlord services) o Lease and furnishing of new office space
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General Fund Loan Pay Back Scenarios
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Payback Scenarios Variables Impacting Loan Payback Timeline Short-term (3 years) Late penalty – 100% of annual fee
First year lien rate – 100% enforcement
Medium-term (4 years) Late penalty – 75% of annual fee
First year lien rate – 75% enforcement
Longer-term (5-6 years) Late penalty – 60% of annual fee First year lien rate – 60% enforcement
Staff recommendation for full cost-recovery framework:
• Program would be full cost recovery after initial General Fund loan (approx. 3-6 years) • Full cost recovery assumes:
o Estimated $1.3 - $2.2M General Fund loan
o Payback period dependent on fee level, compliance rate, and enforcement Considerations
• Service and staffing levels drive program budget
• Cost of initial program launch occurs before fee revenue stabilizes • Compliance and fee revenue increase over time
• Education and enforcement are staff-intensive
• Collection of late and missed payments is critical to cost recovery 11 of 19 City Council December 15, 2025
Updated DRAFT Residential
Rent Stabilization
Ordinance
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DRAFT Residential Rent Stabilization
Key Changes
1. Removed "Capital Improvements" pass through section
2. Added definition of "Landlord"
3. Ordinance implementation date: January 1, 2027
• Base Rent: in effect on January 1, 2027, rent increases on/after that date will be regulated by Ordinance
• Base Year: 2026
• AB 1482 rent cap remains in place in meantime for tenants 13 of 19 City Council December 15, 2025
City Council Direction on Rent Cap
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YEAR CPI 65% CPI
AB 1482
5% + CPI,
Max: 10%
2020 1.10 0.72 6.10
2021 3.80 2.47 8.80
2022 5.00 3.25 10.00
2023 4.20 2.73 9.20
2024 3.80 2.47 8.80
2025 1.30 0.85 6.30
Note: 65% of CPI exceeded 3% only once (2022)
Question - Confirm direction to set in the last 30 years due to high inflation rent cap as the lower of:
• 3 – 3.75% or
• 65% of CPI
City Council Direction
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City Council Direction
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• Confirm direction to set rent cap as the lower of:
o A specific number between 3 – 3.75%
or
o 65% of CPI
• Confirm staff recommendation on full cost recovery model:
o Rent Registry + Rent Stabilization/Enhanced Enforcement Option (estimated $1.3 - $2.2M General Fund loan)
o Approx. 3-6 year payback period
o Program budget estimates to be refined and presented with finalized fee study in early 2026
Next Steps
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Next Steps
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January 12, 2026 Residential Rent Stabilization Ordinance (1st Reading) January 20, 2026 Rent Registry Software Vendor Contract for Council Approval February 2, 2026 Residential Rent Stabilization Ordinance (2nd Reading) February - March 2026
Fee Study for City Council review/adoption including Rent Registry and Rent Stabilization Ordinance fees, program budget appropriation, and General Fund loan
For More Information
19 of 19 City Council December 15, 2025
https://www.sanleandro.org/rentprogram
[email protected]
(510) 577-6011