Pursuit of rent-control measures across the Bay Area has gained steam as living costs continue to skyrocket with a red-hot real estate market.
Starting Dec. 1, Richmond will become the first California city in three decades—and the first in Contra Costa County—to institute rent control following the City Council’s approval during a long, contentious meeting that ended in the wee hours of July 22.
Elsewhere, San Jose is considering possibly retooling its existing ordinance while other communities have broached the idea of adopting rent control.
San Jose is revisiting its rent-control policy amid “the challenge of affordability as you see in other cities,” said David Vossbrink, a spokesman for the South Bay city. “You’re seeing the interest [in rent control] play out in other cities [as] home prices and rents are jumping up.”
Richmond’s policy will apply to about 10,000 units among almost 34,000 total rentals, which represent about half of the city’s residential stock. Exempt from the measure are apartments built after Feb. 1, 1995, single-family residences, condominiums and federal Section 8 low-income housing.
The measure will limit how much landlords can increase rent annually based on the rise in the consumer price index (CPI) for the San Francisco-Oakland-San Jose region. For example, if a tenant paid $1,000 a month last year when the CPI rose 2.3 percent, then the landlord could only bump the rent to $1,023. The measure will also require landlords to cite just cause for evicting a tenant.
The new law will cost about $2 million to implement, which will be funded through a fee paid by all landlords, including those whose multifamily property does not come under rent control.
Richmond pursued rent control because “the City Council is concerned that rising rents and stagnant or decreasing wages will exacerbate housing cost burdens faced by renters in the city and threaten their displacement in the future,” the ordinance said.
The ordinance passed 4-1 but not before Mayor Tom Butt and Councilman Vinay Pimplé—both opponents of the measure—walked out of the tense meeting at City Hall.
“The real estate industry threw everything they had at these council members but were unable to derail these basic protections against unfair rent increases and arbitrary evictions,” San Francisco-based renters’ rights organization Tenants Together said in a news release.
But Sacramento-based trade group California Apartment Association lamented Richmond’s decision.
“It’s not good public policy,” said Theresa Karr, executive director for the association’s division that covers Contra Costa, Napa and Solano counties. “They’re implementing an ordinance at a cost of $2 million paid by landlords, but it will impact only [a portion] of renters in the city. I’m not seeing that justified.”
Rent control can also make multifamily investors and developers wary of going after projects in Richmond, Karr said. Already, she knows of an investor who had planned to buy and renovate an older building in town but backed off as the city was weighing rent control.
The ordinance will leave landlords less money to take care of rising maintenance and other costs and make removing problem tenants difficult, she added.
She argued that better alternatives to rent control include building additional housing or establishing a mediation board where rates could be adjusted through a discussion with the landlord and tenant.
In San Jose, city staff is studying the possibility of strengthening the current rent-control policy and could have a recommendation for the council in the fall.
Right now, San Jose allows an 8 percent annual rent increase whereas “most cities look at 2 percent or 4 percent,” Councilman Raul Peralez said.
Peralez cited a recent poll indicating that most San Jose residents support rent control at 2 percent. “I’m extremely surprised but humbled that our voters are in agreement and supportive of keeping rents affordable,” he said.
San Jose is just one of many cities in the Bay Area trying to tackle the regional crisis in housing affordability, he added. “We’re doing our part to entice housing and keep rents affordable. Everything is on the table, and that includes [toughening up] rent control.”
Up the Peninsula, jurisdictions such as Redwood City and San Mateo County have also been looking at rent control.
The average asking rent in the Bay Area is $2,317 per month—up 13.4 percent year-over-year, according to a 2015 first quarter multifamily market report by commercial real estate services firm DTZ. Over the past five years, the rate has shot up by 62.3 percent.