Spike in San Jose Housing Costs Spurs Council Rent Control Plans

As new figures show average rents in San Jose have soared 54 percent since 2010, city officials are pursuing plans to bolster rent control and tenant rights.

The City Council on Tuesday will consider prioritizing a rent control work plan for the year ahead.

San Jose has consistently ranked as one of the least affordable regions in the nation, especially as home values and rental costs have scaled back up to pre-recession heights. The latest market data shows the average rent in San Jose reached $2,227 a month. That's an average annual increase of 7.8 percent for the past five years.

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But developers have been building mostly luxury apartments, which makes the newest units even pricier than the above-listed averages. At the same time, the remaining supply of housing that used to be affordable could be lost as owners cash in on a white-hot housing market. The city already lost 4,100 affordably priced homes that ticked up to market rate between 2000 and 2013, according to the city's Department of Housing.

Meanwhile, wages have remained relatively stagnant. San Jose's median household wage came in at $81,000 in 2013, a 1.1 percent uptick since the year prior and a 5.4 percent increase over 2010, according to the U.S. Census Bureau.

"This combination of stagnant wages, an increasingly bifurcated workforce, and continuously rising rents are the central reasons why housing is increasingly unaffordable in San Jose," writes Jacky Morales-Ferrand, San Jose's acting director of housing. "Furthermore, these factors contribute to an environment of uncertainty in which many households are concerned about their ability to retain their existing housing at costs which they can afford."

By existing city law, landlords of about 43,000 apartments constructed before 1979 can't up the rent more than 8 percent a year. A proposal by Councilman Raul Peralez would cap that to 4 percent a year. Hayward and Los Gatos already cap annual rent increases to 5 percent. San Francisco, Oakland and Berkeley have more restrictive rent control that ties the cap to the rate of inflation, which evens out to about 3 percent a year in allowable rent increases.

Landlords could also level up rent to market rate if a tenant voluntarily leaves. As long as property owners give enough notice to the tenant, they can evict them without cause. Another proposal being considered would enact a "just cause" ordinance, which would make it harder for landlords to evict tenants. In the past few months, the city's housing officials received 120 complaints of no-cause evictions—four times as many as received in 2011.

Peralez also suggested a protection for low-income tenants that would prohibit discrimination based on income source, including Section 8 housing vouchers. State law permits landlords to deny tenants based on rental vouchers, though some cities have enacted local rules that outlaw that type of screening.

To keep up with the added services, the city would likely have to increase the size of its Rental Rights and Referral Program, which currently employs three staff members to oversee complaints about some 43,000 rental units.

Any update to the city's rent ordinance would be limited by a state law called the Costa-Hawkins Rent Control Act, which exempts all housing built after 1995 from local rent control ordinances.

Council members Rose Herrera and Johnny Khamis want the city to assemble a Housing Affordability Task Force as it studies rent control and other housing proposals.

More from the San Jose City Council agenda for June 16, 2015:

  • Councilwoman Rose Herrera will commend Velma Million, known as "Lady of the Lake," for her longtime advocacy of Lake Cunningham Regional Park.
  • After a series of high-profile break-ins, the Mineta San Jose International Airport landed a $8 million grant to bolster its perimeter security.
  • Riding bicycles on some downtown sidewalks will be a $25 infraction, pending this update to the city's traffic bail schedule.
  • San Jose will extend its contract with CreaTV, the nonprofit that runs four local public access cable channels, for another six months to give the city more time to draft a longer-term agreement. CreaTV is funded through a small percentage of Comcast's gross revenues in San Jose, which amounts to about $1.6 million a year. Since launching in 2007, the nonprofit media group has expanded from one to four channels that broadcast hundreds of local government meetings and youth-produced programming every year. "While CreaTV has been able to earn a significant portion of its operating funds through fees for service and fundraising activities, we must pursue other funding sources that would ensure CreaTV's sustainability for the long term," Mayor Sam Liccardo and council members Rose Herrera, Raul Peralez and Chappie Jones wrote in a shared memo. "If we were to lose CreaTV we would not only lose an operator for the $1.5 million we program in restricted PEG funds, but we would lose the ability to empower our residents, especially our youth."
  • A five-year agreement with the Wildlife Center of Silicon Valley will cost the city $472,000 for a renewed five-year term. The 21-year-old nonprofit treated more than 3,600 birds and fielded 1,244 calls for service in 2014. As the only facility in the South Bay treats and rehabilitates wild animals, it also receives funding from the cities of Milpitas, Campbell, Los Gatos, Cupertino, Santa Clara, Saratoga and Sunnyvale, as well as private donations and membership fees.
  • Recycling rates are set to increase by 3 percent for singly-family homes and 5 percent for multi-family dwellings. That increase will cover the cost of picking up large and bulky items, which will hopefully stem illegal dumping, Herrera and Liccardo explain.
  • The city is considering offering $400,000 in subsidies to bring an advanced manufacturing facility to north San Jose. FlexTech Alliance, a 20-year-old San Jose-based nonprofit consortium of tech companies and academic researchers, is vying for a $75 million Department of Defense grant to build a hybrid electronics manufacturing institute. FlexTech responded to the call for bids with a proposal to build a 35,000-square-foot facility on Lundy Avenue.

WHAT: City Council meets
WHEN: 1:30pm Tuesday
WHERE: City Hall, 200 E. Santa Clara St., San Jose
INFO: City Clerk, 408.535.1260

Jennifer Wadsworth is the news editor for San Jose Inside and Metro Newspaper. Email tips to [email protected] or follow her on Twitter at @jennwadsworth.

23 Comments

  1. A photo of a bunch of DTSJ office buildings to accompany an article about housing and rent control. Interesting choice.

  2. Rents have gotten crazy, to the point where gentrification is beginning to get a foothold in San Jose. The other day I’m down near Monterrey and Phelan, and noticed the sleaze motel next to the bank is now filled with Indians. I’m guessing mostly H1-B workers and their families trying to get a start here.

    Where will our Pimps, Prostitutes and Drug Dealers go? Oh no!

  3. > San Jose has consistently ranked as one of the least affordable regions in the nation, especially as home values and rental costs have scaled back up to pre-recession heights.

    Stupid.

    “Rental costs” or price levels DO NOT establish that a region is “affordable” or “not affordable”.

    If a housing unit is “unaffordable”, it’s NOT because of something the housing unit did, it’s because of something the would be renter did.

    There is undoubtedly AFFORDABLE HOUSING all over Mexico right know because a quarter of the population of Mexico has relocated to the U.S.. Correspondingly, there is likely a shortage of “affordable housing” for Mexicans who CHOOSE to live in the U.S.

    [RAY-CISS! RAY-CISS! RAY-CISS! YOU MENTIONED MEXICANS AND YOU’RE NOT A MEXICAN]

    So, why aren’t you RAY-CISS Americans providing AFFORDABLE housing for Mexicans?

    Because:

    A. We’re not RAY-CISS, and
    B. It’s not the job of taxpayers in a capitalist economy to personally or collectively subsidize the housing wants of the savings or productivity impaired.
    B. There’s plenty of affordable housing in Mexico.

    If San Jose is RAY-CISS to Mexican’s because we don’t provide “affordable housing” for them, then Saratoga and Los Altos are MORE RAY-CISS, and Sea Cliff (where Senator Dianne Feinstein lives) and Tiburon (where Senator Barbara Boxer lives) are even more RAY-CISS.

    Let Sea Cliff, Tiburon, Newport Beach, Beverly Hills, Aptos, Los Altos, Piedmont, Saratoga, and Monte Sereno build AFFORDABLE housing BEFORE it is San Jose’s turn.

    In fact, mark a map of the bay area with push pins wherever Obama or Hillary Clinton or Al Gore have had fundraisers, and build affordable housing within a quarter mile of each such location.

    • and, and, and let’s make sure to keep that “Sanctuary City” policy in place… It’s worked out great so far!

    • SJ Bubble Man wrote: “In fact, mark a map of the bay area with push pins wherever Obama or Hillary Clinton or Al Gore have had fundraisers, and build affordable housing within a quarter mile of each such location.” That’s the “Call the PC Democrats on the Carpet for their Hypocrisy” idea of the century!

    • Well said, and not at all racist.I grew up and San Jose, but had to move because it was too expensive, and the majority of the affordable housing was occupied by illegal Mexicans who had children in America. They don’t just occupy the affordable housing, they occupy the homeless shelters as well. I volunteered at Las Plumas homeless shelter and there was one white family, one black family, two Asian families, the rest were non-English speaking Mexicans. It is very disheartening to see students and young people who are just beginning their adult lives in the Silicon Valley being shut out because so many illegal immagrants of lower socio-economic status are abusing resources that are supposed to be in place for America citizens.

  4. Capping rent to lower that 8% will bring out bully landlord in an attempt to get rid of tenants after their lease is up so they can rase the rent on the new tenants. People are much better off buying their own home. At least they will know what their monthly payments are not to mention they can build equity.

  5. I estimate we could cut the cost of low income housing by $500 to $1500 per month if the state and county would just stop collecting property tax on rental units. I wonder how long before San Jose would look and run like Detroit ?

  6. These city council people are a bunch of donkeys. Rent control will make things worse. It’s simple economics – supply vs demand. The market is telling us to substantially increase the supply of apartment buildings. The city needs to make it easier to allow developers start building more multifamily property, without the bureaucratic BS.

  7. Here in NYC the rent control is set to expire. Hopefully! It sucks 1-2 million people will be homeless, but the 98% of us who pay market share have put up with enough. The rents keep going up!

  8. — “This combination of stagnant wages, an increasingly bifurcated workforce, and continuously rising rents are the central reasons why housing is increasingly unaffordable in San Jose,” writes Jacky Morales-Ferrand, San Jose’s acting director of housing. “Furthermore, these factors contribute to an environment of uncertainty in which many households are concerned about their ability to retain their existing housing at costs which they can afford.” —

    Ms. Morales-Ferrand appears confused about the role wages play in housing prices (as well as the definition of bifurcation). Low or stagnant wages can’t drive up housing costs; a disproportionate population of low wage earners would drive rents down while a truly stagnant situation would exert a neutral effect. What’s happening here is that landlords are enjoying a bidding war driven by a continuously arriving population of renters who are able to pay more. And with Apple’s expansion there will be more to come.

    Of course, it was not Ms. Morales-Ferrand intent to accurately portray the housing situation, for as a City of San Jose social engineer her goal was to fan the flames of the war being waged against the cultural underpinnings of our capitalist system. Where she could’ve specifically identified the unavoidable collision that was set in motion by the city’s stupid policy of soliciting high-tech employers while offering sanctuary to masses of uneducated illegal immigrants (this, in a city already bursting with school dropouts), she instead offered a vague description of an “environment of uncertainty” along with a reference to the inability of some (guess who?) to live here and continue to be insulated from the market forces responsible for making this valley so attractive a place to live.

    As for those vicious landlords, I wonder, don’t they remember all the help the city sent their way whenever the bottom fell out of the market? Wait. I’m got myself confused. That never happened.

  9. Here is the list of allowable rent increases for San Francisco
    Effective Period Amount of Increase
    March 1, 2015 – February 29, 2016 1.9%
    March 1, 2014 – February 28, 2015 1.0%
    March 1, 2013 – February 28, 2014 1.9%
    March 1, 2012 – February 28, 2013 1.9%
    March 1, 2011 – February 29, 2012 0.5%
    March 1, 2010 – February 28, 2011 0.1%
    March 1, 2009 – February 28, 2010 2.2%
    March 1, 2008 – February 28, 2009 2.0%
    March 1, 2007 – February 29, 2008 1.5%
    March 1, 2006 – February 28, 2007 1.7%
    March 1, 2005 – February 28, 2006 1.2%
    March 1, 2004 – February 28, 2005 0.6%
    March 1, 2003 – February 29, 2004 0.8%
    March 1, 2002 – February 28, 2003 2.7%
    March 1, 2001 – February 28, 2002 2.8%
    March 1, 2000 – February 28, 2001 2.9%
    March 1, 1999 – February 29, 2000 1.7%
    March 1, 1998 – February 28, 1999 2.2%
    March 1, 1997 – February 28, 1998 1.8%
    March 1, 1996 – February 28, 1997 1.0%
    March 1, 1995 – February 29, 1996 1.1%
    March 1, 1994 – February 28, 1995 1.3%
    March 1, 1993 – February 28, 1994 1.9%
    *December 8, 1992 – February 28, 1993 1.6%*

    As you can see not once has it hit 3%. No wonder the communist’s love rent control.

  10. Some more thought into this… And I hope everyone pays attention.

    The way SF landlords have been getting around rent control is simple. “Property Sold! Converted to Condo’s! Buy or GTFO!”

    This has been discussed a lot.
    http://www.latimes.com/opinion/op-ed/la-oe-0607-bouie-sanfrancisco-housing-20150607-story.html
    http://www.bizjournals.com/sanfrancisco/blog/real-estate/2015/06/mission-housing-development-to-replace-moratorium.html

    Now “Rent Control” is the gameplan for LA too!!!
    http://www.latimes.com/opinion/op-ed/la-oe-0609-gross-housing-ellis-act-20150609-story.html

    And basically, this is the gameplan around the country. Our politicians get a pat on the back from progressives for “Rent Control” yet there is no “Conversion Control” that goes along with it. Union jobs are created for the destruction of the old structures and the building of new.

    @Sam Liccardo: I heard you’ve had staff dedicated to just getting rid of the halfway houses. I see where you’re going with this. You’re going to single handedly clean the hell out of DTSJ without hiring more cops through this “Rent Control”. by converting all the halfway houses and low income apartments sandwiched between Reed and 280 into Luxury high rise condo’s.

    Wow.. that is just evil brilliance. You scare me dude. You must have gone to Evil Lawyering School.

    https://www.youtube.com/watch?v=cKKHSAE1gIs

  11. May The God of Jacob bless all the citizens of San Jose with comfortable income for many long years to come. Amen,and Amen. Housing is a HUMAN RIGHT. Love and Respect Humanity.

    • > Housing is a HUMAN RIGHT.

      Great.

      Just go to the Human Rights Department down at City Hall, show them your Humanity ID card, and pick up the keys to your new house.

      Just curious,

      I haven’t done this in a while. How big are the houses that they are giving out these days? I might want to turn mine in and get an upgrade.

  12. Where are the persons supposed to live who take care of your children, clean your homes, take care of your landscaping, serve you in restaurants, stock the grocery shelves, take your tickets, clean the theater after each showing, work as caregivers, etc.? Do you really want to live in a city where everyone has to make above a certain amount? Do you want someone who is making minimum wage or a little over, to have to drive from Modesto or somewhere “east”, where they can afford rents, so that you don’t have to look at them? Live with them? Interact with their “poorness”. A real city is composed of all levels of society and economic situations. That’s what makes it a real city. That’s what makes people care about a place: they live there, they’re invested in the community – not in money, but personally. They work better, they spend their free time in the city where they work. It’s better for their families. If you want to live without the diversity of humans in all their variety, then San Jose will never make it as a true city – and that would be a shame. In ending, I just want to add that I believe completely in capitalism, but not the laissez-faire capitalism that has started to re-invade our way of doing business. It didn’t work before and I doubt it will work now.

    • Carroll: I lived in Los Angeles from 1953 to 1963. The joke was that L.A. was a bunch of suburbs in search of a city. 90% of San Jose residents live in a bunch of neighborhoods and they are definitely NOT in search of a city. Except for the relatively few folks who live in downtown San Jose, almost no-one cares in the least about downtown San Jose, and they resent the $3billion or so of their tax dollars that were spent there, to the detriment of the neighborhoods. Even those few thousand who work in downtown flee for their neighborhoods at 5:00, and don’t return to the 24 hour downtown that Tom McEnery, Frank Taylor and their followers in the RDA tried unsuccessfully to build. 25+ years and $3billion later, there is still no “critical mass” in DTSJ. San Jose residents have zero interest in San Jose ever becoming a city. Does downtown SJ look better than it did 30 years ago? You bet. But less than 10% of the people who live in SJ care. I also lived in SF for a dozen years. There are many reasons so many folks call it “The City.” It’s like Noah’s Ark—it has two of everything. You should move there, Carroll. You’d prefer it to SJ.

    • > A real city is composed of all levels of society and economic situations.

      So, does a “real city” have a planning department that assigns people to the “rich” category”, the “middle class” category, the “poor category”, and the “ornamental poor” category?

      I want to be assigned to the “rich” category. Does it come with an income?

      Is there a form I need to fill out?

  13. Caroll asks: “Where are the persons supposed to live who take care of your children, clean your homes, take care of your landscaping, serve you in restaurants, stock the grocery shelves, take your tickets, clean the theater after each showing, work as caregivers, etc.?”

    Answer: They are supposed to live with their families (many of the jobs you listed were once filled by teenagers, empty-nest moms, etc.) or in neighborhoods where rent is affordable. But, of course, the former have been pushed out of the way by the illegals who, upon arrival, increased the expectations of minimum and below-wage employers while driving down wages (which they now demand be increased); as for the latter, the surplus of renters (created by the arrival of illegals) drove (and continues to drive) rents higher in formerly affordable neighborhoods.

    Given that laissez-faire capitalism defines a system in which the government stays out of the way, I don’t see how anyone can fail to see the big, dumb, ugly hand that government has played in the housing crisis. The invasion of illegals was the work of the government (that the private industry exploited it should surprise no one — exploiting is what private industry does), and the wink-and-nod enforcement of immigration laws has led not only to the overwhelming of this valley’s housing inventory, but also its hospitals, schools, jails, water supply, and social programs (all of which have led to tax increases and declines in services). It has also led to increased price jumps in better neighborhoods (and especially better schools), as this valley’s “diversity loving” renters and home buyers will pay almost any price to avoid living among people they apparently perceive as lowbrows and riffraff.