As housing costs soar and incomes remain relatively stagnant, San Jose aims to pass a new rent control ordinance by the start of 2016.
The City Council on Tuesday will vote on an expedited plan to have a draft policy by December and a final ordinance by January.
Over the past five years, average rents in San Jose have shot up by 54 percent. Incomes, however, rose little more than 11 percent from 2011 to mid-2015, according to the city. Meanwhile, the decline of middle-income households has made Silicon Valley’s wealth gap one of the worst in the nation. Low-wage earners displaced by rent hikes struggle to find new housing.
“This concern, coupled with the challenges in finding replacement housing (especially in the same community), has many families feeling uncertain about the future of their living situation,” Jacky Morales-Ferrand, acting director of San Jose’s Housing Department, wrote in her memo to the council.
San Jose adopted its apartment rent ordinance in 1979. Existing rules cap rent hikes to 8 percent annually, reflecting the rate of inflation in 1978.
But San Jose never adjusted its allowable rent increase, even though the region’s inflation has averaged about 3 percent a year since 1983. The decades-old ordinance allows landlords to raise the rent even more to recapture costs of renovations, operations or maintenance.
As the market took off in recent years, the number of evictions and petitions against rent hikes skyrocketed. Since 2010, the number of petitions filed by landlords and tenants combined nearly tripled. The number of issues escalated to a hearing through the Rental Rights and Referrals Program increased more than fivefold over the same timeframe. And the number of no-cause evictions increased by 184 percent.
Of the California cities that have rent control protections, only two—San Jose and Los Gatos—lack “just cause” eviction protections.
In drafting a new rent control ordinance, the city hopes to balance the needs of tenants and their landlords. Concerns raised by tenants at a June meeting included the lack of adequate protections, the rapid increase in rents while incomes founder, the fear of displacement and their inability to afford replacement housing within the community. Landlords said they worried that the city would make it harder to evict problem tenants and that they would lose out on investment returns if allowable rent increases fell below 8 percent a year.
At a stakeholder meeting this summer, the Tri-County Apartment Association asked the city to consider a low-interest loan or grant program for property owners who agree to maintain reasonable rent increases. Landlords raised concerns about being able to afford maintaining their properties if rent hikes are capped at a lower rate.
The Law Foundation of Silicon Valley also met with city officials, noting that San Jose’s allowable rent increase is more than three times the current inflation rate and that incomes aren’t keeping pace. Tenant rights advocates agreed that a thoughtfully constructed ordinance would protect renters from displacement without preventing landlords from getting a fair return on investment.
Housing officials have created a landing page on the city’s website to keep the public up to date on the rent ordinance work plan.
A recent poll showed strong support for a new rent control ordinance. Just about 72 percent of respondents supported capping rent increases at no more than 2 percent a year, according to a July survey by EMC Research.
Renter advocates Tenants Together released a model ordinance to spur cities to bolster local tenant protections. Even if San Jose strengthens its ordinance, it would leave out thousands of apartment units.
Under state law—namely, the Costa-Hawkins Rental Housing Act—any housing built after 1995 remains exempt from rent controls. San Jose's existing ordinance only protects units built before 1979. That leaves some 10,000-plus units built between the late '70s and mid-'90s under no rent control protections.
An earlier memo from the city's housing officials noted that the city could try to include duplexes and apartments built during that timeframe, but would risk getting sued.
More from the San Jose City Council agenda for September 1, 2015:
- City Clerk Toni Taber has come under fire in the press and now by her employers. Come Tuesday, the clerk—a council appointee—will appear in closed session for a performance evaluation. Taber gave out incorrect filing information in 2014 and this year, leading several candidates to violate local election laws. Manh Nguyen, who ran for and won San Jose’s north side council seat this past June, was slapped with a $10,000 penalty after following her advice. Mayor Sam Liccardo and Dave Cortese, his opponent in last year’s mayoral race, also flouted the rules by adhering to Taber’s instructions. Nguyen is suing the city over the fine. Other issues have cropped up, angering candidates, confusing the public and costing the city money to fix. During the special election earlier this year, a typo forced the clerk’s office to reprint thousands of ballots. In an editorial published over the weekend, the Mercury News called for the clerk’s ouster. Taber was appointed city clerk in 2013 after filling in for Dennis Hawkins, who retired in 2012.
- With increasing demand for e-books, videos and other digital material, work is underway to bring high-speed broadband to San Jose libraries. The San Jose Public Library system is already the largest provider of free technology in Northern California, with 1,538 public computers, 64 laptops and tablets and free wireless Internet.
- The city plans to spend $2.2 million on new trails and a bike park at Lake Cunningham Regional Park. Bike industry leaders have told the city that the bike park—set to open next year—could become the “best of its kind on the West Coast” with potential for sponsorships and advertising revenue to offset operational costs. The city hopes to leverage the popularity of the skate park and play up the “outdoor adventure sport” theme of that part of Lake Cunningham.
- Owners of a 100-year-old Dutch colonial-style house off The Alameda are asking the city to designate it as a historical landmark.
WHAT: City Council meets
WHEN: 1:30pm Tuesday
WHERE: City Hall, 200 E. Santa Clara St., San Jose
INFO: City Clerk, 408.535.1260