San Jose Aims for New Rent Control Ordinance by 2016

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

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

25 Comments

  1. Our city and leaders seem to be stuck on stupid. If you want less of something you regulate it and tax it to death/
    rent control. If you want more of something in this case housing you make the permit process free and fast.

    There seems to be no shortage of business parks being torn down and cheap apartments going up.
    Everywhere I go I see lots of stack and pack tenement style house’s piled high, fire hazard 2×4 wood construction.
    I saw another one of these bonfire’s going up yesterday just off the north side of 280.

    If people don’t have enough money to pay the cost of this cheap housing it might be that flood of people coming here to enjoy the nice sanctuary city status and great benefits that go with working for billionaires that like hiring low cost labor to do work American won’t do for that price.

    That being said I’m more than happy to rent my house to some billionaire flunky for as much as I can squeeze him out of. After all I haven’t had a job or a raise in the last 5 years.

    Please show me anywhere rent control works and there is more housing than people waiting in line.

    • > Please show me anywhere rent control works . . .

      It works for politicians who like to give away free things to voting constituencies who like to get free things.

      You know. LIke in a “democracy”.

      • Mayor Saratoga Sam & Councilman Perez have accepted thousands of dollars from executives @ large, corporate rental property owners which are…SURPRISE…exempt from rent control. These corporations are the primary beneficiaries of stricter rent control as it hurts their competition & restricts supply.

        Did you know that 54% of rent-controlled properties in San Jose are 3-7 units and largely owned by individuals & families? Did you also know the average age of a rent-controlled property is 57.5 years?

        So, SJ wants to slap down small, mom & pop business owners with high maintenance costs while allowing their big, corporate donor cronies to skate on by w/ charging the maximum rents possible. Sounds about right, corrupt capitalist cronyism @ its finest.

        SJ has the best darn politicians money can buy! There’s some fine country-club politics going on here.

        Let’s repeal Costa-Hawkins, allowing SJ to apply rent control equally to all properties, and then let’s see where the money goes!!!!

  2. Hmmmmm.

    Maybe the Democrats are smarter than we give them credit for.

    Imposing rent control will suppress construction of new rental housing, which will make more land available for construction of high tech business premises, which will increase tax revenues, which will give more spending money to big spending politicians.

    Meanwhile, the poor suckers needing rental housing can go live in Gilroy, or Tracy, or Stockton.

    Who loves ya, baby!

  3. “The decades-old ordinance allows landlords to raise the rent even more to recapture costs of renovations, operations or maintenance.” So, Jenn, landlords should be required to “eat” that cost? That won’t happen. What will happen is that those costs will not be incurred, renovations will cease, maintenance will be deferred; the same as what happens to a home when the homeowner cannot afford those costs.

    “Concerns raised by tenants at a June meeting included…the rapid increase in rents while incomes founder…” Please explain to me why landlords should bear the financial cost of the slowly rising incomes of their tenants.

    “…without preventing landlords from getting a fair return on investment.” So who decides what is a “fair” return on investment? It is neither illegal nor immoral to maximize your return on your investment. Rent control divests a property owner of a portion of the money she/he can earn by renting the property to another. It is theft by the government. There is no valid legal or moral reason why a landlord should be forced by the government to subsidize her/his renter.

    “A recent poll showed strong support for a new rent control ordinance.” I’m sure a poll would also show strong support for more free sh*t from the government, which is really not free at all. The so-called “free” stuff is paid for by tax money taken by the government from hard working taxpayers and given to others in exchange for their votes. Any government official or candidate who promises to take from Peter to pay Paul will always have Paul’s vote.

    Bob Brownstein was a strong and effective advocate for tenants’ rights when I sat and later chaired the SJ Advisory Commission on Rents in the 1980’s as its sole neutral member (which required that I be neither a landlord nor a tenant). Bob is not neutral. Bob has an agenda, which is fine, since all sides need to be ably represented, and Bob does that. So, I’d like to see the survey questions in order to see if the survey was neutral before I decide how credible the reported poll results are.

    I was a landlord in the 1990’s. I had three sets of tenants during that time. My lone rental was not subject to the SJ rent control ordinance. However, I only raised the rent when a tenant moved out and a new tenant moved in. The last tenants did damage to my property in an amount 4-5 times the dollar amount of the maximum security deposit I was allowed by law to charge, and they moved to Sacramento. There was little chance that I would ever be repaid by those former tenants for the costs I incurred to fix the damage they did to my property, and filing a lawsuit in Sacramento County would not have been productive. So, I ate the loss and I stopped being a landlord after that experience. Things like this happen all the time. Tenants’ protections from rapacious landlords must be balanced by landlords’ protections from rapacious tenants.

    I went to college with a guy who later became a lawyer and worked for the SF Neighborhood Legal Assistance Foundation (SFNLAF). He bragged to me more than once that he could keep a non-rent paying tenant in an apartment without paying rent for AT LEAST six months after the notice to pay rent or quit was served on that tenant who had stopped paying rent. He later became a Superior Court Judge. SFNLAF is still around helping people live rent free.

    • It’s remarkable that “rent control” is always viewed as a “solution” for a tight housing market, i.e. when a high percentage of the rentable units are rented.

      So, if all the rental units are rented by people willing and able to pay the rent, how does rent control help those who “can’t afford high rents”?

      Rent control is NOT going to encourage more housing to be built UNLESS there is some political funny business going on that rewards housing providers on the side.

      And rent control is NOT going to lower rents for people who can’t afford the current rents and hence are not currently living in high rent housing.

      “Rent control” is just the typical “feel good – pie in the sky – something for nothing” narrative that gets Democrats elected to office year after year without ever having to solve a problem.

      Rent control, minimum wage, and pay equity are the “evergreens” of liberal Democrat politics. Politicians run on these same core issues election after election and the populist underclass never tires of voting for them — and never ask why the problems never get solved.

      • Newly constructed rental property is exempt from rent control, which is why Liccardo & Perez accepted thousands of dollars from corporate executives who own & build those new high-end apartment complexes.

        Is that the “funny business” you are referring to?

      • Thank you Kathleen. I know not all tenants are bad. The point I was trying to make is that the pendulum is swinging only one way. No-one in government cares if landlords get hosed by tenants who don’t pay rent, yet have a free lawyer to keep them in their rental home or apartment for months without paying rent. Government will not allow landlords to charge realistic security deposits. It’s all about tenants’ rights and never about tenants’ responsibilities.

        • JMO- A long while back, I worked as a Tenant/Landlord Counselor/Mediator/Arbitrator at the Housing Service Center. I saw both sides of the fence. I had some horrible tenants and some equally bad landlords. It was a real education for me, I’ll tell you that.

          I strongly disagree with Just Cause Eviction because it really does make it hard on good landlords trying to get rid of bad tenants. My concern in not having it is that there are landlords who are just kicking people out so they can raise the rent. It is all so complicated, but I think having input from both sides is vital.

          I’m also not so sure I agree with rent control as a solution either, but we are in a serious crisis with really high rents here in the Valley. I think we really need a lot more rental housing instead, but that will take years to complete and people are struggling now. We also need other cities in the County to step up and build rental housing too rather than just building more businesses.

          • Kathleen,

            Current SJ rent control ordinance specifically disallows using 90 day notices to raise rents. You must re-rent the unit at the prior rate (perhaps with an 8% increase, I have to go reread the code) or face fines/lawsuits. At the city council meetings on rent control the arguments made by local church officials regarding JCE is it is being used with racial bias. These claims where not substantiated. The tenant activists claimed 90 day notices where being used to raise rents, but if true, that could be handled by current ordinances. So far the arguments are all emotional, blurry, and nicely orchestrated; but the rents are too damn high, so no one is checking the facts.

            Just Cause Evictions will lead to unholy wars like we see in San Francisco and will really change the relationship between tenant and landlord. The ones who will suffer, of course, are the good tenants. Because in a rent control regime, the last think you want to do is move out and if you have a problem neighbor the landlord can’t get rid of, you have to live with them or take a huge rent hike. Given no one is going to move with rent control, the landlord doesn’t really care if the good tenants suffer, they get paid either way. And what can they do?

            JCE ordinances sound like fairness, but do not really help.

      • And not all landlords are bad. 54% of rent-controlled properties in SJ are 3-7 unit buildings, owned by individuals and families. I’m one of them. I keep my rent increases to 3-4% to keep up with my increasing costs (prop taxes, insurance, utilities, etc.) and I constantly invest in property improvements which benefit my tenants.

  4. I’m blessed to have a wonderful landlord. He fixes anything that is in need of repair immediately. He is careful who he rents to and gets rid of troublemakers. He gives reasonable rent increases and works with tenants who can’t afford an 8% increase. I love the guy! I’ve been here going on 17 years. My neighbors rarely move because he is a gem! Thank God for EXCELLENT landlords!

    • Glad to hear you have a good landlord, Kathleen. Reading Jenn’s little one-sided sob story one would think you have the only good landlord in SC County.

      • I live in a four-plex that is privately owned. I think the larger complexes operated by property management companies are more the problem, but I’m not sure.

  5. “”Modern”” Rent control in LA and SF has resulted in more rental to condo conversions. I’m curious what, if anything San Jose included to prevent this from happening again here.

    • I’m pretty sure The City Council will send them a strongly-worded letter and… well, that’s pretty much it.

    • Nothing. It will happen. I’ve already looked into it and if SJ moves forward w/ its plans, its less than 5 years until the greatest economic use of my property is to convert to condos & sell off individually.

  6. Rent control shifts the problem caused by government onto a group of private citizens who own rental property. The city council is willing to give tenants the shirts of the backs — of property owners. But it refuses to take any fair and equitable action to solve the problem.

    Section 8 housing vouchers are one example of a solution. Poor tenants get a voucher that pays three-quarters of their rent. All taxpayers subsidize that cost, to help the ‘poor’, and new housing catering to Section 8 tenants is built by developers. But of course, taxpayers don’t want to pay rent for others — especially now that numerous illegals are riding that particular gravy train.

    So the council members pander. There are more tenants than landlords, so it’s easy (and unethical) to confiscate the property of one group, and hand it over to another group. Despicable, but that’s an accurate label for council memebers and the mayor in this case. Rent control is unethical and immoral. And it is never ‘charity’ to rob one group to benefit another.

    Another viable alternative is high rise housing. There is no reason that twenty or thirty story housing can’t be built here. It’s done everywhere else, but not very much in San Jose. Why not? It is the ‘highest and best use’ of the land. A hundred dwelling units can be built on one acre; instead of 150 so-called “high density” units on a 6 acre parcel, the council could authorize six hundred units. Both builders and investors would jump at the chance, and the housing stock would steadily rise.

    The problem is insufficient housing for the local population growth. But the council avoids even discussing that particular solution. It’s easier to rob one group, and hand the stolen loot to another group. But it is no different in principle from taking your money at gunpoint and giving it to my new BFF. Somtimes I wonder if any basic education of ‘right vs wrong’ was ever taught to the mayor and city council when they were growing up. Maybe they have no mirrors in their houses, so they don’t have to look at crooks.

    And no, I’m not a landlord. But I know theft when I see it. Rent control is theft. It does nothing to provide more housing. <–And THAT is the problem. Pandering to rent control do-gooders won’t solve the housing shortage.

  7. > Rent control is unethical and immoral. And it is never ‘charity’ to rob one group to benefit another.

    You’ve won the hearts and minds of those of us who believe in civilization. And the essential nature of civilization is that it is built on excess production of goods and services REQUIRING private property and trade.

    Or, to net it out: civilization equals capitalism.

    The problem is that the majority of people in California (and an even larger majority of planet earth) live their lives by a different ethos.

    Ayn Rand called it “primitivism”, and what she was really describing was tribalist societies supported by foraging.

    And the “ethics” and “morality” of tribalist foragers are NOT those of our “civilization”.

    Tribalist foragers DO BELIEVE that robbing one group to benefit another is “nature’s way”. I.e., it IS “ethical” and “moral”. If YOUR tribe discovers another tribe foraging in YOUR forest, you smash them in the head with a stone axe, eat them, and steal their women.

    This is crucial for people who believe in civilization to understand.

    People who have the mindset of tribalist foragers cannot be “helped”; they cannot be bought off. They can only be tempted.

    When they find a rich patch of forest, they are not “thankful” to the forest keepers; instead, they are jubilant that they have found easy pickings to keep themselves fed, until they consume everything in sight and have to move to the next forest.

    “Rent control” and “housing subsidies” are only lame attempts hold the foragers at bay.Their dominant ethos is “consuming”, and the more their appetites are fed, the more their “consuming” is rewarded and encouraged.

    There is no inherent restraint on tribalist consumers that prevents them from consuming an entire capitalist civilization, except for the capitalists.

  8. Soon “New Rent Control Ordinance” will head to United court if it ever adopted, being sued by L.A. Unfortunately we have people running for the city who “airhead”.

  9. Rents are way to high for many people living in San Jose, CA. You know, it’s all about GREED and landlords who only see their tenants as numbers and not people. I have elderly parents who moved in with me 4 years ago and I also have adopted my granddaughter when she was 3 1/2 years old. My parents don’t get much income, they do pay 30% of their income to help with rent and they also help a great deal with my granddaughter. I pay most of the rent because I work and I make much more then they do. Our rent has increased a great deal since we moved in and I fear that it will be increased much more. I am finally at the breaking point with worry. I hope that rent control comes into play soon…….otherwise me and my family will end up living under a freeway pass.

  10. Who should I contact to get help because my landlord just sent me a notice with a 50% rent increase. I got the notice on May 26, 2016 and he wants it effective June 1, 2016. He has another tenant that he rented out the back room that he renovated and I’m paying all the pge and water bill from their usage too. Please advise what I should do.

  11. JUST SO YOU ALL KNOW RENT CONTROL AND JUST CAUSE EVICTION DOES NOT WORK ! IT MAKES PEOPLE SELL OR USE OMI OR ELLIS ACT FASTER. TRUST ME I WAS A LANDLORD IN SF WHICH HAS DRACONIAN TENANT LAWS. I USED THE ELLIS ACT TO GET THEM OUT. AND I WOULD RATHER HAVE MY PLACE BE EATEN BY RATS AND ROACHES OR SET ON FIRE THAN RENT TO ANOTHER TENANT EVER AGAIN. MY PLACE WILL REMAIN EMPTY UNTIL MY KIDS CAN MOVE IN OR I WILL SELL IT TO ANOTHER SINGLE FAMILY WHO WANTS TO JUST LIVE THERE. AND ADVICE THEM TO NEVER EVER RENT TO ANOTHER PERSON EVER AGAIN. AND TELL ME THEM IF THE WANT TO LEAVE SELL IT TO ANOTHER SINGLE FAMILY HOME. BECAUSE STRICT LAWS SF THERE ARE OVER 30,000 UNITS EMPTY LOL. NO ONE WANTS TO RENT THEM BECAUSE IT’S NOT WORTH IT . I HAVE ONE LANDLORD FRIEND TELL ME IF THEY RENTED AGAIN, THE TENANT WOULD HAVE TO PAY 10K A MONTH TO MAKE IT WORTH IT TO PUT IT BACK ON THE MARKET. AND I DON’T BLAME EM.