Rent Control Proposals Come to San Jose City Council for Vote

Faced with growing demands for tenant protections, San Jose’s City Council will decide this week whether to cut allowable annual rent increases for one-third of the city’s apartments.

Residents demanding rent control say runaway housing costs are pricing them out of the region. Landlords have staunchly opposed any change to the city’s 40-year-old rent control law, saying it would chip away at their income and make it harder for them to maintain properties.

On Tuesday, the council will consider a raft of proposals, which include tying yearly rent increases to the rate of inflation and blocking landlords from passing off debt service and building improvement costs to tenants. Housing director Jacky Morales-Ferrand also wants to create protections for tenants displaced when their rent-controlled units convert to market-rate housing.

San Jose’s existing law caps rent hikes to 8 percent a year, or 21 percent if more than two years passed since the last increase. But the decades-old ordinance only applies to apartments built before 1979, which amounts to about 44,000 units. Under the state’s Costa-Hawkins Rental Housing Act, housing built after 1995 is also exempt.

Recommendations from San Jose’s housing department include linking annual rent hikes to inflation, which has hovered around 3 percent for the past several years.

Screen Shot 2016-04-18 at 9.20.51 AMCouncilman Don Rocha is asking the city to expand rent control rules to duplexes, which would bring another 11,000 units into the mix. He also wants the city to charge commercial developers an affordable housing fee, a proposal rejected by his colleagues last year over fears it would stifle economic growth.

Rocha noted that tenants in rent-stabilized units are among the city’s most vulnerable residents—families, the disabled, the elderly and the poor.

“It may sometimes be difficult for those of us who own homes to fully appreciate the struggles that renters face,” he wrote in a council memo. “Property ownership can confer a degree of stability that renters simply do not enjoy. I believe we have an obligation to take the struggles of renters seriously, even if we do not experience those struggles ourselves.”

Several council members, including Mayor Sam Liccardo, proposed a fixed rent control cap. Councilman Chappie Jones suggested a compromise: 5 percent.

Councilman Johnny Khamis, who originally opposed any changes, recommended a 6 percent cap and an option for landlords to roll over rent hikes for years they don’t use them. Vice Mayor Rose Herrera and Councilman Manh Nguyen signed off on Khamis’ idea. The three of them also asked the city to abandon plans to include a “just cause” protection, which aims to prevent retaliatory evictions.

Jones also wants landlords to cover relocation costs for tenants if an apartment shutters. Under his proposal, tenants would get three months of market-rate rent, a security deposit and $3,000 for the disabled and elderly.

A battle of displacement in Jones’ district has come to head this past week. Owners of the rent-controlled Reserve Apartments plan to replace the complex with market-rate housing next year. Last week, developers offered relocation benefits very similar to those in Jones’ proposal to the 500 people who live in the Reserve’s 216 units. The tenants slammed Jones' anti-displacement proposal, accusing him of being unduly influenced by  Greystar Corporation, the multibillion-dollar company that owns the apartments.

The California Apartment Association contends that any changes to rent control laws fail to address the root cause of runaway rental costs: a shortage of housing. The organization created an online hub for landlords to draft letters to the council expressing their opposition to stricter rent controls.

In other Bay Area cities—namely Richmond, Mountain View and Burlingame—tenant rights groups are fighting to put rent control measures on the ballot. Those three initiatives would limit yearly rent increases to inflation, which has hovered around 3 percent for several years. They would also impose a “just cause” standard on evictions, so landlords can’t simply kick someone out to make way for someone who can pay a higher rent.

Sandy Perry, head of the Affordable Housing Network of Santa Clara County, wrote a letter urging the council to view the affordability issue as a humanitarian crisis.

“The real nuts and bolts of the rent control issue are not so much the policy details and economic arguments,” he wrote, “but the traumatic life issues created by the continuing displacement of thousands of people in our community by rising rents and unjust evictions.”

More from the San Jose City Council agenda for April 19, 2016:

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.

24 Comments

  1. JONES’ RELOCATION PACKAGE WAS WRITTEN BY GREYSTAR CORPORATION!

    This isn’t about mom and pop’s and other privileged prop 13 owners who bought a bunch of properties with their riches, this is about Billion dollar corporations like Greystar that buy up old apartment complexes, treat current residents like crap while the property becomes totally dilapidated, and then they get unanimous approval from the Mayor and Council to bulldoze down and build bottom level commercial and upper level luxury residential. Nursing students can’t continue school – priced out, tow-truck drivers – priced out, vet technicians – priced out. Greystar Corp (connected with Goldman Sachs and all other banks that brought the house down) have now moved on to big profits on the backs of renters. Even if you are not for rent control, I would think that we could at least agree that Corporations that kick out our service workers and replace affordable older buildings with more $4000 apartments ARE NOT DOING SAN JOSE ANY FAVORS! City Hall has been idiotic to have been drinking this Koolaid.

    Please know that the Relocation Package from Greystar and Jones, WAS PATHETIC and does not do want the reporters are saying it does. They haven’t done their duty and posted the proposal. It DOES not help the Reserve residents.

    Greystar got a F rating from the BBB and they are being sued all over the country. GET THESE CROOKS OUT!!!

    • So, Jill, if the government ENSLAVES corporate housing owners and FORCES them to provide $4000 apartments to nursing students and tow truck drivers for $500, where are the people who want $4000 apartments supposed to live?

      Can you think of a reason why San Jose might want them to live in San Jose. Or, are they just useless carbon footprints who should live in refrigerator boxes and send their tax checks in on schedule.

      Do you like “urban decay”? If we listened to you San Jose could be the next Detroit or Pyongyang.

  2. > Reserve Apartments wants to replace its current complex with market-rate housing.

    If we made ALL housing in San Jose “market-rate”, if we replace all the bureaucratic “negotiations” with public safety officers with “market-rate” salary and benefits, it would solve many of San Jose’s problems and make the city much more livable, productive, and HAPPY.

    Why be Havana, Caracas, or Pyongyang when we could be Geneva, Singapore, or Hong Kong.

  3. Ok, let me sum this up for everyone with HISTORICALLY proven facts on Rent Control effects in the US over the past 50 years:

    1) Rent control worsens housing shortages.
    2) Rent control causes deterioration of the housing stock.
    3) Rent control redistributes income in haphazard fashion.
    4) Rent control leads to discrimination.
    5) Rent control shifts the incidence of property taxation.
    6) Rent control reduces labor mobility.
    7) Rent control doesn’t improve housing conditions of the poor.
    8) Rent control doesn’t eliminate price rationing.

    “Insanity: doing the same thing over and over again and expecting different results.”
    – Albert Einstein

    • You want to bring Einstein in here? Okay….

      Albert Einstein wrote that “Men like Henry George are rare unfortunately. One cannot imagine a more beautiful combination of intellectual keenness, artistic form and fervent love of justice. Every line is written as if for our generation. The spreading of these works is a really deserving cause, for our generation especially has many and important things to learn from Henry George.”

      Albert Einstein said this about Henry George’s famous book Progress and Poverty. Einstein was a genius right? He was concurring with everything in George’s book about landowners and the monopolization of land as being the ultimate reason there is poverty.

      Know who are quoting and what they stand for. Einstein was in favor of socialism and in opposition to capitalism, as illustrated by the following quote: “I am convinced there is only one way to eliminate these grave evils, namely through the establishment of a socialist economy, accompanied by an educational system which would be oriented toward social goals”.

      Know who are quoting and what they stand for.

      • Whoa, looks like someone has mastered the art of argument deflection maneuvering? Pretty impressive.

        Anyhow, could you please provide ONE SINGLE EXAMPLE of a town/city/municipality in this country where the RENT CONTROL has actually fulfilled any of its benevolent goals?

        Again, just ONE SINGLE EXAMPLE. I’ll wait….

        • Argument deflection? Just one? Okay.

          Right now there is a nursing student (we want nurses right?). With me so far? Nurses are important to a healthy community, right? She gets into a studio apartment under rent control. She gets into a nursing program at DeAnza and works as an assistant in a convalescent home at a very low wage but it is the job that will give her experience and knowledge in preparation for a career in nursing (which will eventually pay more). Important, right? Still with me? Do you think she can continue to go to school after she is evicted from her rent-controlled apartment (the rent has going up 8% every year and she has struggled with even that amount, but has managed to hold on and still go to school and work. Now, she is going to be evicted due to the owner wanting to redevelop the property. She’s out. Now, I’m trying to help her stay in the nursing program and stay working at the convalescent hospital instead of moving to another city or state because she cannot make it here.

          Sooner or later Vanilla, there will be no one to take your blood pressure (which sounds by the way like it might be pretty high)

          But we all know what your next retort will be right? “If we didn’t have rent control in the first place, she wouldn’t have had this problem…everything in the market would just be like magic for all and make it all work.”

          You have mastered the circular reasoning argument. I can hear it playing in your head right now. You don’t give a damn about anybody but yourself. I hope you experience some serious humbling soon and run into a nice young lady that has a dream of becoming a nurse.

          Maybe we don’t need nurses here…they usually don’t buy Gucci handbags at Santana Row.

          • JILL,

            Your argument is all deflection and cherry-picking. You take one example, then threaten someone else’s health if they don’t go along with you!

            And developing a property is a strawman argument. It’s deflection. This is all about forcing one small slice of the population to pay the entire cost for a problem they didn’t create.

            There are nursing programs all across the country. Why should the property owners in your scam be forced to pay, just because your pal prefers to live above her means? By your specious argument, Buckingham Palace should be made available to her.

            Really, your arguments are all emotion-based. You’ve made no rational, logical argument. The fact is, you don’t give a damn about anyone but you and your pals. Disgusting.

      • JILL,

        Here’s a question for you:

        Why shouldn’t the entire city subsidize rents? Governments subsidize food stamps, another necessity. And medical care. And EBT cards. And welfare. Why should property owners bear the entire burden?

        Can you rationally answer that question?

        This area is expensive for several reasons: the valley is a bowl, and it’s almost completely built up. There are very rich companies here that pay high wages. Jobs are abundant. Due to simple supply and demand, rents are going up. Also, the cities refuse to entertain much in the way of high rise apartments, which would make much more efficient use of the land. And so on.

        None of those things is the fault of property owners. So why should they be singled out, and have the entire burden placed on them? Can you provide a coherent response?

        Tenants can be subsidized by everyone, fairly and equally. But instead, you’re trying to demonize property owners, by cherry-picking one example. But the overwhelming majority of rentals are owned by individual, small time property owners. Why are you so vindictive against them? Why the hatred? And why are YOU so unwilling to pay your fair share?

        You’ve always got your fingers in someone else’s wallet, don’t you? You don’t propose fairness or equality. Instead, you’re trying to demonize and punish those who take all the risks, and provide basic shelter.

        Finally, rent control simply does not work. After the intital euphoria, the higher costs are passed on to all tenants. After a short time, the result is higher rents for everyone. But once again, the property owners will get the blame from people like you.

        New York rent control was instituted during WWII, with the repeated assurances that it would end when the war ended. But 70+ years later it is still 100% in effect — and it’s a travesty, with high paid professionals enjoying very low rents — while new renters pay the going rate.

        I doubt that you can make a coherent argument for forcing one small demographic to bear the entire burden of a problem they did not create. But Leftists are like that: demonize someone for providing a necessity, then punish them for doing so.

        Despicable. If it was your own ox being gored, you would be screaming and sniveling to high heaven. Instead, your schadenfreude is palpable. Truly disgusting. (And no, I’m not a landlord).

        • Jill,
          Why shouldn’t the city subsidise rents? Why not subsidise home owners as well.
          Why not pay kids to go to school?
          Well how about 100 million a year deficit’s in the city budget again
          How about bankruptcy. How about driving the tax base out of town to fund another Detroit.

          We are still waiting for you to point out that perfect rent control utopia Jill.
          Better yet Jill build your own section 8 project.

  4. I live at this property this is referring to. How dare anyone say I should live in a box. Wtf. Seriously!?!?!? I work retail yes. And it is full time. My fiance is in construction. We both work our butts off to barely pay the rent we pay now. Which mind you is decently below the current market rate. For anyone to say they should reduce the already low numbers of affordable properties is just a single minded nut job. I have no kids….but if I did, I can’t imagine how hard this situation would be. The fact of the matter is I live here because I can’t afford to move. And now we are all being tossed out on the street like garbage. My fiance works with a business partialy owned by his family. So what you are saying is because we can’t get a job in tech…that we must move away from our lives we have esstablished? That he must break loyalty to his family and quite on them. That is just rediculouse. I feel sorry for those of you ignorant enough to this that anyone who is low income should just love in boxes. We build your buildings. Fix your plumbing. Are here to help you in the isles of the retail stores you frequent. We save your pets when they are in need. We watch over you in the hospitals when you are sick. Tow your cars when you are stranded. Teach your children (hopefully not the values you hold) Yet we don’t deserve to have a roof over our heads and a stove to cook on even remotely close to these jobs. The state of man kind sickens me.

    • The San Jose City Council wants you to live in a box (if they pass the rent control ordinance in its proposed form) and the San Jose City Council will ensure no additional “affordable housing” is built by chasing away developers IF THEY PASS THE PROPOSED RENT CONTROL ORDINANCE. And if you don’t understand that what they’re doing is just perpetuating the misery, then I’m truly sorry for you.

      • My commentary had nothing to do with rent controle. I dont care what they vote. They could leave it as is. Had you actually read what I posted….you’d see that it was souly about the displacement of the 216 units (aprox. 500 people) at the reserve apartments. Rent controle has nothing to do with what I was referring to. But sure if you want to read the first few words and comment back. That tells me how you go about all the rest of your judgments in life. Quick and un-educated. Also when I was at the council meeting the proposal did put in that as apartments like mine are demolished….other affordable housing will be created. But sure, what do I know. I should just live in a box. But you know what….thats all good. I don’t need you to feel “sorry” for me. I am proud that I work my rear off, even if it’s just to keep my head above water. So save your pitty.

  5. I suggest instead of posting on this blog you get you butts to a council meeting and stand at the podium and say it in public. Otherwise you just feed into SJI and the SJMN.

    • I’m always there. I’ll be there tomorrow speaking against item 6.1 which is a proposal from the City of San Jose to allow Air China to waive their expenses to fly directly from China to San Jose. The city is helping Air China get on its feet. Huh? The city is arguing that we need to offer this communist country and it’s owned airline Air China, special relief from fees in order to help it thrive.

      I sure hope you Trump supporters (against propping up China at taxpayer expense) are there with me.

      http://sanjose.granicus.com/MetaViewer.php?view_id=&event_id=2132&meta_id=567547

      San Jose is as corrupt as can be. I’ll be there, will you help me fight this? Trump and Bernie supporters both agree that we are subsidizing China. And here is your proof. See you at the meeting.

      • Onto to the next topic, aren’t ya? Wow… Well, I’m still waiting on you to provide us with a SINGLE EXAMPLE of a town/city/municipality in this country where the RENT CONTROL has fulfilled any of its benevolent goals.

        • And I’m still waiting for an answer to my question: why should a small minority of the population be forced to pay 100% of all rent control subsidies? Especially since the property owners are not the cause of the tight supply. It’s simply not their fault. Why are they being punished?

          If the greater good is to help those in need, then:

          1. There should be a means test.

          Someone earning $150,000 can afford to pay the going rate. Someone earning minimum wage cannot, unless they double up. It is totally unfair to make a property owner subsidize a well-compensated high tech worker, when the small time landlord might be making less than half what the tenant makes.

          2. If the problem is as serious as claimed, then all taxpayers should provide relief.

          Once again: it is unfair to force a small minority of the population to bear the entire cost of subsidizing EVERYONE who rents — with no regard to how much a particular tenant makes.

          I’m still waiting for some answers, JILL. But I don’t suppose I’ll get them.

          • > … why should a small minority of the population be forced to pay 100% of all rent control subsidies? … it is unfair to force a small minority of the population to bear the entire cost of subsidizing EVERYONE who rents

            > I’m still waiting for some answers, JILL. But I don’t suppose I’ll get them.

            Excellent question, Smokey.

            And, as you have discovered, you are unlikely to get an answer to it.

            It is one of the eternal cosmic questions that progressives with big hearts and even bigger brains are INCAPABLE of answering.

            I think it may be the question that caused the original “deer in the headlights” stare.

            Another question that will get you a close up look into the limpid, vacant eyes of Bambi’s mother is:

            “Why should the minimum wage be only fifteen dollars? Why shouldn’t it be $8,956? Wouldn’t that be more compassionate?”

          • The simple answer to the question “why should a small minority of the population be forced to pay 100% of all rent control subsidies?” is because the city council can force a small minority to pay 100%. Rent control exists because it is the only politically palatable form of public housing the San Jose electorate will tolerate.

            The “small minority” has little political power and the city council and housing department have spent the past 2 years perpetuating the “evil, racist, sexist landlord” stereotype through ridiculous housing reports, ARO reports/recommendations, and “public forums”. There is little legal recourse to this witch hunt, as the CA and US Supreme Court will not take regulatory taking arguments on rent control, mostly out of concern for “result” versus legal considerations.

  6. Rent control is not a friend to anyone. I own a single family home in San Jose, that I rent out. It is been rented at below market rate for the past 8 years. I have good tenants and feel it is a great way to keep them. I have raised the rents this year, to cover costs. I am not getting rich. I too started out as a renter. I work in Real Estate and always advise my clients not to invest in cities where rent control is in effect. It would be wrong on every level to evict a tenant without cause. If the city expands rent control where it becomes an issue, When my tenants lease is up, I will sell my rental house and invest elsewhere. Which means one less rental home in San Jose. There are a lot of landlords who do the right thing. I could see a CAP on increases as long as that CAP gives a variance for capital improvements, city mandated fees (ie garbage bills), I keep my property in good condition and I should not have to worry if there is enough wiggle room in the rent to cover such things as plumbers, appliance repairs and/or replacement etc. If you want to see where rent control has caused a problem look at Oakland. There is no incentive for landlords to improve their properties.

  7. From Kimberly J. Becker’s memo to the Mayor and City Council:

    > FISCAL/POLICY

    > The increase of air service provided by Air China
    is estimated to result in an additional $1.3M in
    various fee revenue to the Airport during the first
    30 months of operations. The wider economic
    impact for the city is estimated to be $65M
    annually.

    Ummmm. A little light on the “wider economic impact” there, Kimberly.

    Did anyone else notice this $65 million sugar plum falling out of heaven and landing in the City’s bank account?

    Sounds to me like we can cancel the quarter cent sales tax increase that is supposedly needed to raise a mere $40 million.

  8. Oakland doesn’t need rent control, they need birth and welfare control. San Jose needs the same. If you put your education first before having kids, maybe you can survive here. Our government is corrupt, and thrive on high tech, big pharm, builders, cheap foreign labor, money forigners pay to be citizens, then bring their ten thousand relatives, and bribes. Stay more educated than all the HB-1 visa and illegals, don’t hire people that clearly don’t pay taxes here, save your money, and buy anything, even if it’s a compromise. Then build from there.