San Jose City Council Lowers Rent Control Cap to 5 Percent

In a split decision that closed out a marathon meeting, San Jose’s City Council lowered a cap on rent hikes for the first time in four decades.

The hearing, which began Tuesday and ended around 2am Wednesday morning, ended with a 6-5 vote to lower a cap on annual rent hikes from 8 to 5 percent. Council members Raul Peralez, Magdalena Carrasco, Donald Rocha, Pierluigi Oliverio and Ash Kalra opposed the move.

More than 500 people packed the council chambers and a staggering 200 signed up to speak. Landlords implored city leaders to leave the city’s rent control law alone or risk putting them at financial risk. Renters urged otherwise, saying soaring rents are literally pricing them out of their homes.

“This is an emergency,” Andrew Bigelow, a member of Silicon Valley De-Bug, told the council. “We cannot place the weight of a broken system on the impoverished. We cannot place the weight of this city on the poor.”

David Yin, a landlord and engineer, said that as an immigrant who arrived to San Jose in 1996, he had to work harder than the average person. Five years ago he bought an apartment complex, he said, which forced him to become a jack-of-all-trades to keep the place up.

“Keep in mind that all people deserve fair treatment,” he said from the podium.

During the hours of testimony, people shared personal accounts of sudden evictions and families divided by forced displacement. One man said he had to move to the Central Valley—the closest place he could afford rent—and left his son behind to finish high school.

According to the Mercury News, a real estate broker camped outside of City Hall during the meeting trying to talk landlords into selling their properties.

Local rent control applies only to units built before 1979, which makes up about one-third of the city’s apartment stock. State law prevents the city from extending rent control rules to apartments built any later. The council’s decision imposes a 5 percent cap, but it also allows landlords to bank unused increases and pass along building improvement costs up to 8 percent the following year.

The plan includes an anti-retaliation measure to protect tenants from eviction if they ask for improvements or report a problem to code violation. It also creates a rental registry to enforce the ordinance, a pilot mediation program and eliminates an option for landlords to pass off debt service to renters.

The compromise upset tenants and landlords alike. Property owners hoped the city would leave the decades-old rent control ordinance intact, while tenants wanted rent increases tied to inflation similar to several major cities.

“We were not satisfied with the result,” said Sandy Perry, an affordable housing advocate. “There were some incremental improvements, but not anywhere near what’s needed.”

Susan Price, herself a landlord, said she wants the city to not only lower the cap on rent hikes, but to adopt a requirement for “just cause” evictions.

“The city has to be bolder,” she said.

City officials will consider more changes to San Jose’s rent laws in the near future. Because this week’s meeting slogged on to such a later hour, the council deferred until May a proposal on an urgency ordinance that would temporarily freeze rent spikes.

Also up for consideration next month is a policy to curb demolition of rent-controlled apartments and another to pay relocation costs for tenants of units converted to market-rate housing.

Taking a cue from San Francisco, Councilman Manh Nguyen said the city should pass a $1 billion bond to build affordable housing. But his 11th hour memo wasn’t on the agenda, so his colleagues had to table a discussion about the idea.

Nguyen said rent control won’t fix the affordability crisis and the real solution is to build more housing. California Apartment Association (CAA), which makes up the landlord lobby, has repeated that message.

“Last night, the council found what some consider compromise, but not a solution to our housing challenges,” CAA spokesman Joshua Howard said. “If the city is serious about dealing with the housing crisis, they should do something now and do something big as Council member Manh Nguyen has proposed. Nguyen offers a community wide solution to a community wide issue.”

Tenant advocates agree, but they want a range of solutions for a city where more than half of renters pay more than a third of their salary to keep roofs over their heads.

“We all want affordable housing,” Price said. “But we can’t get that right away. In the meantime, we need rent control and better tenant protections.”

In other Bay Area cities, residents are taking rent control measures straight to voters. There's a chance this could happen in San Jose, too. But with the deadline for signature gathering almost here, that may not happen for another year.

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.

8 Comments

  1. What dumbbells.

    If units built before 1979 are controlled, but those built after are not, how is that “equal protection under the law”?

    This stupid rule by itself will limit the money spent for maintenance and upkeep of older property and turn them into instant slums.

    But, maybe that’s the progressives plan.

    The notorious rent control of New York City turned the South Bronx into slums, and then the public housing geniuses gave priority for new available public housing to tenants who had been displaced as a result of fire.

    Well, duh?

    Surprise. When the fire trucks showed up to a fire in the South Bronx, the tenants were waiting on the corner with their luggage packed.

    Prediction.

    This is only going to get more stupid.

    • > If units built before 1979 are controlled, but those built after are not, how is that “equal protection under the law”?

      How DO they get away with this crap?

      Q.) Who buys older properties?

      A.) Older people.

      Real estate is often a “buy and hold” investment for small investors.

      This is really a covert form of age discrimination. Can you say “disparate impact”?

      I smell a lawsuit. Civil rights. Class action. Age discrimination. Elder abuse.

  2. San Francisco’s rent control ordinance also was passed in 1979. And had a disparate impact on mom and pop landlords, who might have owned a three-flat, or two, and whose tenants are paying what was last market rate in 1988.
    Here, in SJ, a lot of the old two story apartment complexes are likely to be torn down, and replaced with the five story Soviet tower blocks that have been springing up all over town for the past decade.
    And guess what? No rent control for those puppies.

  3. Some may recall when the ugly, unidentifiable building was plopped down in a historic neighborhood torn up to make room for the new CH there was additional retail/office space that was to be rented out. It took years to find tenants to occupy the spaces – now USPTO and Flames. This was because the city in its enlightened landlord capacity insisted on certain work conditions set by unions. this strong arming caught the city off guard and extended the time the space sat empty – all on the taxpayers dime. The city is the last bunch that should be involved in landlord/rental issues. – especially other’s peoples and their money.

    • > This was because the city in its enlightened landlord capacity insisted on certain work conditions set by unions. this strong arming caught the city off guard and extended the time the space sat empty – all on the taxpayers dime.

      Yet another instance of the city wasting taxpayer money, and a compelling argument against a sales tax increase.

      They will just stuff any more money in the pockets of their special interest supporters, and immediately start working in the next tax increase.

      I would bet that if all the money spent on Social Justice Warrior vanity projects were identified and cut out of the budget, there would be no need for a tax increase AND we would have money to fix the streets.

      How much money is spent on bureaucrats writing memos on bag bans or ways the city can fight global warming?

      CHOP! You’re fired!

  4. San Jose has had rent control (with vacancy decontrol) for decades. It helps lower to miderate income tenants remain. In most cities, landlord groups make sure only anti-rent control politicians are elected.

  5. Rent control on then-existing apartnents was enacted in Jose 40 years ago. It did not lead to slums. It just helped hold down rents for some tenants. But some landlords looking for more money will spin whatever stories they can peddle.