City Council Rejects Proposal to Link Rent Control Cap to Inflation

San Jose city leaders once again rejected a proposal to link rent hikes to inflation, which advocates hoped would offer some relief to cash-strapped tenants. The 6-5 City Council vote on Tuesday keeps the 5 percent cost ceiling on all rent-controlled apartments, which comprises about a third of San Jose’s rental stock.

The council also voted to allow tenants to add more people to the lease without risking eviction. From now on, the limit comes to two adults per bedroom and no limit on the number of children. But city lawmakers killed an idea from Councilman Don Rocha to study the possibility of bringing 11,000 duplexes under rent control.

On the losing end of the vote were council members Rocha, Sergio Jimenez, Sylvia Arenas, Raul Peralez and Vice Mayor Magdalena Carrasco. The debate split the council along the business-labor divide and pit market fundamentalists against those arguing for protections against the exacting toll of “whatever the market could bear.”

Landlords organized under the aegis of the Bay Area Housing Network taped up fliers calling renter-friendly council members—namely Jimenez, Arenas and Rocha—“communists” and comparing them to North Korean dictator Kim Jong-un.

“Today they control your property, tomorrow they cut off your head!!!” read one of the leaflets, signed “Dr. Silicon Valley.” Another labeled the same three councilors “North Korea Undercovers,” and called to “Defend San Jose Against Evil Communists!!!”

Mayor Sam Liccardo, who voted to maintain the status quo of 5 percent, said he fears that imposing more regulations will force landlords to quit the rental business or result in properties falling into slum-like disrepair. He also described the rent control ordinance as “a very limited tool,” because it only applies to apartments built before 1979—although the mayor opposed Rocha’s plan to expand it to older duplexes.

Other opponents of lowering the rent control cap argued that the city should focus on building more housing instead of imposing price controls. “Building low-income housing is the only sure way of providing low-income housing,” Councilman Johnny Khamis said, eliciting applause.

Councilman Tam Nguyen, who supported stronger tenant protections in the past, voted to keep the 5 percent cap while slamming the city’s housing staff for supposedly diverting its attention from building more units. During deliberations, he summarized his position by suggesting that he came to his decision out of spite.

“In conclusion,” Nguyen said, “I will stay at 5 percent for the wrong reason: because nobody listened to me.”

Councilman Peralez clapped back by reminding Nguyen that new housing takes years to build and that with thousands of homeless people on the streets, waiting a decade for new units can’t be the only solution. Peralez also called out Nguyen for railing against city staff when he recently rejected an affordable housing project.

“Certainly, you should live up to your own advice,” Peralez said, “and should be supporting … these affordable housing units.”

Tenants, for their part, cautioned that pricing out the poor would push more people onto the streets and rob lower-income residents of the chance to gain financial stability. They spoke about the intersection of race, housing and how living up to San Jose’s reputation as a “sanctuary city” for immigrants meant supporting price stabilization for low-income residents. Homeowner Vera Sloan, an activist for STAND and Standing Up for Racial Justice, said supporting price controls also helps victims of violence.

“I was 8 years old when my mother was groped by our apartment complex manager and had to explain to me that we couldn’t move away from him because there were so few other places in our area that she—as a single, working mother—could afford,” Sloan told the council. “A few weeks ago, I stayed several nights in a local homeless shelter helping care for a medically fragile infant born to an un-housed woman who was the victim of gendered violence, who had tried unsuccessfully, throughout her pregnancy, to find housing she could afford. Two newborn babies like hers died last year living on the streets of Santa Clara County.”

Since 2016, tenant advocates have successfully lobbied the city to ban no-cause evictions and require landlords to pay relocation benefits. But they wanted to revisit a proposal to lower the rent control cap by tying it to the consumer price index, which has topped out at less than 3 percent in the past five years.

Alex Carballo, a North Valley renter, noted that inflation makes more sense as a benchmark, given that housing costs have skyrocketed while wages stagnate. A recent study by labor think tank Working Partnerships USA found that rent increases have risen four times faster than wages in Silicon Valley.

“Landlords have been benefitting by pillaging the pocketbooks of the working class for a long time,” Carballo told the council.

Jacky Morales-Ferrand, who heads the city’s Housing Department, listed several other major cities that tie inflation to rent control, noting that it did not “drive out small business” in those jurisdictions. Los Angeles aligns its rent hike cap to inflation, with a 3 percent floor and 8 percent ceiling. San Francisco limits it to 60 percent of inflation with a 7 percent max; Santa Monica caps it at 75 percent, and Berkeley at 65 percent.

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.

13 Comments

  1. Rent control and stabilization are like shooting a lame horse rather than examining the horse to find out what is really going on and whether/how it can be healed. Where is the root-cause analysis?

    People on both sides taking advantage of the perverse opportunities of a distorted market is a symptom, a consequence, and not a cause! Sure, you can make a bitter medicine for a symptom, but what of the root-cause disease or bad habit?

    Both sides have their points, and neither is dead wrong, but without factual data and economic science, without proper process and root-cause definition, this whole thing is ignorance and manipulation at its worst.

    Rent control and stabilization are punitive and ever-decaying actions (distortion gets worse not better with time) that do not change market realities. What is certain is that stabilization will lower rents for higher-wage workers that inevitably replace the lower-wage earners.

    Mike, New Almaden

    • Greed is greed. We wouldnt be here if corporate property management groups didn’t gouge renters with unreasonable rent increases with no clear need to other than greed. We are talking about people’s homes mind you. This isn’t trading pork bellies. And no we’re not gonna pave over ever bit of land for more over priced homes, so get off that fantasy.

      Lastly your arguement tries to play like you are being objective but its really the same old real estate and property management industry group garbage to rationalize taking advantage of the working class.

      Heard it all before. National Association of Realtor super PAC playbook.

      • Except all the empirical evidence supports Mr C.’s argument. Rent control does not help the poor in general, and in many cases hurts the poor currently in rent controlled units. See co-op and other conversion processes.

  2. Why have a baby when you can’t afford basic human needs? If someone is so irresponsible why should society carry her? Stop whining!

    • So basically you are saying we should let the babies die? You strike me as a cruel and heartless Scrooge. No birth control is 100%. Babies happen. And now our government wants to deny birth control to women who can’t afford it. If folks were paid a living wage, maybe we wouldn’t have this problem.

  3. A couple of points here,

    Rocha, James menez, and Arenas act as if they were communists as they would revoke all properties if they could. There are many in the city council that feel property rights are a joke and that given their moral authority can make far better decisions than individuals on how best to use private property. This is a basic tenant of communism.

    Regarding the women’s mother who was groped. Actually, one of the consequence of rent control, explicitly accepted by these leftist activists, is that it favors those in a unit over those not in one. Rent control with CPI would make it more expensive to move than less, so rent control only favors sexual predators, not deter them.

  4. Dear Bleeding Hart Jennifer,
    Again you fail to learn the concept of supply and demand. Please explain what you think affordable house should cost the tenant and how much a landlord should have to spend to build such a dwelling. If the cost is higher than the landlord can possibly recover from renting it out who gets to pay the difference? How does this place not fall into disrepair and become the slum socialism seem to achieve everywhere else it’s controlling hands molests the economy.?

  5. many, many people in San Jose may rent out an extra room to help out someone who needs housing. The city with its limited # of brain cells tacked an addendum onto a tax increase – Measure G – a $150 biz license fee for people who rent out a room to a person in need.
    How does this compute in the fairy land, make believe circus barn at 5th and Santa Clara Streets?
    These duplicitous rats cry about the homeless and the cost of housing – and what do they do? they bump up the cost of low income persons room rental.
    Jennifer – could you please go down to the aforementioned circus barn and ask some of the council people why they need to raise the rent on the poor slob who just wants to rent a room? Do they need the extra $ for poor management of city business? this is a dangerous precedent.
    also – isn’t taxing someone for being in their own home unconstitutional?

  6. Rent control is a simple-minded short-term solution to the SYMPTOM of high rents.

    The smarter course of action would be to work on trying to solve the PROBLEM, which is that California as a state has a housing shortage of 25% (meaning that across the state, we need 25% more housing units to bring prices down to “only” 80% greater than the rest of the country – currently prices are ~150% greater than the rest of the country, and as we keep adding more jobs than housing units, prices and rents keep going up.)

    The smart (and long term) way to fix this problem is to push cities like San Jose to ALLOW more housing units to be built.

  7. instead of adding more houses – how about limiting the influx of more people ~ unless of course we have an abundance of natural resources (water, clean air, etc) and swell public services – good, unclogged litter free roads, schools, efficient gov’t, etc – – – then we can think about building more housing for the hordes – -

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