San Jose City Council to Vote on Key Changes to Local Rent Laws

San Jose leaders this week will consider key changes to the city’s rent laws, including some that empower landlords and others that favor tenants.

Utility Bills

One of the changes up for discussion at Tuesday’s City Council meeting would prevent landlords of rent-controlled units from passing unmetered utility charges on to tenants. So-called ratio utility billing systems—or RUBS, to use industry parlance—have created instability for tenants by giving property owners a way to circumvent San Jose’s 5 percent cap on yearly rent hikes, according to city officials.

“The use of RUBS results in monthly cost variations that are very difficult for a tenant to predict,” San Jose Housing Department Director Jacky Morales-Ferrand wrote in a memo advising the council to restrict the practice. “Variations can occur to a variety of factors. One such variation would be a change in the size or composition of the tenant household. A water leak or excessive usage by one individual could also contribute to significant oscillations in costs. Utility bills generated by RUBS pass on these fluctuating costs to tenants. These unanticipated costs may lead a tenant to a situation where they are unable to pay rent.”

To avoid unpredictable bills from displacing tenants, city housing officials suggest requiring property owners to install sub-meters at each individual apartment unit and only charging for actual usage.

As of this year, California law requires sub-metering for all new apartments. The proposals being considered in San Jose this week would extend that standard to all units covered by the local rent control ordinance—that is, all multi-family units built before the fall of 1979.

Councilman Sergio Jimenez said the city should reject all RUBS billing.

“[L]andlords who are currently utilizing RUBS or who have lease agreements with tenants that include RUBS should be considered in violation of the law as the city has been consistent with its interpretation of the illegality of RUBS,” he wrote in a memo. “Allowing rent increases for landlords who have chosen to violate city policy and implement this practice places the burden on the tenant.”

Landlords may complain about the cost of installing sub-metering systems, but Jimenez noted that property owners are already guaranteed to a “fair return” on investment under existing policy.

Several landlords in recent years have already had to pay back tens of thousands of dollars to tenants who appealed RUBS charges through the city.

Criminal Activity

Under San Jose’s tenant protection laws, which the council enacted last year, landlords can evict renters for any of a dozen reasons. Those “just causes” include nuisance activity, non-payment and other lease violations.

The council this week will consider clarifying the ordinance to note that landlords can oust tenants convicted of serious or violent felonies.

“Landlords have a legal and moral responsibility to protect their tenants from foreseeable risks of harm,” Mayor Sam Liccardo wrote in a memo to the council. “It is axiomatic that known criminal activity—particularly where those behaviors rise to the level of not merely felonies, but serious and violent felonies—can pose a foreseeable risk of harm to children and families living nearby.”

On the other hand, Liccardo added, tenants have expressed legitimate fears about how those laws could be applied.

“An understandable distrust— particularly among historically marginalized communities—persists of law enforcement and the criminal justice system, exacerbated by accounts of officer-involved shootings from Ferguson to New York, or of wrongfully convicted individuals freed by DNA evidence years after their sentence,” the mayor wrote. “Reasonable concerns also arise that the innocent families of the arrested person will also face displacement, particularly where domestic violence victims and immigrants could be illegally evicted or mistreated.”

For that reason, Liccardo said, juveniles should be excluded from the criminal activity provision, and tenants should have a chance to remain in their homes if they choose to evict the convicted felon.

Immigration Status

Another important update up for review this week stems from a state law that prevents landlords from disclosing—or even threatening to disclose—a tenant’s immigration status to authorities.

Ellis Act

The Ellis Act is a state law that establishes how a landlord can remove their rent-controlled property from the market. It requires property owners to give renters a 120-day notice and to provide relocation assistance, but only applies to apartments built before September of 1979, the same 40,000 or so now subject to the city’s 5 percent-a-year rent cap.

Because rent-controlled units are older, many of them lie in areas slated for redevelopment. City staff suggests requiring landlords who demolish and rebuild rent-controlled apartments to place at least 50 percent of the new units under that 5 percent yearly cap—with exceptions for those who instead put affordability restrictions on at least 15 percent of the new units.

Other jurisdictions in California, including Santa Monica, require all redeveloped rent-restricted units to come back under rent control if it’s built within five years of demolition. But San Jose officials determined that cities requiring 100 percent return to re-control have seen an overall loss in the number of rent-restricted units. Santa Monica, for example, has lost more than 2,000 rent-controlled units in recent years, according to Morales-Ferrand’s memo.

“One reason for this is because apartments are often replaced with for-sale housing, commercial use, and/or mixed use development,” she explained in her memo to the council. “In addition, developers building rental housing sometimes do not bring the apartments into the rental market until the five-year re-control period required under the Ellis Act has lapsed. These factors have led to the net loss of apartments covered by Santa Monica’ s rent control provisions.”

San Jose also suggests extending Ellis Act requirements to all apartments with at least three units, which would bring an additional 1,035 complexes under the ordinance.

Income Discrimination

One proposal that was dropped from Tuesday’s agenda would prevent property owners from rejecting tenants based on their source of income. The measure, which will come up for discussion at a later date, was designed to prevent property owners from turning away prospective tenants just because they rely on publicly funded rent subsidies known as “housing choice” or Section 8 vouchers.

More from the San Jose City Council agenda for April 24, 2018:

  • The council adjourned the meeting in honor of Richard Kavanagh, an elderly handyman who died of cancer on Feb. 27 after getting evicted from the duplex where he lived with his wife, Helen, for 50 years. “Richard’s courage, fortitude and steady hand will be missed by all of us,” Councilman Don Rocha, whose district encompasses the Kavanaghs’ former home, noted in his commemoration.

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 the News Editor for San Jose Inside and Metro Newspaper. Email tips to [email protected] or follow her on Twitter at @jennwadsworth.

6 Comments

  1. The Section 8 restriction is grandstanding. Every rental property owner I’ve ever met loves Sec. 8, because if the tenant is evicted for failure to pay the rent, or for bad behavior, they will lose their certificate—and if that’s canceled, they can’t get it back. And from then on they’ll have to pay the full rent. As a result, Sec. 8 tenants tend to be the least troublesome of all.

    A tenant with a Section 8 certificate only pays 25% of the rent. The gov’t pays the other 75% directly to the owner, and it’s always paid in full, and on time. And the rent schedule is very generous. What could be better for an owner? And since the tenant only pays 25% of the rent, the Sec. 8 certificate is extremely valuable to them.

    So it’s a good thing that particular grandstanding was dropped, most likely because the Council couldn’t find a credible case of an owner refusing to rent to someone on Sec. 8.

    Next, if a property owner produces a utility bill verifying that costs have risen, why doesn’t Sergio Jimenez go after those utility companies, instead of blaming the property owners? District 2 made a serious blunder putting an economic illiterate on the City Council. Jimenez wrote: “We have a housing crisis… an affordability crisis.” &etc. But in pushing rent control, Jimenez ignores the raft of studies and numerous examples proving that rent control results in a smaller housing stock than without rent control. Thus, Jimenez is part of the problem of rising rents. He doesn’t understand what he’s doing.

    Next, did it ever occur to these Councilcritters that no property owner wants to evict anyone? Tenants are the customers. And the owner always loses money on an eviction! It’s not done on a whim; the tenant has either repeatedly violated the rental agreement, or has simply stopped paying rent—the reason for most evictions.

    The City Council ignores the fact that in an Unlawful Detainer action (an eviction), the tenant always has the right to tell the judge their side of the story. It is the Court that decides if an eviction is warranted, it is not the property owner’s decision. So this is just more grandstanding on behalf of drug users and/or deadbeats.

    Or, maybe the Council isn’t ignoring the Court’s role, since the Council is composed of individuals whose only verified accomplishment is their ability to get more votes than the next guy. But they presume to know more than the judge, whose decision is based on facts, rather than votes.

    We still have far too many pot holes in our roads. Why? Because the same Council has misappropriated the tax dollars paid to maintain our infrastructure. And the tail continues to wag the dog with the totally bizarre “road diet” fiasco, where they close half the traffic lanes in an attempt to pander to a tiny handful of bicycle rider, at the expense of everyone else. They stick it to commuters and also the folks living on the one-lane streets, who can’t back out of their driveways now because of the reduced-lane congestion. (Best to not get into THAT insanity, or this will take all day…)

    I’d love to see these Council members try managing rental property for a couple years. That would truly be “walking in another man’s moccasins.” They’d understand that the real reasons for most evictions are deadbeat tenants—and they’d see the other tenants applauding their actions when they file an Unlawful Detainer for non-payment. They might finally understand that it isn’t fair to the tenants who pay as agreed, if deadbeats are allowed to to live next to them rent free.

    The City Council seems to believe that pandering to the deadbeat vote will somehow fix the inadequate supply of rental housing. It won’t. They’re just sucking up to a few who won’t pay as agreed. But that won’t do anything about escalating rents. It’s just showboating. They’re good at that, aren’t they?

    But wake me if those pot holes ever get filled…

  2. > Renters Rights Now?

    What rights does a renter have if there are no houses to rent?

    Does building a house create renters rights?

    If a house burns down, does the owner have to build a new house for the renters?

    Do renters have rights to Sam Licardo’a house?

  3. “Because rent-controlled units are older, many of them lie in areas slated for redevelopment.”

    Finally, after three years, an honest statement.

    The city knows these properties have needed to get demo’ed and replaced with higher denisty properties for at least a decade but fail to have the courage to tell these activists the truth. Instead, they scapegoat property owners and layer their properties with one regulation after another to force down their value, so developers can come in later, buy cheap, cut a deal with the housing dept (when the sky is falling – happens once in a while here in the BA) and build high density. They will be ready for sale just in time for the market to recover.

    This was always a clear shakedown of mom-and-pops to pave the way for corporate builders to redevelop. The City Council should be ashamed of itself for this three-year stunt. I called this day one when Raul Peralez started this whole thing back in 2015, it was Equity Residential et. al. (or who ever they are now) putting the boot to us with the Long East PA Heist.

    Rent Control not only will hurt tenants (explained a million times), it will usher in permanent gentrification as it will force mom-and-pops to sell these old, tired six unit boxes sitting on 12K sqft to corporate developers. The city gets more revenue and red meat (grandma landlady carcasses) to throw to the bused-in, sign-toting crazies and the FoS win because they get the development deals.

    SJI and Ms. Wadsworth – how does it feel to get played this whole time by a bunch of rent-seeking, crony capitalists?

  4. Great, so we limit the options of Landlords, add more rules and red tape, and think this will help with the housing problem how? When it gets to be too difficult to be a landlord my guess is people will stop being landlords and do something else with their property. I suppose that was an easy guess since that’s been happening around here for some time now.

  5. This part about utility billing is a phony dodge and Jimenez knows this and if he doesn’t he better get educated. the part about landlords putting in sub-meters – is illegal to begin with. To meter someone’s utility usage and then charge for it -you must first be a utility.

  6. > Tenant activists are once again demanding stronger protections for renters.

    TRANSLATION: warriors of the renter tribe stage a show of force to intimidate other tribes into turning over their land and their houses. The signs are virtual spears, clubs and axes. A tribal shaman holds a microphone and exhorts the warriors to be fearless in battle, and reminds them that they will all share in the loot.

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