Because yesterday’s post got seriously derailed, I’m going to repost this particular portion because it’s important to the discussion about the rent ordinance and there’s only a few more days left until the City Council votes on the issue next Tuesday. So this may look familiar to those who managed to get past the tweet of Frank Matarrese facing off a handful of sign wielding protesters.
Anyway, I wanted to start discussing the rental housing ordinance in pieces now that it is up for review on the City’s website. I think the most important message is: this is not rent control.
This ordinance is not rent control.
I know people want to call it rent control because it simplifies the discussion, but this ordinance is no where near rent control, at best it is rent stabilization.
There is no rent cap. There is not a limitation on how much a landlord can raise the rent on any unit. There is, however, a trigger to have a quasi-public airing of why you want to raise the rent more than 5%. From the staff report:
Even though there is no cap on rent increases, if a housing provider seeks a rent increase above 5%, the housing provider must initiate a rent mediation process using the RRAC. If the rent increase is 5% or less, a tenant may initiate the RRAC process. If the rent increase is resolved prior to the RRAC hearing, the parties must inform staff of the terms of the resolution of the rent increase. This last step ensures transparency once a City process has been initiated and allows tracking of the agreed upon rent increases.
At the RRAC hearing, a person with an ownership interest in the rental property (or a person from the ownership entity who can legally bind the owner) must attend if the rent increase is above 5%. The property owner, or representative with the authority to agree to a mediated resolution, must attend the RRAC hearing for rent increases of 5% or less. Regardless of the amount of the rent increase being mediated, if a person with ownership interest (or a representative in some cases) does not attend the hearing, the rent increase is void and the housing provider is prohibited from noticing another rent increase for one year.
Of course if a landlord’s unit is exempt from Costa Hawkins (built after 1995, a single family home, or a condo) then the RRAC process is non binding. So essentially one could go through the process, take the recommendation and just say “thanks but no thanks” and do whatever they want with regards to that unit.
For those units that are not exempt from Costa Hawkins this is when it becomes very important about the composition of the RRAC. If the RRAC as a whole continues to decide that 10% is an acceptable percentage to raise annual rents then the tenant will be on the hook to appeal to the binding mediation process, which could also not go in the tenant’s favor. The next step for the tenant would be to go to court for relief, but again it’s hard to predict if that would go in the tenant’s favor as well.
Units built after 1995, a single family home, or a condo would also be able to circumvent the relocation fee if they simply raise rents to a level that is just not affordable for the tenant, forcing the tenant to vacate as opposed to initiating an eviction. The only negative would be the quasi-public RRAC process which may be a deterrent for some landlords. I say “quasi-public” because barely anyone pays much attention to the RRAC.
As you can see this is only one part of the rent ordinance and there are already loopholes that exist. However, given that only 29% of the rental housing units in Alameda would be exempt perhaps this loophole is one that won’t be exercised often.
And here’s new stuff!
This is probably the most important bit that might discourage landlords from evicting without cause, in addition to the relocation assistance, if a landlord evicts a tenant without cause there will be a cap on how much more the new tenant’s rent can be. Specifically 5%. From the staff report:
The housing provider shall not impose on the new tenant an increase in rent more than 5% of the rent in effect for the tenant whose tenancy was terminated and provide documentation to that effect to the Program Administrator
At that point a landlord will need to make the decision if it is worthwhile between the relocation assistance and the cap on the next tenant’s rent if it will be advantageous to go ahead with the no cause eviction. The math may work out better if the tenant is severely under the market rate rent, but if it’s only to get a few extra hundred it may not make sense in the long run. Or course nothing in the ordinance changes the existing right of a landlord to evict “for cause” which would not incur the relocation assistance. So if a landlord truly has a terrible problem tenant the rights that exist now still would exist if the ordinance is passed.