Renters Weigh in on Recent City Ordinances

Renters Weigh in on Recent City Ordinances

Part one
To: Mayor Trish Spencer, Vice-Mayor Frank Matarrese, Council Members Tony Daysog, Marilyn Ezzy Ashcraft and Jim Oddie.

Cc: Interim City Manager Liz Warmerdam, City Attorney Janet Kern, City Clerk Lara Weisiger. Community Development Director Debbie Potter and members of the Alameda Renters Coalition Steering Committee.

Subject: Item 6-G on the Feb. 16 City Council agenda: Provide Direction to Staff Regarding Certain Elements of a Proposed Rent Stabilization and Tenant Protection Ordinance.

The Alameda Renters’ Coalition (ARC) respectfully provides the following for your consideration regarding rent increases and evictions in Alameda. We believe there are important principles that must be emphasized and kept in mind during your deliberations. They are that the ordinance regarding rents and evictions must, in the first instance, serve the dual purposes of keeping rents stable and keeping residents in their homes. Recall that it was renters, the majority of Alameda residents, who brought the issues of excessive rent increases and unfair evictions to the City Council in 2014.

Why do we say this? It’s because too much discussion has focused more on landlords’ “right to a fair return” rather than on rent stabilization and tenant protection. So much so that it seems tenant concerns have been marginalized throughout the proposals. This is not as it should be. The rent crisis was not created by the tenants but by excessive rent increases and unjust evictions by too many Alameda landlords. Again, we ask you to keep this in mind.

Cap on Maximum Allowable Increases: Without a cap on rent increases, rents quickly become unaffordable and rent stabilization is not achieved. We have consistently called for a rent cap at 65 percent of the Bay Area CPI, in line with numerous other California cities. Despite this, staff has never provided data indicating why it is not possible for landlords to make a fair return with rent increases capped at 65 percent of the CPI nor even addressed it as a reasonable option for Alameda.  

Neither staff nor City Council provide a rationale for uncapped rent increases nor provide data regarding the cumulative effects of uncapped rent increases. Uncapped rent increases do not stabilize rents and ultimately lead to displacement. 

Similarly, the proposed 5 percent rent increase threshold to trigger mandatory review by the Rent Review Advisory Committee (RRAC) is not related to any economic metric, such as the CPI. And again, no analysis of the cumulative effect of 5 percent rent increases is provided. Cumulative 5 percent annual rent increases show that after three rent increases, a $2,000 apartment will cost $2,315 (a $315 monthly increase) and after five rent increases, the rent will be $2,552 (a $552 monthly increase). These are not affordable rents and increases like this do not achieve rent stabilization. 

On the other hand, rent increases at 65 percent of CPI show that a $2,000 a month rent amount increases to $2,098 (a $98 monthly increase) after three increases, and to $2,165 (a $165 monthly increase) after five rent increases. Rent increases at 65 percent of the CPI stabilizes rents and protects tenants from economic displacement.

Meanwhile average income growth has been 2 percent per year, meaning that Alameda families will fall farther behind each year without a cap.  To truly stabilize rents, increases must be limited to 65 percent of the Bay Area Consumer Price Index, which is currently 2.4 percent, making 1.6 percent the allowable increase. 

Capital Improvement Plan (CIP): Landlords must not be able to evict tenants for substantial rehabilitation. Rather, tenants may be temporarily relocated if necessary for substantial rehabilitation. Landlords may relocate tenants within the same building or perform the rehabilitation with tenants in place.  In all cases, all moving costs and additional living expenses related to the relocation are to be paid by the landlord. Temporarily displaced tenants have a right to return to the building and their unit.

The CIP must be approved by the City of Alameda prior to the landlord taking any action to relocate tenants. The CIP must include approved building plans and building permits, and any other permits and approvals required by law. 

No-cause Eviction Protections: An ordinance that allows no-cause evictions does not provide tenant protection.  The various proposals for payment of relocation benefits, limitations on subsequent rent increases for new tenants, and limiting the number of no-cause evictions do not provide adequate tenant protections or housing security for current tenants. 

For-cause evictions and certain no-fault evictions allowed under state law remain available to landlords.

Cap on the Number of No-Cause Evictions: Because we oppose all no-cause evictions, we cannot envision a circumstance where multiple no-cause evictions are acceptable. 

Relocation Assistance: All rental property must be treated identically without special preference. Relocation assistance is to be provided to each tenant in a lump-sum amount to be determined by the Rent Board or the RRAC and based on a replacement unit of similar quality and type at the current market rent. The relocation assistance payment, plus moving expenses, is to be provided to the tenant(s) at the time of serving the notice to quit.

Relocation assistance based on the tenant’s current rent up to four months as proposed is insufficient and does not account for dramatically higher rents that vacating tenants will encounter.  Also, reducing the relocation assistance because a tenant remains in the unit beyond 60 days is unreasonable. It is not reasonable to expect tenants to both continue paying rent and save money for a new unit elsewhere. This is not a tenant protection.

Relocation Benefit Exemption for “Mom and Pop” Property Owners: The staff report provides a definition of a so-called “mom-and-pop” property as one comprised of 2-4 units. Alameda has 4,648 such rental units totaling nearly 28 percent of Alameda’s rental housing.  An exemption for these landlords will create a large separate group of tenants deprived of benefits available to other tenants. This outcome would have the opposite effect of a tenant protection.

No data is provided to substantiate the claim that mom-and-pops are not able to afford payment of tenant protection benefits. In fact, the claim is contradicted by statements from experts in the real estate industry regarding the current financial conditions of small and mom-and-pop rental property owners.

For example, in October 2015, Lawrence Yun, Sr. Vice-President of Research with the National Association of Realtors, wrote:

In August (2015) rents spiked 3.6 per cent over the same time a year earlier, the fastest pace since 2008. Naturally, people collecting rents are thrilled with the gains they are seeing. Both large apartment investors and mom-and-pop landlords are enjoying the best conditions they’ve seen in years. 

Zillow’s Chief Economist, Dr. Stan Humphries, discussing the Bay Area in an article titled, “Best Cities for Small Landlords,” wrote: “The greatest returns are actually in markets like San Jose and San Francisco where there are short-term monthly losses, but the long-term earned equity makes them the best markets to invest in.”  

Thank you for your consideration. 
Catherine Pauling
Duane Moles
Bunny Duncan
April Squires
Jason Buckley    
Monty Heying
John Klein
Helen Gilliland
Jennifer Orsolini
Steering Committee
The Alameda Renters’ Coalition

Part two will appear in next week’s edition.