Alameda places 2.8 percent cap on annual rent increases

Alameda renters scored a major legislative victory late Tuesday night when the Alameda City Council approved an ordinance that places a cap on annual rent increase. The change amounts to a reduction in annual increases from up to five percent under a previous ordinance to 2.8 percent for many Alameda renters, starting on Sept. 1.

The council’s decision ties annual rent increases to 70 percent of the Consumer Price Index (CPI) for the San Francisco, Oakland, Hayward region. The urban CPI for April pegged the figure at four percent, meaning Alameda landlords are allowed to raise rents by 2.8 percent for the next year.

The ordinance also allows landlords who forego some annual rent increases  to “bank” them for future years. But the council, after more than a hour of debate, added restrictions to the banking of rent increases. Under the ordinance, landlords may set aside up to 8 percent worth of rent increases, but can only use three percent during any given year, and not in consecutive years.

The increase comes on top of the annual adjustment now set at 2.8 percent. In addition, landlords can only use banked rent increases three times during the life of tenancy. The banked increases do not carry over to the next tenant, or if the property is sold.

It is unclear how many landlords will make use of the ability to bank rent increases — essentially lowering rents — when they may now view their ability to raise annual rents as being diminished by almost one-half.

The vote represents a partial validation of an ill-fated ballot measure backed by the Alameda Renters Coalition in 2016 that sought to cap rent increases to 65 percent of the Consumer Price Index.

Members of the group said they were pleased by the council’s decision after more than three years of continued advocacy on behalf of island renters. “The goal has always been just to have a consistent percentage without displacing renters,” said Catherine Pauling, a member of the Alameda Renters Coalition Steering Committee. “We want landlords to have a fair return on their investment and for renters to have a stable home.”

“Tenants have put up with five percent increases for four years and that been a heavy burden,” said William Rowen, an Alameda renter.

Alameda’s previously rent stabilization ordinance set a threshold of five percent on annual rent increases. The number, though, was not a rent cap. Landlords seeking to raise rents over the five percent threshold are required to petition the city’s Rent Review Advisory Committee (RRAC). However, the board’s decisions are non-binding.

Tuesday’s ordinance requires that a hearing officer facilitate rent disputes between landlords and tenants. The move essentially signals the end of the RRAC. A separate ordinance will be proposed at the Sept. 1 meeting to officially eliminate the RRAC.

A rent registry will also be created under the ordinance in order for the city to track rent increases, in addition, to allowing for a record to mark when landlords bank rent increases and when they trigger its use in subsequent years.

The annual rent increases, called an “Annual General Adjustment” in the ordinance could have been slightly lower. City staff recommended 100 percent of CPI, while renters groups aimed for 65 percent. But Mayor Marilyn Ezzy Aschraft, worried about landlords maintaining a fair rate of return on their properties, urged for at least 75 percent of CPI.

In conversations with landlords, Ashcraft said they feel under attack. “I just want us not to judge the landlords by the most egregious among them.” Councilmember John Knox White joined Ashcraft by urging for a slightly greater percentage of CPI before reaching a compromise of 70 percent.

Knox White also led the way on the issue of banking, arguing the set up would give landlords the incentive in the near-term for not to raising rents to the maximum allowable percentage every year.

“If we have a cap, there shouldn’t be banking,” said Councilmember Malia Vella, warning it will have the unintended consequence of producing effective evictions in the years when landlords use their stored-up increases. She later agreed to the menu of restriction on banking.

It was Vella who put the housing crisis at hand Tuesday night in context of her millennial generation and the current economic model that is preventing them from succeeded as a whole. Vella said, through excessive student loan debt and the inability of younger generations to afford home ownership, the system promotes “oppression and keeping people down.”

“I just want to say, ‘I’m sorry,'” Vella told a large group of young housing advocates attending Tuesday night’s meeting. “If you are a millennial, we are the first generation to do worse than those who proceeded us. And the next generation is going to be worse.”

As with other rent-related discussions at City Hall in recent months, Councilmember Tony Daysog was the lone opposition to Tuesday night’s proposals. After presenting three sets a charts that laid out his claim for maintaining the city’s status quo, Daysog said, “The hard data confirms Ordinance 3148 is working,” describing the previous rent stabilization laws by its ordinance number. “The data does not support wholesale changes.”