San Jose Landlords Slam Rent Control Recommendations and Housing Department

 In Real Estate

San Jose landlords filled the city council chambers Wednesday night to blast the housing department’s draft recommendations for modifying the city’s current rent control ordinance.

The often heated criticisms were aired during the 12th and final meeting of the Apartment Rent Ordinance Advisory Committee, a 12-member body split between tenant and landlord advocates that has given input to the housing department over the last seven months.

“I certainly don’t feel that my voice has been heard at all,” said Valley View Properties Owner Gustavo Gonzalez, a landlord who sits on the comm

In San Jose, rent control covers 44,300 units that were first rented out before Sept. 7, 1979, the date when the current Apartment Rent Ordinance was adopted.

Landlords were particularly distressed by a proposal to change the annual allowable rent increase from its current 8 percent cap.

In its place, the housing department proposes tying maximum increases to changes in the Bay Area Consumer Price Index, a measure of inflation, which has increased an average of 3.4 percent annually over the last 35 years, according to the department. The proposal would allow landlords to raise their rents by a minimum of 2 percent, even in cases where the CPI increase is less than that

Over 50 people spoke during public comment, the overwhelming majority of which were landlords.

“CPI is a joke,” one commenter said, reflecting the dominant view among attendees that this change would severely harm landlords’ ability to maintain their properties or even be economically viable.

Landlords also blasted the department’s proposal to eliminate current law that allows landlords to pass through the costs of capital improvements to tenants over a 60 month period. The recommended change would consider standard capital expenses as operating costs.

Wayne Chen, a division manager at the housing department, said the rationale for this recommendation was based on a city-funded study that states more than 25 percent of rent-controlled units turnover annually and 70 percent turn over in a four-year period.

This triggers vacancy decontrol, which allows landlords to increase the unit’s rent without restriction. This turnover, according to Chen, allows owners of rent-controlled units to make a reasonable return on their investment.

But several landlords disputed those turnover rates. Gonzalez said, “I haven’t had any turnover forever … the only reason I’ve had turnover is because people haven’t paid or their kids have grown up (and need more space).”

Three people did speak in favor of tighter rent control, including Working Partnerships USA Director of Policy Bob Brownstein and a rent-controlled tenant named Gina, who later told media she wouldn’t provide her last name for fear of being evicted by her landlord in retaliation for speaking at the meeting.

The city council will discuss the housing department’s recommendations on April 19.


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