When we discuss the various challenges Bay Area renters have faced in recent years due to the explosion of housing costs, one question that often comes up is: why don't we have rent control?
Local policymakers all across the Bay Area are debating this and other questions as they work to create protections for tenants who face displacement and instability in the current rental housing market. Rent control measures in neighboring communities have seen mixed results with examples of success and failure alike in neighboring cities like Richmond (succeeded) and Alameda (failed).
Many people are understandably confused about rent control: What housing is covered? Why is it only in place in some cities? It is not uncommon to find that people are unfamiliar with some important details about rent control and what a city can actually do to enact local rent stabilization measures like rent control. The goal of this post is to share with readers a few items: (1) the role of rent control as an intervention; (2) the limits placed on local cities by state law; (3) some of the arguments commonly made for and against rent control; and (4) the considerations cities like Emeryville must make.
RENT CONTROL: A STABILITY INTERVENTION
To begin, its very important to understand that rent control is a stability intervention. This is different from other types of interventions related to housing. Examples of other types of interventions include things like rental subsidies, which is one kind of affordability intervention; fair housing laws, which is an accessibility intervention; and code regulations, which can serve as a type of habitability intervention.
In other words, rent control is designed to create stability by placing limits on annual rent adjustments, giving tenants greater predictability of their future housing costs. While rent control can have indirect positive impacts on affordability, accessibility and other important housing metrics, its primary purpose as an intervention is to promote tenant stability by putting a statutory limit on the amount by which a landlord may increase rents annually, with some exceptions.
The most successful local strategies for protecting tenants employ an array of these interventions. Many of them already exist here in Emeryville. Anti-discrimination protections in rental and ownership housing exist through federal and state laws such as the Fair Housing Act. State law also creates due process and habitability standards for all rental properties. The California Department of Consumer Affairs maintains an excellent website that informs the public on many of these rights and protections. As discussed in my most recent blog post, the City of Emeryville took additional steps several months ago to provide tenants with additional protections against harassment and no fault evictions. Together, these laws and resources offer Emeryville tenants a number of protections. If enacted in Emeryville, rent control would be an addition to this compliment of existing protections.
It is important to remember that the landlord-tenant relationship is not a one-way street. Having good, responsible landlords in our city is critical to having a vibrant and diverse community. Our city is enhanced by ensuring that landlords have access to resources and support as well. Approaching landlord relations from a place of partnership is always the best way for tenants to overcome challenges that might occur. Current or prospective landlords can access resources oriented to their own needs, rights and obligations through professional associations such as the East Bay Rental Housing Association and the California Apartment Association.
BREAKING DOWN THE COSTA-HAWKINS ACT AND HOW IT IMPACTS EMERYVILLE
In 1995 the California Legislature adopted the Costa-Hawkins Rental Housing Act. This law created statewide restrictions that limit a city's ability to implement local rent control protections for tenants. The law prevents anyone other than the property owner from setting initial or subsequent rent limits on three broad categories of rental property:
(1) Properties that received a Certificate of Occupancy on or after February 1, 1995. This was a blanket protection against rent control for all "new construction" property. Said more plainly, if the structure was build after February 1995, it can never be subject to rent control under Costa-Hawkins.
The Emeryville Impact: Because the vast majority of Emeryville's housing was constructed after 1995, all the new structures built in the past 22 years and all the ones set to come online in the future are exempt from rent control. Many residents contact Council, justifiably concerned about the cost of new units or the 10-20% increases in rents they are experiencing after living in their rental for as little as a year. The city has no legal authority to moderate or control rent increases due to this provision of state law. In an effort to give residents as many tools as possible, Emeryville does offer voluntary mediation services to landlords and tenants to help resolve rent increase disputes through ECHO Fair Housing.
(2) Properties already exempted from rent control prior to February 1, 1995. This provision prevents cities from imposing rent control on any property that was exempted under a local rent control exemption that existed prior to Costa-Hawkins becoming law.
The Emeryville Impact: Because Emeryville has never had rent control, we have never exempted any local units from rent control and so this provision doesn't apply to our city directly. There may be an indirect effect on Emeryville, however: properties exempted by this provision in neighboring cities like Oakland and Berkeley that had local rent control exemptions before 1995 exacerbates the rent adjustment problem at a regional level. This section "grandfathers" in any unit that had already received a local exemption at the same time this law was passed in 1995, preventing it from being subject to rent control.
(3) Any property with its own separate title. This means all single-family homes and condominiums are also exempt from rent control.
The Emeryville Impact: A unit rented at a place like Watergate or Pacific Park Plaza, even though those buildings were were built before 1995, is also exempted from rent control because they are condominiums. Likewise, any single-family home that is rented out as a single unit in places like the Triangle or Doyle-Hollis neighborhood is exempted from rent control.
The Bottom Line: The reality is that only structures built before 1995 where there are multiple units under one title can be covered by a rent control ordinance in Emeryville. In other words, homes that are rented out as multiple units or small apartment structures with a handful of units in them that were built before 1995 are the only properties that could be rent controlled in Emeryville today. The only major market-rate commercial rental property in the city that could be subject to rent control is Artistry Apartments at 64th and Shellmound Streets. City staff estimates that less than 10% of all residential units in the city are even eligible for rent control (meaning that the structure qualifies). The number of units that would actually be subject to rent control in the end could be even less than this figure because some units will be owner occupied or are not available on the rental market at the choice of the owner.
THE ARGUMENTS FOR AND AGAINST RENT CONTROL
Whether or not to implement a local rent control scheme is not without controversy. Understanding the arguments both for and against rent control is important to the local discussion and identifying solutions. I have provided links to a couple different perspectives that summarize some of the key arguments that advocates for and against rent control make below. I strongly encourage those who interested in the issue to familiarize themselves with the arguments each side raises. After doing a thoughtful review of roughly 20 different perspective pieces, I felt that these four best captured the positions held by advocates on both sides of the debate:
- FOR: Tenants Together offers a comprehensive rent control toolkit that explains the advantages of rent control from the tenant advocate's perspective.
- AGAINST: The National Multifamily Housing Council offers an argument against rent control that is consistent with the position held by many developers and large apartment owners.
- FOR: Pacific Standard, a California-based non-profit research and policy center has also presented an argument in defense of rent control.
- AGAINST: The Foundation for Economic Education has made its own arguments against rent control.
As outlined in the links above, there are many opinions about the efficacy of rent control and its effects on the local housing market, community stability and the quality of rental housing conditions. Evaluating the impacts that rent control has on a community includes examining housing availability, geography, market conditions and other factors that are unique to each community.
Additionally, rent control ordinances can be extremely complex. Rent control generally involves the creation of a rent control board that adopts regulations that set local limits for annual rent increases, exceptions that can allow landlords to get higher-than-allowed adjustments, situations related to financing structural repairs, the adjustment of the base rent after a voluntary tenant vacancy occurs, appeals processes to settle disputes arising from rulings of the board, and many other issues.
WHERE WE ARE TODAY
As mentioned above, the Costa-Hawkins Act prevents about 90% of Emeryville's housing units from rent control eligibility, making any reforms the city might consider today very limited in terms of its reach. Before Emeryville could consider something comprehensive that would benefit the whole city, the state legislature would have to change the state law by eliminating the restrictions that currently exist under Costa-Hawkins.
Several members of the current California Assembly have proposed to do just that. Assembly Bill 1506, authored by Assemblymembers Bloom, Chiu and Bonta, would repeal the Costa-Hawkins Act in its entirety. The bill is expected to be a two-year bill, meaning that it will be heard between now and the end of the current legislative session in fall 2018. The City Council will consider supporting this legislation during Item 10.7 on the April 18th agenda. The city staff report explaining the proposed legislation can be found HERE.
Some of you have asked why the city doesn't just enact rent control anyway - even if it will only benefit the small number of units that can be covered by a rent control ordinance today. While protecting tenants is a priority for the Council, as evidenced by the recent Landlord and Tenant Relations Ordinance the city adopted, implementing rent control correctly does require a significant investment of new resources. Regardless of how many properties would be covered, implementing rent control requires a minimum investment in the form of new staff, time and resources in order to be operable. At this time there is no funding stream available to sustain the ongoing costs associated with managing a rent control program, even at the minimum staffing levels that would be necessary for it to be successful. As always, I and the other members of Council are actively engaged in reviewing opportunities to improve financial efficiencies within the city and identify new revenue opportunities to fund programs and services that are important to the Emeryville community.
I hope you found this brief overview of rent control helpful. The City Council is committed to finding ways to ensure that tenants facing increases to their housing costs can remain part of our community. Advocacy is needed at all levels of state government to bring solutions to the current housing crisis. To be clear, state reforms are needed on many issues, not just rent control. I encourage you to reach out to your state legislator and your City Council to discuss the impact that Costa-Hawkins, the current housing market or other housing issues particular to your situation has on you and your family. Regardless of whether you are a landlord or a tenant, please take advantage of any (or all!) of the resources provided in this post. An informed community is a strong community.
Cheers,
John