Amid soaring housing costs and a tight rental market, tenant advocates are urging the San Jose City Council on Tuesday to limit increases for rent-controlled apartments to inflation levels.
Currently, landlords can raise rents in the 44,359 apartments subject to the city’s rent-control ordinance by no more than 5 percent a year. Tuesday’s proposal would limit increases to the area’s consumer price index, a variable rate determined by the federal government and considered an inflation gauge.
According to the city, the Bay Area consumer price index has risen annually by a range of 2.1 percent to 2.8 percent in the last five years, and from 1.07 percent to 4.19 percent from June 2001 through June 2011. It rose 6.59 percent from June 2000 to June 2001, but the proposed change would cap annual rent hikes at 8 percent per year regardless of the CPI.
“Renters are being taken advantage of in Silicon Valley and it’s not fair,” said Rose Wallis, 56, who lives in a low-income unit not subject to rent control and fought back against a $300 rent increase. “People are being displaced. I believe this will make a difference. We need to be able to put food on our table, put gas in our cars and buy clothes for our kids.”
San Jose’s rent control law, adopted in 1979, applies to units built before that year. Those apartments make up 49 percent of the rental housing stock in San Jose and are home to 140,000 people.
Last year, amid outcry from renters over exploding housing costs, the San Jose council agreed to lower allowable rent hikes in those units from 8 percent to 5 percent and eliminate a provision allowing landlords to “bank” unused increases year to year.
Landlords say rent control already makes it burdensome to do business in San Jose while investing in their properties.
“CPI is not enough to cover costs and improvements, meaning maintenance and improvements could be diminished, which doesn’t improve the living situations for renters,” said James Townsend, a longtime housing provider of rent-controlled apartments. “If this passes, we will certainly entertain getting out of the business after providing good, clean, well-maintained units since 1985.”
Eleven other California cities use the consumer price index to limit rent increases, including Oakland, Los Angeles and San Francisco.
Under Tuesday’s proposal, San Jose would allow landlords to pass some maintenance costs on to renters for five years, including painting, plumbing and electrical work without those costs counting toward the inflation-pegged increase limit. And it would once again allow them to “bank” unused rent hikes each year to apply them in the future — but by no more than 5 percent at once.
Housing advocates say the changes will provide a lifeline to renters who are being driven out of Silicon Valley amid skyrocketing housing costs. A study by Apartment List found nearly 1 in 4 renters in San Jose and surrounding cities spend more than half of their income on rent. On average, a one-bedroom in San Jose goes for $2,050 and a two-bedroom for $2,570.
But the proposal faces an uphill battle on Tuesday, with the mayor and council almost evenly divided. Advocates who failed to persuade the council to adopt a similar proposal two years ago are hoping they have enough votes to pass it this time.
The decision is expected to draw hundreds of passionate renters and landlords, and it might ultimately come down to Councilman Tam Nguyen as the swing vote. He said he’s undecided but leaning against further rent control changes.
“I’m still studying it,” said Nguyen. “But I tend to think we did a lot for the renters in the past year, including the 5 percent cap. I think we need a little more time to let that work out before we change it.”
Mayor Sam Liccardo said that tying rent increases to inflation creates too much unpredictability, and he also prefers a fixed rate.
“It’s a whole lot easier if everyone knows what the number is each year,” he said. “I like the idea of providing renters and property owners with some degree of certainty.”
On Thursday, more than 30 renters and housing advocates marched to Liccardo’s office at City Hall to demand a meeting with the mayor, claiming he hasn’t responded to their requests but has met with landlords and developers.
“We should let the mayor know we’re not pleased with his attitude,” said Salvador “Chava” Bustamante, executive director of Latinos United for a New America. “He is taking sides on the issue. He has an obligation to represent everyone and he’s not doing his job.”
Liccardo spokesman Ahmad Chapman said the mayor has been in Washington, D.C., on city business but that he’s “passed along the request to meet with the mayor to his scheduler to see what may be possible once he returns to town.”
Another key part of Tuesday’s debate will be whether San Jose should put duplexes under rent control — an idea introduced by Councilman Donald Rocha — which would add 11,000 more units to the program.
But administering the city’s rent control law — even without duplexes — comes at a cost: San Jose would need to create a “rent registry” to track rents, and housing director Jacky Morales-Ferrand is asking to add five new positions to oversee the program.
The City Council meets 1:30 p.m. Tuesday inside the council chamber at City Hall, 200 East Santa Clara St., San Jose.