California Apartment Association

By Mike Nemeth

The San Jose City Council on Tuesday is expected to vote on proposed changes to its rent control ordinance that could bring economic instability to renters and property owners while failing to address the underlying causes of rising market rents.

Possibilities include lowering the current 8 percent annual cap on rent increases, a move favored by Mayor Sam Liccardo. On the other hand, the city’s housing department recommends tying allowable rent increases to inflation, using the consumer price index.

The California Apartment Association opposes both options and encourages its members to speak out at next week’s council meeting, scheduled for 1:30 p.m. April 19 in council chambers, 200 E. Santa Clara St.

In San Jose, rent control is part of the city’s Apartment Rent Ordinance, and Tuesday’s meeting will culminate many months of debate over how to change it.

Raising especially serious concerns for CAA is the housing department’s recommendation that the city tie rent control to inflation, a fluctuating economic indicator. The current 8 percent cap, by contrast, is steady, so both landlords and tenants know what to expect.

San Jose Residents for Real Housing Solutions, a coalition that includes CAA, made this point in a memo late last month opposing recommendations from the housing department.

“One of the guiding principles of this ordinance has been reliability, predictability, and stability,” the document says. “A maximum allowable increase tied to a fixed rate achieves those principles and serves to provide owners and residents each year with the ability to forecast their income and expenses, and provides residents with a sense of stability.”

The memo notes that even though property owners can increase rent by 8 percent each year, the increase is by no means autmatic. A city report shows reflects more modest adjustments by landlords, with average rent growth in ARO units at 5 percent annually.

The coalition’s memo also points out that the city’s ARO study and staff analysis have not contemplated the unintended economic consequences of stricter rent control. The policy can cause rents for non-rent-controlled units to rise more rapidly, creating hardships for low-income families in unregulated housing, an assertion expanded upon in this study by Beacon Economics. The ordinance also fails to address the region’s housing shortage, which is the root cause of rising prices.

“While we understand the very real housing shortage our region is experiencing, this ordinance will not add one additional unit,” the memo says

Finally, the memo suggests the city pursue education-based efforts for renters: “The city should, in partnership with rental owners and advocates, develop a multi-lingual, multi-media program to provide information to renters on local laws, their rights, and available resources to help residents resolve their housing issues, available funding sources for housing assistance, and prevent and defend evictions.”