San Jose Caps Apartment Rent Hikes at 5 Percent

     SAN JOSE, Calif. (CN) – After hours of public testimony, the San Jose City Council hammered out a compromise to an apartment rent control ordinance to curtail a meteoric rise in rent in one of the most expensive markets in the nation.
     “In District 5, toss a rock anywhere and you will hit a house where there are two or three families living in one house,” Councilmember Magdalena Carrasco said. “There is a housing crisis in our city.”
     The council narrowly passed the ordinance, which limits annual rent increases to 5 percent. It allows landlords to bank rent increases they don’t use in a given year, but even then they can only raise rents by 8 percent at a time.
     As of February 2016, average apartment rent within 10 miles of San Jose is $2,783. On average, rents went up about 8 percent from 2013 to 2014, according to the San Jose Housing Department.
     As the discussion over income inequality in the United States dominates talking points on the presidential campaign trail, ample evidence of class and generational strife was on display during the marathon meeting which stretched to 2 a.m.
     “This is a moral issue,” one man said during public comment, one of many urging the council to pass aggressive rent control to protect the working poor.
     San Jose Housing Director Jacky Morales-Ferrand and her staff recommended the council tie rent increases to inflation, limiting landlord hikes to how much the Consumer Price Index increases each year.
     Under this model, if the index — which measures the change in price of consumer goods and services — rises one year by 3 percent, then the maximum that landlords could raise rents would be 3 percent.
     Last year, the CPI inched up 2.6 percent. The council approved a maximum rate of twice that amount.
     Led by Councilmembers Rose Herrera and Johnny Khamis, a faction of the 11-person council felt the staff-proposed rent control was an inadequate tool to address what everybody agreed is a housing crisis in San Jose.
     “Instead of helping you stay in San Jose, this could be worse for you and your family,” Khamis said, addressing the audience.
     The council noted that because state law does not allow cities to pass rent control on buildings constructed after 1979, the ordinance would likely only have an affect on more “mom-and-pop” landlords rather than the high-rise corporate real estate developers.
     “Rent control is not the salvation or the poison,” Mayor Sam Liccardo said. “In either case, it’s not terribly impactful.”
     But Khamis said a draconian imposition of rent control could produce the effect of driving mom-and-pop landlords out of business, forcing them to sell their land to unscrupulous developers who care more about turning profit than providing the community with adequate affordable housing.
     “This ordinance would be a gift to big land developers,” he said.
     Khamis and Herrera tried to propose of a compromise of a 6 percent cap.
     Morales-Ferrand said the cap was inadequate.
     “Market rents are at an all-time high,” Morales-Farrend said. “For tenants choices are limited and they are expensive.”
     Local wages on average have declined over the past five years at a time when housing prices have jumped, meaning there is a significant discrepancy.
     “What it means for our families of moderate and low income is that they are falling farther and farther behind,” Morales-Farrend said.
     Other members of the council also balked at the proposal, which they said failed to do enough to protect people struggling to get by and stay in their homes.
     “When I look at housing, I see it as a human right,” Councilman Raul Peralez said. “And San Joe is too unaffordable to live.”
     Peralez led a late charge to cap rent hikes at 4 percent per year, but could not muster the necessary votes for passage.
     Eventually the council barely garnered the six votes necessary to pass a motion limiting increases to 5 percent, a number Morales-Farrend and her team indicated was acceptable if not ideal.
     The council continued to work into the early morning hammering out other provisions, include retaliation protection meant to protect tenants from unjust evictions particularly after they make complaints about potential code violations.
     Councilmembers also directed staff to create a pilot program for mediation between landlords and tenants while changing a capital improvement program intended to incentivize landlords to maintain and upgrade their facilities.
     More than 100 people spoke at the meeting, and more than 500 initially signed up to talk, although many filtered out as the meeting passed from Tuesday into Wednesday. The speakers for and against the rent control ordinance were roughly even.
     Several of the speakers that showed up to the marathon meeting attested to difficulties making rent in San Jose while maintaining enough money to cover other expenses.
     “Families are being evicted not only from their homes, but from the city as well,” one young boy said during public comment.
     Another woman, a student at San Jose State University, said “being a student today is expensive enough.”
     But the property owners and landlords who showed up said that times were tough for them as well, and they needed latitude to be able to make money and keep up their facility.
     “We are working-class people,” one landlord said. “If this passes I am not going to be able to maintain my property.”
     One rental property owner accused the city of trying to “approve modifications on the backs of mom-and-pop businesses.”
     Property owners at the meeting almost universally advocated for the creation of more housing — especially affordable housing — as the appropriate solution to escalating prices.
     Both councilmembers and staff acknowledged the creation of affordable housing is imperative to help alleviate the housing crisis, but Morales-Ferrand said the creation of new housing is a protracted and difficult process and more immediate remedies were necessary.
     “The market can not address all housing needs,” she said.

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