How well is the Rent Stabilization Ordinance passed by Council last February working?
If you want opinions, we refer you to the videos of the last two Council meetings, where speakers on and off the dais weighed in on that subject.
But if you allow us to pose the question more precisely, the Merry-Go-Round can give you data, put together at our request by Community Development Director Debbie Potter and Housing Authority Rent & Community Programs Director Claudia Young, that suggests a fact-based answer.
And that’s what we intend to do today.
But, before we do, we want to extend our sympathies to the members of the Alameda Renters Coalition for what happened to them at last Tuesday’s Council meeting: Take it from a veteran of the golf wars, folks. You got sand-bagged. And you’re being set up to lose even though you win.
One of the items on the agenda was for Council to decide whether to place the Rent Stabilization Ordinance on the ballot as an amendment to the City Charter. When this idea was floated at the previous meeting, Councilwoman Marilyn Ezzy Ashcraft argued, and Councilman Jim Oddie concurred, that such a move would rob Council of the flexibility to fix any unforeseen flaws in the law without submitting the revised version to a vote of the people.
This was surely a legitimate point – indeed, we made it ourselves – and virtually all of the speakers from ARC came to the meeting prepared to offer other reasons why voters should not be asked to write the Ordinance into the Charter.
But then City staff changed the game.
When the item was called, City Manager Jill Keimach announced that staff was now recommending that Council place the Rent Stabilization Ordinance on the ballot not as a Charter amendment but simply as an ordinance.
Oh, and there were a couple of conditions that a Council-sponsored ballot measure would need to contain: first, even if the measure were passed by the voters themselves, Council could amend or repeal the Ordinance on its own without going back to the electorate; second, even if the voters also passed a related initiative (like the one sponsored by the renters’ coalition), the Ordinance would prevail if it got one more vote than the competing measure.
The staff report published before the meeting did not mention this option, and, when Mayor Trish Spencer asked to see the proposed language, Ms. Keimach responded that it hadn’t been written yet.
Council members spent the next half hour trying to get Ms. Keimach to explain exactly what staff was recommending and why. She turned the microphone over to Assistant City Attorney Michael Roush, who proceeded to bungle the legal question about a conflict between two competing ballot measures. (For our part, we’re not convinced that a Council-sponsored ordinance, regardless of how many votes it gets, can nullify a citizen-sponsored Charter amendment passed by the voters at the same election. If we were sitting on Council, we’d want to get an opinion from outside counsel specializing in elections law.)
And then it was time for public comment.
Not having had the opportunity to review, or even read, staff’s recommendation, the best the speakers from ARC could do was to express their incredulity. After looking in the direction of Ms. Keimach and City Attorney Janet Kern to confirm that she really had heard the recommendation correctly, ARC’s Catherine Pauling quickly sketched out a scenario in which renters ended up with no relief even though the voters passed the ARC initiative.
She was right to be concerned. By accepting staff’s recommendation, Council could gum up the works sufficiently so that rent control might never become the law in Alameda.
Before Tuesday (or, rather, before August 8, when staff will present Council with the actual language of a Council-sponsored ballot measure), ARC was able to offer voters a clear and simple choice: Here’s our initiative; it caps rent increases and bans no-cause evictions; vote for it or against it as you see fit.
Now, at a minimum, voters will be asked to decide between two measures, both of which purportedly have “tenant protection” as their goal. The renters’ initiative will be titled, “A Proposed City of Alameda Charter Amendment to Establish Rent Control, a Rent Control Board, and Regulate Termination of Tenancies.” (The grammar ain’t ours, we assure you). Suppose the ballot measure containing the City ordinance is titled something like, “A City of Alameda Ordinance to Establish Rent Stabilization, a Strengthened Rent Review Advisory Committee, and Regulate Termination of Tenancies.” That would be totally accurate – and totally confusing.
And we haven’t even gotten to the possibility that the initiative proposed by a landlords’ group also will qualify for the November ballot, so voters will face a third option. (Maybe this initiative could get a clearer, if cruder, title: “A Proposed City of Alameda Charter Amendment That Would Torpedo The Other Two Ballot Measures.” At least that way, voters would get a heads-up about what they were voting for.)
At Tuesday’s meeting, Councilwoman Ashcraft expressed her confidence that “voters are smart; they can make an informed choice,” and Councilman Oddie declared his own “faith in the voters and their ability to not be confused.” (Hint to Mr. Oddie: You ought to check the history books – or at least Wikipedia – before you quote Harold Laski again. Laski indeed championed the “clash of ideas.” But a good Hillary Clinton Democrat might find a lot of his other political views rather, well, extreme.)
Tell you what, Marilyn and Jim: We’ll assign you the task of going around and explaining to voters that, if they want rent control, they should vote for Measure A but not Measure B or C; and if they don’t want rent control or anything like it, they should vote for Measure C but not Measure A or B; and if they want to keep the status quo they should vote for Measure B but not Measure A or C.
May the side with the least befuddled voters win.
Now to the data.
Ms. Young prepares a monthly report on the results of the “rent program” created by the Rent Stabilization Ordinance, and, at the July 5 Council meeting, Ms. Potter presented a slide offering a “snapshot” of those results to date. This information is quite useful, but we asked Ms. Potter and Ms. Young to dig deeper into the data to enable us to answer a couple of specific questions:
- Since the Rent Stabilization Ordinance was passed, what levels of rent increases have gone into effect?
- How often have landlords succeeded in getting the rent increase they asked for?
- What role has the RRAC played in these outcomes?
They kindly obliged and, in a day’s time, prepared for us a case-by-case summary of all of the cases triggered by the filing of a notice of rent increase since the Ordinance took effect on March 31. (You can view and download the summary by clicking on the link in the “Sources” below.) We then analyzed the data to come up with the answers to our questions.
All told, landlords have filed 44 notices of rent increases greater than five percent since March 31. Four cases were “withdrawn,” and in four others the “tenant vacated” the premises after the notice was served. (It might be instructive to explore the latter four cases further, since they might shed light on whether, as the tenant advocates contend, renters are choosing to move out when the rent increase is too high to bear).
Of the remaining 36 cases, here are the results:
|Percentage rent increase||Number of cases|
This chart provides the “big picture.” If your definition of “excessive” is a rent increase of more than 10 percent – and 10 percent is the figure Councilman Tony Daysog often throws out – the chart shows that such “excessive” rent increases still are occurring under the Rent Stabilization Ordinance. But, most of the time, the rent increase has fallen below the 10 percent threshold.
To us, the second question is the more interesting one: Are the landlords who filed notices of rent increase getting what they want – or something less?
The summary prepared by Ms. Potter and Ms. Cooper enables us to compare the percentage increases sought by the landlord with the percentage increases actually going into effect. But before we present the results we want to discuss one aspect of the data that stuck out.
Of the 36 cases that went through the RRAC process, roughly half appeared to involve just two large apartment buildings – 2465 Shoreline Drive and 2445 Shoreline Drive. For both buildings the landlord offered the tenant a choice: in the former case, between a 12-month lease and month-to-month tenancy; in the latter, between a 12-month lease, a 6-month lease, and month-to-month tenancy. The rent increase sought for the shorter tenancies was greater than that sought for the longer ones.
In itself, this disparity in the offers for the same unit may not be surprising: one could see how a landlord who wanted a stable tenant base would give a tenant a lower rate for a longer term as a way to induce her to stay in the building. But in the cases involving these two buildings, the month-to-month rent increase often was far greater than the 12-month rent increase. To cite the starkest examples, for 2465 Shoreline, one tenant would face a 39.6% increase for a month-to-month tenancy – but she could get a 12-month lease with an 8 percent increase; for 2445 Shoreline, one tenant would pay 46.7 percent higher rent if she stayed month-to-month – but she could sign a 12-month lease with a 10 percent increase.
This kind of pricing structure suggests to us a deliberate strategy of putting the arm on tenants either to sign a 12-month lease – or to move out. Indeed, the summary shows that the “tenant vacated” in four cases involving 2445 Shoreline, and two others were “withdrawn.”
What would be the point of such a strategy? Based on his public statements, including the comments he posted in response to our last column, we can guess what ARC’s Monty Heying would say: the landlord is trying to get the tenant to sign a 12-month lease so that it can take advantage of the “fixed lease loophole” to avoid paying relocation benefits when the term is up. You don’t have to be a conspiracy theorist to acknowledge that Mr. Heying may be on to something.
Now for the comparison between rent increases sought and rent increases going into effect:
|Number resulting in
|Number resulting in
|Number resulting in
* The total includes three cases in which the rent increase for the 12-month lease was exactly 5.0%.
This chart shows that, generally speaking, landlords have been able to get what they wanted. Indeed, the “success rate” is about 80 percent. But there were exceptions. So we decided to take a closer look at the five cases in which the landlord sought a rent increase of 5.1 percent or more and ended up with 0-5 percent. Three of those cases were resolved by “private agreement” – and therefore we can provide no further details – but two went through a full-blown RRAC hearing, both on July 6.
In one of those cases, the landlord of a one-bedroom unit in a duplex raised rent by $98 (7.8 percent) and the RRAC recommended a 4 percent increase for six months, with another 3.5 percent thereafter. Both parties accepted the recommendation.
The other case was more dramatic. There, the landlord of a two-bedroom unit in a duplex notified the tenant that he was raising the rent by $980 a month (60.5 percent) and filed the notice required by the Rent Stabilization Ordinance. His papers stated that he had spent $51,000 on repairs in the last three years and intended to spend another $45,000 on the property. The tenant responded that she was a disabled person living on a fixed income and “the rent increase would seriously impact my health and ability to stay in my home.” She said the maximum reasonable rent increase was $31 per month.
We weren’t there when the RRAC heard the case, and the audio and minutes are not yet available, so we don’t know the evidence and arguments presented by the parties. But we do know from Ms. Potter’s and Ms. Cooper’s summary that the RRAC recommended a rent increase of $81 (5 percent), and both parties accepted the recommendation. If one wanted to brag about the RRAC exercising its newly enhanced power to prevent an “extraordinary” – we tried to pick a neutral word – rent increase, we suppose this case might be the poster child.
Which leads to our last slice of the data: the role of the RRAC itself.
The case-by-case summary prepared by Ms. Young and Ms. Potter showed that 30 of the 36 cases had been resolved by “private agreement.” The other six were heard by the RRAC. In two of them, the parties reached an agreement after presenting their case; in the other four, the RRAC made a recommendation. The chart below (which includes the two cases we’ve just discussed) displays the results:
|Percentage rent increase sought||Percentage rent increase agreed to
|7.8%||4% (first six months)
additional 3.5% thereafter
This chart shows that, in every case heard by the RRAC, the landlord got a lower rent increase than it sought. All of the landlords accepted the RRAC recommendation; the tenant appealed the 5.8 percent increase. If one was looking for evidence that the newly empowered RRAC is forcing landlords to scale back rent increases, this chart might help make the case.
For our part, we don’t want to push the data too far. The summary prepared for us by Ms. Potter and Ms. Cooper shows what happened but not why. Maybe the cases resolved by “private agreement” include situations in which, as the tenant advocates argue, renters were too intimidated to confront their landlord before the RRAC. We just don’t know.
By the same token, the data doesn’t show what might have happened had the City not adopted the Ordinance. Maybe there are landlords who intended to raise rents by more than five percent but abandoned their plans once they found out they’d have to go through the RRAC process to get their way. Again, we simply don’t know.
Finally, the data, of course, covers only three months. But by the time voters go to the polls to decide the fate of the renters’ initiative in November, six months worth of data will be available. We encourage Ms. Potter and Ms. Cooper to update their case-by-case summary on a monthly basis. Maybe they’d even be willing to prepare the kind of charts we’ve created for this column.
We realize that the effectiveness of the Rent Stabilization Ordinance in protecting tenants from “excessive” rent increases is not the only factor to consider in deciding whether to vote for or against the rent control initiative. But it surely is a relevant one. If the ARC initiative is a sledgehammer, the Ordinance is a stiletto. It should make a difference how well the stiletto is hitting its mark.
July 5, 2016 staff presentation: 2016-07-05 staff presentation
Case-by-case summary: Q1 RRAC Case Summary