Their CASA, your casa

A little more than two years ago, Alamedans voted for an ordinance that did not place a cap on annual rent increases and against a charter amendment that not only imposed such a cap but also banned so-called “no-cause evictions.”

The first measure – Measure L1 – passed by a margin of 55.51% to 44.49%.  The second measure – Measure M1 – lost by a much larger margin:  34.07% in favor and 65.93% opposed.

This Tuesday, staff will seek “direction” from Council about whether it wants to reverse both of these decisions by the electorate and get staff to draft a law that bars landlords from raising rents by more than a specified percentage and prohibits terminations of tenancy without “just cause.”

The Merry-Go-Round is willing to bet that Council will give staff the green light in both respects.

How come?  The short answer is:  Based on the statistical evidence, the local rental market does not appear to have gotten dramatically worse for tenants since 2016, when the current rent stabilization ordinance was passed, but the composition of Council has shifted toward renters’ interests, with Alameda Renters’ Coalition endorsee John Knox White taking the Council seat formerly held by Frank Matarrese.  Moreover, a “blue-ribbon panel” appointed by the Bay Area’s regional planning agencies recently endorsed both rent-increase caps and “just-cause” requirements.  All of our Council members who consider themselves enlightened and who call themselves “progressives” surely will want Alameda to take the lead in adopting the panel’s recommendations.  That means at least three, and maybe four, votes for amending the ordinance to benefit current tenants.

And if the majority of Alamedans who voted in favor of Measure L1 and against Measure M1 don’t like that result?  Well, there’s another Council election in 2020.

The staff report teeing up rent-increase caps and “just cause” requirements for consideration by Council does not attempt to justify either action as necessary to address an accelerating “rental crisis” in the City.  Fortunately for those who rely on data rather than ideology in their decision-making, the Alameda Housing Authority publishes annual and monthly reports with statistics on rent increases and “no-cause” terminations.

Here’s what they show:

Rent Increases

Under the rent stabilization ordinance, landlords are required to submit any proposed rent increase of more than 5% to the Rent Review Advisory Committee.  According to AHA’s annual report for fiscal year 2017-18 (which ended on June 30, 2018), 13,389 rental units were subject to this requirement.

As the chart below shows, slightly more than 1% of these units annually have seen proposed rent increases exceeding 5% since the ordinance went into effect.

 

Rent Increase

 April 2016        through
March 2017
April 2017       through
June 2018
July 2018
through
February              2019
>5%-10%          71        54       92
>10%          78        54       78
“Dual option”*        285        57     N/A

* “Dual option” refers to offering tenants a choice between a 12-month lease and a month-to-month agreement, with different rent increase amounts for each.

The number of proposed rent increases of more than 5% thus went down in the second year of the program and back up again in the first eight months of FY 2018-19.  Further analysis is necessary to determine whether the data for the most recent period reflects the beginning of a trend toward higher annual rent increases.  For example, one might want to know how many of the proposed rent increases represent catching up on units for which there has been no change in rent since the tenancy began.  (By our quick count, 20 cases fit into this category.)

RRAC Review

The Rent Review Advisory Committee reviews all proposed rent increases exceeding 5%.  Its decision is binding for multi-family apartment units built before February 1995 and advisory for single-family homes, condos, townhomes and multi-family apartment units built after February 1995.  (According to the AHA annual report for FY 2017-18, the split is 11,490 units in the former category and 1,899 in the latter.)

From July 2018 through March 2019, the RRAC rendered decisions in 37 cases (30 binding and seven advisory).  Of those 37 cases, only one has been appealed to Council.  (The appeal will be heard Tuesday.)  As the chart below shows, in every decided case but the last one the RRAC reduced the percentage rent increase sought by the landlord.

RRAC Chart

No-Fault/No-Cause Terminations

The rent stabilization ordinance identifies 10 separate grounds for terminating a tenancy.  The AHA monthly reports provide statistics on two of them:  “no-cause” terminations, where the term of the tenancy has ended and the landlord serves a notice to vacate, and “owner move-ins,” where the owner “seeks in good faith to recover possession” of the unit for “use and occupancy as a primary residence” by the landlord or certain specified relatives.  (In addition, during the first two years of the program, the AHA summarized the number of units withdrawn from the rental market, but it stopped breaking out this figure in August 2018.)

As the chart below shows, the number of “no-cause” terminations has fallen significantly in the last eight months compared to the prior 15-month period.  So, too, has the number of owner move-ins.  (With four months left in the fiscal year, it is, of course, still possible that the final totals will reach the levels attained in the prior period.)

 Reason for termination April 2016
through
March 2017
April 2017
through
June 2018
July 2018
through
February            2019
“No cause”        32         51       30
Owner move-in        22        49       14
Withdrawal from rental market          8        10     N/A

N.B.  For purposes of comparison, the chart includes only those notices of termination deemed “valid” by AHA.

This data, and especially the apparent decline in the number of “no-cause evictions,” may strike a reasonable decision-maker as insufficient to justify amending the ordinance to prohibit such terminations.  Indeed, when the issue of a ban was first raised, one Council member specifically cited the lack of evidence of a “crisis” as a reason not to adopt a just-cause requirement.  (No-cause terminations affected only “.0016 percent” of the total number of rental units, he stated.)  Moreover, the Council member argued, the voters had spoken overwhelmingly against imposing such a requirement on Alameda landlords.  (“I don’t think anyone goes into the voting booth without being educated,” he said.  “So I would be hesitant to overturn that decision of the voters. . . .”)

Well, that was Jim Oddie speaking in April 2017.  We doubt it’s the Jim Oddie we’ll hear Tuesday night.

Instead, Mr. Oddie – and, we suspect, the majority of his colleagues – aren’t likely to pay much attention to the evidence or the election results when they can look to a far more authoritative source:  the “blue-ribbon panel” appointed by the Association of Bay Area Governments and the Metropolitan Transportation Commission.  Who cares what Alamedans think when you’ve got the ABAG/MTC A-Team telling you what you should do?

And that they have done.

According to the report announcing the so-called “CASA Compact,” ABAG and MTC created CASA to devise a “comprehensive set of solutions to the Bay Area’s housing crisis.”  Its 18-member steering committee consisted of elected officials, “thought leaders,” tech industry executives, and two union honchos, assisted by a 32-member “technical committee” composed of housing “experts.”  (No one from Alameda was a member of either group.)  These worthies came up with a “Compact” containing 10 policy recommendations – called “Elements” – and five “Calls for Action.”

The first “Element” is a “just cause eviction policy” limiting terminations of tenancy to a specific list of “permissible” causes and providing “relocation assistance” – i.e., money – to any tenant evicted for a “no-fault” cause (except where the owner is moving into the unit).  “Studies show that eviction can cause health issues, emotional trauma, school disruption for children, longer and costly commutes, and reduced wage earnings for adults,” the report states. “Just cause eviction protections promote tenant stability and limit eviction-related health consequences.”

The second “Element” is a rent cap limiting annual rent increases to “CPI+5%” for the next 15 years.  (The report does not specify which version of the Consumer Price Index is to be used.)  The cap does not apply to accessory dwelling units on owner-occupied properties (an exemption that might interest Mr. Knox White).  “A rent cap would prevent extreme increases in rent on a year-to-year basis,” the report states, “thereby decreasing the number of households who are at risk of displacement and homelessness, decreasing the number of households who are rent burdened, and promoting tenant and community stability.”

Neither ABAG nor MTC can force any city in the Bay Area to enact either of these (or any of its other) policy recommendations into local law.  Accordingly, the focus is on getting the state legislature to “implement” the Compact on a statewide basis.  According to the League of California Cities, nearly 20 bills already have been placed in the hopper for that purpose.  Among them is a bill offered by our own Assemblyman Rob Bonta to ban “no-cause evictions.”  (A similar bill by Mr. Bonta was defeated in an Assembly floor vote last year.)  Another is a bill introduced by Assemblyman Daniel Bloom of Santa Monica to roll back the restrictions on rent control established by the Costa-Hawkins Act.  (A ballot measure to repeal the Act altogether was defeated last November.)  And a third is a bill offered by Assemblyman David Chiu of San Francisco to cap rent increases at an as-yet unspecified percentage above inflation every year.

On March 19, Council voted, 4-1 (Councilman Tony Daysog dissented), to “incorporate” state legislation “introduced to implement the CASA Compact” into the City’s “legislative agenda.”  All that means is that the City’s esteemed Statehouse lobbyist, former State Senator Don Perata, will have more to talk about when he makes the rounds at Frank Fat’s.  But don’t expect our Council members to wait for Don to do his job.  Instead, they may see an opportunity to seize “progressive” bragging rights by passing laws embodying the Compact before their Democratic colleagues in Sacramento get around to it.

There is, however, one potential problem:  The Compact doesn’t go as far as our local true-blue tenant advocates would like.  At the March 19 meeting, ARC’s Catherine Pauling told Council that the group “deeply disagreed with” the Compact’s rent-cap and just-cause recommendations.  She urged Council to enact an ordinance limiting annual rent increases to 4% or less, with a 10% maximum over three years, and imposing “just cause” requirements for terminations of tenancy “without any omissions.”

Will Mayor Marilyn Ezzy Ashcraft and Council members Oddie, Knox White, and Malia Vella, all of whom have sought support for their campaigns from renters’ groups, take heed?  After all, the Alameda Renters’ Coalition doesn’t have the same power to promote – or punish – politicians as, say, the Alameda firefighters’ union does.  But if any of these four refuses to give the tenant advocates what they want, they should expect the ARC Facebook page to light up with outrage at their insensitivity – and ingratitude.

Sources:

Staff report for April 2, 2019 Council meeting: 2019-04-02 staff report re amendments to ordinance

AHA Rent Stabilization Program Annual Report FY 2017-18: AHA, FY 17-18 annual report re rent stabilization ordinance.  The monthly reports may be found at http://www.alamedarentprogram.org/reports.

CASA Compact: CASA_Compact

About Robert Sullwold

Partner, Sullwold & Hughes Specializes in investment litigation
This entry was posted in City Hall, Housing and tagged , , , , , , , , , , . Bookmark the permalink.

4 Responses to Their CASA, your casa

  1. Mike McMahon says:

    To minimize the confusion about the reporting of No Cause evictions and its related activity here is a picture from the staff report comparing the last two fiscal years.

  2. continually municipally disappointed says:

    Just as interesting in this chart is the rise in owner move-ins, which I predict will continue to escalate as homeowners are less willing to cooperate with the increasingly odious plans of the pro-rent control advocates (despite all indications that rent control is an EPIC FAIL) and their council puppets.

    Soon, you won’t be able to rent a nice house in Alameda, and if those pushing for more changes get their way, developers will stop building and current landlords will stop making property improvements, having been financially shackled by these appalling restrictions on their property.

    Many ordinary, hard working ‘evil landlords’ I know have told me they will begin to raise rents EVERY YEAR – despite have rarely done it in the past. Those who decry ‘evil landlords’ are creating their own horrible mess which will ultimately only benefit those already here and in no way help anyone else, the ultimate rent control nimbyism.

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