The City of San Jose has been embroiled in Silicon Valley’s clashes over rent control for some time now. As I previously reported in this blog, the San Jose City Council enacted two ordinances in April 2017 that imposed additional obligations on landlords in their dealings with tenants, requiring “just cause” to evict tenants and placing a variety of targeted restrictions on exiting the residential rental market under California’s Ellis Act. Since then, our region’s strong economic growth has only exacerbated existing tensions between landlords and tenants in San Jose, which continue to fester.
Last month, at its April 24 meeting, the San Jose City Council once again took up legislative action in an effort to address this ongoing conundrum. For the third time in little more than a year, the City Council adopted revisions to its landlord-tenant regulations, enacting three changes to its existing ordinances (a fourth prospective amendment, which would have barred landlords from taking into consideration a tenant’s source of income in rental decisions, was dropped from the agenda for the meeting). These new modifications are as follows:
- With regard to landlords who remove rent-controlled apartment units from the rental market as allowed the state’s Ellis Act pursuant to the procedures set forth in the city’s Ellis Act Ordinance adopted in April 2017, this amendment established the number of replacement units put in service by the landlord within five years in the same location that would remain under rent control as being the greater of (a) the number of units removed or (b) 50% of the replacement units built. The amendment also exempted the replacement units from rent control if 20% of the replacement units have been deed-restricted as affordable housing. As adopted, the Ellis Act Ordinance required that all replacement units were subject to rent control. Further, the amendment harmonized the Ellis Act Ordinance with certain other city rental ordinances by making all of them applicable to triplexes. Previously, the Ellis Act Ordinance only applied to four units or more.
- With respect to the “just cause” limits on eviction established by the Tenant Protection Ordinance that was enacted in April 2017, this amendment bars landlords from either threatening to notify immigration authorities of the immigration status of tenants or otherwise sharing such information about tenants. The amendment also specifies that a tenant’s conviction for a serious or violent felony at the premises during the tenancy shall be considered a separate “just cause” for eviction, subject to the landlord giving written notice to the convicted tenant’s household to allow them the opportunity to avoid eviction by removing the convicted tenant themselves by restraining order or other means.
- For all rent-controlled tenancies in San Jose, this amendment prohibits landlords from billing tenants for utilities by the ratio utility billing system (“RUBS”), or by any other prorated, unmetered allocation method. The amendment allows landlords who have pass-through utility contracts in place prior to January 1, 2018 to apply for a one-time rent increase calculated based on historical usage rates.
Despite these undertakings, it is clear from many of the statements made at the meeting that a great deal of dissatisfaction with the current situation in San Jose remains. Members of the public as well as members of the city council expressed their frustration at the city’s inability to do anything about this state of affairs. While landlords and tenants railed at these new laws from their own respective perspectives, Councilmember Johnny Khamis lamented that “[w]e keep creating new laws, we keep creating new regulations, but what we’re not creating is affordable housing” by taking these actions.
Most of us would agree that Silicon Valley’s strong economy is a boon, for those of us who live and work here in particular, and for the country and the world generally. It would thus behoove us and those who represent us as policymakers to take great care in imposing burdens on our economy for the benefit of the polity. Ultimately, our rental housing issue will be governed by the laws of supply and demand; we would do well to keep that fact in mind as we make policy choices affecting that matter.
