Breakdown of Richmond’s newly-passed rent control and just cause for eviction ordinance

4
763
Contra Costa judge to review arguments against Richmond rent control

After months of debate, Richmond City Council passed the rent control and just cause eviction ordinance by a 4-1 vote during a special meeting Wednesday night.

The ordinance went through a number of changes over the course of five lengthy, often heated council sessions, and some community members remain unclear about its terms.

What follows is a breakdown of the final ordinance, which Radio Free Richmond posted in full here.

Rent Control

The rent control portion caps rents to annual increases of no more than 100-percent of the Consumer Price Index — about 1.5 to 2 percent — for nearly 10,000 units in the city. Excluded from rent control are all single-family homes, units built after Feb. 1, 1995, Section 8 recipients, hotels, condominiums and nonprofits providing childcare and other social services.

Although the rent control ordinance is not effective until Sept. 4, or 30 days after Wednesday’s passage of the ordinance, base rents have been capped to July 21 rates. So, if a tenant paid $1,000 per month on July 21 and the permitted CPI increase is 1.5-percent, a landlord would only be able to increase the rent for the next year to a maximum $1,015 per month.

Any unallowable rent increases imposed beyond the July 21 base rate will be reviewed and could be rescinded by a five-member rent control board that will be created to monitor tenant-landlord disputes, city officials say. Landlords who charge more than the allowable rent may be ordered to pay the overcharges back to the renter or face a civil lawsuit.

At the same time, landlords who are not able to receive a just and reasonable return on their property due to rent control can appeal to the rent board for an individual adjustment.

No later than June 30 each year, the rent board will announce the allowable rent increase for the ensuing year, and the increase will be effective Sept. 1 of that year.

If there is a change in tenancy, meaning a unit is back on the market after a tenant moves out, landlords can set a new rental rate without restriction.

Just Cause Evictions

The just cause portion of the ordinance, also taking effect Sept. 4, applies to all residential units in the city, including condos and single-family homes, but not for units such as hotels or nonprofit service providers.

The ordinance replaces the current system where landlords only need to give notice, not a reason, for eviction. Just causes for eviction include illegal activity in a unit or failure to pay rent. In cases of no-fault evictions, landlords are subject to paying tenants a relocation fee of two times the monthly rent in addition to a $1,000 fee.

At Wednesday’s meeting, Councilmember Nat Bates pointed out that landlords could possibly evict tenants before the ordinance takes effect next month and set rental rates as high as possible. While that is possible, City Manager Bill Lindsay said, landlords are still subject to state rules on giving proper notice.

As a warning to those landlords, Councilmember Gayle McLaughlin said tenant advocacy attorneys will fight landlords who attempt to increase rental rates through evictions imposed before Sept. 4.

Cost

The ordinance will require the city, which had difficulty closing a budget deficit for next fiscal year, to hire staff to run the program and to fund the election of the five-member rent board.

The first board will be appointed, and it will be replaced by a new board that is elected in 2016.

The money for elections will come out of the city’s general fund, but the ordinance has landlords shouldering most of the financial burden through annual fees. The program is expected to cost the city an estimated $1.6 million to $2 million.

Landlords can pass on no more than 40 percent of the fees to tenants, which the were estimated to vary from $170 to $230 per unit per year, or $15 to $20 a month, according to the Contra Costa Times.

Next steps

Now that the ordinance has passed, the city says it can begin building the program’s infrastructure.

As early as this month, staff will begin searching for a Housing Director to oversee the program’s administration. From August through December, the city expects to sign third-party contracts for legal, mediation and other services required to implement the program. During that period, the city will also train and educate staff on policy and process, and distribute informational materials to all tenants and landlords.

In April of next year, the CPI percentage will be announced by the Bureau of Labor Statistics. No later than June 30, 2016, the rent board will announce the rate adjustment based upon that CPI percentage, which will be effective Sept. 1, 2016.

Reactions

Opponents of the measure, including a majority of economists along with Mayor Tom Butt, Council member Vinay Pimple and Bates, say rent control policies in San Francisco, Oakland and Berkeley have not prevented skyrocketing rents. Such policies do little more than create an expensive government bureaucracy, they say, arguing that creating more affordable housing is the best way to combat rising rents.

Economists also cite evidence that rent control discourages property owners from making building improvements, thus inviting the potential for blight. And with rent control, there’s less turnover as renters hold onto to rent-controlled properties, freezing other low-income families out of the market.

Supporters of rent control, including tenant advocacy groups and the RPA, say low-income renters need protection or else they will be displaced from their homes. The city’s rent control ordinance cites data that more than half the renters in the city spend at least 30 percent of their income on rent. They also cite figures from RealFacts showing rates for units in six properties with 50 or more units increased 24.3 percent between 2011 and 2014.

Without rent control, advocates add, rates in Richmond will continue to spike as the Bay Area technology boom sends more people to Richmond seeking relief from rising rents in Berkeley, Oakland and San Francisco.

Opponents, however, say Richmond’s recent rent increases are less symptomatic of the Bay Area tech boom and more an effort by landlords to catch up on rent increases they were unable to impose during the recession.

Wednesday’s vote:

Richmond Progressive Alliance members on council — Jovanka Beckles, Eduardo Martinez and McGlaughlin — voted in favor of the rent control and just cause eviction ordinance, along with Councilmember Jael Myrick.

Councilmember Bates voted no and Mayor Butt and Councilman Pimple were absent.

 

LEAVE A REPLY