Over the course of the last year, Santa Rosa’s city council has been intentionally attempting to craft a rent control ordinance, due to the disparity between supply and demand. The lack of housing throughout Santa Rosa and Sonoma County has caused a dramatic increase in rents, particularly over the last four years. Many analyses show that over this period of time, average rents have gone 40 percent or more. Santa Rosa’s city council is in the midst of creating an ordinance that’s intended to be a permanent rent control structure, designed to protect a certain percentage of tenants in the city. In the meantime, they have instituted what is identified as a Moratorium.
Rent Control Moratorium status, as of May 2016
This is a rapidly changing and developing situation. You may be wondering what this moratorium means for landlords. It’s effectively a temporary freeze on rent increases that stays in place while the city of Santa Rosa creates a permanent ordinance. An ordinance simply cannot be instituted immediately; it will take considerable time and effort to craft, review and approve. The council is concerned that if they take three or five months that might be necessary to create and vote on a permanent ordinance, some landlords might take advantage during that period, and raise rents excessively. Santa Rosa’s rent control moratorium is intended to prevent that from happening.
Moratorium Begins June 18, 2016
A first vote and reading of the moratorium took place on May 10, 2016. A second reading occurred on May 17th. This procedure was sufficient to allow the moratorium to begin thirty days hence – on June 18. In a limited sense, it mirrors what the actual ordinance is likely to include. The verbiage says that if you own a property that falls under the auspices of rent control (multi-unit properties, larger than a duplex, built before 1995), you cannot institute a rent increase of more than three percent over the course of a 12-month period. The moratorium also specifies that, if you instituted a rent increase on March 1 of 2016 (for example), and the moratorium goes into effect June 18th, you do not get the benefit of an additional three percent allowance starting that date. If your previous increase already exceeds three percent, you will not be allowed an additional increase for at least 12 months.
The moratorium was initially passed for a 45-day period, but it is able – and likely – to be extended by as much as six months, until the city manager completes the creation of the ordinance, submits it to the council for approval and the council votes it into law. Given the dynamic of the city council, there is no reason to believe that, when submitted, it won’t be approved.
I’ve said it previously: property management can be complicated. It’s our goal to help simplify your life. On this particular topic, there are many interlocking pieces adding up to a very complex picture, so we’ll continue to follow it closely. Check out our other blogs on rent control or any of the various subjects we’ve addressed. Alternately, feel free to contact us directly at DeDe’s Rentals.