Due to a disparity in the supply and demand for housing in Santa Rosa over the course of many years, we have come to a crisis. There are more people looking for rental properties than there are properties available. Rents are increasing, and they have been increasing dramatically. The city council is presently crafting an ordinance which will effectively institute Rent Control in Santa Rosa. The city manager’s office is working on the details. Early reports seem to indicate that they may be looking at an ordinance already in effect in the city of Alameda as their template. If you review Alameda’s existing rent control law, you will be able to evaluate the individual “ingredients” already in place. In Santa Rosa, nothing is yet set in stone. However, if our ordinance is anything like Alameda’s, this is what will likely be established:
Maximum Rental Increase
If your property falls under the governance of rent control, the amount you can increase your rent each year will likely be capped at 3 percent. An immediate consideration, important solely at the time the ordinance is instituted, is the concept of “clawback.” Clawback relates to rent money already collected by the landlord prior to the institution of rent control. For example, you might have raised rent by 10 percent in February 2016. Imagine that a rent control ordinance goes into effect on September 1, 2016 and it says that you can only increase rent up to 3 percent STARTING JANUARY 1, 2016. That means that you EXCEEDED the allowable amount by 7% each month starting in February, so that overage must be returned to the tenant. This concept has been included – and frequently removed thereafter – from a number of the ordinances instituted in cities throughout California.
Rent Control Oversight
The governing body in each city – ie city council – must determine how rent control oversight will be implemented. In Santa Rosa, that has not yet been established. We don’t know if it will be regulated by an agency within the city or through the court systems. If through the city, will it be an expansion of an existing agency, or a new agency? In Sonoma County, this proposed ordinance will only pertain to multi-unit buildings, meaning triplexes and above, built before 1995, and located within Santa Rosa city limits. So far, this ordinance not affect other cities or unincorporated areas of Sonoma County. However, if an ordinance is passed in Santa Rosa, it’s more likely that such a policy will be seriously considered by other communities in the future.
Just Cause Eviction
In order to prevent landlords removing tenants simply to re-rent a rent-controlled property for higher rent, the ordinance will undoubtedly include a limited list of reasons why a landlord could insist that an established tenant leave the rental property. Given the complexity of that particular issues – and its far-reaching implications, we will address that subject in more detail, with a separate video and blog.
In the Alameda template, there’s an interesting consideration, wherein if you ask a tenant to leave, even for a justifiable reason, there might be a cap on the new market rent you’d be able to command – in other words, it’s possible that you’d be prevented from increasing the advertised rent on a vacant property by more than a set percentage.
This is detailed, complicated, and messy. I am personally convinced that it’s counter-intuitive, but passing a Rent Control ordinance is the political will of a majority of the Santa Rosa city council and, as a result, it is almost certain to be the law of the land before the end of 2016.
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.
