Landlords of rent-controlled buildings in Oakland will no longer be able to raise tenants’ rents by more than 3% each year.
The policy, passed by the Oakland City Council on Tuesday, is the first significant change to the city’s rent control system in 20 years. The meeting drew over two hours of impassioned public comment from tenants and landlords.
“Now, more than ever, it is critical that we advance policy that helps stabilize our communities by ensuring Oakland tenants, who make up a majority of the residents in Oakland, remain housed,” said Councilmember Carroll Fife, who wrote the policy, in a memo to her colleagues.
Most Oakland rentals built before 1983 are covered by the city’s rent control law which allows landlords to set the base rent at any price when a new tenant moves in, but only raise it by a designated percentage each year after that. For years, those allowable annual rent increases have been pegged to the regional consumer price index (CPI), also known as inflation.
Property owners have been able to raise rents by the CPI each year, usually somewhere between 1-3%. The highest rate that Oakland has seen since that formula took effect was 3.6% in 2003.
This year, however, soaring inflation rates resulted in a CPI of 6.7%, set to go into effect July 1. The revelation stunned many renters and prompted Fife to propose the change.
Passed 6-1 with one abstention, the new rule sets the annual allowable increase at 60% of the CPI or 3%—whichever is lower. This coming year, it will be set at 3%.
“This is sound public policy,” said Chanée Franklin Minor, manager of Oakland’s Rent Adjustment Program, at Tuesday’s meeting. “The [previous] formula was drafted 20 years ago, and now we find ourselves in a different situation with the prolonged housing crisis as well as COVID. We’ve heard directly from a lot of renters who are fearful of being homeless” if they get a 6.7% hike.
Dozens of tenants and supporters called into the council meeting before the vote.
“I’ve seen my cost of living increase astronomically even as my salary has remained fairly stagnant,” said educator Alexander Otruba. “Home ownership and even rent is increasingly out of reach. My landlord increases the rent by the maximum allowed each year, all while resisting even routine maintenance.”
Linda Warrick described the “hopelessness and despair” she’s felt after getting priced out of five Oakland homes with her children.
Dozens of landlords also called in, some excoriating the fact that the city didn’t study Fife’s proposal in depth before considering it, and others saying the 6.7% rent hike reflects their increased cost of running their business.
“There have been no committee meetings, no analysis, just pure emotions,” said Joshua Polston, board member of the East Bay Rental Housing Association, a landlord advocacy group. “This is everybody getting together and saying, ‘We like free stuff.’ Inflation is real—everyone lives with it, whether you’re a tenant or a property owner.” Other landlords commented that costs of materials for property repairs and utilities have risen substantially.
“There are remedies,” said Minor in response to those concerns, noting that property owners can petition the city for higher increases, including to pass the costs of renovations on to tenants, if they’ve increased housing services such as installing a washing machine, or if they don’t believe they’re receiving the “fair return” on their investment that the state guarantees them.
However, the pandemic eviction moratorium temporarily prohibits such increases above the CPI.
Other landlords said the 3% cap will harm small-time property owners who rely on rental income.
“It seems to me the city is closing off pathways for Black and brown people to build wealth through property ownership,” said Danny Gonzalez, who owns a duplex where his tenant pays $800 a month. “I grew up in public housing and it’s hard trying to climb out of poverty.”
Oakland does not keep data on the proportion of rental property owners that are corporations versus individuals, though a proposal to create such a registry will come to the City Council this summer.
Councilmember Dan Kalb, who voted for Fife’s proposal, said he understands the concerns of landlords but the problems renters face are more urgent. “We have to balance things and decide what we’re going to focus on in an effort to protect those who need it the most,” he said.
Councilmember Loren Taylor proposed an amendment to Fife’s legislation that would have allowed landlords to “bank” CPI increases above 3% and apply them in later years when the CPI dips below 3%. Then rent increases still wouldn’t exceed 3% but property owners could make back some of the money during low-inflation years, he said.
His proposal earned support from Councilmember Noel Gallo but was rejected by the rest of the council. Gallo then voted against Fife’s policy while Taylor abstained.
At one point during the meeting, Fife and Council President Nikki Fortunato Bas implied that Taylor might have a conflict of interest in proposing landlord-friendly amendments. Taylor is a rental property owner. .
“You should recuse yourself from this particular vote,” Fife told Taylor. At the request of Bas, a deputy city attorney assured the council that there was no conflict of interest. Taylor rents out a single-family home, which is not covered by rent control.
Taylor called Fife’s assumptions “off-base and simply false.”
Fife was previously employed as the Oakland director of ACCE, a renter advocacy organization, but hasn’t held that position for several months.
The new policy also changes the timing of rent increases, putting them into effect Aug. 1 each year instead of July 1, to align it with state rent law.
The rent cap will get a final vote, called a second reading, at the June 7 meeting.