Rent control is likely coming to Sacramento. How a new plan will affect renters, landlords

The Sacramento City Council is expected to approve a local rent control measure Tuesday in a compromise between city officials, labor unions and developers. The agreement – which will cap rent increases for older housing – will avoid what likely would have been a bitter, multi-million dollar political campaign next year.

In its new form, the Sacramento Tenant Protection and Relief Act, which the council will consider at its 2 p.m. meeting Tuesday, will create a set of renter protections for tenants who live in housing built prior to Feb. 1, 1995. The ordinance will cap the amount that landlords can increase rent each year; prohibit landlords from evicting tenants without a reason; and create a process where tenants can report landlords who violate the act.

The proposal is a compromise that’s the result of months of talks between city officials and advocates who gathered signatures to put a stricter rent control measure on the local ballot in 2020, said Councilman Steve Hansen, who led the negotiations.

The advocates have agreed to remove the measure from the ballot after the council approves the ordinance Tuesday, according to a city news release.

“I think there’s been a long conversation about how we protect renters who are of modest means or who are vulnerable,” Hansen said. “The struggle has been how do we help them while not hurting our overall problem, which is lack of housing supply.”

Mayor Darrell Steinberg, Vice Mayor Eric Guerra and Councilman Rick Jennings are also proposing the ordinance, which Hansen said he expects the council to approve Tuesday. It would go in to effect in October.

The ordinance will prohibit landlords from raising rent more than 6 percent plus the “consumer price index” percentage for the West Region per year. The U.S. Bureau of Labor Statistics releases a new “consumer price index” figure each month for the region. As of June 2019, the latest figure available, the CPI was 2.7 percent. That means landlords will be prohibited from raising rent more than 8.7 percent from the previous year’s rent, based on the June figure. The figure in April 2020 will be used for the ordinance.

Landlords will never be able to increase rent more than 10 percent, even if the CPI ever exceeds 4 percent, the ordinance says. The CPI hit 3.6 percent in the summer of 2018, but has fluctuated between 2.4 and 2.9 percent during the first half of this year, according to federal data.

The ordinance will also prohibit landlords from evicting tenants, unless tenants stop paying rent, are criminally charged, are illegally selling drugs, fail to give landlords access to the unit, or otherwise violate their leases.

“A lot of people worry about what would happen if they lose their housing, especially in a tight market, where there’s not a lot of units,” Hansen said. “If you have kids, you have to change schools sometimes, you have to move away from the place where you’ve been involved in the community. This is a way to keep people stable.”

The ordinance will bar landlords from evicting tenants for no reason, and require they give tenants an option to renew their lease, Hansen said.

Currently in California, landlords only have to give 30-day notice to evict someone with a month-to-month lease if they’ve been living there less than a year, and a 60-day notice to evict someone who’s been there more than a year, according to the Judicial Council of California.

Landlords will still be able to evict tenants if they are making certain repairs or selling the unit, under certain circumstances, but will have to show proof, and will need to give the tenants an extensive 120-day notice.

The act will cover tenants who signed leases that are month-to-month or longer, those who live in apartments, mobile home parks and single room occupancy hotels, Hansen said. The act cannot legally apply to tenants renting single-family homes, though, unless they have been converted in to multiple units, such as duplexes.

After five years, council members will consider whether to amend the ordinance, Hansen said.

Sacramento has a good track record of building new housing, Hansen said, but has high construction costs, partly because the city has to follow Bay Area labor costs, Hansen said. That’s stalled some affordable housing projects while costs continue to rise.

The California Apartment Association strongly opposes the proposal, saying it will stall new construction of badly-needed housing units, even though the compromise is not as far-reaching as the ballot measure.

“Sacramento needs to build more housing to keep pace with demand. Bringing rent and eviction controls to the city will drive out investment in new housing and exacerbate our housing shortage. It also will leave many rental property owners without the financial wherewithal to upgrade or even maintain existing properties, an invitation for blight and lower property values,” the apartment association’s Jim Lofgren said in a statement. “Let’s not play a ‘lesser of two evils’ game. The bottom line is that rent control is a failed policy. If brought to Sacramento, it will worsen the city’s housing shortage.”

The ordinance will require property owners to pay a fee, likely between $15 and $20 per unit per year, Hansen said. The fees will go toward running the program, enforcement, and tenant/landlord education.

Landlords will be able to apply to impose higher rent increases in front of city hearing officers, but only if they plan to make significant improvements to the units, the release said.

The compromise avoids what likely would have been one of the city’s most expensive political battles in recent memory.

A political committee behind the ballot measure spent roughly $774,000 over the past 16 months, backed largely by donations from labor unions, city campaign finance records show. Opponents of the measure, primarily organizations representing apartment owners, had spent nearly $740,000.

Much more likely would have been spent during a campaign leading up to the March primary election.

“This agreement strikes the right balance between protecting tenants and ensuring that we don’t stymie badly needed housing construction in our city,” Steinberg said in a statement. “Rising rents have contributed significantly to the crisis of homelessness that we face, and these reasonable limits will help prevent more people from being forced onto the street.”

Cathy Creswell, Board President of the Sacramento Housing Alliance and member of the Housing for Sacramento Coalition, said in a news release: “The Sacramento Housing Alliance supports these historic renter protections. They will provide critical relief to Sacramento renters and are an important step toward ending our affordable housing crisis. By stemming skyrocketing rents and increasing production of affordable homes, Sacramento will attack a fundamental cause of homelessness.”

The meeting is scheduled for 2 p.m. Tuesday at Sacramento City Hall’s council chambers, 915 I St.

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Theresa Clift covers Sacramento City Hall. Before joining The Bee in 2018, she worked as a local government reporter for the Pittsburgh Tribune-Review, the Daily Press in Virginia and the Wausau Daily Herald in Wisconsin. She grew up in Michigan and graduated from Central Michigan University.