Shortly before the midnight Tuesday night, the Oakland City Council voted unanimously to approve a package of reforms that will increase protections for Oakland residents who live in the city’s 60,000 units of rent-controlled housing.
“Tenants are awakening,” Marc Janowitz, a Staff Attorney at the East Bay Community Law Center told Oakland Local in an earlier interview. “We are organizing so that these huge loopholes came be closed.” Janowitz, along with James Vann of the Tenant Justice Campaign, represented tenants in mediations between landlord and tenant interests that resulted in the compromise approved at Tuesday’s meeting.
The council voted unanimously to do away with the debt service pass-through. This provision in the law allowed property owners with negative cash flow to pass on as much as 95 percent of their loan payments to tenants. Advocates for landlords did not oppose this change and it seems likely to take effect shortly after the required second hearing at council on April 1. The law will allow debt service pass-throughs currently in process to be grandfathered in but no new pass-throughs will be allowed after the law takes effect.
In negotiations mediated by councilmember Libby Schaaf prior to the council meeting, landlord and tenant groups had agreed to a cap on total annual rent increases from all sources of ten percent per year and a limit of 30 percent within a five year period.
Tenant advocates had pushed for a requirement that landlords petition for approval from the rent board before passing through capital improvement costs; landlords wanted to keep the current system, which requires tenants to challenge any increase they feel is unfair. The compromise calls for enhanced notice of capital improvement pass-throughs which landlords must file with the rent board; failure to do so invalidates the proposed rent increase. This will allow Oakland to track rent increases due to capital improvements, a move that will provide data on which to base future policy. In addition, landlords will be required to drop the pass-through increases at the end of the prescribed period or face a penalty. All overcharged rents must be returned to tenants, with interest.
The one item on which the group did not reach agreement was the amount of capital improvement pass-through. The Tenant Justice Campaign demanded that tenants share just 25 percent of improvements, because landlords benefit from tax write-offs, increased equity and increased rent on vacant unit. Landlord advocates wanted the figure to be closer to the current 100 percent pass-through. The compromise brought forward by Schaaf and councilmember Larry Reid proposed 75 percent be passed through to tenants. At the end of the day, the council settled on 70 percent.
“This is the first time that some pro-tenant legislation was passed at the council,” Robbie Clark of Causa Justa::Just Cause said. “The voices of tenants and other advocates were heard.” He joined several councilmembers in citing the ten percent cap on rent increases as a major win for tenants.
A handful of landlords were the first to approach the mic. Two of them suggested that tighter rent control regulations would lead to greater gentrification, a contention that was challenged by later speakers, who argued that rent control offered protection against displacement.
Luke Blacklidge of the East Bay Rental Housing Association, who was a landlord representative in the negotiations mediated by Schaaf, said, “I don’t think anyone is going to get pushed out” because of the ten percent annual rent increase limit in the proposed law.
The landlords were followed by a long line of tenants advocates. Some told personal stories of habitability issues, losing neighbors to gentrification, and rent increases that had forced them to move.
Two people reported rent increases due to capital improvement pass-throughs soon after investors bought their buildings, a worrying trend as more investors move into the rental housing market.
Wendy Georges spoke on behalf of the Alameda County Public Health Department (ACPHD) about the public health consequences of displacement. “The Public Health Department has an important stake in this discussion,” she told Oakland Local. ACPHD research shows that median rents in recently gentrified neighborhoods, such as North Oakland, were higher in 2011 than rents in the historically affluent neighborhoods, including Rockridge and the Oakland Hills.
“Gentrifying neighborhoods have resulted in a substantial displacement of African American households in Oakland, including a loss of Black home ownership. Between 1990 and 2011, the proportion of African Americans in all Oakland neighborhoods decreased by nearly half, and home ownership dropped from 50% to 25% of all homeowners in the city. Across Oakland, the African American population declined by 17 percentage points from 43% to 26%. This was the largest drop of any population group. The impact has clearly been disproportionate and favorable to people at the higher end of socio-economic income scale at the expense of people at the lower end of that scale.” – excerpt from Wendy Georges’ testimony to Oakland City Council.
Three of the people who spoke in favor of the Tenant Justice Campaign identified themselves as landlords. One woman, whose said her family has owned rental property in Oakland for 30 years, reported never passing on more than a small percentage of capital improvements to tenants because, “It’s obvious that the benefits of improvements accrue to us, the owners.”
Several speakers thanked Larry Reid for pushing for additional negotiations between the parties, noting their surprise at the positive outcome in what had been seen as a battle between two entrenched sides whose interests couldn’t meet.
“It’s a major victory but there’s also a lot more work we need to do,” said Clark, adding that tenant organizers won’t ease up until the capital improvement pass-through and cap on rent increases become law.
Staff has been directed to draft an ordinance based on the motion that emerged from Tuesday’s meeting. The city council will consider these rent control changes at its April 22 meeting and, if it passes, the ordinance changes come back for a second hearing on May 6. If they are approved, these provisions will go into effect after 90 days.
“In this urgent surge of gentrification, there’s this growing tenant justice movement,” Clark noted. “We’re going to continue to build this. This is not the end. This is the beginning.”