Amongst a carousel of aerial vistas of the “American Riviera,” The Santa Barbara Association of Realtors’ homepage issues a warning: “Calling all real estate professionals! Oppose unsustainable rent caps and an expensive rent registry.”
The homepage challenges a proposal by Mayor Cathy Murillo and Mayor Pro Tem Oscar Gutierrez to cap annual rent increases to 2% plus the consumer-price index. They also want to create a list of rental units in the city of Santa Barbara — where 60% of residents rent — with a price tag yet to be determined.
The Santa Barbara City Council will consider their suggestions near the end of its 2 p.m. meeting today. Organizations representing landlords and tenants have asked members to speak up during public comment.
The memorandum Mayor Murillo and Mayor Pro Tem Gutierrez submitted to the council’s office Nov. 15 leaves much to the imagination. Perhaps that’s why Realtors and news organizations alike think the proposal limits rent increases to 2% without concern for inflation.
Mayor Murillo told the News-Press it was a common misconception. Central Coast Alliance United for a Sustainable Economy, or CAUSE, advocates for a 2% cap. This way, she said, it’s like a compromise to include the consumer-price index.
Lawmakers enacted rent control statewide through Assembly Bill 1482, which capped increases at 5% plus the consumer-price index beginning Jan. 1, 2020. It also requires “just cause” during evictions.
SBAOR President Brian Johnson said the number of laws imposed on landlords recently have become “burdensome.” He’s concerned owners with fewer properties may choose to sell their rentals.
“I think it’s not only going to affect our landlords but our tenants as well,” he told the News-Press. “I understand that everyone’s concerned about the cost of a home, but putting a draconian rent cap will not decrease the cost of a home.”
He points to climbing utility fees and the cost of materials, like lumber.
“The concerns that we have is that it is going to shrink a property owner’s reserves and they won’t be able to maintain upkeep,” he said.
Mayor Pro Tem Gutierrez has heard Mr. Johnson’s arguments that small landlords might sell out in the midst of restrictions.
“I personally don’t understand that mindset because real estate in Santa Barbara, as an investment, has held fast through so many recessions,” he told the News-Press. “When the pandemic happened, the price still went up.”
According to the city’s 2021 rent survey, the median rent in Santa Barbara is about $2,700. The difference between the proposed ordinance and the state’s rent cap is $81 per month.
Mayor Murillo said single-family homes, unless owned by a real estate trust or corporation, would be exempt from the rent cap as well as duplexes where the owner lives in a unit. These terms were specified in AB 1482.
A rent cap only restricts what a landlord can charge a tenant who is renewing a lease. Santa Barbara does not have vacancy control, a limitation on the amount a landlord can raise the rate between tenants.
Mayor Murillo and Mr. Johnson both told the News-Press they didn’t think evictions would be weaponized as a way to raise rent. Mr. Johnson, though, said some landlords would be holding tenants “to the letter of the lease.”
Max Golding, a representative from the Santa Barbara Tenants Union, said he has seen harsh tactics.
He is in favor of the proposed rent cap and rental registry, though he said AB 1482 yielded a “mixed bag.”
Some landlords attempted to raise rents over the legal limit — which he argues wasn’t strong enough of a cap. A cap of 5% plus inflation has resulted in 9% hikes this year.
“It’s also had them resort to smarmier tactics in many cases,” Mr. Golding told the News-Press. Tenants complained that they had amenities, like parking, taken away or that landlords refused to pay utilities in a renewed, capped contract.
“We know that as long as housing is an investment vehicle, they’re going to find their way around it,” he said.
He supports a rental registry because he would like the city of Santa Barbara to log rent costs each year. That way, he said, there’s accountability if a landlord seeks an illegal rent hike.
But Mr. Johnson has concerns about privacy and cost. He worries about who will maintain the system and if residents’ data will be stored.
Mayor Pro Tem Gutierrez said he is waiting for the city attorney’s office’s advice as the council discusses what data the registry would track. But he said it would be beneficial to have a list of all the rental units as they look for affordable-housing solutions.
“We can talk about whether or not it can come out of the general fund, but we need to be doing things we’ve never done before to try to find a solution for something we’ve been dealing with for decades,” he said.
Mayor Murillo described the registry simplistically as a listing of address and rental terms. She said the idea has been discussed as the city implements Senate Bill 9, which allows urban lot splits statewide. Properties used as a rental in the past three years are not eligible for a lot split, so councilmembers questioned how staff could track that data.
“SB 9 will change the way people can use their properties so it will be important to know if people have been living in those units,” she said.
She said the City Council is far from voting on a rental registry but could vote on the rent cap.
Many have criticized the timing of the proposal, arriving just before Mayor Murillo’s departure. Indeed, Mayor Murillo and Mayor Pro Tem Guitierrez filed the memorandum less than two weeks after the mayor’s loss in the city election to Randy Rowse.
But Mr. Gutierrez said the rent cap is something both he and Mayor Murillo have wanted to enact for years.
“This was something that was brought up to me over three years ago when I was running for office to be elected,” he said. “We’re only two of seven so if the majority of council does not agree, then we did our best to make it happen.”
To watch the City Council meeting or view the agenda, go to santabarbaraca.gov/cap.