Earlier this month, councilmembers Meagan Harmon and Kristen Sneddon introduced a concept via memorandum called a Community Stabilization Policy Initiative in attempts to explore a limitation on the increased percentage landlords can charge per year.
The proposed limitation is no more than a 2% increase in rent a year. In addition, in the event of a decrease in Consumer Price Index in any given year, no rent increase is allowable in that year.
While an ordinance dealing with no-fault eviction and relocation assistance will be voted on months from now, the rent cap proposal is far from even being written down on paper.
Currently, the councilmembers hope to engage with Santa Barbara residents in public discussion.
“Community stabilization is just a concept we are hoping to engender discussion on,” Ms. Harmon told the News-Press. “It’s not an ordinance. It’s not scheduled to be voted on.”
In the memorandum, a copy of which was obtained by the News-Press, the councilmembers pointed out that Santa Barbara County is the sixth most cost-burdened county out of the 58 counties in California. More than half of city renters are paying more than 30% of their income on housing.
“We want to have a conversation about what stable housing looks like and what the options are to move us in that direction,” Ms. Harmon said. “The policy itself is not particularly innovative — it follows the policy in place in the state.”
She added that the vacancy decontrol ordinance is key to the rent cap. When a tenant moves out or relocates, the unit can be re-let at whatever price the landlord is able to negotiate with the next tenant, potentially returning to market price.
“That’s an important piece because it does, in our view, really respect and reflect the rights of property owners to price their unit as they see fit while also reflecting the needs of our community for stable housing, now more than ever,” Ms. Harmon said.
The memo includes many “carve-outs,” including: “rental housing with a certificate of occupancy issued less than 15 years ago; duplexes where the owner lives on site in the other unit (including ADUs); deed-restricted affordable housing or government subsidized housing; rental units within a single-family home or condominium; and other units determined ineligible under State law.”
In addition, “the rent may be raised more than the allowable amount in any given year if the landlord is making allowable capital improvements to the unit.”.
“We have some old houses here and old houses require repairs, so I want to honor that and I think in this concept, we have tried to do so,” Ms. Harmon said.
She concluded by saying, “Fundamentally, I truly believe that tenants and landlords, wherever you are on this debate, you want what is best for our community.”
The memo says the projected community impact of this initiative would be “significant.”
“With the advent of COVID-19, the ramifications of ever-increasing housing costs are as of yet unknowable, but they are undoubtedly extreme,” the memo reads. “By coupling rent stabilization with vacancy decontrol as we have, we are facilitating much needed stability for our community’s families, while respecting the right of landlords to price their units in accordance with market forces.”
In the state of California, it is illegal for residential landlords to raise rent more than 5%, plus the local rate of inflation, in one year, per a law signed by Gov. Gavin Newsom in 2019.
The law was turned down by voters, but signed anyway.
This fact does not sit right with Irene Kopel, a Mom ‘n’ Pop property manager in the state.
“It’s shocking to me that this could have even gotten through this way,” Ms. Kopel told the News-Press. “How can that happen? What is the point of voting?”
The property owner opposes the proposed rent cap, saying it targets property owners as a whole.
“There’s something bizarre about all of the sudden picking a private group of Americans who worked their whole lives and making them personally responsible for other individuals in the state,” Ms. Kopel said. “They’re now carrying them. They’re privately providing welfare for these people.”
She said that the rent cap wouldn’t only hurt the property owners, but the tenants too.
“The big guys who have professional managements’ rents are usually right up there, but for the little Mom ‘n’ Pops, these people tend to fall in love with their tenants,” she said. “They tend to give them breaks, and now they’ve been really penalized and hurt.”
The property manager concluded that she’s concerned with building maintenance and the fact that the program isn’t “needs-based.”
“When rent control like this is not need-based, there are people in some of these units who have more income than the owners,” Ms. Kopel said. “Then they (the owners) can’t afford to maintain their properties. You really can’t have something that’s statewide and then decide to put these massive problems on the backs of a group of private individuals. It’s grossly unAmerican.”
Laura Bode, the executive director of the Santa Barbara Rental Property Association, told the News-Press the organization does not have enough information on the initiative to comment, so it will wait until there is a public hearing and conversation.
However, she did include comments regarding the current state of the association’s properties.
“Our members are paying the expenses of keeping renters housed — even those who can’t pay rent,” Ms. Bode said. “According to a July 2020 study by the National Association of Hispanic Real Estate Professionals and UC Berkeley’s Terner Center of Housing, 25% of Mom ‘n’ Pop landlords were already borrowing money in June to cover a shortfall in rent.
“Most of our members are small “Mom ‘n’ Pops” that own at most a couple units. They are typically well below market-rate rents. They aren’t professional investors. They hold jobs to support their families. Some of them have also experienced lay-offs and reduction in job income,” she continued.
Ms. Bode said that as the association enters the fifth month of renters unable to pay, she is hearing from more and more Mom ‘n’ Pop owners that they need to sell because they cannot pay the bills.
“Why should other Santa Barbarians care? Because when a Mom ‘n’ Pop sells, their below-market rental unit disappears,” she concluded.