Sacramento Inches Closer to Rent Control. but Which Competing Proposal Will Win?


Sacramento Inches Closer to Rent Control. but Which Competing Proposal Will Win?

2018-10-26T12:51:34+00:00October 26th, 2018|Advocacy, Local Updates|

“Sacramento’s rent-control wars hit a boil this week. And became incredibly convoluted as well.

A petition drive to stifle rent hikes by landlords got a boost at City Hall, albeit from a not entirely supportive City Council. The same day, a competing proposal, kinder to landlords, written by three council members, saw its first formal hearing. And a business group vowed a lawsuit to kill the petition effort.

The mayor also pitched several steps the city may take in the coming weeks to encourage more affordable housing construction. Meanwhile, the city’s controversial Measure U sales tax hike, which is on the Nov. 6 ballot, looms as perhaps the biggest game-changer of all on the city’s affordable housing playing fields.

Keeping up requires a cheat sheet. Here is an insider’s look at what’s happening:

Sacramento’s housing worry

Sacramento has won the ignominious prize of being the city with the fastest growing apartment rents in the country in several of the last few years, at one point topping 10 percent. A 750-square-foot apartment in midtown now rents for $1,500 a month on average.

That’s not nearly San Francisco-level prices, but it’s enough to push many workers to the edge of their budgets, and to stifle city efforts to create a more robust local economy that includes young workers.

The battle begins

Saying city leaders weren’t dealing with the problem, a group of affordable housing advocates and union leaders gathered 44,000 city voter signatures on a petition this summer to create a city rent control board that would annually decide how much landlords can increase rents. The proposal also set limits circumstances under which landlords can evict tenants.

The City Council this week voted to certify that the petition drive has enough signatures to qualify for a public vote. Mayor Darrell Steinberg pointed out, though, that the council vote was a “ministerial” step and doesn’t mean council members like the proposal. In fact, most don’t.

The proposal, called the “Sacramento Community Stabilization and Fair Rent Charter Amendment,” stipulates that annual allowable rent increases for affected units must be no less than 2 percent and no more than 5 percent each year.

Voters won’t get their shot at the measure anytime soon, though. The group failed to meet the deadline to qualify the rent control initiative for the upcoming Nov. 6 ballot. Instead, the measure likely will go on the city ballot in 2020.

Despite that delay, the effort, led by the nonprofit Public Advocates, Inc. and labor officials, already has served as a catalyst at City Hall for other efforts to spur affordable housing and to tamp down extreme rent increases.

The legal challenge

One reaction: A coalition of landlords, builders and real estate agents say the rent-control initiative is illegal and that they will sue to stop it from getting on the ballot if they have to. They won a small victory this week when they persuaded the City Council to ask the city attorney to look into the legality of the measure.

“If the city fails to act, we will,” said Josh Wood of Region Builders, which opposes the rent-control plan. “Either way, the ballot measure is dead on arrival.”

Rent control advocates counter that they’ve vetted their strategy with a political law firm, and determined it’s legal.

The legality debate revolves around the question of how to change the city charter. Rent-control initiative proponents say their proposal merely “amends” the charter, something voters have the right to do.

Opponents characterize it as a more substantial change, a charter “revision.” They point out that a judge in 2010 threw out a previous initiative that would have revised the charter via public vote to create a “strong mayor” form of government.

The competing proposal

Several City Council members say the initiative effort by affordable housing advocates goes too far, and could discourage builders from constructing new rental units. Those three, Eric Guerra, Steve Hansen, and Rick Jennings, are countering with a proposal they formally introduced this week called the Sacramento Tenant Protection and Relief Act.

It requires landlords to offer tenants the option of 18-month leases with set rents for that entire period. It also sets up a mediation process if a landlord attempts to increase rent by 6 percent more more – if a renter challenges that attempt.

The landlord likely would have to pay a $200 mediation fee to the city. But the mediation is not enforceable. That means the landlord can charge a 6-percent-plus rent increase regardless of what the mediator says.

Michelle Pariset of Public Advocates Inc. said that means the proposal doesn’t have the teeth to protect renters. “It’s non-binding. That’s not functional.”

The council trio’s proposal would sunset after three years. It also leaves open the option for landlords to charge higher rents for 18-month leases than they might for shorter term or month-to-month leases.

City tries another approach

Steinberg said the Guerra-Hansen-Jennings plan has merit, but he suggested it may not offer strong enough protection for renters.

He’s also advocating for internal city changes that could boost affordable housing reform: The council on Tuesday will take up a proposal essentially eliminating some permit fees for builders who are willing to construct new affordable housing apartments. The council likely will follow up with steps to speed the permitting process for affordable housing units.

“It is simple economics,” Steinberg said. “It can be expensive to build affordable and workforce housing. Whatever we can do to increase the volume that is reasonable, we are going to do.”

Measure U and affordable housing

But the mayor’s biggest political push this year is Measure U, the city sales tax initiative on the upcoming Nov. 6 ballot. The money that measure produces will go to a plethora of city needs, including, if Steinberg has his way, a big chunk into a housing trust fund to allow the city to help subsidize more construction of new affordable housing projects.

Ever since the state killed its redevelopment program in 2011, cities no longer have a funding pipeline that allows them to distribute seed money for projects that fight blight or add affordable housing.

As a result, the city’s housing fund now has only enough money to help build about 15 apartment units, Steinberg says. That’s a paltry number in the minds of city officials who say their goal is to see several thousand affordable units built in the next decade.

“We need a trust fund that is worthy of great city,” Steinberg said.

But what about Prop. 10?

Proposition 10, the statewide rent control measure on the Nov. 6 ballot, could dramatically change the potential scope of Sacramento’s proposed 2020 rent-control measure. Prop. 10 repeals a 1995 state law that banned cities from imposing rent control for apartments built prior to that year.

If Prop. 10 passes, Sacramento’s rent control measure would be much broader, applying to all rentals regardless of when they were built, and applying as well to houses and condominiums that are used as rentals.

If Prop. 10 fails – polls show it losing the Sacramento ordinance would have a smaller reach, affecting only landlords and tenants at apartment buildings constructed prior to 1995. Advocate Pariset, however, estimated that still accounts for 72 percent of the Sacramento city rental market.

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