Some Richmond property owners agree to limits on rent increases, but face skepticism
on May 4, 2015
In Richmond, politicians and community organizations are tackling the issue of rising rents. Last week, in a step that he hopes will bring immediate relief to tenants vulnerable to rent increases, Vice Mayor Jael Myrick announced agreements with a number of property management companies to temporarily limit rent increases while the city council debates solutions for tensions over rent prices.
According to Myrick, some of the biggest players in the city’s rental market, who collectively own more than 1,600 units, will voluntarily limit rent increases to no more than 10 percent per year. “I think that’s a very good sign, and it gives us the ability to move forward and figure out what direction we really want to go in without having to fear that people are going to have their rents increased,” said Myrick.
He pointed out that the agreements he negotiated with the companies are his own initiative, not an official action of the city council, and they differ from case to case. For legal reasons, he said, the firms were not allowed to talk to each other about the content of the arrangements. A majority of property owners involved did not put a timeframe on the agreements, but will keep to the rent increase limit as long as city council discussions are continuing, while some of them specifically listed a period of 90 days, said Myrick.
The agreements were negotiated after the vice mayor removed from the April 21 council agenda a proposal for a 45-day emergency moratorium on all rent increases. The moratorium would have required six of the council’s seven votes to pass, rather than five, as Myrick had previously believed. Myrick said that the City Attorney’s office had miscalculated the number of votes needed, and the correct figure was only announced the day before the meeting. As Richmond Mayor Tom Butt and Councilmember Nat Bates “oppose anything related to rent control,” Myrick said, it then became clear that the moratorium could not pass and that he had to remove the item from the agenda. Meanwhile, Myrick said, he began a dialogue with property management groups about temporarily limiting rent increases.
According to a copy of a letter provided by and addressed to Myrick, the global real estate investment and services firm Kennedy Wilson has agreed that while “the city is discussing how to best cope with the accelerated housing crisis in the Bay Area,” the company will restrict rental increases to no more than 10 per cent per year for notices issued after April 21, 2015. According to the letter, Kennedy Wilson operates 1,008 units of rental housing as the owner of Bella Vista Hilltop Apartments at 3400 Richmond Parkway. The firm added that it expects “to continue this practice” while the city discusses its housing challenges.
In an email, Myrick said that he received similar letters from companies Greystar California Inc., Castle Management Company, CCH Property and FPI Management.
In an email statement, Joseph A. Lawton Jr., vice president of Castle Management and member of the California Apartment Association, confirmed that his company voluntarily agreed to limit rent increases for existing tenants. He also said that the firm wants “the city of Richmond and its residents to know” that owners of multifamily residential units “are willing to work with them.” Other companies involved in the initiative did not reply to requests for comment.
For Myrick, the companies’ commitments show that “as long as we move forward in this process in a responsible way,” the city will be able to avoid having rents raised “prematurely” before the city council debates whether to pass rent control measures and stricter eviction policies in the future.
But there are people in the Richmond community who are skeptical about the industry’s intentions—and the reliability of such agreements. Edith Postrano, an organizer with the non-profit Alliance of Californians for Community Empowerment (ACCE), said that the agreement “is doing something,” because the city hasn’t implemented a rent control ordinance yet. But, she said, she thinks that by agreeing to the voluntary limit, landlords are trying to avoid rent control for as long as possible. “It’s this tactic to try and make sure that rent control doesn’t get passed,” said Postrano.
“There’s a large vulnerable community, people in Richmond that are vulnerable to moving out if they can’t afford to live there any longer,” she continued. For her, she said, the question is whether local politicians are “standing by the community, the tenants, or are they standing with the landlords?”
Richmond City Councilmember Eduardo Martinez said that he has to review the specific language of the agreements between Myrick and property management companies first before judging them in detail. But he pointed out that a rent control ordinance would probably keep rent increases at 3 percent per year, which is much lower than the 10 percent stated in the agreements.
In Bay Area cities with existing rent control policies, notably in San Francisco, Berkeley and Oakland, landlords can give tenants a rent increase only once a year. Ordinances vary from city to city, but in general rent increases are limited to a certain percentage that depends on the Bay Area Consumer Price Index (CPI). For example, according to the San Francisco Tenants Union’s homepage, the allowed rent increase in the city for the period March 2015 to March 2016 is 1.9 percent. The City of Oakland states on its website that the annual CPI rate for rent increases that take effect from July 1, 2015 through June 30, 2016 is 1.7 percent.
However, because of state law, buildings constructed after 1996 are excluded from rent control in all of California. Richmond’s mayor Tom Butt said in an interview that, of the approximately 19,000 rental units in the city, only a few thousand units would be subject to rent control.
Martinez said, in the case of rent control, Richmond would have “legislation that makes something a certainty.” But in the case of Myrick’s efforts, he continued, “We have a handshake which could be worth nothing or worth something.” He said that, as a renter himself, judging from his experiences with landlords, he would prefer a binding legal arrangement rather than voluntary agreements. Even though he has had landlords who were “fantastic,” Martinez said, “I had landlords who made empty promises.”
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