The rent control board has capped rent increases $60 a month following a brief hearing last week.
Increases for rent-controlled units are subject to two caps: a percentage and a fixed dollar amount. The percentage is mandated by the city’s rent control rules and is determined by a fixed formula that yielded at 2.9 percent increase for this year. The board is not required to establish a dollar limit but can do so utilizing a separate formula that yields a $60 cap this year.
Under the City’s rules, rent-controlled tenants will pay either a 2.9 percent increase or $60, whichever is lower.
“Because a $60 ceiling would apply only when it would yield a lower rent increase than application of the 2.9% general adjustment, the ceiling necessarily applies only to higher rents,” said the staff report. “This means that imposing a ceiling would result in a proportionately smaller increase for market-level tenancies than for many long-term controlled tenancies. For example, a tenant paying $1,500 per month will see an increase of 2.9% or a dollar amount of $43.50, rounded to $44. A tenant paying $3,000 per month would pay the $60 ceiling that, while greater in dollar terms, is a percentage increase of only 2%.”
Landlord David Miller said establishing a dollar cap unfairly penalizes buildings that provide larger units. He said costs associated with maintenance are not capped and do decrease for large units.
He said a recent bill for more than $18,000 from a roofer will never be covered by the limited rents.
“Yes, we have a reserve fund, but there’s no way to pay this invoice from the rents,” he said. “I’ll just have to reach into my retirement savings to pay this bill.”
Miller said the caps are unfair to owners who are trying to cover the cost of repairs.
“My point is, is that the general adjustment doesn’t cover the increased cost of skilled labor and materials and to give less than the general adjustment just makes it impossible to maintain these older buildings,” he said.
The Board was unmoved by his arguments and unanimously approved the $60 cap.
Chairwoman Anastasia Foster said the board has a duty to protect current tenants just as boards protected tenants when rent control was first established.
“It’s a tool we are given and it’s a tool I am willing to use,” she said.
Commissioner Todd Flora said vacancy decontrol rules, known as Costa Hawkins, allows landlords to charge market rates when a new tenant moves into a unit and with the ever-increasing cost of market-rate rents, landlords should be able to cover their costs.
“I continue to be baffled by landlords that cry poverty at these post-Costa Hawkins rental rates,” he said. “The rents out there these days are staggering, people are spending more than 50 percent of their monthly income. This is the absolute least we can do for them as pertains to the general adjustment being what the general adjustment is.”