Rent increases for rent controlled units will be limited to 2% this year with a maximum monthly increase of $44.

Rent control increases are governed by formulas in the City Charter and while the Rent Control Board has no control over the percentage increase they do have a choice when setting the additional dollar cap. The board unanimously approved the increases at their June meeting and only one individual spoke about the decision.

Local landlord David Miller said the dollar cap deprived landlords of necessary income to maintain units and would encourage small operators to sell to developers.

“The main thing that imposing this arbitrary cap on top of a sub-inflationary annual adjustment is just to deny housing providers the money they need to maintain their aging buildings and an ancillary effect of imposing the cap is to encourage mom and pop housing providers like me to sell their buildings, often to developers,” he said.

Miller said the cost associated with operating a building are increasing at a rate far greater than the annual adjustments.

“I guess my point is we’re in an unsustainable situation,” he said. “We have expenses that are governed by the free market and rent adjustments are limited to sub-inflationary increases that are then further decreased by an arbitrary cap. It’s really not fair and it’s going to get worse.”

Several commissioners said the increases were necessary to maintain stability and landlords were able to make up the costs when units reset to market rates.

Commissioner Nicole Phillis said the commission wants mom and pop landlords to succeed in the City but said that without a dollar cap, the compounding of annual percentage increases could quickly drive out newer tenants.

“We hear you on this but this is a critical point because the compounding impact on tenants in the long term undercuts the entire purpose of rent control,” she said.

Commissioner Anastasia Foster said the adjustment formula captures some of the annual cost increases associated with owning a building and said landlords are reaping huge profits when long term tenants vacate a unit that more than compensate for the rent caps.

“There’s nothing sub-inflationary about the gigantic, 30, 80, 100, 150, 200 percent rent increases every time there’s a Costa Hawkins vacancy filled,” she said.

Landlords can implement the General Adjustment (GA) of 2% for eligible units, with a maximum $44 increase for rents of $2,175 and above effective September 1, 2019 with proper notice.

editor@smdp.com

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