The Rent Control Board will meet this week to determine allowable increases for rent controlled units and while the proposed figure is significantly higher than increases in recent history, it is less than half of the figure that roiled renters last year.
Rental increases in rent controlled units are established by a preset formula that limits rents to 75 percent of the Consumer Price Index (CPI). This year, the CPI comes in at 3.7 percent meaning increases will be capped at 2.8 percent for the next year. The Rent Control Board has the option to establish a dollar cap on those increases which is also determined by a preset formula and if they do implement the cap it would be a maximum of $67 per month on units already paying $2,375 a month or more.
This year’s general adjustment is the first since skyrocketing inflation rates upended the system and prompted a renter rebellion at the ballot box.
Record inflation rates last year of about 8.5 percent required the Board to establish a rent increase of 6 percent, which was at the time the highest allowable increase.
The last time the annual rent control adjustment reached 6 percent was in 1990. Prior to passage of the 6 percent cap amendment, the highest annual adjustments were 7 percent in 1979 and 6.5 percent in 1980. In comparison, the 2021 adjustment was 1.7 percent and the 2020 adjustment was 1.4 percent.
The increase prompted local officials to propose a new charter amendment that would lower the maximum allowable rental increase to just 3 percent a year regardless of the CPI. That effort became Measure RC and the ballot measure also rolled back the 2022 general adjustment to an average of 3 percent.
To accomplish the rollback, landlords who had increased rent by 6 percent for the months preceding the election had to reduce rents to a 0.8 increase for the remainder of the year. For example, a $1,000 payment would have increased to $1,060 for the first part of the year before dropping to 1,008 per month for the remainder of the year.
The result was an average increase of three percent for the year and this year’s adjustment will be applied to that rate, meaning the increase of 2.8 percent would be applied to an annual rent of $1,030 in the example situation (taking the example rent to $1,059 this year).
This week’s discussion will be limited to the formula mandated percentage increase and the Board will debate establishing the dollar cap next month.
The Board will meet on Thursday, May 11 at 7 p.m. in City Hall, 1685 Main Street. Visit https://www.smgov.net/Current_Board_Meetings.aspx for more information.