2.26 22-0377 Subject: Ordinance To Modify The CPI Rent Adjustment
From: Councilmember Fife
Recommendation: Adopt An Ordinance Amending Chapter 8.22 Of The Oakland Municipal Code (Residential Rent Adjustments And Evictions) To (1) Make The Annual Permissible Rent Increase For Covered Units 60% Of The Percentage Increase In The Consumer Price Index Or 3%, Whichever Is Lower And (2) Align Annual Adjustment Period With State Law
The City of Oakland is showing bad faith and injecting politics in unilaterally breaking a 20-year agreement. Politicizing the Inflation Adjustment for Rent each year is detrimental to everyone involved. This is by definition NOT a rent increase, just an adjustment to keep pace with inflation. That is why in 2001 tenant advocacy groups, housing providers and the City of Oakland came together at the table with their viewpoints and negotiated in good faith.
The CPI adjustment as it is currently calculated is the time-honored result of collaboration and agreement among community stakeholders and the city. The average rent adjustment for the last 19 years is 2.4% (with two years of 0.7% CPI adjustments). The longstanding covenant should not be lightly dismissed because of the result of a single year’s rate of inflation. It's most likely an aberration.
And in classic hypocritical fashion, city council just voted to give themselves 6.2% raises. Heck, when Oakland's CPI was a mere 0.7% CPI, they gave themselves 5% raises each time, I believe.
Let's not forget MANY Oakland housing providers have not seen ONE DIME given the seemingly endless eviction moratorium. Many are at risk of losing their property. And to be clear, the most vulnerable housing providers, the owner occupied situations mean they may also be at risk of losing their homes to FORECLOSURE. This latest proposal might just be the death knell for many. Think "grandma and her duplex", not Blackstone!
Very short sighted of the City Council to propose such an ordinance without an analysis study. I am a small mom and pop housing provider. To suggest that the rent increase be capped at 3% or 60% of the CPI is not reasonable or sustainable, This small amount cannot cover maintenance let alone any improvements to improve tenants life. This is not good for tenants or for small housing providers. We will be forced to sell to greedy investors who could care less about our tenants or our communities. Please see that this is a very short sighted on all of your and request a study
No no no! Capping a CPI increase for the rental market is a bad idea and very shortsighted. Limiting the amount a landlord can increase encourages slumlords and discourages good landlords from maintaining their property because a budgetary constraints. If the city Council can vote itself a generous 6.3% CPI increase for their salary it makes sense that landlords ought to be able to especially since they were handicapped by moratoriums Since 2020. Why is Oakland City council so determined to harm the residences of tenants and make it so difficult for small mom and pop landlords to upkeep their properties?
Please pull item and request a complete analysis and report
Dear Councilmembers:
Mom and Pop housing providers provide low-cost housing and need your support because we are part of the community solution to the housing crisis.
The public and council did not receive a full and transparent or honest report from staff on May 31st regarding the Proposal on Inflation Adjustment for Rent. In fact, community members were shocked by the MATERIALLY MISLEADING staff presentation by Shola Olatoye and Chanee Franklin-Minor who suggested that housing providers would not be severely impacted by the Inflation Adjustment proposal. Ms. Franklin-Minor presented that housing providers are guaranteed a “Fair Return” but also MATERIALLY FAILED to disclose that the “Fair Return” is another False Promise. In fact, as RAP director, Ms. Franklin-Minor, is well aware that a “Fair Return” is virtually impossible to get. Between 2016 and 2022, only 16 applicants for a “Fair Return” were filed and it is unclear how many were granted. The biased RAP requirements are made to be impossibly onerous, so much so that just 2 thousands of one percent could apply (16 applications per ~100,000 housing units one 6 years). OUR REQUEST: Given that the public and council were MATERIALLY MISLED by staff, Oakland residents respectfully ask council members to 1) pull the Inflation Adjustment for Rent item from the consent 6/7/2022 consent calendar and 2) request a complete analysis and full report.
What exactly is "progressive" about lumping Mom and Pop rental providers with Major Corporate landlords and wealthy developers? Haven't we suffered enough already? Many of us are still suffering from the effects of all the economic Covid related "help" you've given to the world, yet while our costs for just about everything have increased, the City Council continues to punish small housing providers with more insane ordinances like this one. Mark my words renters, if this goes through you may think you've won, but give it a few years ....when our properties have been gobbled up by what ever "non-profit" that your council members are aligned with and you're trying to get your leaking toilet fixed and you're put on hold by someone at a call center in... Mumbai. Or Florida.
Tying the ceiling on rent increases to CPI has been used in the past to limit rent increases to below 1%. Now inflation is running high and making it more costly to maintain property. A 5-6% rent increase in the current inflationary environment is not a rent increase. It's simply allowing property owners to keep real rents constant. Capping increases is forcing landlords to accept lower rents in real terms. Certainly some large corporations can afford this, but small owners will struggle to maintain their properties if this amendment passes.
This kind of significant policy change should not be done without the benefit of accurate staff reports. Reporting must provide objective information. Without clear benchmarks and rationale for changing the formula, there is no basis for making future changes.
This year's spike in allowable rent increases was anticipated, but rather than start the public process ahead of time, the author found it politically advantageous to rush this through using the cover that covid emergency rules provide. We deserve better.
All housing providers face the same operating cost increases consistent with inflation. The capacity to absorb them depends in large part on volume and financial backing. Fewer units means smaller income margins, therefore this ordinance unfairly targets small scale providers who have already been asked to shoulder the economic impacts of the pandemic with eviction moratoriums that remain in place to this day with no end in sight. It encourages providers to remove rentals from the market and it also encourages investment from out of state or even out of country. Everyone loses. While pitting renters and landlords against each other may be an old and easy solution, it's not the smartest one. Please demonstrate leadership by bringing all stakeholders to the table for a transparent analysis and discussion of a fair solution.
Mom and Pop housing providers provide low-cost housing and need your support. The public and council did not receive a transparent or honest report from staff on the CPI Rent Adjustment. Community members were shocked by the MATERIALLY MISLEADING presentation by staff who suggested that housing providers would not be severely impacted by the Inflation Adjustment proposal.
Ms. Olatoye stated that “Qualified” applicants for missed rent would be paid but MATERIALLY FAILED to disclose that ALL applicants with missed rent starting April 1, 2022 going forward will NOT be paid. Similarly, applicants will NOT be paid if tenants fail to apply, make > 50% AMI, or moved during the pandemic.
Ms. Franklin-Minor presented that housing providers are guaranteed a “Fair Return” but also MATERIALLY FAILED to disclose that the “Fair Return” is virtually impossible to get. The biased RAP requirements are made to be impossibly onerous, so much so that just 2 thousands of one percent could apply.
OUR REQUEST: Given that the public and council were MATERIALLY MISLED by staff, Oakland residents respectfully ask council members to
1) pull the item and request a full report
2) add a 3 year sunset clause and an equity study to analyze policy impact on black and brown owners who rent to fellow minority members.
As hard working providers of low-cost housing, we seek fairness & immediate relief from the city's "Free Rent" Policy. We can not absorb 40% of inflation costs every year.
This is policy based on mis information to the public and should be discussed by all stakeholders before a vote can even be considered. City council is sacrificing the well being of one group in the hopes of helping another group. If City Council truly believes in equity and fairness then they should postpone this item and consider how this affects ALL of our long time community members who have been struggling with increased costs due to covid.
This report contained no analysis, consequently many questions were raised on the floor and city staff was not prepared with data to respond to Council questions. Voting on policy based on anecdotal statements and no data is irresponsible and a disservice to both the tenant community and small housing providers. Even if the facts didn't change the vote, the Council missed an opportunity to educate themselves and the community about the cost of rental operations. They promulgate divisiveness rather than understanding.
Bas, Fife, Thao, Kaplan, and Kalb have methodically and continuously excluded small mom & pop landlords in the community from the progressive business tax and now they're making it more difficult for this segment of the community to operate in the city of Oakland. It seems there's a 3 step process taking place:
1. Maintain high taxes.
2. Methodically reduce income.
3. Organize tenant strikes thru ACCE and use TOPA to force landlords to sell. Even if those landlords are small mom and pop landlords.
This amendment does not take into consideration the potential issues on some struggling housing providers who are not able to keep their heads above water with the current inflation. An owner petition to passthrough for increased costs of ownership is not a simple process for many longtime small owners in Oakland. The petition process takes time and is full of red tape to the point of it being un navigable for many owners. It is also a very inefficient use of the rent boards time and resources. n allowable adjustment closer to true CPI minus housing is a fair way to go about rental adjusts. It is not an adjustment for profit, CPI only barely allows housing providers from keeping up with increased costs. Permit fees, utilities, and covid safety measures have been very expensive.
Last week's statements that RAP has existing avenues to let housing providers pass through some part of their repairs costs was: puzzling, at best. Capital improvements petitions, by definition, exclude repairs & maintenance. Petitions to recoup "increased housing" expenses might possibly address items like our yearly increases in PG&E, EBMUD & WMAC charges - but have nothing to do with this year's outrageous jumps in labor & materials costs for doing repairs & maintenance. And, has any housing provider ever succeeded with a "fair rate of return" petition?! (Not as of 2019, as I recall.)
Instead, each year's price fluctuations are designed to be offset by our 20-year-old CPI-based formula. "Offset," so as to keep rent revenues on an even keel in terms of real dollars - - as you heard last week, CPI adjustments do no more than that; they are not pay "raises" in the true sense.
If Council is unwilling to give back half of the 6.3% CPI adjustment it's voted for itself, it is unconscionable to deprive housing providers of their equivalent CPI adjustment.
Councilmember Taylor's amendment would at least let us spread this "once in four decades" number over time.
"Fair is fair."
NEIGHBORS DEFENDING OUR HOMES COALITION STATEMENT
Permanent Rental Increase Cap. Now the CC is poised to implement a permanent change in the long-standing limit on rent increases, with no sunset provision for this year’s historical anomaly. This action will be yet another significant blow to small rental providers who have been seriously harmed by skyrocketing inflationary repair/maintenance costs, rent/eviction moratoriums, and tax burdens. The proposed limit on Rent Adjustment should have a sunset clause of 3 years and its policy impact reviewed by adding an equity study that examines displacement of small and minority housing providers and their tenants.
The citywide Neighbors Defending our Homes Coalition (NDH) includes groups and individuals strongly supporting tenant rights and increasing low-income housing. Separating small Mom & Pops from major corporate landlords, commercial renters and wealthy developers advantages both tenants and small local housing providers.
The City of Oakland is showing bad faith and injecting politics in unilaterally breaking a 20-year agreement. Politicizing the Inflation Adjustment for Rent each year is detrimental to everyone involved. This is by definition NOT a rent increase, just an adjustment to keep pace with inflation. That is why in 2001 tenant advocacy groups, housing providers and the City of Oakland came together at the table with their viewpoints and negotiated in good faith.
The CPI adjustment as it is currently calculated is the time-honored result of collaboration and agreement among community stakeholders and the city. The average rent adjustment for the last 19 years is 2.4% (with two years of 0.7% CPI adjustments). The longstanding covenant should not be lightly dismissed because of the result of a single year’s rate of inflation. It's most likely an aberration.
And in classic hypocritical fashion, city council just voted to give themselves 6.2% raises. Heck, when Oakland's CPI was a mere 0.7% CPI, they gave themselves 5% raises each time, I believe.
Let's not forget MANY Oakland housing providers have not seen ONE DIME given the seemingly endless eviction moratorium. Many are at risk of losing their property. And to be clear, the most vulnerable housing providers, the owner occupied situations mean they may also be at risk of losing their homes to FORECLOSURE. This latest proposal might just be the death knell for many. Think "grandma and her duplex", not Blackstone!
Very short sighted of the City Council to propose such an ordinance without an analysis study. I am a small mom and pop housing provider. To suggest that the rent increase be capped at 3% or 60% of the CPI is not reasonable or sustainable, This small amount cannot cover maintenance let alone any improvements to improve tenants life. This is not good for tenants or for small housing providers. We will be forced to sell to greedy investors who could care less about our tenants or our communities. Please see that this is a very short sighted on all of your and request a study
No no no! Capping a CPI increase for the rental market is a bad idea and very shortsighted. Limiting the amount a landlord can increase encourages slumlords and discourages good landlords from maintaining their property because a budgetary constraints. If the city Council can vote itself a generous 6.3% CPI increase for their salary it makes sense that landlords ought to be able to especially since they were handicapped by moratoriums Since 2020. Why is Oakland City council so determined to harm the residences of tenants and make it so difficult for small mom and pop landlords to upkeep their properties?
Please pull item and request a complete analysis and report
Dear Councilmembers:
Mom and Pop housing providers provide low-cost housing and need your support because we are part of the community solution to the housing crisis.
The public and council did not receive a full and transparent or honest report from staff on May 31st regarding the Proposal on Inflation Adjustment for Rent. In fact, community members were shocked by the MATERIALLY MISLEADING staff presentation by Shola Olatoye and Chanee Franklin-Minor who suggested that housing providers would not be severely impacted by the Inflation Adjustment proposal. Ms. Franklin-Minor presented that housing providers are guaranteed a “Fair Return” but also MATERIALLY FAILED to disclose that the “Fair Return” is another False Promise. In fact, as RAP director, Ms. Franklin-Minor, is well aware that a “Fair Return” is virtually impossible to get. Between 2016 and 2022, only 16 applicants for a “Fair Return” were filed and it is unclear how many were granted. The biased RAP requirements are made to be impossibly onerous, so much so that just 2 thousands of one percent could apply (16 applications per ~100,000 housing units one 6 years). OUR REQUEST: Given that the public and council were MATERIALLY MISLED by staff, Oakland residents respectfully ask council members to 1) pull the Inflation Adjustment for Rent item from the consent 6/7/2022 consent calendar and 2) request a complete analysis and full report.
Benjamin Scott
What exactly is "progressive" about lumping Mom and Pop rental providers with Major Corporate landlords and wealthy developers? Haven't we suffered enough already? Many of us are still suffering from the effects of all the economic Covid related "help" you've given to the world, yet while our costs for just about everything have increased, the City Council continues to punish small housing providers with more insane ordinances like this one. Mark my words renters, if this goes through you may think you've won, but give it a few years ....when our properties have been gobbled up by what ever "non-profit" that your council members are aligned with and you're trying to get your leaking toilet fixed and you're put on hold by someone at a call center in... Mumbai. Or Florida.
Tying the ceiling on rent increases to CPI has been used in the past to limit rent increases to below 1%. Now inflation is running high and making it more costly to maintain property. A 5-6% rent increase in the current inflationary environment is not a rent increase. It's simply allowing property owners to keep real rents constant. Capping increases is forcing landlords to accept lower rents in real terms. Certainly some large corporations can afford this, but small owners will struggle to maintain their properties if this amendment passes.
This kind of significant policy change should not be done without the benefit of accurate staff reports. Reporting must provide objective information. Without clear benchmarks and rationale for changing the formula, there is no basis for making future changes.
This year's spike in allowable rent increases was anticipated, but rather than start the public process ahead of time, the author found it politically advantageous to rush this through using the cover that covid emergency rules provide. We deserve better.
All housing providers face the same operating cost increases consistent with inflation. The capacity to absorb them depends in large part on volume and financial backing. Fewer units means smaller income margins, therefore this ordinance unfairly targets small scale providers who have already been asked to shoulder the economic impacts of the pandemic with eviction moratoriums that remain in place to this day with no end in sight. It encourages providers to remove rentals from the market and it also encourages investment from out of state or even out of country. Everyone loses. While pitting renters and landlords against each other may be an old and easy solution, it's not the smartest one. Please demonstrate leadership by bringing all stakeholders to the table for a transparent analysis and discussion of a fair solution.
Mom and Pop housing providers provide low-cost housing and need your support. The public and council did not receive a transparent or honest report from staff on the CPI Rent Adjustment. Community members were shocked by the MATERIALLY MISLEADING presentation by staff who suggested that housing providers would not be severely impacted by the Inflation Adjustment proposal.
Ms. Olatoye stated that “Qualified” applicants for missed rent would be paid but MATERIALLY FAILED to disclose that ALL applicants with missed rent starting April 1, 2022 going forward will NOT be paid. Similarly, applicants will NOT be paid if tenants fail to apply, make > 50% AMI, or moved during the pandemic.
Ms. Franklin-Minor presented that housing providers are guaranteed a “Fair Return” but also MATERIALLY FAILED to disclose that the “Fair Return” is virtually impossible to get. The biased RAP requirements are made to be impossibly onerous, so much so that just 2 thousands of one percent could apply.
OUR REQUEST: Given that the public and council were MATERIALLY MISLED by staff, Oakland residents respectfully ask council members to
1) pull the item and request a full report
2) add a 3 year sunset clause and an equity study to analyze policy impact on black and brown owners who rent to fellow minority members.
As hard working providers of low-cost housing, we seek fairness & immediate relief from the city's "Free Rent" Policy. We can not absorb 40% of inflation costs every year.
This is policy based on mis information to the public and should be discussed by all stakeholders before a vote can even be considered. City council is sacrificing the well being of one group in the hopes of helping another group. If City Council truly believes in equity and fairness then they should postpone this item and consider how this affects ALL of our long time community members who have been struggling with increased costs due to covid.
This report contained no analysis, consequently many questions were raised on the floor and city staff was not prepared with data to respond to Council questions. Voting on policy based on anecdotal statements and no data is irresponsible and a disservice to both the tenant community and small housing providers. Even if the facts didn't change the vote, the Council missed an opportunity to educate themselves and the community about the cost of rental operations. They promulgate divisiveness rather than understanding.
Bas, Fife, Thao, Kaplan, and Kalb have methodically and continuously excluded small mom & pop landlords in the community from the progressive business tax and now they're making it more difficult for this segment of the community to operate in the city of Oakland. It seems there's a 3 step process taking place:
1. Maintain high taxes.
2. Methodically reduce income.
3. Organize tenant strikes thru ACCE and use TOPA to force landlords to sell. Even if those landlords are small mom and pop landlords.
This amendment does not take into consideration the potential issues on some struggling housing providers who are not able to keep their heads above water with the current inflation. An owner petition to passthrough for increased costs of ownership is not a simple process for many longtime small owners in Oakland. The petition process takes time and is full of red tape to the point of it being un navigable for many owners. It is also a very inefficient use of the rent boards time and resources. n allowable adjustment closer to true CPI minus housing is a fair way to go about rental adjusts. It is not an adjustment for profit, CPI only barely allows housing providers from keeping up with increased costs. Permit fees, utilities, and covid safety measures have been very expensive.
Last week's statements that RAP has existing avenues to let housing providers pass through some part of their repairs costs was: puzzling, at best. Capital improvements petitions, by definition, exclude repairs & maintenance. Petitions to recoup "increased housing" expenses might possibly address items like our yearly increases in PG&E, EBMUD & WMAC charges - but have nothing to do with this year's outrageous jumps in labor & materials costs for doing repairs & maintenance. And, has any housing provider ever succeeded with a "fair rate of return" petition?! (Not as of 2019, as I recall.)
Instead, each year's price fluctuations are designed to be offset by our 20-year-old CPI-based formula. "Offset," so as to keep rent revenues on an even keel in terms of real dollars - - as you heard last week, CPI adjustments do no more than that; they are not pay "raises" in the true sense.
If Council is unwilling to give back half of the 6.3% CPI adjustment it's voted for itself, it is unconscionable to deprive housing providers of their equivalent CPI adjustment.
Councilmember Taylor's amendment would at least let us spread this "once in four decades" number over time.
"Fair is fair."
Thank you.
NEIGHBORS DEFENDING OUR HOMES COALITION STATEMENT
Permanent Rental Increase Cap. Now the CC is poised to implement a permanent change in the long-standing limit on rent increases, with no sunset provision for this year’s historical anomaly. This action will be yet another significant blow to small rental providers who have been seriously harmed by skyrocketing inflationary repair/maintenance costs, rent/eviction moratoriums, and tax burdens. The proposed limit on Rent Adjustment should have a sunset clause of 3 years and its policy impact reviewed by adding an equity study that examines displacement of small and minority housing providers and their tenants.
The citywide Neighbors Defending our Homes Coalition (NDH) includes groups and individuals strongly supporting tenant rights and increasing low-income housing. Separating small Mom & Pops from major corporate landlords, commercial renters and wealthy developers advantages both tenants and small local housing providers.
I have been a renter in Oakland for over 10 years. I support this amendment.