Alameda City Council Votes to Allow Rent Increases to Resume

Shoreline Apartments

At its March 1st meeting, City Council approved introducing an ordinance to end the rent-increase moratorium imposed in response to the Covid-19 Pandemic. Under the ordinance, rent increases will be allowed up to the current year’s Annual General Adjustment (AGA). Landlords will be able to give tenants 30 days’ notice of a rent increase as early as May 1st so that rent increases can begin on June 1st.

Landlords may not impose banked rent increases until 60 days after the City rescinds the Local Emergency Declaration. Council Member John Knox White anticipates that Council will rescind the Declaration mid-year.

Background

Because of COVID-19’s economic impact, City Council adopted ordinances in 2020 that disallowed rent increases for regulated rental units until 60 days after rescinding the Declaration of a Local Emergency in Response to the COVID-19 Pandemic.

However, at a December 2021 City Council meeting, landlords expressed concern about continuing the rent-increase moratorium, citing the rising costs of rental unit operation, such as property taxes and insurance. In response, the City Council directed Staff to research and return with options to create relief for landlords or allow rent increases to occur again.

Staff reviewed 14 jurisdictions in the Bay Area and Southern California. While all adopted eviction moratoria and several adopted rent-increase moratoria, only two still have a rent freeze moratorium as of January 2022 – the Cities of Los Angeles and Oakland.

Alameda’s Rent Program Ordinance

Under a 2019 Alameda Rent Program Ordinance, landlords can increase rents by no more than 70% of the percentage change in the Consumer’s Price Index and no more than once per year. The ordinance provides a process for “banking” a rent increase if a landlord chooses not to increase rent in a given year.

The program calculates an Annual General Adjustment (AGA) and allows landlords to bank a maximum of eight percent. The sum of the banked AGAs through August 31, 2022, is 6.5%, which is the sum of the AGAs for 2019 through 2021.

When implementing a rent increase using the banked amount, a landlord may increase rent by the current year AGA plus three percent. Therefore, if the current rent-increase moratorium were not in place, a landlord could increase the rent up to 5.7%, the current AGA of 2.7% plus 3% from the bank.

Staff Recommendation

Because the finance industry considers a rent increase of more than 5% as potentially leading to difficulty making payments and displacement, Staff recommended:

1. Ending the moratorium by permitting landlords to implement a rent increase up to the current year’s AGA of 2.7%, but not permit further increases from previously banked increases;
2. Permitting landlords to begin using banked rent increases upon the termination of the Local Emergency;
3. Clarifying exemptions to the Rent Program due to regulatory agreements.

Council Discussion

Council members felt that the Staff’s proposal offered a good compromise between landlords needing to increase rents to recoup increasing costs and renters who are still in the early stages of a recovering economy. By allowing an AGA increase as early as June, the Board hopes to encourage landlords to impose a smaller rent increase in 2022 rather than waiting to increase rents until after the Emergency Declaration is terminated later in the year. Rents may not be increased more than once per year.

Once the City rescinds the Local Emergency Declaration, landlords can impose a more significant rent increase comprised of the AGA plus 3%. This year’s AGA, to be issued in September, is anticipated to be higher than previous years due to rising inflation.

In the final vote, City Council voted unanimously to adopt the Staff’s recommendation with the addition that landlords may not apply banked increases until 60 days after the City rescinds the Local Emergency Declaration.