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Final rent control changes released

One month after City Hall released a plan to tie rent control increases to inflation -- which would reduce rent hikes from the maximum 8 percent per year -- the final proposal released Thursday shows little change.

The City Council will vote on the plan, which has sparked outrage from landlords, on April 19. In her recommendations, city Housing Director Jacky Morales-Ferrand still suggests replacing the current 8 percent allowable rent increase with an increase no higher than the consumer price index.

The index, an inflation gauge, has ranged from 0.7 percent to 2.8 percent over the past six years. That's far less than the maximum 8 percent allowable increase under the city's current law, which ramps up to 21 percent if rents haven't been raised in more than 24 months.

San Jose's 40-year-old rent control law covers one-third of the city's apartments, or about 44,000 units.

The recommendations, first released March 1, were aired at a host of public meetings over the past month. Landlords rallied against the plan, saying reducing allowable rent increases would impact their ability to stay in business. Some formed a political committee and are eyeing a potential ballot measure to replace the city's rent control.

"What we hear from landlords is we don't see a problem and you'll ruin our business," Morales-Ferrand said. "Based on data from our consultant's report, it demonstrates that there is an issue we need to address to create a balance and to ensure tenants are not subject to large rent hikes."

Mayor Sam Liccardo supports decreasing the 8 percent cap to provide relief to renters but prefers a fixed amount instead of the uncertainty that comes with inflation.

"Whatever the allowable increase we choose, there should be clarity and certainty for both landlords and tenants so people know their rights and obligations," Liccardo said.

To weigh the interests of landlords, Morales-Ferrand is introducing a few new ideas. One would allow landlords with historically-low rents to increase above the cap to "catch up" with other properties. Another is a pilot mediation program to help landlords and tenants resolve disputes.

Morales-Ferrand also is asking for a "temporary pause" in annual rent increases until city staff can finish work on the new rules.

Another issue that will be hotly debated is how to replace rent-controlled units when a landlord decides to go out of business or convert to condominiums. The City Council will discuss looking at policies to provide tenant protections in those situations, including possibly requiring landlords to replace lost rent-controlled apartments.

Housing advocates say the new rent control proposal will provide relief to residents facing soaring rents amid a Silicon Valley housing crisis. Average rents in San Jose have increased 37 percent in the past five years, with a two-bedroom apartment going for $2,750 last year. Rents are projected to rise 7 percent to 10 percent in 2016.

But critics of rent control say it has the opposite effect. A recent report from the Legislative Analyst's Office said rent control wouldn't increase housing supply and "likely would discourage new construction" because renters might face stiff competition for limited housing.

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