Redwood City Council seeks more details on rent control initiative

The city is extremely limited, regardless of how the ordinance is adopted, should it be adopted, to amend anything written as is in the ordinance. 

The initiative proposed a measure that would cap annual rent increases at 5%, rather than the state allowance of up to 10%, and it also would establish further protections for renters. 

The city had a report prepared to analyze the initiative’s potential impacts on the city, which were largely focused on fiscal implications and what the actual difference is between the ordinance and what is already established as city law. 

However, councilmembers opted to neither adopt the ordinance immediately nor call for an election, just yet. Instead, they directed staff to expand upon the report, called a 9212 report, and answer further questions about the ordinance. 

The report did highlight some details and nuances of the ordinance, though.

It is clear that existing rental tenants “will benefit from lower rent growth and stronger protections against evictions, above and beyond what they currently have,” consultant Jason Moody, who conducted the report, said. 

In Redwood City, 46% of renters are considered rent burdened, or pay more than 30% of their income on rent. A previous study found that between 2016 and 2021, 25% of Redwood City residents were displaced. 

In the city, 48% of the housing stock is renter occupied, and 19% would be subject to rent control provisions. However, all rental units would be subject to the tenant protections included in the proposed ordinance. 

The rent stabilization portion of the ordinance would cap annual increases to 60% of inflation, with a maximum of 5%. It would apply to multifamily complexes, with three or more units, accessory dwelling units, affordable housing developments, and mobile homes but, of all these, only those developed before February 1995. 

In effect, if a unit’s rent is $2,500 now, after five years of occupancy, the rent increase allowable under the proposed ordinance would be $937 less than what a property owner could charge without the measure’s cap in place. 

The ordinance also expanded upon the city’s Tenant Protection Ordinance and added additional eviction protections for students, educators, the elderly and those who are disabled or terminally ill. While the city’s protections go in place after a tenant has occupied a unit for a year, the proposed ordinance’s protections would apply to tenants immediately. 

The amount tenants are guaranteed for relocation assistance is also heftier than that established in the city’s existing law. 

If approved, the proposed ordinance would require landlords to pay relocation assistance for any and all no-fault just-cause terminations of leases that equates to four months of fair market rent or a $12,000 minimum, whichever is higher. An additional $6,000 would be required to tenants who are elders, disabled or terminally ill. 

The current fair market rate for a two-bedroom unit in 2026 is $3,604. 

It also expands the requirement of landlords to allow for the right to return of tenants. 

Beyond the city’s existing protections, if the proposed ordinance is adopted it would also require landlords to offer a right to return if the owner moves into the unit and then returns the unit back to the market.

If a demolition and rebuild occurs on the same property within five years of the terminated lease, the tenant has a right to return at the same rental rate. The city currently does not have a right to return policy for demolitions. 

The proposed ordinance also restricts property owners from increasing rents for tenants returning after a significant renovation, unlike current city law. 

The inability to raise rents to an allowable rate following a major renovation may affect an incentive for owners to invest in their properties, Moody said. It may also sway investors from looking in Redwood City, he said. 

“This could affect the decision of property owners and operators to invest in property built prior to 1995 because they’re concerned about recouping their investment,” Moody said. 

There is also a unique impact on affordable housing stock, Moody said. There are currently 625 affordable housing units that would be subject to the proposed ordinance’s rent control provisions. 

“They operate on very low margins,” Moody said. “Many of these older properties have deferred maintenance, they depend very much on rental income to maintain and operate their buildings, but they would not be able to keep up with their costs.” 

While costs to property owners like insurance and utilities will continue to increase at the rate of inflation, rents would not be able to do the same. 

“Their rents will decline but their obligations won’t be declining, so that will put pressure on affordable housing,” Moody said. 

A study conducted by Moody on a dozen other cities with rent control gave a rough estimate of what the cost to the city would be. Currently, Redwood City “doesn’t have the excess capacity to administer a program of this scale with existing staff,” he said. 

In addition to startup costs estimated between $300,000 and $700,000, the annual cost to put the proposed ordinance into effect is estimated between $4 million and $10 million. 

The proposed ordinance also states that the city cannot use general fund dollars to fund the program, and would most likely have to charge a fee on rental units — that property owners cannot pass along to tenants — to recover the operating costs. The annual fee is estimated to be between $338 and $545 per unit, to property owners. 

If passed, the city would need to likely create at least seven new positions and fill those positions before the ordinance would be entirely implemented at scale, Housing Leadership Manager Alin Lancaster said. To bring it to scale, Lancaster estimated it would take a year after the ordinance would go into effect. 

On Monday, the City Council directed staff to return at a specified date, within 30 days, with an expanded 9212 report that gets further into detail of implementing the proposed ordinance, before it will vote one way or another. 

“Thirty days is not a lot of time, but I think the answers we would get in that time period would be really valuable, not just for the people that worked on this proposal, but for the voters who are going to make the ultimate decision on this,” Mayor Elmer Martínez Saballos said.