The City of Alameda tells the landlord: Your renovated townhouses do not add to the housing supply, so the Costa-Hawkins Rental Housing Act does not apply.
A Hearing Officer concludes that 150 units of formal naval housing are subject to Alameda’s rent control rules. This is part of a larger effort to chip away at the longstanding state law.
Nestled between Alameda Landing and the city’s Main Street Ferry Terminal, the Admirals Cove was built in 1969 to house military personnel at Naval Air Station Alameda and their families.
Fast forward to 2017, when the federal government auctioned the parcel and its vacant buildings. Developer Carmel Partners won the bid and after an extensive renovation job, began leasing the units to tenants in the Fall of 2019.
Its sales pitch is that the reborn community is one “rooted in naval and Coast Guard heritage now reimagined for today’s lifestyle.” When the developer began raising the rents, they found that the Costa-Hawkins Rental Act could be reimagined.
In a contested administrative hearing, Caramel Partners unsuccessfully argued that Costa-Hawkins bans the City from limiting rent increases for tenants residing at the Admirals Cover property. A hearing officer disagreed.
In a media release, Alameda Rent Program Director Bill Chapin stressed that Costa-Hawkins was designed to add sorely needed housing stock in California.
“The Hearing Officer’s decision affirms what the Rent Program has maintained from the beginning and what courts have held in several cases since the passage of Costa-Hawkins… Namely, that the legislature intended the limits it placed on local rent control to apply to only newly constructed units that expand a city’s housing stock. The Admirals Cove Property apartments have been used to house members of the Alameda community as far back as the 1960s, and their current occupants are entitled to the full protections of the Rent Control Ordinance.”
While statewide rent control (AB 1482) spells out its own rent cap, many cities and municipalities thought this was too generous to housing providers and enacted their own, more restrictive rules on rent increases.
Alameda’s rent control ordinance says that landlords cannot raise rents in excess of 70% of the change in the Consumer Price Index and as of September 1, 2023, this amount is 2.9%.
In 2022, the Alameda Planning Board gave the nod for Carmel Partners to build more than 200 additional units at the site, and since these units will be built from the ground up, will not be subject to the City’s rent increase limitation.
We’ve seen this kind of reasoning before. If there is no net gain to housing, Costa-Hawkins is tossed out.
In Berkeley, there were a pair of decrepit single-family homes purchased that were used in prior life as rooming houses. When these homes were rehabilitated, new certificates of occupancy were granted.
It stands to reason that when these renovated units were put on the rental market, they would be exempt from Berkeley’s Rent Stabilization and Eviction Ordinance. Not so fast.
Berkeley’s Rent Stabilization Board decided that some units were merely converted from one form of residential use to another, and not considered new construction. Upon judicial review, the courts agreed.
For the cerebral types, the case is NCR Properties, LLC v. City of Berkeley.
Yet another example of how Costa-Hawkins can be shelved: what, exactly, is a single-family home?
Just as rent boards and courts can interpret what is “new construction,” so can they interpret what is a single-family home, which is generally exempt from local rent control.
An Alameda County judge ruled that the owner of a four-bedroom detached home was subject to Oakland’s Rent Adjustment Program (RAP) when the landlord rented out separate bedrooms because the judge explained, “for the purpose of landlord-tenant law, a ‘dwelling or unit’ or a ‘dwelling unit’ is not the entire property to which an owner holds title; rather it is an area understood to be committed to the habitation of a given tenant or tenants to the exclusions of others.
Parting thoughts
Costa-Hawkins was passed in an era where there was a more moderate legislature and the rents were affordable. The Act wouldn’t pass in today’s climate. Of course, our landlording community should pay close attention to the efforts to repeal the law altogether as voters take to the polls on November 5, 2024.
Unlike the failed campaigns of Propositions 10 and 21, the latest push to put Costa-Hawkins on the chopping block seems to get more traction as calls for rent control spread outward from urban centers into suburbia, where rents have climbed.
Barring any radical change next November, Alameda and other locales have demonstrated that the law is still under assault. If landlord rights afforded under Costa-Hawkins cannot be erased in a dramatic fashion, they can melt away slowly like a candle.