Oakland is being Oakland again by passing a handful of measures detrimental to housing providers

Early in our legal careers, San Francisco and Berkeley were home to the most pernicious regulations for landlords to follow but over time, Oakland has arguably become the worst. The news didn’t get any better on December 3, 2024, when on the first reading, politicians voted to amend the Oakland Rent Adjustment and Just Cause Eviction Ordinance.

What the City Council and Mayor gave the nod to:

  • Limit banking of CPI rent increases to expire after five years and after the sale of the property unless the property is transferred to a close family member. Currently, owners are allowed to bank up to ten years of rent.

  • Prohibit rent increases for owners delinquent on business taxes unless the owner demonstrates financial hardship and enters into a payment plan.

  • Extend tenant petition deadlines from 90 days to 180 days.

  • Prohibit no-fault evictions for owners delinquent on business taxes.

Housing providers were well represented in the marathon meeting and made cogent arguments.

The first speaker, a disgruntled small landlord, didn’t couch his words, telling the councilmembers that every time the City tinkers with new regulations, housing providers are “bent over.” He noted that while there is enthusiasm over revamping the vacant California College of the Arts site in Oakland’s Rockridge neighborhood into hundreds of mixed-income apartments, small owners are left to the wayside. While the Rockridge project highlighted the importance of housing, incentivizing developers, and creating a sense of community, Oakland’s stance towards mom-and-pop landlords is markedly different.

Oakland’s public policy only serves to deny housing providers a return on their investment, if not drive them out of the rental business, the speaker submitted.

 

With Oakland close to falling off of a financial cliff with a massive budget deficit, alternative ways to collect revenue were suggested by Derek Barnes, the CEO of the East Bay Rental Housing Association. He pointed out that housing providers are already paying an inordinate share of business license taxes and that no other sector of the economy is penalized. There are already stiff penalties for not paying taxes, Barnes noted, and stripping owners of their property rights is unprecedented.

We concur. If a restaurant is late on their business taxes, they are not prohibited from serving food, right? Another speaker says that this heavy-handed approach will not get to the root of the problem.

 

The city is imposing a hefty 35% late fee after just 60 days on overdue business license taxes, with an additional 1% charged every month thereafter. This Mafia-like approach may fill city coffers in the short term, but it won’t drive long-term growth. Instead of squeezing business owners, the focus should be on fostering business expansion. When businesses thrive, the entire city benefits.

~ Steven Edrington

Some tenants’ advocates suggested that 90 days was not enough time for renters to file grievances with RAP. This was debunked by one speaker who reminded lawmakers that tenants are notified of their rights at the inception of the rental relationship. Short of putting a billboard on the lawns of Oakland properties, tenants should be well aware of their rights under the City’s regulatory regime, so we find it curious that any tenant could feign ignorance.

This extra time afforded to tenants to file petitions will only give more ammunition for tenants and their attorneys (often representing them for free) to prolong eviction actions for breaches of the lease. Notably, housing providers can still evict for just cause, but this new window of opportunity gives inventive tenants’ attorneys more leeway to come up with ways to keep a problematic tenant implanted and stall an eviction.

Another point stressed was that tampering with banked rent increases will devalue properties. We know firsthand that potential buyers rely on banked increases as an attractive option when contemplating a purchase and that buyers are spooked when they look ahead knowing that their rental income would be limited.

A second reading of the amended ordinance will be convened on December 17. This ordinance will do nothing to solve the city’s housing woes, but Oakland is being Oakland again. You can re-play the discussion here, where the topic is broached at around two hours into the meeting.