Encouragingly, Palo Alto Moves to Pause Decade-Long Rent Control Push. But the Debate Isn’t Over.

We are not always the bearers of bad news. Finally, cooler minds prevailed in Palo Alto after a City Council committee voted unanimously to halt efforts in the city’s long-running pursuit of disastrous rent control policies.

Although the council’s Policy and Services Committe’s decision must be given the thumbs up by the full City Council, housing providers in the city can breath a sign of relief for now after neighboring cities have chosen either to embrace rent control, or advance discussions on added local tenant protections that exceed what is afforded to renters under the statewide Tenant Protection Act of 2019 (AB-1482).

This law was later modified by the Homelessness Prevention Act (SB- 567) to close perceived loopholes in the original law’s “no-fault” eviction protections.

By voting to shelve efforts to ink a local rent control ordinance and expand the city’s Rental Registry Program, the committee has heeded the recommendation of staffers who say that the data doesn’t support the need for new regulations.

After a careful review of the numbers, City Staffers noted that the sky is not falling. Without evidence of widespread, acute rent increases displacing tenants, Palo Alto politicians should not disrupt the status quo with additional restrictions and regulations. The staff goes on to say that administering a local rent control program is a herculean and costly task with an estimated price tag of $2 million per year and would require no less than five new city employees.

Palo Alto’s rental registry — created to help the city evaluate local housing conditions — paints a picture of a relatively stable rental market rather than one experiencing widespread rent spikes.

At a Glance: Staff Findings From Palo Alto's Rent Registry:

• 62.85% of market-rate units reported no rent increases in the past year
• Only about 11% of units saw increases above 5%
• The citywide vacancy rate hovers at 5.21%

The fight may not be over.

There is an idea being floated to expand the rent registry to cover two or fewer rental units. The committee voted to defer this proposal, but this is still on the table. For what it's worth, our long-standing belief is that nothing good will come out of rent registries, but they have increasingly become a staple in the Bay Area's tapestry of regulations for housing providers to follow.

More and more, there are growing consequences looming for landlords who fail to register their units, obtain requisite business licenses, pay taxes, and otherwise get in good graces with the city in which their rental property is situated.

It is also naive to believe that the calls for rent control in Palo Alto will be muted. The City has undergone a long, storied history of flirting with strict rent control. Despite these proposals being defeated thus far, the composition of the City Council is changing with the fluid nature of new members being elected. New faces have kept the threat alive for more than a decade.

Palo Alto's pause in moving forward with anti-landlord policies comes after troubling developments elsewhere in the East Bay. San Leandro's newly minted rent stabilisation ordinance is one of the most onerous pieces of legislation we have ever seen, while in Albany, a trio of councilmembers is engaging in an open discussion about strengthening tenant protections there.

As the tentacles of rent regulations spread from urban centers to cities not traditionally associated with tenant activism, Bornstein Law will keep you plugged in.