San Jose makes changes to housing policy

Emily Deruy| San Jose Mercury News| Link to Article

 (Dai Sugano/Bay Area News Group)  The Housing Department recommended tweaking several of San Jose’s housing policies to the City Council on Tuesday.

(Dai Sugano/Bay Area News Group)

The Housing Department recommended tweaking several of San Jose’s housing policies to the City Council on Tuesday.

SAN JOSE — As development in San Jose explodes and housing prices continue to soar, the City Council on Tuesday night adopted changes to the city’s housing polices that could benefit renters and provide protections for landlords.

At the Housing Department’s recommendation, the council agreed to prohibit landlords of rent-controlled apartments from dividing utility costs based on how many people live in each apartment and the unit’s size rather than how much gas or electricity they actually use. So the council is asking property owners to install sub meters at each apartment so families are charged only for what they actually use.

The council also tweaked the tenant protection ordinance it adopted last year, and will now prevent landlords from threatening to share information about their tenants’ immigration status with immigration authorities.

The city also will let landlords evict tenants with serious or violent felonies. Acknowledging concerns about the displacement of families, landlords must give renters a chance to evict such felons before ousting an entire family. Mayor Sam Liccardo supported the idea, and asked the city to provide an exception for children convicted of such crimes.

Also up for debate was an issue around the Ellis Act, which outlines when and how the owners of some rent-controlled apartments in the city — generally those built before September 1979 — can take them off the market.

Like other cities, San Jose requires that new apartments built to replace old rent-controlled units within five years also come back as rent-controlled apartments. The Housing Department didn’t want to do away with that entirely, but it cautioned that other cities with such rules have actually seen a drop in the number of rent-controlled apartments available, in part because building owners sometimes simply wait five years to rent the new apartments in order to dodge the requirement.

Instead, the Housing Department recommended, in part, that only a portion — at least half — of a building’s apartments be subject to such rent controls, and the council agreed.

In a recent memo to the mayor and City Council, Deputy City Manager Kim Walesh and Planning Director Rosalynn Hughey acknowledged that rising construction costs combined with some slowdown in the rental market makes it difficult to entice developers to San Jose, particularly when nearby cities offer more of a return on investment with both higher rents and land values.

According to the memo, the city taxes and fees per unit for high-density, mixed use developments has spiked in the last five years and ranges from about $40,000 to more than $63,000.

Liccardo has said he wants the city to add 25,000 residential units over the next five years or so, and the city has been pushing the development of so-called urban villages — high-density, mixed use pockets throughout the city. But the conditions developers currently face place a damper on that vision.

“While San José and its surrounding metro area continue to be one of the most robust real estate markets in the nation,” the memo reads, “the increases in cost associated with new construction and the relative slowing of rents mean that development in most areas of San José is currently unlikely without some extenuating project circumstances (such as long-term land ownership, or self-financed development with expectations of a return over a longer timeframe).”