Because the review of the proposal was at a study session, the council couldn't vote on the policy. Councilwoman Betsy Nash and Vice Mayor Cecilia Taylor were in favor of an ordinance that would give broader support to displaced renters. Council members Drew Combs and Catherine Carlton opposed the draft ordinance as it was written. Mayor Ray Mueller fell somewhere in the middle.
Under the proposed ordinance, landlords can continue to set whatever rent the market will bear for their tenants. However, if a landlord evicts a renter for no reason, or if the landlord proposes a rent increase of more than 5 percent plus the annual increase in the consumer price index — an increase defined as "rent gouging" by the Terner Center for Housing Innovation at the University of California, Berkeley, he or she would be expected to pay the equivalent of three months' "fair market" rent, as defined by the U.S. Department of Housing and Urban Development for the area, with additional funding for some households.
As of last December, the consumer price index (CPI) was up 4.5 percent from the previous year, so that would mean a tenant would be eligible for rental relocation help if a landlord raised rent more than 9.5 percent in one year and the tenant opted to move out.
Landlords would be expected to pay three times the fair-market-rate rent and offer renters a 60-day rental service subscription. Displaced renter households with a person over 62 years old, a child under 18, or a person with disabilities would be eligible for four months' worth of fair-market-rate rent.
For landlords who can demonstrate that they can't afford to pay for the relocation help, the city is considering a "hardship" exemption, which would likely take the form of a separate fund to aid displaced renters.
The requirement would apply only to renters who have lived in a unit for a year or more and who earn up to 150 percent of the area median income, or $124,350 for a one-person household.
According to Clay Curtin, the city's interim housing manager, the idea behind the policy is to reduce the short-term financial burden on households that are displaced and to reduce displacement of community members from the city's neighborhoods and schools. People facing eviction often struggle to pay the first and last months' rent as well as a security deposit needed to move somewhere new, he said.
By including a trigger based on major rent increases, the ordinance also aims to deter landlords from rent gouging, he added.
"We have the opportunity with this policy to actually make a difference in the community," Nash said. She explained that, while campaigning for her City Council seat last year, she asked residents in her district what they thought about this kind of policy. "I heard a groundswell of support from homeowners, apartment renters and other renters in District 4 as I was campaigning," she said.
"Landlords have purchased property that is an asset rising along with rents. That's something that must be taken into account," she added, noting that the policy is intended to deter explosive rent increases, not normal business procedures.
"There's a small portion of landlords this might even affect," she said.
Taylor said that displacement has been a problem in Menlo Park, and an acute problem in her district, which includes the Belle Haven neighborhood, for well over a decade. Some developers and some landlords are acting unethically, she said, and people are being pushed into poverty and forced out of the community or onto the streets as a result.
She cited what's happened to Sandra Zamora, a Belle Haven renter who was active during earlier months of the city's public outreach process on this proposed policy.
Zamora's rent was increased $800 per month after the apartment building she lived in was sold to a group of investors last year.
She and others in the building formed the Redwood Landing Tenants Union and publicly shared their experiences at several of the city's Housing Commission discussions on the matter, which began last July.
On Feb. 1, Zamora wrote the following to the City Council in an email: "It is unbelievable that nothing has (been) done to support and implement the Tenant Relocation Assistance in Menlo Park. We (tenants) fought hard to bring some kind of attention to the problem ...
"I, and many of other (tenants) in Belle Haven Community are leaving our homes this month. This is because the rents are extremely high and there are NO PROTECTIONS for the hard working human. WE HAVE BEEN DISPLACED!!! And you have (no) idea of what this causes to people. It places people/me in the brink of being homeless. ... Please do not let Greedy Landlords/ Investors take over the community that once was Menlo Park."
Other council members saw things differently. Calling in from Dubai, Carlton echoed many of the landlords who said they believe that the ordinance would be "functionally rent control." She also said landlords should retain the right to ask tenants to leave because they don't like them, and speculated that adding any costs for landlords might lead to properties falling into disrepair.
Combs called the process "unwieldy," and said that a provision to extend eligibility for relocation assistance to households earning up to 150 percent of the area median income was "incredibly problematic." He suggested that the terms of relocation eligibility be narrowed to renters of old apartments so as to not risk any chance of conflict with the Costa-Hawkins Rental Housing Act.
That law governs rent control policy in California and restricts what types of housing can be subjected to rent control. Under the Costa-Hawkins law, landlords of most properties — including single-family homes and any apartments built after 1995 — are entitled to impose whatever rent they want to.
The city of Menlo Park in August received a letter from a law firm representing Anton Menlo, a high-end apartment development in eastern Menlo Park, threatening litigation should the tenant relocation policy be enacted. In that letter, attorney Ofer Elitzur of Cox Castle & Nicholson LLP argued that the ordinance would be "hostile" to the Costa-Hawkins Act because it would penalize owners who choose "to exercise such rights."
However, legal experts, including assistant City Attorney Cara Silver, argued numerous times that a tenant relocation assistance ordinance is not rent control.
'Mom and pop' landlords
Menlo Park landlords who gave public comment, many of whom introduced themselves as "mom and pop housing providers," presented a number of arguments opposing the ordinance. Many said they don't raise rent more than a couple of percentage points a year but objected to the concept of the ordinance on principle.
"The market is just as hard on providers as it is on renters," said landlord Mike Haddock.
Some said they felt the policy would unfairly target landlords to pay to help fix the housing crisis, which they say has larger root causes.
"Rising rent is not caused by us," said Helen Chen, a small-scale landlord. "It's caused by Facebook, which pays (high) salaries to people."
Richard Li blamed the city for not permitting more housing density near mass transit. Others blamed the city for enabling too many new jobs and too few new housing units.
Others noted that much of the rental housing stock in Menlo Park is old and sometimes requires landlords to incur unexpected maintenance and investment to keep it safe and habitable, which they sometimes have to pass onto renters.
Yet others said the city shouldn't try to interfere in the market. "I believe the free market should take care of this," said homeowner Bill Lamkin, urging the council to tackle other problems.
A number of landlords added that the introduction of new bureaucracy and regulations might push them to avoid the hassle and sell their properties and take their rental units off the market entirely.
Questions and next steps
Mueller recommended that Taylor and Nash develop a draft version of the policy they want, which would largely align with the Housing Commission's recommendations, while staff lines up the Redwood City ordinance as a backup. He also said he wants to discuss setting up a landlord-tenant mediation board for alleged rent gouging cases and to look into using Measure K funds from San Mateo County to create a fund to aid displaced renters.
The council also agreed to consider putting city resources into a "hardship" fund to help renters in need find funds to relocate.
Taylor and Nash favor the Housing Commission's recommendations to make the law an "urgency ordinance," meaning it can be implemented faster if it receives support from four out of five council members; and to apply eligibility to renters in all kinds of housing, except for people who rent rooms, live in secondary units or rent affordable housing units already restricted to income-qualified tenants.
Redwood City's ordinance is more modest in its scope and restricts recipients of such assistance to renters earning 80 percent of the area median income, or about $82,200 for a one-person household. Relocation assistance is triggered if a home is withdrawn from the rental housing market, demolished or converted into a condo.
One question is: How does Menlo Park's proposed policy compare with other cities' ordinances? A number of Menlo Park's neighbors have such policies, which vary substantially in the triggers, eligibility requirements, and required assistance levels.
Other cities have triggers based on rent increases, such as San Leandro, which requires relocation assistance after a renter is displaced following a 12 percent raise over the base rent in a year. In Portland, tenant relocation help is triggered when rent increases more than 10 percent in a year, and in Santa Cruz, it is triggered in scenarios when rent increases more than 5 percent in one year or cumulatively more than 7 percent in any two consecutive years.
The matter is expected to be brought back to the council at its Feb. 26 meeting.