Okay, it's seven o'clock, and I'm calling to order the San Lando City Council meeting today's Monday, October 13th.

At this point in time, I'll lead us in the Pledge of Allegiance.

Please stand if you're able to.

I Pledge Allegiance.

Use a flag of the United States.

And to the Republic, for which it stands when we under God, indivisible with liberty and justice for all.

Today will be the day that liberty and justice for all today.

Every single day is our commitment of liberty and justice for all.

That's our pledge.

Okay, so at this point in time, would Madam Clerk you please take roll?

Councilmember Aguilar.

I don't think we caught that on the mic.

Councilmember Aguilar.

Present.

Thank you.

Council Member Azevedo.

If you are present on Zoom, please let us know.

Council Member Bolt.

Present.

Thank you.

Council Member Simon.

Present.

Councilmember Vivero Swalton.

Present.

Vice Mayor Bowen.

Present.

And Mayor Gonzalez.

Present.

Thank you.

A quorum is present.

Okay.

Just to confirm my notes.

That's correct.

Okay, thank you.

The City of San Leandro conducts orderly meetings to fill its mandate, discriminatory statements or conduct that would potentially violate the Federal Civil Rights Act of 1964.

And or the California Federal Employment and Housing Act, California Penal Code Sections 403 or 415 are per se disruptive to a meeting and will not be tolerated.

Please see the City Council handbook and city council meeting rules of decorum for more information.

Madam Clerk, if you would please make your announcement.

If you would like to make a public comment during the meeting, you can do so in person or via Zoom.

If you are present at the meeting, please complete a speaker card and submit it to the city clerk before the item is presented.

If you wish to participate in public comment via Zoom, you can use the raise your hand tool when the item is called.

During the public comment session, speakers will be invited to speak and will have a set time to share their comments.

All raised hands outside of public comment will be lowered to avoids confusion to avoid confusion.

Once public comment is opened, hands may be raised to speak.

Thank you for your announcement at this point in time.

We'll go to close session.

I know we had two hours of thorough and extensive conversation, but was there any reportable action taken?

Uh thank you, Mayor.

A reportable action was taken, but is not to be reported this in time to non-present prejudice the city and potential litigation.

Thank you.

Okay, item number four presentation.

And I believe we've got Director Liao to lead us off with 4A.

Oh, good evening, Mayor and City Council.

Getting used to this.

Since the ordinance was put out for public uh comment.

Tonight, uh, in addition, we'll also give you a preview of some preliminary cost options.

If this ordinance were eventually adopted of what those options might be.

Uh, we have three specific council directions uh questions that we're asking for guidance on, and then we'll end with next steps.

But let me I'm also going to begin right now with some background and how we got here.

Um, you know, we as you know, we've been working on housing protections uh through the council prioritization process since 2023.

Um but earlier this year, council made the exploration of a residential rent stabilization ordinance a priority for staff to pursue, and so um in working with the rules committee the last couple months.

Um, a draft ordinance was initially a preliminary draft ordinance was put out for 60 days from July 17th to September 17th, and public outreach, community meetings, and stakeholder meetings took place.

Again, a slide that you all have seen.

The number of potentially eligible rental units that would fall under any rent stabilization ordinance if it were to be adopted.

So over 7600 units.

So let me begin tonight, too, with the public outreach process that was taking place and initiated at the rules committee of July 17th.

One of the big focuses this year, we know we've done our typical kind of email distributions.

We've had a lot of stakeholders that have been put into the email on both sides of the coin.

And so since the last couple of years, organizations, individuals, tenants, and landlords posting typical places.

But a couple areas of focus was reaching out to our growing Spanish speaking and Chinese speaking populations.

So we had everything translated, of course, into both languages in terms of the notifications.

We had a very good suggestion from the rules to think beyond where we normally post.

So we have we had our ED staff go out into areas, such as commercial areas that were heavily either Chinese speaking or Spanish speaking, or in terms of retail and commercial, and even some centers of service social services.

Some of our key events that we held were two community-wide meetings open to any everybody in the public, and one was online and one was in person in late August and in early September.

We also had, as we mentioned, some before stakeholder meetings that were targeted to housing providers and tenants.

Again, for people, you know, understandably that wanted to be in kind of a more private situation and did um you know wanted to be in a safer environment to make comment.

And again, at each of those meetings, uh one of we we had Cantonese and Spanish interpreters.

And we also received written comments that um you all summarized over the 60-day period.

I wanted to highlight some of the comments.

You know, in your packet, uh, we have much more kind of almost almost close to verbatim things that were submitted in terms of comments.

But we wanted to summarize key themes that we saw either from the tenant side or and or the housing provider side of the commentary.

So, in terms of the housing providers, some of the common themes that came out of the public comments over the public outreach period or the public comment period.

Um, so it was um the ordinance seems to be uh being moving too quickly, being implemented too quickly.

There are already existing state and city tenant protection laws.

Um it seems that um providers may feel like they're paying for a duplicative, burdensome, confusing city program.

Um property owners also have rising costs, such as interns and taxes.

Um there was some questions about so where does this put the rent review ordinance as opposed to the proposed rent stabilization ordinance?

And then some housing providers came out and uh noted again that they were still impacted uh negatively as a result of the COVID-19 uh eviction moratorium protections and uh their units are still falling below market in terms of um uh the returns.

In terms of the tenant uh comment, some of the key highlights were again this was a preliminary, we took a preliminary stab at some of these thresholds, so they weren't we knew that they would generate public comment, but renters felt like the 5% cap was too high.

Uh, in terms of the rent cap adjustments, they felt that either lower the cap or add a percent uh consumer price index to that threshold.

Um, there was a potential fear of increased homelessness due to displacement uh and affordable rent increases.

Uh there was a commentary that was a theme of uh vulnerable populations being impacted without stronger measures, low-income tenants, seniors, and persons with disabilities, uh capital pass-throughs, um, several people felt that they should just go through a fair return process and not have a separate capital improvement pass-through process.

And again, uh back to the issue of vulnerable populations, whether there should be more exemptions for seniors and persons with disabilities or special needs.

So now I'm gonna begin for for several of you who are on the rules.

This is probably the first time you've had this presentation.

Staff did make some minor adjustments based on the helpful feedback we received from the public the last couple months, and also some of the comments that we received from rules in July.

We added a purpose section.

So one that both balances the key issue of preventing displacement of individual renters who are no longer able to afford rent due to excessive increases, but also ensuring that housing providers, landlords receive a constitutionally required fair return.

In terms of the definitions, I won't read through everyone, but we did have some good feedback about rent, and so we kind of switched out the word compensation with consideration, kind of elaborate a little bit more on that.

Had a really good comment during the public period.

What is the base year?

That was not defined.

So we've defined the base year as this current calendar year, given that most likely progress would be made more in the year 2026.

We'll get to the issue of capital improvement, but that's something that is a repair improvement that adds value and excludes maintenance and kind of ongoing typical repairs.

A hearing officer is a neutral individual appointed by the city manager to be the sort of oversight administrative hearing officer.

They shall neither have to avoid conflict of interest, they should not own property or be a tenant here in the city.

And then the program administrator is again somebody appointed by the city manager to carry out the responsibilities of administering the program, and that would be typically staff.

In terms of exemptions, we know the overriding state law that exempts things under this ordinance would be the Costa Hawkins Act of 1995.

So, as you all know, single family homes, also individually sold units like condos or town homes, are exempted, and also most importantly, any kind of unit built after February of 1995.

So that is one of the protections that the state of California has in place to ensure that new construction and new housing are not impacted by rent stabilization.

One key thing is that these exemptions are explicitly included in the draft ordinance so that they will remain exemptions even if cost of Hawkins is repealed.

Additional common exemptions that we kind of summarize were as we know the MOMO home community has its own rent stabilization ordinance currently, accessory dwelling units, which is a priority of the state to be expanded upon.

Golden duplexes where owners own one of the units and rents out the other.

Short-term rentals, like Airbnb would be exempted, long-term affordable rental housing, such as the ones that the city has subsidized over the decades, like Maria Alton, La Vareda would be exempted.

They're already going through their own form of rent rent increased caps.

Also, emergency transitional housing, such as our newly established lowelling interim housing and drop-in center.

And of course, shared housing.

So when people rent out a room, especially people who are fixed income homeowners, that uh that would be exempt.

So, in terms again, we set the initial rent cap, we looked at and got some direction about other cities, including Alameda, so it was capped at five percent, and we got a lot of commentary on that, as I mentioned.

This ordinance would allow one increase per year.

The capital pass-through would be capped at five percent of a tenants' current rent.

We for this draft did not allow for banking of unused increases.

Um, again, Costa Hawkins allows for vacancy decontrols when landlords can reset the rent to market when a unit becomes vacant, and then rent increases are allowed only if the unit is registered by the landlord or provider and the fees are paid.

So, some limits on what is in the rent.

So, housing providers can't unbundle or increase fees like utilities or parking mid mid mid lease, whether it's month to month or a 12 month.

Uh, but um increases or unbundling can happen when police renewals happen, and that should be included in rent cap calculations.

And then charges for new housing services, such as parking or storage requested by tenants, and and separately metered utilities are typically would be excluded from rent cap calculations.

So there's three types of applications or petitions that would be allowed for a rent adjustment, and their capital improvement pass-throughs, the fair return petition, and the decrease in housing services.

The first two would be by housing providers, the third would be by the tenants.

So in terms of the capital improvement pass throughs, so landlords can request to pass costs for major upgrades.

They must be filed within six months of them finishing their work.

The minimum cost would be about $10,000.

Again, that would emphasize more substantive work being done.

All pass throughs authorized would terminate when any rental unit becomes vacant.

And again, this is a model at the time that we used just as a starting point from the city of Alameda with guidance from the rules, just again as a starting point.

There's a tiered kind of pass-through for smaller units, it's a higher level of pass-through.

And then past 25 units, they would go through a fair return process.

We do have a question for you on that on the policy side.

In terms of calculating the pass through, they must be amortized or useful life based on the IRS schedule.

The rules mentioned that we had an OR 10 years.

They said suggests we pick one, so we did.

Reimbursements such as insurance would must be deducted before you calculate the pass through.

And then if work is submitted before the work is done, that amount cannot be increased later, and landlords must show actual costs match or exceed estimates.

And then this is a key concept.

I know, and I expect we would have some questions.

What is a fair and reasonable return?

And this is a core issue in all rent stabilization ordinances.

And so here we we reiterate that property owners are entitled to a rent increase if necessary to achieve a fair return, presuming that an owner is receiving a fair return if their net operating income adjusted for inflation is the same amount or greater than what they received in the year before a rent and stabilization ordinance was enacted.

In terms of the fair return petition, the landlords can request rent increases of not earning a fair return.

They would base it on their NOI compared to the base year, but they would also need to provide financial documentation with their petition.

A decrease in housing services is the tenant-driven application or per petition.

Tenants, if they feel, a number of them feel that they are experiencing a decline in their services in their complex, they can request a rent reduction, and the result if they are in their favor, a rent may be lower to reflect that lost value.

In terms of the overall process for these three petitions, I'm gonna go through a few of these rule, and I'm not gonna go through every one, but a highlight key ones.

Again, a landlord attendant would file with the program administrator, which is city staff.

The city staff city will come up with a form for the public, as we have in our programs.

There will be a fee as set by council, and I guess we'll get to some of the cost discussions later today and and probably in a couple months.

There's noticing requirements by the landlord and the tenant, and then there's a completeness check by the program administrator.

Notifications are key.

So written notice is sent to all affected parties.

The ordinance provides the content of those petitions, and then responses are shared with the petitioner.

Hearing dates would happen within 90 days of a petition being accepted for capital improvement pass-throughs.

If the majority of tenants consent to it in writing, then no hearing is required.

For 10 units or less subject to a pass-through, no hearing is required of at least two-thirds of the people, the tenants living their consent in writing.

Now the program administrator has the option to attempt mediation and can require parties to attend at least a media some kind of session for mediation.

In terms of hearing details, there'll be notices sent out at least 15 days in advance of a hearing, and then hearings can be continued by the officer.

Um parties involved would present data and testimony at those hearings.

The hearing can proceed even if one party does not attend, and then the hearing officer may consider uh failure to provide documents as part of their verdict.

In terms of decision and outcome, uh the applicant or petitioner has the burden of proof.

Um, these hearings will be recorded.

Parties are not required to, but could seek assistance from attorneys or tenant reps.

Decisions will be issued within 30 days of the when the hearing ends.

And then rent adjustments would take effect immediately unless stated by the hearing officer otherwise.

There is an appeal process to the hearing officer's decision, that would go to the courts by whoever's appealing.

And those judicial filings must be also forwarded to the city program administrator.

Other notable features of the ordinance.

So the landlord needs to inform new tenants about the ordinance, and also existing tenants whenever a rent increase occurs.

One kind of unique feature that we've added was a more explicit detail on buy-out agreements.

We know that happens regularly at times.

So a key part of this provision is just make sure there's transparency on all sides.

So tenants and must receive those disclosures before signing, they have 30 days to cancel, and then any signed mutual agreement would be filed on record with the city.

In terms of penalties and remedies, I think we've kind of modified the section so that we just reference our existing municode, the citations and violations, and also this ordinance would not override any state or federal laws.

The program fee, that would be an annual fee related to this program paid by housing providers.

There could be a late fee charge in this draft ordinance, up to 50% could be passed to the tenants in up to two installments, spread it out a little bit, and late payments by the provider could incur penalties.

And lastly, there would be a city annual report by staff about program effectiveness.

One topic that has come up, certainly during the public period and as well as that rules was the idea of means testing with rent stabilization.

And that would be a test uh an ordinance that basically just benefits more vulnerable populations like the low-low income or senior tenants.

We as staff are not aware of any existing rent stabilization ordinance that has a means tested rent stabilization means testing requirement.

One of the analyses that's been done by our city attorney's office is this creates significant legal risk because instead of regulating the rent increases on a market-wide basis, it regulates certain landlords based solely on the characteristics of individual tenants, which is maybe outside of the tenants' landlord's control.

So a typical means tested program, as most of you know, is usually a service or a financial program.

So this I wanted to just bring up that the human services department will be in the coming uh months rolling out and presenting to council a rental assistance program through a state grant that we've received for extremely low-income tenants at or below a 30% area meaning income or tenants who are at risk of homelessness.

So that is an example of a means tested program and financial assistance that the city is going to be rolling out separately.

So this is one area that we also began preparing with the help of a consultant firm, Baker Tilly, that has done a lot of analysis for other cities doing rent stabilization.

These are some preliminary costs, and again, I think we emphasize the word preliminary.

We would like to come back and explore this more with you in your future work session.

But we have two, we had some comparative cities that were done: Alameda, Oakland, Berkeley, Mountain View, Concord.

We have two options that we're going to show, we're going to show you a little bit more detail in a second.

But one of the kind of indicators that Baker Tilly has used is a ratio of units per full-time employee.

That's a standard that is able to use to compare cities of different sizes and rent stabilization units eligibility and staffing.

And so that's one area that that's a criteria we can talk a little bit more about, but wanted to show you this slide first, and then I'm going to go into the specifics of the two options.

Option one is called the benchmark of the baseline services option.

So this is one to run an effective program.

And so currently this would be proposing uh adding in the rent registry program that would ordinance that was already adopted and approved of the budget last year or earlier this year.

It would be total for staff.

You subtract out the existing full-time staff that's already been approved for rent registry.

So for rent stabilization, this option would propose an increase of two full-time staff.

The proposed budget would be about 1.4 million total for rent registry plus rent stabilization, but if you subtract out what was in what's in the two-year budget, about 650,000 for rent registry currently, the cost uh to create the rent stabilization program would be about 740,000 for this first year.

So this gives us a what we call a baseline satisfactory service delivery model.

We can get effective service to the community with effective and responsive times to uh follow up on inquiries by the landlords and the tenants.

You can do some proactive informants enforcement efforts, and kind of what we mentioned with the units to employ ratio, you have a manageable staff workload that to accomplish that effective service.

Option two is a little bit more of an enhanced or you could say a Cadillac version.

So here it would be adding three additional staff beyond what's been approved for rent registry, uh three adding three staff for rent stabilization.

Uh, the total costs would has increased up to 1.6.

This is a higher service level.

Subtracting out what's been approved in the budget for fiscal year 27, uh, it's closer to about over 950,000 that would need to the city would need to sort of uh approve in order to get this off the ground.

This would allow for what we call an excellent level of service.

It's 125% higher in staffing and operating budget than option one.

It is what we would define as a very well resourced program with a very manageable staff workload to allow for more effective and efficient service delivery and uh and more active uh proactive enforcement.

So typical line items that fall into a budget in rent stabilization would be obviously a key one here would be personnel costs for staff.

Uh consulting is always and professional services with help with administration and reporting on this program is always helpful too.

Uh the hearing officers on the legal side and ongoing enforcement by our our city attorney's office.

Um, outreach translation and education is very critical for the success of success of this, and we're learning this with rent registry right now.

Uh, and then indirect costs are include insurance and info technology.

Um, one thing I did want to note too, going back with the cities we compared to, they those that have rent stabilization also had a rent registry that paired with that.

There are challenges, we know, um, to take on these programs.

There's unknowns going in.

So we know similar to rent registry, it will probably take about three to five years to get substantive, you know, at least 85% cost recovery or full compliance.

Uh, once full staffing is in place is important.

Uh, public outreach and public education is critical, and that does take some time.

Um, this could put some burden on existing staff while we're staffing up.

Uh we are finding with rent registry too, integrating the software with existing city software with business licenses and such, is also something that we have to kind of coordinate ahead of time.

And of course, um, we know right now that the city is going through a structural deficit and facing some uh current and immediate future uh challenges fiscally.

So, in terms of direction, we have three questions to follow up with.

Um, one, the first question we ask is should the rent cap threshold remain at 5%, and should a consumer price index threshold be added.

So we wanted to show you some pros and cons here.

So the pros of keeping a 5% rent cap, um, you know, lowering the rent cap below 5% could further cost burden existing housing providers.

Um, keeping a straight rent cap percent is pretty straightforward and simple to administer.

Some of the cons of 5%, as we've heard from the public commentary from the tenant side, would be that's too high for cost burdened tenants.

The pros for adding a consumer price index threshold, you know, typically a CPI is tied to better reflect cost of living increases, living increases and decreases, and that could be helpful for tenants.

In terms of the cons for CPI threshold, um, the premise of a CPI is based on specific bundles of goods and services, but they don't always necessarily reflect the actual cost of owning the residential rental property.

And also tying a CPI to CPI or like a specific percent of CPI could further sort of cost burden housing providers who are already facing a high property management costs with maintenance and operating costs.

Our question number two, and again, a common theme is a lot of small mom and pops came out to make comments.

Should small rental unit property types be excluded, any types from the proposed ordinance.

So, you know, we used a definition at one of our presentations a few years ago during the eviction moratorium from the city of Oakland.

This is it's very broad.

We've seen very broad definitions of mom and pop, but I think City of Oakland had mentioned property owners having eight or fewer units.

We know that small mom and pops are typically they face greater cost, administrative burdens, they have to manage their units themselves and they have smaller profit margins, and we know many of them came out during this public comment period.

That's uh in terms of cons.

Um, you know, if you removed a certain segment of the small of the rental housing, um, those you uh those tenants would only be protected protected by the higher current state rent cap law and not by the whatever the city may or may not adopt.

Um, in terms of small housing providers, um, some of them we also heard, you know, they do, some of them do own other small smaller properties in other jurisdictions, so they may not truly be mom and pops, um, and also a matter of equity.

Um, you know, all rental property owners and tenants should be treated equally regardless of size, and most of our city require um regulations that we have apply equally across the board for all businesses.

And our third question would be related to the pass throughs.

Should the proposed capital improvement pass through allocation by rental property size remain or be changed?

So again, we've laid out the tiered structure that the city of Alameda has.

Again, this was a starting point, so we know it doesn't uh the pros of this, this is adjusts for the small housing provider who can pass more on because they face greater cost burdens than larger providers.

The cons are if the pass through is high, it could burden tenants if too low.

Housing providers may be unwilling or unable to undertake needed improvements.

Another con would be providers and tenants should be treated equally regardless of property size.

Uh, and most city regulations, again, this is an equity issue that's mentioned in question number two.

And then a con would be it's simpler or fair to administer just one standard for all property types under the 25 units.

Uh sorry, I'm going a little bit over and I'm almost done.

I can get this done in just a few more minutes.

Um, this is one slide again that we've heard about the concept of intended and unintended impacts or consequences.

So we wanted to kind of put out there the ones that we think do have merit again.

Um, so in terms of intended impacts of a rent stabilization ordinance, they do protect tenants from excessive rent increases.

They reduce tenant displacement, especially in gentrifying or high demand areas, and they reduce turnover.

But they can cause what we call housing markets segmentation, where you have two types of markets, higher rent and lower rents.

Um they do serve in some ways as an economic development tool, because they can house at all income levels, uh, the local and regional workforce.

They provide and promote economic diversity, and in some cases, they can also prevent unscrupulous uh property buyers from purchasing here in San Leandro just the fixed and flip rental properties causing unnecessary uh displacement of tenants.

What we would call unintended would be the disincentives for reinvestment improvements to the rental housing inventory, uh potential loss of rental units for the market, reducing tenant mobility because of the lack of tenant turnover, discouraging acquisition of rent stabilized properties, to lower returns, lack of reinvestment, inheriting rent stabilized tenants and the and the regulations, and then also decreasing property values on affected rental housing uh buildings, and that may in some instances lower property tax revenues.

So, in terms of next steps, um we brought forward a housing and homeless plan that the tenant protections for rent stabilization was on.

We are on track up until today.

Uh one of the things that was noted to councils after today pending advancement and the identified funding.

We had mentioned coming back for a first and second reading in January.

We are suggesting that we would like to come back, certainly to prove to make some changes based on feedback today from the public and from yourselves for another draft, but also to explore more of the preliminary cost options.

Uh coming back probably to a December work session on the 8th.

So that would push back the first reading, most likely into sometime in spring of 2026.

So with that, I would say that I have assistant city attorney Alex Mogg here and myself.

We have housing manager Carrie Husler to answer questions, and we have our consultant from Baker Tilly, Andy Bellnap, he's actually online, so we have questions.

If you all have questions about the preliminary costs, Andy is here to answer that as well.

And we do have um Chinese and Spanish translators, I believe, here for the public.

And so I'm just reiterating the the three questions.

We would like to receive guidance from you all by tonight.

So thank you.

Okay.

So at this point in time, would uh do we have council?

Thank you for your presentation.

Do we have council members with any questions on what's been presented thus far?

We'll begin with council member Viveros Walton.

Let's make sure that we do this correctly.

We have a new system that we are using.

There we go.

Perfect.

Thank you.

Councilmember Swalton, please.

Thank you.

Just a point of order.

If we do have simultaneous translation available, we should probably make that announcement in Spanish and in either Cantonese or Cantonese or Mandarin.

It would be Cantonese, I believe, yeah.

We should probably make that announcement in that language in case.

Thank you for the recommendation.

So at this point in time, uh would you please have your translator step forward to the mic to just make their presence uh be known?

Hi, this is uh way coin 10.

Um, uh Cantonese interpreted uh for um the procedure to Naiya.

Uh we are asked to uh interpret for uh the comment uh comment period only.

Um so no simultaneous interpretation.

Yeah, thank you.

Thank you very much.

Uh um there is any audience uh for members of the orange who uh need uh interpretation on their questions or their comments, uh, we'll be here to to uh help them.

Could you make that statement?

Okay in Cantonese.

Of course, of course.

Thank you.

Um, you go hiya, gong don't walk, I go, you know, yeah.

Okay, now in Spanish, please.

Good evening, Mayor and Council.

I just want to go ahead and make the announcement in Spanish.

Okay, so those who stand aquí presentes.

My number is Armando, voy a serial interpreting casually, necessity or quiero ser un commentary publico.

Muchas gracias.

Thank you.

So councilman Rivero Swalton, is that it?

Okay, perfect.

Thank you.

At this point in time, we will go to Councilmember Aguilar.

Please proceed.

Uh thank you, Mayor.

Uh, my question is with regards to um the five percent question one.

Um, what was there any reaction with regards to CPI or 3.5%?

Again, I think on one of those slides before, um, you know, I think we laid out, especially like from the tenant side that there was uh seemed a common thing there was a per preference to have that in addition to a cap, whatever that will end up being, whether it's five percent or another number.

Thank you for that.

And with regards to um the pass through, we had some examples.

Um was there any objection with regards to no pass through?

Sorry about that.

Um, no, I think that was um at times.

We did hear a comment uh in some cases.

I I think we highlighted on the tenant summary that um uh several of them had indicated a desire just to eliminate a pass through and go to a fair return process.

So, and then if in terms of the pass through for the provider side, it could be very cumbersome.

Um, you know, also with regards to the the rent adjustment petition process.

Um there was a mention of a fee for both the landlord and the tenant.

Do we have any idea of what that I know you know, we we haven't discussed uh what that potential fee could be?

I think that um I have to give that some thought.

I mean, right now we are working in the process of developing a rent registry fee that will go into the fee schedule that for that's an adopted ordinance.

Um so um, you know, I think in terms of a range, you know, I think you could probably see anywhere uh you know, I would say a range you could see anywhere from like maybe $30 or to a hundred dollars, it's pretty wide range.

We'd have to look at that and we'd have to go through a fee consultant.

Um, but uh we know we to make this cost recovery, we would need a f uh a fee, appropriate fee to pay for that.

Oh, for the petition.

Oh, I'm sorry.

Um for the rent um the petition fee.

Um, you know, I think we would also that is something also we would have to explore.

That I would not, but it I think we would need to keep it um, yeah.

I mean, I think keep it reasonable, certainly on the the housing decrease side if it were the tenant side too.

So, gotcha, understood.

Thank you for that.

My other question is with regards to sorry, I just lost my train of thought.

Um I think those are my questions for now on until I remember what the other question I was gonna ask, but uh, thank you, and we can come back to you.

Um I do want to recognize that council member Azevedo joined us immediately when that presentation began.

So he's been present for a good 30 minutes now.

Um I'm going to come to you, Councilmember Azevedo.

Would you please unmute yourself and proceed?

Thank you, Tom, for the presentation.

I have a couple questions.

One of them is the regarding the rent adjustment petition process.

So a landlord or tenant can file a petition.

If if they like a landlord, if they can't um they're not making a profit, so say that we set it at five percent.

I'm not for the five percent, but if we set it at five percent, um, would a landlord be able to go over that if they're not making a profit.

Um, so the idea um uh kind of with what you're asking is that to go over the five, whatever the cap would be in this case five percent, they would uh need to put in for a petition.

Either so, well, there's still is a way that they could go over five percent if this is this is the this is a uh a transparent and uh um public way to do that, okay.

With the process.

Okay, okay, thank you.

My next question is out of the seven seven thousand six hundred and ninety-three units, how many of those are mom and mom and pop shot?

Uh mama, mom and pop owners, sorry.

Yeah, so on the table that was there before, um, so I would say um, you know, um we can show you it's uh it's on slide number five, I believe.

But um, if you I could tell you that with the duplexes out of the 7600 or so, um, over 1200 are duplexes, um almost 400 are triplexes, and uh over 530 or 4plexes.

Okay, no, I understand that, but what would what would we consider a mom and pop?

Someone that's owning two units or four units, or what what do we consider?

You know, in that slide we mentioned a definition, it's the definitions we've seen can be fairly broad.

One we've used in the past is uh somebody owning eight units or less.

So yeah, I heard eight units or less potentially.

Um, but you you as counsel could decide that could be a much smaller uh you know um subgroup.

Okay, okay, those are my questions for now.

Thank you.

Thank you.

I'm gonna come back to council member Aguilar, I think.

Are you still in that queue?

Yes, okay.

Coming back to you.

Uh thank you, Mayor.

Uh thank you, Tom.

Sorry, I I had it written down, but I couldn't find it in minutes.

Um, you showed cost option one and cost option two.

Obviously, cost option two is is uh in my ISD better option, but can you explain the added benefit for one versus two?

And with regards to the the price difference, sure.

And if I could on oops, if I could online um, I might have that our consultant address that Andy.

Are you online?

Were you able to hear council member Aguilar's question?

Yes, Tom, I was.

Can you hear me okay?

Yes, okay.

Um we were mainly looking at that level of um units administered per FTE, and uh we tried with that second level to get to get it down to a level um that was near nearer to the level of um not quite as low as Berkeley, but nearer to that level, because they seem to have the highest level of service that we could find in the in the area.

That was really what we were shooting for.

For the higher level of service, gotcha.

Thank you.

Those are my questions.

Okay, thank you.

At this point, what time we'll go to Council Murray Fitzwalton?

Thank you.

Um I'll just limit my comments now to just specific questions about the ordinance.

Um I'd like to move over to the portion on enforcement.

Um, so there's uh one with kind of two lenses, one on the cost estimate, and then two, like what would that actually look like in terms of um from the city end in terms of what what would proactive enforcement look like?

And is that scenario one or scenario two?

Or is it both?

I think both.

Sorry, but it's it's both.

Um, but again, scenario two, the enhanced version, um, would allow for greater level of that.

In other words, at some point when this if the program if adopted were stabilized, then you know, based on the data that we get, say through the rent registry or something, would the staff could be more proactive in finding patterns or things uh from that data to enforce and um because their workload is more manageable at that enhanced level, they would have the capacity to do that maybe you know more more effectively.

Thank you.

Um and have you had any discussions with our colleagues from other cities who have run stabilization programs in terms of some lessons learned, or is that already kind of baked into what your thought process is, and if it does pass, what would a proactive enforcement look like for us?

Yes, I mean so those are questions.

I think we have uh at times talked to some of our uh cities as well.

Andy has as well his team as part of their research, so yeah.

Okay.

Um I wanted to go over to uh hold on, let me just look at the rest of my questions.

Specific to um recourse for tenants.

Um can you point me to the part?

I have it on the presentation, but I'm trying to read it on the actual draft ordinance in terms of recourse for tenants.

Um for uh if they have any issues with the landlord on rent increases and/or pass-throughs.

Um I'm having trouble finding it on the spot.

I'm just wondering if you can point me to that.

Are you referring to if uh a landlord has an improper increase?

Yeah, so in it's in section 165, landlord's failure to comply.

Got it.

Yes, that was my um that was one of the questions I had.

So can you translate this for me if we were to uh in non-legalese, what would this actually be?

Yeah, so first uh it's a defense to uh eviction proceeding.

You know, if you get a uh if a tenant gets a rent increase, let's say we go with five percent and they get a seven percent rent increase and they don't pay that, and the landlord gets to try to evict them.

First of all, it's a a defense to that eviction action.

Um they also can bring um they or or the city can bring you know a suit against the landlord seeking damages for those violations, and we lay out sort of those things or injunctive relief, you know, an order from the court telling the landlord not to do what it's doing.

Okay.

Okay, so those are kind of the more technical questions.

I'm gonna step back and kind of just go more global.

Um, the original draft ordinance does not include a CPI, although some of the um our colleagues or our neighbors that have a rent stabilization ordinance and and the books, um, have kind of a combination.

Um, I and I don't know if is this uh just in terms of processes.

Is it time just for questions in the draft ordinance, or are we kind of combining questions comments?

Hold on, I'm thinking like Jeopardy, like how do I make that into a question?

That's actually a statement.

Um, so CPI.

Uh the current draft ordinance does not include that.

Um understanding what CPI is, it's a percentage or large percentage of that is actually based on the rising cost of housing.

Oh no.

Um has there been any analysis in terms of uh combining a cap and a CPI, whichever is lower.

Um, I'm particularly thinking between the kind of between the 60 and 70, somewhere in there, just in terms of analysis on what that would look like.

You know, I'm I've been trying to kind of project it out based on previous numbers, uh, but I'm trying to look ahead to see what uh a possible increase could look like.

Yeah, no, that think that's a good question.

Uh there has some preliminary, and again, we analysis done.

Uh again, we use the percent with some guidance from the rules committee at the time as a starting point.

And I want to emphasize that there was if anything meant to probably stimulate public discussion, which it has.

Um, but as you've mentioned, because this is where best practice best practices or existing practices have occurred.

Um, a lot of the cities that we know of uh have that.

So um, you know, one thing we would depending on the direction that we're given, uh, we would look a little deeper into like to your question of um if that was an option that's council would want us to consider what percentage kind of what you just asked, maybe the most appropriate.

That would be up to us to follow up with once we get some direction from you all.

So but we have done some preliminary look at that.

So we know it's it's it's feasible and it's doable.

Um, yeah, so.

Thank you.

And I do have questions about the pass-through.

So if my colleagues want to dig into that, that would be amazing.

At this point in time, we will go to council member Simon.

Thank you, Tom, for the presentation.

And I do have some pass-through questions.

So my first question on the pass-through is related to pages or slides 20 and 21.

And I want to get a better understanding of the fair and reasonable return.

And if you could explain a little bit more, what is the process?

If someone, for example, comes in and say they need a roof for their apartment, and they submit a cost estimate for that roof repair.

What type, I mean, that's cost from an income side of the owner.

What type of data are you obtaining from an income side?

For example, is their apartment building paid in full?

Do they have other assets that they have been saving up from the years of rent increases they could have used for this repair?

Could you explain a bit more?

So thank you, Councilmember.

I want to clarify there are two separate things, right?

So there's a fair and reasonable return, a fair return, um application that could be sought regardless of any capital improvement.

And then the way the ordinance is structured now, it could be structured as part, you know, to pay for a capital improvement, um, and if there wasn't going to be a pass through.

So under a fair, you know, if someone's applying for a fair return, we're never looking just at the costs related to a uh capital improvement.

The application is looking at their total net operating income.

So all of their expenses for running the rental property and all of their income.

And so the ordinance defines what those are.

So income would include all the rents they're collecting, any other payments, you know, laundry fees, uh, you know, other types of fees, and the expenses would include all of the expenses of maintaining the property, property taxes, capital repairs that they're doing that they aren't getting a pass-through for.

Um, so all of that uh would be looked at by the hearing officer to determine if the the net operating income is the same as it was in the base year, okay.

Um but looking at the the pass-through.

If so, so a pass-through, if if we have a pass-through, it is not looking at a return at all.

It is just looking at the expense.

No income is considered, it's just saying what is the cost of this capital repair you are doing.

Is it a necessary repair?

You know, was it the result of your neglect or or was it you know just a necessary repair that that happens?

Um, are the quotes you submitted for that, you know, reasonable quotes for that cost?

If so, it's approved, and then the percentage based on the schedule is passed on.

So if it's a hundred dollar cost of that repair, uh that's a made-up number, you know, but let's say it's a uh $50,000 cost to repair the roof, replace the roof, and we say you can pass on 50 um percent of it that $25,000 of that is passed on to the tenants, amortized over the life of the roof repair or or the what IRS regulations say you should amortize it over.

Okay, but the way it's shown now, for 25 plus units, it has to go through the fair return process for capital.

So that just means the only way to recover that cost is through the fair return process.

So if you are a landlord and you do a repair and that causes you to no longer make a fair return, then you could apply for an increase.

But let's say you would still be making a fair return even with the cost of paying for the improvement, then you're not gonna be approved a fair return increase.

But for 25 plus units, do you still have to go through the process to analyze?

If the landlord is seeking uh return, is seeking a rent increase, yes.

But if you know they just a pat, but on page 19, slide 19.

If you can pull that slide up, yeah.

So the only way basically that's saying there's no amount of that that can be passed through.

If you're over 25 units, you cannot do a separate pass-through.

If you want to increase, you would have to go through a fair return process.

Okay.

And the only way that would be granted is if that additional cost is what is making it so that you don't have a fair return.

Understood, got it.

But in that fair return process for 25 plus units, or the council could decide to make it less units, whatever the the number of units is.

Do you look at the the assets that that proper owner has?

Does he own that building in full?

So the fair return process does not consider debt or equity.

It's really looking at uh operating income alone.

So we don't consider whether the uh owner is sitting on a you know has a lot of equity in the the property.

We also don't consider whether the landlord has a very large mortgage and large interest payments on that.

Neither of those are considered.

Okay.

Are there any I'm gonna come back to you because you've had about almost seven minutes?

So I'm gonna come to council member bolt.

I'm actually gonna ask one clarification.

All of that was in the context of you kept saying repairs.

But it can it's just any capital improvement.

Like a sorry for that, Miss Staman.

Yes, correct.

Okay, perfect.

So council member Bolt, you are next.

Okay, thank you.

Uh thank you for the presentation.

I know it's a lot of hard work.

Uh it's been a long time coming.

I'm glad we're here.

Uh I I guess this is this is a question for legal, but would it be illegal to limit or or not allow any pass throughs?

That would not be illegal.

Um to not allow that.

We we have to allow a fair return process, but we do not have to have the capital pass through process.

Okay.

Um, and then on that, what how about the did you did?

I guess this would be to Tom or maybe to Andy.

Did we look at Richmond's uh ordinance where they have the fair return petition?

Is that where I'm hearing that a little bit, and I'm not sure if that came from the Richmond's um idea.

I am familiar with Richmond's ordinance, and it is not it is very it's very similar to um Oakland and Berkeley.

Um, so I guess we kind of have a proxy for it because we did look at Oakland and Berkeley, and it's Richmond is similar to those there.

And and so uh what is you know, I mean, to have them go through some type of of petition to prove I think that's the the most prudent way to do it, right?

Instead of just the idea that you know it's it's it's just it's really hard for me to accept that tenants are gonna get a rent increase because they need a new roof or they need new windows or or something of that sort when it's uh it's a capital improvement that they should have been planning for for years.

That's not something that sneaks up on you, and so I think that the fair return petition would would kind of would give it some some uh level uh playing a level playing field there.

Um, I think what the ordinance is I think the typically there I think what the ordinance is trying to do is grant some leeway for the smaller landlord, um the uh the larger ones with 25 or more units, it is a fair return only.

Uh and that i think the thinking was to give some leeway for the smaller the smaller um uh less than 25 units that's i think it that can be changed it's a policy decision right oh and that but thank you because that leads me right into the next one um what when we talk about excluding mom and pops and the other ordinances is was that done were were mom and pops excluded um typically um in my experience um there may be some exclusions of duplexes but typically uh typically there's not a lot of exemptions except maybe for duplexes the go what what Tom called the golden the uh the the duplexes where one unit is occupied by the owner those are typically excluded otherwise uh the ordinances typically pick up most rentals uh that are not otherwise excluded by state law thank you that that's kind of what I I was picking up on too as I was going through them I wanted to be clear and so I'm I'm really questioning our idea of somehow excluding them now when really nobody else did it but us and then the eight units like to me that's not mom and pop uh this is not a question this is statement I know we're not on statements now but we need to know well then I'll ask you to wait on your statement since it's not time for comments.

Uh the question is uh in any of them did when they defined it what number was it defined at I'm sorry could could you repeat that again council member bolt so so it says should should the mom and pops be excluded and then that's the question.

So my question to you is when we define it did you read any that had them defined at a number at a certain unit besides the uh golden no I I think we uh the the definitions are very wide widely so they're they're fairly broadly defined in um you know most research that's out there so there's no one sort of you know um specific definition for mom and pop um we pulled one that we've used before uh and as I mentioned the presentation at some point based on what you hear public testimony wise and what the what you've read um it really is a council's discretion to determine what that level of small property would be if we even want to exclude anything if if you choose to move forward with that exactly right thank you.

At this point time we'll go to Vice Mayor Bowen thank you mayor um did um in terms of looking and we obviously looked at um different jurisdictions in the Bay Area did we look at LA County at all in comparison to just some the uh there about civilization policies I ask because as I was looking um at rent uh at um small mom and pop LA County actually has a certification program to define what small mom and pop is and they actually say 10 which was much higher than I had seen and I saw that I said Oakland was eight um and so the question so that's the first question and then the follow-up question is at what point is it tonight or at the future work session is it for us to def answer the questions of how we define it.

I would just add that um instead of trying to get into too technical of a definition and I and I know we've heard this from the council over the last year plus doing protections is um, you know, gearing your decision making into what makes San Leandro unique.

So as you saw the numbers on the fifth slide, that represents what could fall under, you could see the breakout.

And I think um when the council members asked what the breakout was, I think it was council member Acevedo.

You could see what that breakout is by small unit type.

So you could see your impact if you were to eliminate uh you know one category, say duplexes, you could see that percentage impact if you were impact, adding triplexes in there and go up the ladder.

Um, you know, I know at rules committee, I think um one of you all made the comment that potentially could go up to eight, but um there would seem more comfort that smaller generally seem to be five units or less.

So again, it's subjective, but again, I think looking at what we have, we have that information about what our housing stock is.

If we start subtracting out, you could see what percentage impact that would be.

Thank you.

Um in section 446 145, there's a reference to a language access plan in terms of sharing information about I think the rental agreements and and potential um increases.

Can you share a little bit about what what that means with our like our language access plan?

Yeah, I think we were being mindful of um you know fair housing, you know, to define that you know, typically when we do translation, I know I think we've heard this from helpful comments you made uh during rules committee is um we certainly um we want to as the city has we want to gear your translation towards typically uh standard if it's uh analysis uh historically, we know that uh the Chinese popul speaking population and this uh Spanish speaking population um has risen to that um analysis that we probably did about 10 12 years ago.

So if if there were more we if the council vote there were other languages, we would probably need to do some kind of analysis to make sure that that kind of fit that pattern so uh or threshold population wise, and we could have a standard we could follow for translation.

So, and that's just for translation purpose, or just right, got it, okay.

Um, and then uh there's mention of an annual review.

Um, is that in the form of a staff report or is that a work session presentation that we would have on an annual basis?

You know, it's typically in the form of a staff report, and um, you know, it's presented to council it uh sometimes on consent.

Um, so it could be pulled, you know, and and discussed.

Um, so yeah.

Okay.

Um in terms of the preliminary costs for the full four-time um four FTEs at 1.4 million is that and I think the rent registry was at 600,000, and so then the remaining was what's the math on that?

Sorry, for which option?

For the satisfactory.

Oh, the satisfactory, yeah.

So I think it was about 1.4 million total.

Uh then you take out the 650 that was been approved in the two-year budget cycle for the FY27, and so that left about I think 740,000 as the gap, and that would be the rent stabilization portion approximately.

And that 740,000 is yet to be found in our budget?

Well, again, you would have to go through the budgeting process to write exactly that.

As we mentioned in the calendar, that would be identified and approved funding by council that's outside of our two-year budget has been approved.

So, okay, and that's once we actually hire the two additional staff members for it.

So it wouldn't necessarily be 1.4 from the onset.

No, that would include the cost of hiring those two additional.

So, okay.

Um and was was it in this?

I think you mentioned Tom, it would take about three to five years for cost recovery, and the cost recovery um would come from where?

The fees that would be established.

Yeah, and we would have to kind of calculate those very uh with the nexus to the service.

Okay.

I have a few more.

My I heard the dinging, okay.

So I will come back to you.

I'm gonna jump in to ask a few of my own questions, and then I'm going to go back through the queue a second time.

Um I'd like to go to the purpose.

Is that page four?

Where is that?

Wherever the wherever the purpose is.

So the purpose focuses on prevention of displacement.

So my my question is have we done any analysis on the number of people being displaced currently?

That's what I would like to do.

No worries.

If you could repeat that question again, Mayor.

Yeah.

Have we done a second line of that says that it's an order the purpose of this is to prevent displacement?

Have we done any analysis on the number of people that are currently being displaced in the absence of this regulation?

You know, again, we don't have that data, so to speak.

I think that's been kind of established in the last couple of years in the work sessions that we've had.

We don't have that clear data.

Okay.

But um, there are approximately 1,450 people receiving uh housing assistance.

1,450 approximately receiving housing assistance of a material amount here in the city of San Leandro.

Would they be eligible for this program in addition to the housing assistance that they already receive?

Oh, you said housing assistance.

Sorry, when you say housing assistance, are you referring to section eight?

Yes.

Yes, section eight.

So actually, I think um in I think that question would have arisen.

Um, and Alex, you can verify, but they would be a section eight recipient would be exempted from this under the those households.

Maybe I'll just confirm with Alex that that's those households are exempted from this process, regardless of whether they're in a large complex, small mom and pop, whatever.

They're just exempted, okay.

Um, are we able to?

I'm not quite clear.

Are we able to provide certain protections, additional protections for for protected categories like seniors?

Or is that deemed illegal?

We believe that tying the whole, or you know, applying the rent stabilization itself, you know, the limit on rent increases based on those protected um categories proves problematic.

Um certain other categories, like you know, additional fines for you know you illegally raising the rent uh on those protected categories is something that's more um allowable, thank you.

Have we looked at if we um actually done the the numerical analysis of financial analysis if we take out the people that are covered by section eight, um, and I'm sure some of them are in single family homes, but if we take out the single family homes and we take out the section eight and we look at the number of people, do we have estimates of the number of people that will be no longer displaced because of what we're we're we're thinking about here?

I think sort of generally speaking, uh, there's not a great correlation there.

I think if we tried to take a uh look at that, it would be sort of a guesstimate.

I mean, we could try.

I don't think I've done that before.

I could uh coordinate with housing authority and see.

Um, but it might be matching apples to oranges in terms of data sets.

So, so I'm just I'm gonna work work with me here a little bit because if I think of we started with about 7700 eligible households, and then I'm trying to think about what proportion of those are subject to displacement right now because of our current rent processes as they exist right now in the city of San Leandro.

We have any sense of that, five percent or ten percent.

That would be um, you said excluded or that that are subject to displacement.

So that's the purpose of this.

Yeah, and I again, as part of the that's one of the categories, the unintended impact consequences that again, these are things that based on other ordinances or programs that have been adopted, we know can happen, but you're we're kind of projecting into the future with that that, for example.

So we don't know exactly.

Again, every city is different because of the types of regulatory framework that's there, the types of socioeconomics uh demographics that are involved.

So it it really can vary, and so it's an impact, it's an unintended impact, but at this point, as we're going into your the data is not clear what that would be until you know a program is implemented.

Thank you.

At this point in time, I will come back.

I believe council member Azebito had another question.

So we'll come back to you, Councilmember Azabito online.

Okay.

I have a question regarding about a loophole with regard to rental leases, because I know trailer haven had um a loophole where they have they got a 20% increase because they signed a lease.

Is that gonna happen the same with this where if someone signed a long-term lease that they could still get their rent raised a higher amount?

So the under the mobile home, under state mobile home laws, the city was prohibited from applying rent control to um mobile home spaces with long-term leases.

There's no similar requirement for uh what I'll call traditional residential units, and so this you could not have a rent at least that allowed for uh a longer uh higher excuse me, a greater rent increase.

So the short answer is no.

Okay, okay, because yeah, what happened at Trailer Haven, man?

They went from paying $800 a month to $1,100 in one year.

So yeah, I just don't want that to happen.

Thank you.

That's my question.

At this point in time, we'll go to council member Simon, please.

Yeah, I want to kind of build upon my previous questions on the fair and reasonable return, whether it's for a capital pass-through for 25 plus units or whatever units may be decided or not decided, or from a rental rate increase.

From a legal perspective, can we look at more assets of the property owner, whether it's the equity in their property, not just the net income and expenses?

So I would say that our ordinance is structured, how many ordinances are on maintaining net operating income, which is just looking at operating income, you know, income versus expenses.

That's how most of these ordinances um apply.

We haven't seen any ordinances that do that, and I would say in general, there wouldn't be a rational basis to only look at someone's assets and not look at their debts as part of that process.

So right now we don't look at either, but uh only look at one and not the other might create be problematic.

Okay, so you could look at their assets, but also to be fair, look at their debts too.

To clarify, we are not aware of any ordinance that does that.

So we would be in an unclear territory there.

We're confident that that way we've structured this will withstand legal scrutiny.

Many cities' ordinances are structured this way.

It would be doing something new and novel to take uh into account assets that uh uh landlord may have.

Okay, but because it's new, doesn't mean it's illegal.

We could try it.

It means that we can't you know guarantee that it is, and it's up to the council to decide if that's um you know still something you want to pursue.

Okay, but I'll I'll just end it with this.

We wouldn't violate any laws if we did that.

I I can't, you know, we we have there's been no other cities that we know of who do it like that.

So we haven't seen how uh if someone challenges it, how a court might deal with that lawsuit.

I want to come to city attorney in addition on that.

Thank you, Mayor.

And I concur with Alex.

Let me just sort of color the argument, color the statement this way is that that analysis, Councilmember Simon, that specific question, Alice has not been done.

And I think we'd want if that's the council's wish to consider it.

My advice, our advice would be to provide you an analysis on the risk so that you can be fully informed as to to assess the risks of that.

Concurring with Alex that to do so would be an outlier from all the other ordinances that have rent control.

Okay.

If we asked if the council decided to move in that direction, would you still be able to meet this timeline that you've proposed by the end of the uh to meet the timeline to provide the analysis?

If you were to do an analysis, does that fit within your timeline by the end of the year or beginning of the year to have this ready?

Is that is that a huge lift, this analysis, or is there something?

No, it would not be a huge lift.

Okay, we think we could accomplish it if the counts if uh the council decided.

Thank you.

This morning in time, we will go to Councilmore Vivos Walton.

Thank you.

I'm nearing the end of my question, so I'm ready to hear what folks here would like to say, and also kind of recaps a lot of the communications I've had over email over the last several months.

Um so my last question, um, it's on section 46130 on capital improvements, section C, calculating pass-throughs, section two.

Um I'm looking at it doesn't have a page number.

Sorry.

So 46130 calculating pass through number two.

I have a concern around, you know, similar to council member bolt's question around uh some of uh deferred maintenance that may pass through to tenants.

Some of those can uh depending on how the property is financed and how it's structured, property owners could have could write it off as a deduction or as a loss.

Um in terms of section two.

Um I think that the the reimbur the section on reimbursement must be deducted from capital improvements.

I think it why was it only I'm trying to frame it as a question.

Um are there any other considerations that um you the example there says insurance.

Um are there any other considerations that could be included to ensure that um when a landlord is being reimbursed for a pass-through, that it's it's actually not double dipping, right?

Where you get you can you can uh uh report a loss, take it as a deduction.

Um I'll leave that there.

Yeah, we you know the the EG is just an example of one that is not intended to be an exhaustive list.

Um, you know, we we chose what was the most obvious I think type of reimbursement you would see in the situation, but we could certainly try to put together more examples to put in there, like a tax deduction.

Right.

And uh the reason I'm bringing it up is because if um if I'm keeping track of all the deductions and all the losses, I probably will have a record of them and we're gonna submit them to the IRS anyway.

So I think if I think it would be uh the same lift, um I guess it would depend on the timing, right?

Of the six months versus when tax when you have to submit all your paperwork to the IRS.

Uh but uh I'm particularly concerned, and as I look through the ordinance, I'm concerned about that double dipping concept in various parts of the ordinance.

So I'll be digging into that in the comments.

Um, but that was just an example.

I appreciate your time and I yield my back time to the chair.

Thank you.

This point we go to council member Bowen or Vice Mayor Bowen, please.

Thank you, Mayor.

Sorry, I've got lots of notes and I have bad handwriting.

I think the new proposed timeline was potentially a work session in December.

Can you elaborate on like what that looks like in terms of what we would be talking about?

And I really appreciate the fact that you have put all of this work in because the rules committee did kind of say, here's where we're gonna start, and please go fill in all the pieces for us so we can kind of analyze it.

Yeah.

I think um coming back to you all with another draft based on the input that we're getting tonight, uh, is important, and also based on the input, not only that we've gathered already from the public process, but what you're gonna hear more of tonight, that has been very helpful for us to come to you with this second draft.

Um the other thing is that we mentioned the cost estimates.

Um we're kind of really just giving a preview.

So we are trying to our best to answer those questions.

But uh, Andy, our consultant and his team are gonna refine it some more.

So when we come back and there might be some slight tweaks to those, uh, we could have a deeper dive into a discussion on that because we know that putting those two together, the policy um and the program budget side will help inform your decision going forward when we get if if and when we get to a first draft.

So we we just wanted to take a step back and also be respectful of the um the complexity of the issue, the the really helpful public comments from providers and from tenants, and really um want to um you know, kind of give that some thought and not and emphasize for the council too that this is not just to be rushed to be rushed.

So I appreciate that, and and that makes sense to me.

Um, one of the things that wasn't um as clear to me in the presentation, and I could have missed it.

Um, was there an overall sentiment that you got up regarding the ordinance in general?

Was so in general, like a general feeling of it, just in, I mean, obviously there's people that are you know excited about it and not so excited about it, but overall, and then the second piece of that was what were there any or were there any of the different policy mechanics that were less contentious or some of them that were more in some of the arguments around it?

Is do we have further analysis of that?

I think we tried to frame um in some of our summaries what the key like from the summary of the public meetings, what's attendance, the the key issues arising from uh common tenant comments, common housing provider comments.

Um you're gonna hear more of that, I think, tonight.

Um, and so um, yeah, I think that we have distilled as much as you know, again, um, we're the three questions we have are ones that we as staff have realized that we can't answer.

We can once you give us that direction, we can then come up with some options for you in this next past in December potentially.

Um so I think we've kind of gone as far as we could on those three elements.

That's why we're bringing them forward to you.

Um you saw that we made some tweaks again.

Thank thankfully, it's some really helpful public feedback from all parties in this so-called second draft.

So, yeah, I think we are, I guess like I said, we have tried to manage where we can feel comfortable to say this is something that we can recommend, but on the areas, um, critical areas we cannot, we are bringing those forward to you all.

Okay, and I forget which which slide it was, but it was around um what we were trying to oh, I think it was basically what we were trying to solve for with with this rent stabilization ordinance.

And one of the things that um would be helpful, maybe this is a comment, um, be helpful is trying to understand which of the different levers that were that are included in this, like how it directly impacts some of the things that we're trying to get done.

Um, and I think that's just like a much more deep analysis of it.

That would be helpful.

Um, and then the last question I had is around, and I think maybe this is to the city manager, but um, in in recent months, um, we have the city of San Leandro has been uh granted the California pro housing designation.

Um, and I think very recently we just were awarded some additional funds for that.

Is uh we want we want housing, and I I am wondering if there's been any conversation at any point, whether it's to do with the designation or um in the conversations with um uh residents and the people that have been coming to um the the sessions around um the impacts on our housing designation, our pro housing designation.

Um in regards to this rent stabilization order?

So I think one thing I would emphasize is that our pro housing designation was based on existing policies and programs that we have that promote the creation of new housing.

So again, this is a this is uh a key priority of the state and the regional planning body of uh protecting existing tenants.

There's production, preservation, protection.

But pro housing, the um emphasis and the credit that we got was for being in a housing uh friend friendly city for the for new new new housing.

So um, I think part of what we have to use that million for is to facilitate the creation of new housing optimally, but we're you know, we're we're looking at the options for that right now, too.

Okay, thank you.

Okay, we just got a few questions that I'm hoping for really fast answers.

Okay, does the current draft have anything with respect to control over the prices the rents charged by sub-leasers?

It does not perfect.

Um, in the definition of fair return net operating income for the base year, what if the year in which you're uh uh we adopt this, you've got really bad net operating income for any of a variety of reasons.

How is that addressed?

So in the fair return process, it can be adjusted based on those considerations.

So there's some examples given, like you were charging rent below the to be clear, is the base year NOI adjusted permanently?

Uh yes, when you make that application, so if it was 200,000, and market would be whatever, 500,000 forever going forward, the base year will be treated as if it was.

So if let me clarify, if your fair return application is granted, your base year then becomes the year the fair return application was granted because it's sort of resetting there based on that uh fair return.

Perfect, thank you.

Uh, capital planning.

So uh I've heard this comment that people should be planning to replace their roofs, people should be planning to do X, Y, and Z.

In the current return pro in the process that's laid out, the anticipated expenses and the saving money for those anticipated expenses, is that considered part of net operating income?

The income includes all rental payments you receive.

I asked about net operating income.

So is the money that you the money that you're saving specifically for the purposes of that future expense?

I believe the answer is no.

Okay, um, if we look at improvements, so let's just say hypothetically that you have carpet and you want to go to wood floor, you have wood floors and you want to go to tile, whatever the case, you want to make an improvement to your actual improvement, the property will be nicer, more market appropriate for whatever the times are.

Are those improvements considered in the fair return application process?

Yes, it would be all uh expenses uh related to repairs or capital improvements.

Perfect.

And then my last question the the petition.

So if you're a petitioner, you're a tenant, you're very concerned about the cost, or the service that's been provided to you has fallen, or you're a housing provider and you're concerned.

I kind of got some sense from I think maybe from you, Director Liao, that it would be possibly a um a lower price than maybe the actual cost of running that hearing.

So maybe running that hearing might cost us five thousand dollars in total, but we might make the fee only two hundred dollars, let's just say for the sake of argument.

So am I understanding correctly that the the we are currently envisioning subsidizing the cost of submitting a petition?

No, that's uh again, I would have to.

Let me try to get you there.

Thank you.

Um again, that would also involve a fee analysis too.

So before I I would not say that we are going to subsidize that.

Uh, but I would say so I just mentioned that because I think um, you know, with our current uh uh rent review program and mobile home program, you know, in this budget cycle, we did come up with a fee analysis, and there was some fee that the council, I think from the home appeals.

Um, because that does impact those mobile home residents.

The council did go below a recommended amount so as not to to burden the applicant.

But um, but I think we would have to just defer to uh the fee analysis process because the ultimately to pay for this program if it were to be adopted, I think uh it would behoove us to look at how to recover the cost and then work backward from there and um bring forward to you all what you would want to recommend.

Perfect, thank you.

So at this point in time, we're gonna move to public comment on this item.

I understand that we might have on the order of 20 commenters in person.

Is that approximately right?

Mayor, we've received 19 comment cards.

Perfect.

And so 20, so we've got one more.

Uh, at this point in time, what we'd like for you to do is kind of uh start lining up in that the clerk will call you in groups of three.

And if you could just line up against the wall so that we can move through our comments as efficiently as possible.

Two minutes.

The first speakers are Rob Rich, followed by John Sullivan, followed by Luis Lovell.

Uh Mr.

Mayor, Ms.

Vice Mayor, Council members, staff, my name is Rob Rich.

Um, I'm lucky enough to live here in San Leandro.

This is not the first time San Leandro has created a rent stabilization ordinance.

Six years ago, San Leandro's mobile home rent stabilization ordinance went into effect.

It is a moderate ordinance passed by a moderate council with only a single dissenting vote.

It caps annual rent increases at 4% or CPI, whichever is lower.

It provides meaningful protection while allowing a reasonable rate of return, of course.

It needs to be updated to rain and abuse, like unfair capital improvement pass-throughs.

The proposed rent stabilization ordinance you are discussing should also cap the maximum allowable increase by a percentage and some form of CPI.

Reasonable people may disagree on those specific percentages, but we need both a percentage cap and a CPI threshold, whichever is lower.

Just like our mobile home rent stabilization ordinance, just like the city of Alameda's rent stabilization ordinance, just like so many other rent stabilization ordinances.

Please ensure that the limit on rent increases is the lower of a percentage cap and a CPI threshold.

Thank you.

Thank you.

The next speakers are John Sullivan, Luis Lovell, and Jimmy Kelly.

Good evening.

I'm John Solomon.

I've been a San Leandro businessman for over 50 years.

And I'm really proud of our city, and I really would like to see it continue to move forward.

I'm very, very concerned about this mad rush really for rent control.

Why now?

You know, rents are going down.

Okay.

Now Tom did a very excellent job in getting information and so forth, but this handout that I gave you will show some vital information really on items that were not captured, really.

So for instance, um any claim that every tenant gets maximum rent increase every year is absolutely false.

A recent study of the annual history on almost 400 units in San Leandro, seven different um seven complexes, small and large, shows that 65% of tenants did not receive a rent increase this last year.

That's two out of every three did not receive a rent increase.

So please don't impose the statement of rent controllers.

It sends the wrong message.

Now the good news there is an alternative.

Revisit and revise our rent review program, but make it binding arbitration.

This would be a huge victory to our tenants who for years have been pleading for this finding arbitration.

Uh and our city, of course, would not be labeled as stigma or the stigma of rent control.

It's double double bank for your book.

So please slow down this train.

Let's uh start work together to get it right this time.

So to finish up, um the suggestion is out there to have this go to a vote of the people or later to go back to another city council.

Let's uh let's avoid that really.

Let's instead put your valuable time towards lobbying for uh more than thank you, sir.

Your time is up for our tenants.

Thank you.

The next three speakers are Louise Lovewell, followed by Jimmy Kelly, followed by Jenny Madsen.

Good evening, Mayor, Council people, and all the people here.

My name is Louise Lovell.

I've been a resident of this wonderful community since 1979 with my family.

In the 1990s, we helped to build something called building futures.

I had a long discussion last week with Liz Varella, who's running it.

The key to helping the people in this community to keep them from being unhoused, is to keep the people who are low income away from the unhoused.

If we can work with more organizations like Building Futures, which right now is not included in that section eight, is subsidizing 350 families every month, along with actually giving rent, paying for rent for another 50 families.

I know you guys have worked hard on this.

I don't believe that rent control is the secret.

I think the secret is having more organizations to help building futures to help the people so that they do not have to go from the um, so I say the low income over to the to the unhoused situation.

That is the key.

We work together.

Landlords can take in some of the people that maybe building futures has.

Right now, building futures is having all these people go to Oakland and to Hayward.

So we need to work with these organizations, building futures, um Davis Street Center, the people that are providing for other people in this community.

That's how we can help the people so that they don't become unhoused.

So think about that.

A new way of looking at it.

We don't have to pit landlord against tenant, have this big convoluted thing, which is no offense, very complicated, and it's going to turn away a lot of pension money from the pen from the unions and the teachers.

So I'm going, let's work together, San Leandro.

Thank you.

Thank you.

The next speakers are Jimmy Kelly, Jenny Madsen, and Carol Hoppercross.

Good evening, City Council Mayor.

I'm on tenant.

And just good.

You redire directing me, Mayor.

There you go.

We just want to make sure you're microphone.

Yeah, you can hear it.

Yeah.

Anyway, I'm a tenant.

I've been living here for 15 years, and I have yet to have a year where I didn't get a rent increase.

In fact, uh my rent has gone up over 100%.

However, I can't say that's the same with my income.

And that's why this is important.

If you've worked at this very long time, and I think you need to come to a conclusion that you want to wrap it up as soon as possible so people can get the benefit of it.

So both the landlord and a tenant knows what their future is.

I dread every January because that's when I get my rent increase, and I don't know how much it's gonna be.

But uh for the for the people that own the property, you have a proposition 13 that regulates your taxes.

I don't have anything like that.

And you have you have an opportunity to take deductions, but as a tenant, I can't deduct my mortgage.

So you're privileged, and I think what you need to do is find some balance for the tenant and make sure that people can still afford to live here because it's really difficult in the Bay Area.

Everybody knows that.

And I think the what you're about to do is very important.

So I support what the city has done to bring about this rent stabilization and hope you'll do the cost of living or the lower the the lower the rent for the tenant because we don't have any say about our future.

I can't deduct it.

I can't uh look forward to anything but another rent increase this year.

And with this stabilization, at least I'll have a little bit of stabilization in my livelihood.

I'm working two jobs now, sometimes three, and that's what I do to keep my thank you, sir.

Your time is up.

The next three speakers are Jenny Madsen, Carol Hoppercross, and Derek Barnes.

Okay, there it is.

You've all heard way too much from Jenny Madsen.

I know you're tired of it, but I can't stop.

One of the reasons for doing this on the local level, as opposed to the state, is that you design the program for the the local conditions.

San Leandro is different than Alameda.

We have a lot more fourplexes, three plexes, and duplexes here, and not the common kind that you're talking about with the golden one where it's just one building.

No, there are whole buildings of duplexes, and I know you want to do what will make San Leandro's brand improve.

You want to build, you want to have people invest in San Leandro.

Well, what I have been looking at, and who owns the prop rental properties in San Leandro?

They're owned by people who don't live here.

It's an investment, it's extractive.

And we want San Leandro to be a place where people can people come here because they want to live.

I've been here 20 years.

I've been coming here for 55.

And I will, the first thing I did when I moved to town was I got asked to by some property owner to go speak up to the city council about grocery outlet.

That's the only thing that I've seen a benefit for that I've spoken up about in San Leandro.

I got other things to do.

There are health care issues that need to be worked on.

There are ecological issues.

I do stuff at the state.

This is not all I want to do.

And look, you can make it real easy.

Take out capital improvements, just leave it with the fair rate of return.

You can simplify this, make it more complex later.

But the fact of the matter is the rent review board is toothless.

Thank you.

Your time is up.

The next three speakers are Carol Hypercross, Derek Barnes, and Chun Chi Ma.

Good evening, City Council.

Mayor, Vice Mayor, staff.

My name is Carol Habercross.

I'm a renter here.

I've been renting for 16 years here in San Leandro.

Before that, I lived in Berkeley and I had rent control there.

I had stability and affordability in Berkeley.

Renting here, I don't know what my rent's going to be.

So that's one thing that we need here.

We need we need affordability and we need stability.

We need to know what our rent's going to be next year.

I right now I work with uh children.

I'm a teacher in the school district here.

A lot of the children and their families, they're struggling.

You know, these are low-income families.

Before that, I worked with seniors in San Leandro on Social Security, and they were struggling too.

They were living in little apartments, you know, one bedroom apartments, and they were again a lot of them were forced out of San L'Angelo because they couldn't afford it anymore.

So I feel like we I am also for the cap of 3% or 65% CPI, whichever is lower.

I think that we need to do that.

And I think that we need to look at our population and all the people that are struggling right now, and this would really help them.

And I think that as a renter, a lot of renters are afraid to really come out.

And I, you know, I think you wonder why aren't there more renters?

They are afraid of their landlords, they're afraid of retaliation.

So, you know, we try to come out, but really I'm representing many, many renters of families that I work with in the schools and also with seniors, and what they are afraid to say because uh they're afraid of what will happen to them.

So again, I am going for the cap of 3% or 65 CPI, whichever is lower.

Thank you.

Thank you.

The next three speakers are Derek Barnes, Chun Chi Ma, and Chin Yit Liao.

Good evening.

Hello?

Good evening, Mayor and Council members Derek Barnes with Ebra.

I'm here on behalf of small rental housing providers who form the backbone of San Leandro's rental market.

Data, data, data.

These policies need to be driven by displacement data, by the way.

How is housing production, the housing production market in Richmond and Oakland?

It's not good.

And there's a reason for that.

While we share your goal of housing stability, this proposed ordinance, particularly tethering rent limits to consumer price index, will do the opposite of what it intends.

I think we've heard about what makes up CPI, um, and what we deal with in our realities as owner operators.

This will create a slow squeeze that drives mom and pop providers to sell or exit the market entirely, shrinking supply.

A recent Ebra member survey indicates that for 34% of our small owner operators are intending to exit the market within the next 24 months.

I think I've relayed that to some of you.

And that's something that I think we need to address.

This will accelerate owner erosion ultimately and compound the business risk and losses that small owners will endure.

Um 50%, 55% of our members are our owners of four units or less, and one size does not fit all.

These owners with older housing stock are typically our most vulnerable owners, typically lower access to reserves, resources, capital, and financing.

So we should find some way to exclude certain owners uh from this.

Renter means and needs testing as also sounds is also a sound thing to think about.

San Francisco, LA, Santa Monica, and Berkeley each have screen income hardship already uh block charges and surcharges and waive fees that would otherwise push effective rents above guidelines.

And New York and DC have a similar model uh that that looks at age and disability income to tighten caps or rents freezes for qualifying homeowners.

So it can be done.

Thank you.

Thank you.

Your time is up.

The next three speakers are Chun Chi Ma, Chin Yit Niao, and Kathleen Parsons.

Good evening.

Um, Chen Chi Ma, a small housing city council to be moder at San Angel and data driven in policy making and reject any extreme.

Right now, the rental market is very soft, especially in East Bay.

Our rent is pretty much flat line for the last couple years, while the expenses going up a lot.

The renovation and repair costs all gone up due to tariffs, and our property insurance went from less than 6,000 a year, three years ago, to more than 10,000 now.

A 60% high, 60% plus.

Second, right now, budget is very tight for very for every metro, and San Leandro is no exception.

Instead of implementing a costly new rent control program, why not look into the existing and effective rent mediation program and maybe consider uh consider adding T to it, making it more effective.

Not a lot of requests from tenants for such service indication of possible lack of education about this availability of such channel.

So why not put in more effort into this education about this existing program before a new one requiring more resources from the city?

Last but not least, there are existing AB 1482 state law already in existence in since uh 2019.

Adding more regulation will not add a single unit to the housing supply.

Strict rent control will have high chance of leading to shrinking in uh rental stock.

A couple of my friends in San Liango already expressed to take back their rental unit to let relatively in there instead of renting up.

Such unintended consequences will hurt the very people who the city council will.

Thank you, sir.

Your time is up.

The next three speakers Chen Yit Liao, Kathleen Parsons, and Emily Rich.

Um good evening, Mayor and Council members.

Um thank you very much.

Um give us the opportunity here to um provide our prospect from as a small housing provider in San Leandro.

I live in San Angel.

I was a registered nurse and uh Kaiser Permanente, and I own four units in San Leandro.

Um I do not increase my rent regularly every year.

I only increase every two or three years at two or three percent.

That's what I want to tell you.

And I thought that uh mayor brought up a very interesting question that is any statistic for you know getting this uh rent stabilization and for the displacement of people, and you don't even have that statistic, and you want to implement this uh um ordinance.

So I thought it's very ironic that you would even consider this uh stabilization or rent ordinance when you don't even have any statistic that any displacement of the people, and that was the whole purpose.

You want to do this program.

So that's my comment.

Thank you.

Thank you.

The next speakers are Kathleen Parsons, Emily Rich, and Emily Grego.

Hi, um, I've lived in San Leandro since 2009, and I lived in a set of buildings owned by the Peroni family, who are very good about rent increases.

The building in 2022 is taken over by a corporation.

My rent has been raised twice.

It's been raised five percent plus the CPI, which equals almost eight percent a year.

By year 2028, I'll be paying 50% approximately 50% more rent than I am in 2022.

I'm not going to qualify for any kind of social program.

And I watched the same thing with my mother, where she earned just over the amount that any kind of program would help her.

But it wasn't enough to live on.

So I ended up helping out.

I guess I have a couple questions in the sense that I kind of interested in the mechanism of the capital improvements.

My understanding is if somebody puts a new roof on and they sell the building, then that is going to be considered an asset, and the price asking price is going to go up.

It's not like the property values in California are going down anywhere.

My second question would be I'm kind of wondering how the capital improvement process is handled as far as what prevents a landlord from conspiring with a contractor to inflate the cost of a repair that can then be passed on to the tenant and money split between the contractor and the landlord.

Thank you.

Your time is up.

The next speakers are Emily Rich, Emily Grego, and Gordon Imry.

Hi, I'm Emily Rich, a 25-year San Leandro resident and homeowner.

I've made several comments since San Leandro started this process, so I hope you, the members of the city council, are aware that I'm in favor of tenant protections similar to those of our neighbors, Oakland, Berkeley, Richmond, and Alameda, all of which tie their annual allowable rent increases to regional CBI at rates from 60% to 70%.

Tonight I'd like to comment on the rental housing lobby's apparent attempt to convince the council to expand the exemptions from coverage by the city's rent stabilization ordinance.

That group wants buildings from two to four units or two to eight units added to the list of exemptions.

In enacting Costa Hawkins in 1995, the California legislature gave landlords an enormous gift and one they have fiercely protected for 30 years.

Costa Hawkins prevents any California municipalities from applying rent control to single family homes, no matter what kind of entity owns them.

Huge corporate investors are protected by Costa Hawkins equally to individual rental unit owners.

According to staff's presentation tonight, there are about 32,000 rental units in San Francisco San Leandro, excluding mobile homes, but fewer than 8,000 of those are eligible for rent stabilization, primarily due to Costa Hawkins restrictions.

So if the council passes the ordinance with the current exemptions, it will be adding protections for only about one quarter of San Leandro's renters.

Please do not permit the landlord lobby to persuade you to grant them freedom from rent stabilization for another 3,000 households because they live in buildings that contain from two to eight rental units.

These real estate interests couldn't convince the California legislature to grant them that gift in 1995, and San Leandro shouldn't grant them this now.

Thanks.

Thank you.

The next three speakers are Emily Grego, Gordon Emory, and Carrie Ann Steele.

Hello, everybody, good evening.

I'm Emily Grego.

I'm CEO of the San Leandro Chamber of Commerce, and I'm here this evening to share with all of you that our organization opposes the proposed rent stabilization ordinance.

We believe this ordinance could create unintended economic and administrative problems that work against its very goals.

First, it's redundant and costly.

AB 1482 already limits rent increases and requires just cause for evictions.

Capacity ordinances have struggled with enforcement and staffing, and this proposal risk creating another bureaucratic process with without clear funding and measurable results.

The administrative process proposed for rent adjustments adds unnecessary complexity and cost.

Given existing staffing and fiscal challenges, it's unclear how this would be effectively managed and enforced.

Second, this ordinance sends the wrong signal to housing providers and developers.

Cities that pass such ordinances are often perceived as having the potential to expand these regulations even more.

This perception discourages new housing investment at a time when we need more housing.

When investment slows, businesses, employment, and sales tax are all affected, and they are all vital to maintaining our city services.

Finally, it creates a new bureaucracy without solving the real problem.

Based on what has been shared at public meetings, this ordinance will not effectively help the most vulnerable, which includes our senior population.

Instead, the focus should be on practical solutions that address the root causes, helping residents earn higher wages through job creation and workforce development, supporting new housing, and providing targeted assistance for our seniors, such as utility subsidies.

These strategies can make San Leandro more affordable and accessible for all of us.

Thank you.

Thank you.

The next speakers are Gordon Emory, Carrie Ann Steele, and Li Ying Zhang.

Yes, I'm Gordon Emory, California resident for 20 years and San Leandro for 10.

First, want to note that there were no review in the presentation of successful rent stabilization experiences elsewhere.

We need more specifics from Andy about comparable cities' alleged success with rent stabilization.

There are cities that have suffered under rent control for over 50 years.

I lived in one.

The conservative Cato Institute did studies, which I can provide, discovering that 10 to 20% reduction in housing supply in rent controlled areas.

Also, Mr.

Mayor's perspicuous questions about displacement data expose a fatal weakness in this proposal.

What if this problem is actually small?

The rent control bureaucracy proposed would not be small, and the unintended impacts, I believe, would be large.

So this regulation makes government a kind of clumsy, uncaring partner to housing providers.

It has myriad unintended consequences, the main one being choking new construction and conversions.

If the council were intellectually honest, the council would simply subsidize rents, provide vouchers to low-income neighbors.

If orange juice became more expensive, would it be fair to tax orange juice producers?

And that's what this really is a tax to the risk produced, risk takers who provide housing.

So I've been a small landlord for decades, and I lived under rent stabilization for a long time back east.

It's sort of like drinking salt water if you're on a raft in the ocean.

It might be a short-term delight, but in the long term, it's fatal.

Thank you.

Thank you.

The next speakers are Carrie Ann Steele, Li Ying Zeng, and Chris Tipton.

Good evening, Mr.

Mayor, Vice Mayor, Council members, and staff.

My name is Carrie Ann Steele.

I'm a 12-year resident of the city of San Leandro.

I'm a homeowner, and my very large family owns two properties here, and I believe I meet the definition of a small landlord.

And I'm speaking in favor of the rent stabilization ordinance because we really want our friends and my children's classmates who are renters to be able to afford to remain in San Leandro long term.

I do have some concerns about this draft, too.

So first, the annual allowable increase in a tenants's rent should be 65% of CPI or 3% of their current rent, whichever is lower.

In other words, the max should be 3%.

The current draft is 5%, which I fear is not protective enough.

My second concern is that the capital improvement pass-throughs should be allowed only when a landlord establishes that they cannot make a fair return on investment without passing through the cost.

It should not be allowed simply because they decided to improve their property.

Landlords should routinely set aside revenue in anticipation of such maintenance on their properties.

I view the capital improvement pass-through provision to be a huge and potentially dangerous exception to the rent cap provisions.

Third, I would urge this council to reject the landlord lobby's request that you exempt owners of eight or fewer or even four or fewer units.

There's no justification for that exemption.

And many of those so-called mom and pop landlords may not actually be.

She's paying is uh is also going up too.

So hopefully the council will uh pay a pension more to um small uh landlocks interest uh to protect their their interests.

Thank you.

Thank you.

Okay, that's it.

Thank you.

Thank you.

The next speakers are Chris Tipton, Jim Prola, and Leo T.

West.

Good evening, Mayor and uh City Council members.

My name is Chris Tipton, and I'm with East Bay Rental Housing Association.

We share the city's goal of providing safe and stable housing when we urge the city to reconsider aspects of the proposed rent stabilization ordinance that could unintentionally harm the very housing providers who provide an essential service here in San Leandro with the rent registry fees and this rent stabilization fees and business license fees, a budget of 1.6 million dollars you're looking at, that's where it starts and it goes up every year.

Look at other cities on how these budgets are ballooning.

If you're looking to use the funds towards something, I really uh admire the rent uh emergency rental assistance program.

That's a place that can really help renters that need an assistance to pay rent.

We believe that a robust and functioning rent review board is the best way to move forward, use that existing program.

If it's not working, then do some work and improve it, make it better.

Um, but if you do move forward with this stabilization uh program, uh please consider these these following uh important elements.

Please reject the CPI.

That is not a does not reflect the true cost of maintaining housing CPIs is these arbitrary percentages they're throwing out, especially with a rising insurance premiums and maintenance costs that are way above that.

Second, we ask the city to exempt small owners with four or fewer units, these are community members, retirees, families, small business owners.

Third, the city should focus on a mandatory mediation as steps resolve disputes.

We also urge the city to avoid this rent registry that collects personal data.

Berkeley, Berkeley just had the rent registry breach, showed how vulnerable this information can be, so please let's not repeat those mistakes.

In short, please adopt a fair, balanced approach.

This this uh ordinance does nothing to increase the amount of housing.

Thank you.

Your time is up.

The next speakers are Jim Prola, Leo T.

West, and Tuan.

Hi, Council members, uh mayor.

Um, I know you all know me.

Um, but what some of you may not know is I was a landlord.

Uh there was eight of us that owned some property out in Hayward, had three businesses on it.

Uh I know what the deductions and the write-offs are.

It's pretty generous.

And uh I can tell you that we never raised our rent more than two or three percent every year.

There's no reason to have a five percent increase.

Um we always put money into a reserve fund, the capital improvements thing.

I could, that's a that's a landlord's dream.

And they've been in control in San Leandro for far far too long.

I've always been against rent control, but I've always been in favor of rent stabilization, and I do believe that 3% or the cost of living or percent of the cost of living, whichever is lowest, you should be able to get by.

You put money into reserve every year.

We didn't charge our tenants when we put a roof on, or when we even patch a roof for the driveway, because that money was all put aside into reserve, like you do with your own budgets.

You put aside a reserve for when you need improvements.

Uh I do believe that um uh it's a start, rent stabilization.

I think we can go a little bit lower on the percentage and definitely have a limit of uh percentage and um uh I guess that's about all I have to say.

It needs to be fair for both parties, and as a landlord, I can tell you this 3% or the cost of living, whichever is lowest, is fair.

And thank you, sir.

Your time is up.

The next speakers are Leo T.

West, Tuan, and Edward Escobar.

In 2017, myself, with a small group of tenants, supported the passing of the tenor relocation assistance program.

That program was very effective in stopping most of eviction without cost because it allowed the equivalent up to four months of rent paid to the tenant.

It also has a clause for its updating every year.

Well, that updating has never happened.

This city council has been fiddling around for a year to come back once again without the screen, Jim Prola's proposal of rent stabilization at that time.

It allows for the capital improvement cost to be passed to tenants, and it allows five percent rent increase yearly.

And the candy, the city council would appoint a program administrator.

You know what?

San Leandro has a rent review board appointed by the mayor for many years.

That bowl has been chaired by developer Tom Silva.

Good luck with that program administrator.

I'd like to know why the proponent of the rent stabilization have a look at the most effective way to control rent by updating the already existing tenor relocation assistant program.

Reducing rent increase to the annual federal rate of inflation.

I'm all on that point.

There's no news.

What will happen to the tenor relocation assistance program because this proposed program infringes on some of the clauses of the other program?

So I oppose it for that reason.

Rent stabilization is not rent control.

Thank you, sir.

Your time is up.

The next three speakers.

Tuan, Edward Escobar, and David Stark.

It's a question about fair return and a lot of discussion around fair return.

I actually read a book on fair return.

And I would suggest there was a question whether we could get consultation on.

I would suggest going to a person by the name of Michael St.

John.

He has a PhD.

He served on the Berkeley Rent Stabilization Board for some years and was what does it say here?

This paper in front of me.

So again, that name is Michael St.

John.

The other thing I like to point out is, you know, we spent a lot of money to address homelessness, and that 24 billion that the state spent worked out to be 160,000 per homeless resident, and it didn't really reach the people who needed the help the most.

And a lot of money was bled away in administration.

So if we're looking at a program that's gonna cost us a million dollars up to a million up to close to a million dollars to administer, and we look at the eviction that data that Tom Liao provided for San Leandro, I believe it was 32.

I could be wrong.

But if you say 50 evictions per year in San Leandro, that worked out to be 20,000 that you could give directly to people who are at the verge of eviction, and mind you, eviction filing in court doesn't actually all translate to actual sheriff coming to your door.

The other thing is I like to point out that many decades ago, for over four decades ago, San Francisco, Berkeley, Oakland.

Thank you, sir.

Your time is up.

The next three speakers.

Edward Escobar, David Stark, a Dallas Fan.

Hello, I'm Edward Escobar.

San Leandro stands out despite being next to the worst part of Oakland.

Let's keep it that way.

This is not Oakland or Richmond, and proud of our unique approach to governance and economic development.

You want to replicate the failed policies of other cities.

We say if you're looking for a place in experiments with excessive rent controls, San Leandro isn't the place for you.

You might consider moving to Oakland or Richmond where those policies have already been tested and found wanting.

San Leandro's success isn't a coincidence, it's a result of fiscal responsibility, business-friendly policies, and a commitment to our residents' quality of life.

We should continue to prioritize these values, not import failed ideologies that have led to stagnation and decline elsewhere.

Let's preserve San Leandro's success by staying true to our values and principles.

If elected officials are more interested in performative politics and practical solutions, we have a simple message.

Recall or vote them out.

Let's keep San Leandro thriving, not struggling.

Be advised, I've represented the voice of many, many voters that have successfully recalled failed politicians with failed policies in the Bay Area, and they say enough is enough.

Thank you.

That's the first warning for tonight.

We did so well through 19 speakers.

So we don't do that in this chamber.

Either way, if you're pro or against, we don't do that here.

Please proceed.

Good evening.

I'm David Stark.

I represent the Bay East Association of Realtors.

Many of our members uh either own or manage just a handful of uh rental properties each, many of them here in San Leandro.

Uh first congratulations on the pro housing incentive program, and I do want to circle back to that at the end of my testimony.

Uh before that, though, I do need to get in the weeds.

There's been quite a bit of discussion about exemptions.

And during the presentation, I believe it was on slide 14.

A staff reported that the exemptions for single family homes is explicitly included.

About four o'clock this afternoon, I printed off a red line version of the ordinance.

And in the definition section, I'm sorry there's not a page number.

The definition of a rental unit, and I'll start, it says rental unit means any unit in real in any real property.

And at the end, in its own standalone sentence, it says a rental unit includes a single family home.

I'm not sure how that's an explicit exemption.

So if this council believes in exempting single family homes and condos, I would encourage you to direct staff and the consulting team to remove that from the definition section so that it is truly um explicitly uh removed from that.

Um I want to pull back a few steps.

I've been involved in advocacy on this issue for a number of years, and there's a lot of smart people on both sides.

And what really strikes me is that among all these, you know, smart people understand the concept of supply and demand, is this is an issue of supply and demand.

And there's just not enough conversation about supply.

Now you have a million dollar head start on doing something about supply, and that comes in the grant that you received as part of the pro housing incentive program.

If you're really thinking about allocating multiple FTEs up to a million dollars in staff costs, it seems to me, because you're all really smart, allocate those funds to increasing the supply of rental housing.

Leverage this grant, hire some people to do some economic development and to attract more rental development in this community.

Don't hire staff that will remove and shrink the supply of rental housing.

Thank you.

Thank you.

The last two speaker cards are from Adele's Fan and Mark Janowitz.

Good morning.

Good morning, mayor and the council members.

My name is Zed Dallas.

I'm the board member of a business and housing network.

We are a group of uh housing providers.

Um, the rental market has been very soft over the past two years.

We have kept our rent low and affordable to maintain the low vacancy rate.

However, our expense uh continue to increase property insurance costs have more than doubled compared to the pre-COVID levels.

Labor costs has increased significantly, and the new tariffs have further raised the cost of maintenance materials.

On top of that, high um utility bills add even more financial pressures on housing providers like us.

AB AB 1482 is a statewide rent control ordinance that already imposes street limit and applies to rental unit with two or more units.

In addition, the existing local rent review program, also adopted by the city of Fremont, has proven to work efficient and uh working very well to uh for both landlords and uh tenants.

Therefore, there's no need for any additional or straight-run control policies.

People need housing, and the please uh don't kill the housing market.

And uh please don't turn our beautiful San Langel to Oakland or Richmond.

So I'm here to ask all of the city council to vote no on any streeter proposal.

Thank you.

Thank you.

The last speaker is Mark Janowitz.

Good evening, Mr.

Mayor and Council and uh staff.

Thank you as always for all of your really hard work.

Uh I have a couple of really boring uh kind of technical and narrow questions.

Uh not questions but comments.

Um, I believe in the proposed proposal that's before you there's no definition of landlord.

Uh I have sent you a proposed uh draft of my own, our own uh ordinance, and there's a very nice concise suite uh definition of landlord that must be included.

And uh was it was Mr.

Mayor's uh uh comment about um restrictions on sub tenants sub master tenants uh limiting the rent increases for their subtenants.

That's included in the definition that we have provided, and mostly uh the situation that your honor uh uh was referring to, it's illegal in the state of California.

There's an anti-rent gouging uh law in the in the civil code.

Um the other thing I urge you to be careful about is conflating the concept of what number of units in a building will be exempt and trying to benefit the mom and pops.

You talk about exempting two units or fewer owner-occupied or eight units.

Um, as if you're protecting mom and pops.

Well, mom and pops are an individual can own three or whatever number of buildings they want with those exempted units in it.

So if you're exempting uh properties with more than one unit, you're not addressing the issue of mom and pops.

We don't believe the tenants in mom and pops should be uh treated any differently, should be subjected to fewer rights.

We believe mom and pops do really well in the business when they do it professionally, being advised by the by their lobbyists and how to run property.

They they run seminars all the time.

Uh, it can be done, and uh, that we don't believe the there should be these of these exemptions, but just be careful when you do that not to conflate the concept of what's exempt and uh and attempts to protect the mom and pops.

So thank you very much for all your hard work.

Uh sixty-five percent.

Thank you, sir.

Your time is up.

We're three percent.

Thank you.

Mayor, that is our last in-person call.

So, what we're gonna do before going online because it is nine twenty-two, and we typically take a break at nine o'clock.

We're going to take a 10-minute break at this point in time.

So people can do their bio stuff and get some munchies if they need them.

Stretch their legs.

So we will be back in here at 9 32.

Yeah.

I think that's a very good one.

I don't know if we have a lot of people.

Oh my god.

I was going to say a message.

Okay, let's re gather, please.

Okay, staff.

We can have a seat.

Staff.

Okay, we are back in session, madam clerk.

At this point in time, we will open up public comment online.

So let me just check, triple check.

In the room, is there anybody else who wants to speak in person?

On 4A.

On 4A.

Okay, seeing nobody else, I'm closing public comment in person.

No more public comment in person.

Um, before actually proceeding, that's a really good question.

Um, it is my intention to postpone item 4B, the updates so that it staff can get their due time and not feel rushed at you know 10 30 or 11 o'clock at night or whatever time it turns out to be when we're done.

Is there any opposition to that?

Seeing none, item 4B is removed from today's agenda.

It is also probably a good time to go ahead and just as a pro forma make a motion to start some time, set some time that we have as a goal for when we will exit this space.

Councilmember Aguilar.

I'd like to make a motion to extend the meeting to 10 30.

Thank you.

Is there a second on that motion?

Councilmember Viveros Walton.

Second.

Okay, so I've got a motion from Councilmore.

From Councilmember Ailard, second from Councilmore Votis Walton.

Um, any discussion from any council members online?

Not discussable according to the parliamentarian, so we will vote.

We have uh all votes are in.

Actually, one moment.

Councilmember Azevedo, may we have your vote?

Aye.

Councilmember Bolt, may we have your vote?

Aye.

And Councilmember Simon on the vote to extend to 1030.

Yes.

Thank you.

All votes are in.

The record will reflect that council member Simon did say yes.

Yes.

And the motion passes unanimously.

Okay, at this time we will continue with our public comment.

Public comment in person is closed.

We're moving to public comment online.

If you would please proceed there, Madam Clerk.

Our first online speaker is John Mino Schwartz, followed by Douglas Spaulding, then Lucas.

John, you can unmute yourself.

Uh good evening.

Um, I'm John Minut Schwartz, San Leander resident and homeowner.

Um, also with East Bay for everyone and San Leandro for everyone.

Uh I support a robust rent stabilization ordinance.

I think it has been a long time being discussed, and uh the voters have made their views clear.

I think that there is uh research showing that rent stabilization uh reduces displacement.

I think that um it saves lives and saves livelihoods.

That said, I think that the best rent stabilization ordinance is the one that we actually get.

So I do uh recommend to council members to try to pass it in a relatively off-the-shelf form, something comparable to what is being proposed tonight, discussing the numbers, of course, but something basic because getting it implemented will itself be a big lift.

You implement something basic, you see how to implement it effectively, then you revise as needed if there are new directions to go in.

Um, as someone who cares about both housing production and tenant protection, indeed sees housing production as the main route to lower rents.

I do believe that out there in the world, there are kinds of regular degrees of rent ordinance that could, if used, disincentivize housing production.

However, based on California law, everything on the table tonight is nowhere near what would actually disincentivize housing production.

And indeed, we see the city of Berkeley has been achieving a great deal of housing production and even seeing rents drop, not just stay flat because of that.

Uh and uh they maintain their tenant protections.

So let's do production and protection simultaneously and continue to facilitate the uh desperately needed new housing.

Uh, this is especially relevant in the context of the great state legislation that is just passed this year, 79 130.

They may not affect San Leandro quite as much as our zoning is already pretty close to that standard, but it may kick start in other ways.

And in this context, there are people who may fear, I think incorrectly, but not unreasonably, that more construction is higher than your time is up.

The next speakers are Douglas Spalding, followed by Lucas and Chris Moore.

Thank you.

Good evening, San Leandro.

On an agreeable note, I just like to say you plus doucement.

Uh I think it's unfortunate that this uh discussion has been uh framed in the us versus them framework of tenants versus landlords.

I think really the goal should be for us to as a city come together and figure out what is best for our municipality.

Um, what I think is undeniable is that there exists a power dynamic, and in this power dynamic, landlords have more power than tenants and the and the the importance of housing protections to try to you know make the playing field a little bit more fair.

Uh I myself, I'm just trying to maintain my sobriety because I've been taking a shot every time the the uh phrase displacement data has been implemented.

It's a great pleasure to follow uh the rational comments of John Minor, but I I didn't realize you cost me another shot.

Who are some good ten some good landlords?

Well, the Peroni family I heard tonight, the woman who spoke earlier who raises their rents uh two to three percent every two to three years.

Pete Blue is a really good example of a landlord.

He charges reasonable rate, he maintains his properties and isn't a nice guy.

These are the reasons why people are landlords to provide housing, develop relationships with their tenants, and of course, for for revenue.

Um renting property is a business.

Not everybody's successful, but it's not that hard to make money.

And fair rate of return does not mean that you get to maximize your profits on the back of your tenants.

Let's be a little bit more fair and let's make housing affordable for everyone.

There's no reason for pass throughs.

I really appreciate the comments of Jim Prol early and others who've testified look, you just have to be responsible, set aside money.

I just did it myself in order to put uh some um uh insulation in my attic for the first time ever, and I just had to budget to do it.

So thank you very much.

I look forward to the other comments.

Thank you.

The next speakers are Lucas, Chris Moore, and Maina Young.

Lucas.

Uh good evening.

Can you hear me?

Yes.

Thank you.

Thank you, uh, mayor and counsel.

Um, I want to say that I believe that this is uh very complex regulatory regime.

I think it's trying to prevent the displacement of some renters.

But as you've said many times today, you have no data about how many.

Who are we trying to help?

This ordinance reads that that's in such a way that it's so full of gaps and loopholes and exemptions that it's kind of like a Swiss cheese regulation with very negative consequences.

It feels like a bad solution in search of a poorly defined problem.

If you re if you put a cap on capital returns, you disincentivize investment, you disent disincentivize improvements, and operating costs often exceed the 5% that's being contemplated here.

You will discourage developers from building new units, you will create a housing shortage.

People will build in places where they can get a fair return on their investment.

It also artificially helps existing tenants and locks out new residents.

People who got an apartment today or 10 years or 20 years ago, why would they move out and get a new apartment, potentially a smaller apartment if they if their family and their kids moved out when they can be sitting on a five, six, seven-bedroom apartment paying very cheap prices.

We see this all over Manhattan.

Landlords will be potentially incentivized to remove long-term tenants just so that they can reset the rent to a fair market level.

The ordinance for some reason doesn't apply to apartments with a housing occupancy permit after February 1995.

Why?

Why are older properties subject but newer properties exempt?

The petition and hearing and mediation process is costly and slow.

The ordinance doesn't take into account a renter's ability to pay.

If you're working remotely in Silicon Valley, earning God knows how much money you don't deserve to get a rent control department in San Leandro.

Please reject this proposal and reconsider writing something better.

Thank you for hearing my comments.

Thank you.

The next speaker is Luke is Chris Moore.

Maina Young and Ramses.

Hi.

Hello, this is uh this is Chris Moore.

Um to the point uh the mayor made uh earlier in the previous gentleman that spoke, this policy is to prevent the displacement of individuals who are no longer able to afford their rent.

So that means this policy applies to everyone, or why does it imply to everyone?

Uh there's no means testing.

So let's say, for example, Donald Trump's family or Elila Musk's family, they're renting uh in San Leandro, the city's gonna go on record here to say that they support rent discounts to the ultra risk.

There really should be uh an application to the AMI in the Bay Area AMI and who this actually applies to.

Banking.

This policy was built from the City of Alameda's policy.

Uh yet where they include banking uh in Alameda, uh city of Alameda, but it was removed from this policy.

Banking enables, particularly small uh housing providers to be able to negotiate rent, and if their renter uh has a broken car or they have a health reasons, they don't raise the rent that year, but maybe they catch it up over the next three or four years.

That's what banking's about.

It's an important component.

Uh as the cost, in 2016, Oakland charged third the landlords and housing providers $30 a unit.

And today, nine years later, they charge 137 dollars per unit.

That's an increase to housing providers of 18.8% per year, way over the CPI.

Just be prepared that these costs are going to escalate for the city.

I'd like to see staff include economic studies.

Where what economic studies say that that uh rent control policy will actually increase uh housing production and will also decrease rents for all our market rents, and also show how other cities like Oakland how has their policy worked, has it improved and reduced rents in those cities?

Uh thank you.

Thank you.

The next speaker is Maina Young.

Hi, this is Maina Young.

I'm the president of Business and Housing Network.

I hear that and I'm I really applaud San Leandro for being identified as pro-housing designation, which is uh a great uh accomplishment, and that's without rent control.

So um, and in cities that have these strict policies actually, they don't get that poor housing uh situation.

Um, so I think that as the previous speakers have uh mentioned, and also our presentation, um, it's good to identify your um actual problem first, you know, analyze the data because right now you don't even have that, and so uh your policy may not work, you know.

Uh and also a lot of the places with the straight rent control they really don't work.

So, in order to have production, you got to have uh the existing landlords or housing providers who are willing to provide.

If there's no willingness, then you won't have any housing.

So these strict policies will do exactly um that is to prevent housing providers from providing housing.

So, when there's no existing housing, you cannot speak of preservation and prevention.

Okay, San Francisco is showing 40,000 to 60,000 vacant units.

If you look at their um the census data, and also if you look at the um the housing production, the um the number of units that have been produced in the since their rent control uh was implemented is actually one third less than prior to rent control so you can look at many cities and and compare and how that's they are doing their own thank you your time is up the next speaker is Ramses followed by Marilyn Villa Nuva Via Nueva Hello can you hear me?

Yes okay hi um I'm Ramses longtime tenant first time caller um so I'm calling because I want to um put my uh voice towards rent control being implemented in San Leandro I think it's because volumes that um there are multiple advocates on on both aisles both landlord and tenants who are advocating for this um additionally um it should be capped at the 3% um or the uh 60 or 63% uh CPI as well um I see that I I'm my heart is warmed to see that there are a lot of good people in San Leandro and with that being said um I mean in terms of good people I mean also good landlords as well um I've had my own fair share of running with not so great landlords so it's good to know good to know that they are out there um additionally I want to um just kind of implore city council to uh just kind of take into account and do the proper um uh do the proper assessments and take into account the proper figures in order to try to find the happy medium like because just because we offer protections for the people does not mean that the landlords can't also benefit here as well it doesn't uh necessarily mean that um that the that all like the um additionally like regarding profit um I understand that housing is a profit market however housing shouldn't be strictly for profit um and I know a lot of people in San Leandro believe that as well which is why we have such great people here um but additionally I just think that um there should be a strive for an equitable market that won't kill the San Leandrian economy um as well as protect its tenants.

Thank you the next speakers are Marilyn Villanueva Alvaro Alvaro Ramos and Michelle Villanueva Hi there um it's like okay perfect okay hi uh my name is Marilyn and I have been living in San Leandro for quite some time I actually graduated from San Leandro High and I have you know had in turn the experience of becoming a tenant um and you know for the last 10 years I have been a tenant um in San Leandro I have been displaced a number of times um especially due to the increase of rent including uh COVID during COVID our landlord at the time tried to exorbitantly increase the rent and so I have been displaced due to unjust rent increases and so I really do think that we need protections um I understand the viewpoint of the landlords and the need for them also to make profits but at the same time housing is a human right so for me it's not a business it's not for profit for me it's a place to live I have not been afforded the opportunity that some folks may have been given 50 years back to where properties were affordable now properties are at an exorbitant amount we're talking in the millions range which is unrealistic to expect someone that does not come from a lineage or family, you know, that has money to be able to afford.

And so I am stuck like many of my age group being a tenant.

And so we need protections for folks to stay here and to be able to stay in a community that I grew up in and that I love.

And I know that I'm not the only one that feels this way.

I know that I'm not the only one because I have peers who I went to high school with who are also still in Salandro renting.

And they're not able to be here now, but I can promise you that we all feel strongly about the need for needing tenant protections, specifically at a reasonable rate of three percent.

Um thank you all so much for your time, and I hope everyone has a lovely night.

Thank you.

The next speakers are Alvaro Ramos and Michelle Villanueva.

Can you hear me?

Yes.

Okay.

So I support lower percentage increases in the rent stabilization ordinance.

And I want to talk about the big picture.

The federal government has made cuts to Medicaid, Medicare, the Affordable Care Act, food stamps, increase energy utility costs, cause a trade war using tariffs, and now we're in a government shutdown.

The consequence of these policies is inflation that is overburdening family budgets.

This situation keeps tenants eternally poor and never able to retire or own a house.

Worst of all, it stops tenants from accumulating wealth.

Um hence the whole community is poorer.

This brutal barbarism will lead to more unhoused people living on the streets of our community.

Lowering housing costs will help to keep people housed and survive this crisis.

In addition, there's no significant protection from the state of California for tenants.

State politicians have chosen to do absolutely nothing about these issues.

And from what I hear, neither landlords are or tenants are happy with the current rental system.

All I ever hear is that the system is not working for either party.

That means it's time for change.

All arguments that rent is a small business are false.

Rent is not a production system.

Instead, it is a private tax.

Increasingly, governments have legalized a rent-based economy as a result of private utilities.

Pacific Gas and Electric is a private energy utility.

They charge expensive bills.

Tech companies take our data and they don't pay us money for it.

And housing is hoarded.

We live in a privatized and monopolized economy left for future generations.

And that's why ownership is superior to rent.

Please focus on bread and butter issues.

That's my advice to council and comment.

The next speakers are Michelle Villanueva, followed by Evelyn.

Michelle, can you unmute yourself?

Evelyn.

Evelyn, are you.

Yes.

Okay.

Uh yes.

Good evening.

During the pandemic, you know, and my tenants, you know, didn't pay rain for fully and more than three years.

So, and then we still have to, you know, in order to keep the property, we have to pay mortgage utilities.

And during this time, especially like now, everything goes up.

Insurance goes up 100% and materials.

Um, the cost.

And also, you know, we have uh because we don't receive the rent, we have to pay for, you know, like all the uh after the move.

We have to pay we have to try to do it everything must uh try to do as much as we can to fix the properties because they uh that the property was damaged.

And also because the, you know, like uh some of the, you know, a lot of the uh restriction is overprotected by tenants, and but it hurts the good tenants and the good landlord.

Like myself, my experience, I don't like to increase people's rent.

But uh the problems that when I lower the rate, uh lower the rent, and then everything, everything everybody's thinking all the uh tenants, the uh potential tenants, you know, thinking that there's something wrong, and also all the policy that, you know, like um, you know, like uh the seat, the city of uh and also the city already, City of already have the uh state rent unit uh limits under the uh AB 1242 uh 1482 and a mediation program to address rental rate dispute.

In fact, San Andrew over which rent are currently below hot 2005, 2025 fair market rent level with studios and one to three bedroom price approximately 20% lower.

And so um, it's not fair that you just for the tenants to cover all those costs, the over cost and the tenants, you know, like all you know, like especially right now and then tennis that has a lot so you know like all that.

Thank you.

Uh your time has elapsed.

Mayor, there are no more hands raised on Zoom.

Thank you.

And so to be clear, was that Evelyn or was that Michelle?

That was Evelyn and I believe Michelle dropped off the call.

Thank you very much.

Okay, so we will close public comment online.

We'll come back to council members for discussion deliberation for their questions.

Who would like to begin?

And the discussion, to be clear, is not limited to this.

We can cover anything that we want to.

This is our meeting.

Who would like to begin?

Okay.

I mean, I'm happy to begin, but okay.

Let's start with Councilman.

I think you just uh first off, I did want to um thank the the housing team and the city manager team for getting us to today.

It has been um it has been a journey, and I've only been here for not that long compared to those of you who've been working on it.

So appreciate your time and your energy.

A couple of comments, um, and some of I I also wanted to thank um the folks who took the time to come here tonight and to call in.

Um I read all of the emails that got sent to us as well as the comments that were submitted through the um through the virtual platform um that get um sent to us.

So thank you to members of the public, advocates um on all the sides.

Um appreciate you taking the time to stay with us on a Monday night.

Um I will try to make this uh short and sweet since I have four minutes.

Um this has been a process that really has started way before many of us have been on the council.

Um our housing and our housing element in 2016 and specifically section 6.1 points to um fair housing and renter protections is one of the many strategies um needed to ensure that people in San Leandro um are able to um live here.

Um I think uh rent stabilization provides our city with economic stability and community and social stability, it allows people to have predictability over one of the largest um expenses that that we all have, which is which is housing.

Um a couple of things uh that um I wanted to touch on specific to the policy that's before us.

Um I am supportive of including a CPI.

I'm uh looking at um, I'm thinking at around 65%.

Um and I am amenable to have a discussion.

Um, I I think five percent is too high, uh, particularly for um where we are in San Leandro.

I think one of the one of the feedback or some of the feedback that I've received has been around uh that the rents in San Leandro are much lower than they are in other parts of the Bay Area.

Um that while that may be true, um, I think that our um our median household income in San Leandro is lower than some of the cities that have rent stabilization.

Um, not only is the median income, which is just the midpoint between the distribution of uh how much folks earn in um San Leandro, but the but the poor cap the per capita and the average is somewhere between 46 and 57,000 dollars a year.

Um even with uh looking at San Leandro's market, um, we are our average income, either household income, individual income, folks are just not able to make um ends meet.

So that's why I'm not supportive of five percent.

Um I would like to uh start off the conversation at 3% and include a 65% uh of uh CPI.

Um I'm also very concerned around the capital uh the capital improvement pass through.

And I think that that's something that I really want to hear from my colleagues of kind of where they are.

Um my concern around that is that um some of uh some of the information that I've seen is and in reading through the ordinance is that some property owners, depending on the number of units, there are different financing uh mechanisms.

Um, and for some property owners that own five units and above, the financing is very different than from those that have less.

So um the the pass through is one thing that I do want to make sure we talk about.

Um about to run out of time.

So in terms of the units, uh the number of units, I would uh like to continue the conversation in keeping the ordinance as is, um, including um including the uh let me look at the at the um presentation.

Um keeping it as is so it would uh exclude single-family homes, um, but keep duplex, triplex, and anything above uh anything above that um that would be eligible for rent stabilization.

Um I would like to start kind of just level set and see if this is something that we can work through.

I have a bunch of other proposals to the actual language, but I think here we're trying to get some general direction and not specifically Wardsmith, the actual ordinance.

There will be many opportunities to comment on the language, and we can have a smaller working group through rules, for example.

So big picture.

I can also come back to you, but I would like to hear from other council members.

Sure.

I'll I don't have any time to see, so I'll just turn off my mic.

Okay.

At this point in time, we'll go to Councilman Raguillard.

Uh thank you, Mayor.

And thank you, staff, for all of your hard work.

It's uh it's it's uh visible.

I'm sure we all appreciate it.

I know this is a long time coming as uh advocate for housing rent stabilization.

Um I, you know, I'd like to direct staff with regards to the recognition of the urgent need to stabilize rents, prevent displacement, and preserve affordability for San Leander residents.

So I'd like to um make some comments with regards with regards to the draft rent stabilization ordinance, uh with the following provisions with regards to the annual rent uh cap the annual rent increase cap um to amend the rent cap limit to uh annual allowable rent increases to sixty-five percent of the regional consumer price index, CPI not to exceed 3.5% in a year.

I think this formula ensures that rent adjustments remain modest and predictable, aligning with actual cost of living increases while promoting long-term housing stability for tenants with regards to inclusion for all residential rental properties.

Um I'd like to keep it as is and have a discussion with regards to um what that looks like.

I think uh the the owner-occupied rental properties um should uh have some sort of exemption, but I'm just like to take a closer look at what that looks like.

Um and um with regards to capital improvement cost recovery.

I would like to revise the capital improvement cost pass-through provision to utilize the existing fair return standard for all rental properties, regardless of the unit count.

The cost recovery shall be determined on a case-by-case basis, ensuring that property owners maintain the ability to receive a reasonable return on investment while preserving tenant protections from excessive rent increases due to capital improvements.

And then there is a commenter um with regards to the definition of a landlord.

Um I'd like to include a clear and comprehensive definition of landlord in the ordinance that ensures clarity and enforcement and applicability.

Uh, the definition should distinguish between property owners, property managers, and third party agents where appropriate.

Um, and I think with regards to long-term housing solutions, like in developing this ordinance, staff should consider broader regional housing context and the need for long-term sustainable housing.

I think Senate Bill 79 was just passed, so that allows, you know, that's a kicker to create housing.

I know this is something separate, but I know that.

But anyways, um, you know, I I'd like staff to evaluate how San Diego's rent stabilization policies can complement state level efforts um and support broader goals for housing affordability, equitability and uh equity and livability.

But those are just my comments for now.

Okay, who is our next council member?

Is there anybody online?

Nobody online, so no other council members wish to speak on this item.

Vice Mayor.

I'll speak.

Um, yeah, I I wanna first, and um, as some the first day I was on rules committee, I think we tackled rent stabilization.

So that was really feeling like I was jumping into the fire, and so I really appreciate um staff's work on all of this because while there's been a ton of work obviously before I got here, um, I really appreciate both the opportunity for council members to share their perspective and for um a city staff to hear from um all the stakeholders involved because this is such an important and complicated um policy decision.

And I um and I believe in um trying to come up with a compromise to be able to get us started and being able to iterate and and fix and change and improve as we go.

So I I do want us to at least get start somewhere.

Um, some of the things that I'm thinking about right now, and I know we're gonna have a lot more conversations about this.

Um, a few things, you know, I have to think about like the what what problem we're trying to solve and and why we're here, and it really is about housing stability and it really is about trying to ensure that um there's housing affordability and that people are not displaced.

And I can't um think about what we're talking about right now, given where we're at in our current landscape, where we started this conversation a year ago, five years ago, 10 years ago is a very different place.

So I am really really um cognizant of that.

I represent a district that is incredibly diverse.

Um seven of our eight elementary schools are Title I schools.

Um many of the students and families that attend my school um live in apartments, and um it is a very difficult time to be able to um meet basic demands of of living in this world right now.

Um, and so I really appreciate so much of the comment that's that's been given about how hard it is, and also how hard it is to try to pay for increased insurance and pay for capital improvements.

Right now, and I appreciate Council Member Varis Walton, you know, talking about like our starting point, and I think that's where I want to be is thinking through like where is a compromise because so much has been laid out there, and I think about um uh once things are out there, the point is to try to figure out like what works and what doesn't work.

Um, I I've been my beh my background is in behavioral economics, and you think about how these sorts of decisions affect how people will behave.

Uh initially I didn't understand banking, for example, as much, and you know, why why have it and why not?

And I started doing a lot more research around that, and so I I want us to um as we're thinking through, you know, what um what happens next, like if we have banking, research has shown that people will um increase rents year over year because that's your floor because you're afraid you're gonna lose something, and so we've had landlords come in here and say, you know, we don't I didn't raise rents every year, and then all of a sudden, uh, you know, research has shown that more people will actually raise rents every year, and that's not something that we want to have either.

And so I want us to kind of talk through each of um the different mechanics, uh, the policy mechanics and figure out like does this work and where can we move if we don't have um capital improvement pass-throughs?

Like what what else can we do to show that this is a real compromise?

Because we don't, you know, I think it's it's a pro stability, and I don't this idea that we can come up with something that's going to keep people housed and keep housing providers in place.

I am also still open to um there's what 532 potential units that would be um uh excluded if we had four units in total, and um and that's four units in total in San Leandro, not in one one complex and another complex.

I think we can talk about all of that, but I I do want us to um uh I I mean I I'm I think I I'm still trying to figure out what it looks like, and to me, I still need a lot more information, but I I hear that you know uh the um the the my council colleagues' apprehension around five percent and no CPI and and the pass throughs, and so I I want us to um I really appreciate the conversations that we're having because I'm trying to process it all.

At this point in time, we will go to council member bolt online.

Can you guys hear me?

Yes.

Okay, all right, thank you.

All right, so um, I just want to, you know, the thank yous.

I really appreciate all the work that's gone into this, and you know, the countless people that have reached out.

Uh I know staff, long hours, late nights, um, doing public meetings, uh, and then to the council as uh the vice mayor just said it's not easy.

Um I think this comes down kind of for me as more of a a moral kind of thing, and you know, there's a lot of conversations going on about different aspects of this, and there's a lot of landlords that came up tonight, and you know, God bless them, they were saying they don't really raise our rents every year, and you know, two to three percent.

So, you know, that sounds good then, you know, three percent.

Um I don't have a problem with that.

I think five percent's too high.

I've only heard that.

Um we do have people coming in and saying five percent is too low and you can't do that, but then uh they're not necessarily renters or people that live in our city who provide the housing, so um that strikes me as as um odd.

Um the small mom and pop stuff that we talk about, instead of us trying to define it, I say we just get rid of it.

Uh let's not have a uh any type of of um exclusions, right?

Let's just let's just eliminate all that.

Let's be in a space of uh if you're providing housing, um you're gonna be under this ordinance.

Uh Vice Mayor brought up uh banking.

I do not support banking.

Um that is not, I don't think that's even proposed yet for us.

So I don't I hope we don't go down that path and start to institute something um in that realm.

Um there was a lot of talk about, you know, this isn't gonna create housing.

Uh well, it's not supposed to create housing.

The idea here is not that that somehow we would get um more housing units in the city of San Leandro, it's it's really about keeping low-income families rooted in a community and not being pulled away because they can no longer afford the rents.

Um three percent is what we is an annual income increase, and if we really want to help the residents out, we should not have rent going up more than their income goes up.

Um, I'm in a position I would do two percent.

Uh that would guarantee it's below three percent, and then any of the seniors who can only count on a three percent increase may start to see the gap close because right now it's extreme.

Uh housing compared to income for years, has been way off, and it just continues to widen and widen and widen, and it's never in favor of the human being, it's always in favor of money going into other people's pockets.

It's never in favor of the family unit and keeping people together, it's always in favor of the business, and so I urge us to make sure that we're doing this for the common family and not uh the more wealthier side of this equation.

I'm not here to make millionaires into billionaires.

I'm here to try and help the common work and family unit uh stay in a home that they've been in, uh, so they could see their kids go through the same school district, graduate with their friends, uh maybe have the opportunity to have some people come back.

Um so my goal here tonight, I'm gonna I I liked what uh council member Vivarus Walton laid out with 65% and 3%, but then I heard a change and I heard uh 65%, 3.5%.

So I'm gonna go with uh 50% CPI and 2% uh and whichever is lower.

And you know, I'm amendable to that, but uh I guess I'll have to come up a little bit to meet someone, but I'm definitely not gonna start high.

I want to see us come down and be in a better place for the community and not necessarily for everybody that just wants to make a buck.

Thank you.

Okay, council member Rezebito, please.

First of all, I'd like to thank the whole community for coming out and spoke online and to staff.

Thank you all.

I know it was a it's a big hurdle to get to this, but I wanted to say that I I support CPI, just a straight CPI with up to 3.75%.

So that's my compromise and with no pass-throughs.

I agree with council member, former council member Jim Prola that we we should put some money away in case we have to repair something.

So I agree with them that.

But I do agree about a means test.

I don't know how much support I would get, but I believe, you know, if there are rich people, you know, renting over here.

I don't know how many there is.

I mean, if Donald Trump's family or someone was running over, yeah, they shouldn't be able to do it because I know there's a New York City mayoral candidate that's bragging about he makes 250,000 a year and only pays 2500 a month in rent.

So yeah, if people are making a lot of money, then they shouldn't, but I don't know how much support.

So I I support a CPI with um or up to 3.75, whatever's lower, and no pass throughs.

And if I can get support for a means test, but I don't know how how many people are actually because most of the people renters I see in Salandro, they're hardworking people, they're blue collar, so I don't think they make a lot of money here in selling.

No, they're just trying to strive to get through, and so that's what we need to do something.

So I'm trying to I'll go up a little to 3.75 for a compromise.

So I know understand landlords have to make money too, but tenants need to stay in their place.

So I'm trying to make a compromise.

So let's see if we can get support for that.

Thank you.

And then Councilmember Azebito, I apologize.

I was speaking with city manager about something.

Did you say what did you say about pass-throughs?

Did you say no pass-throughs?

Yes, no pass-throughs.

And I wanted to, I didn't know if I had a motion to put, I wanted to motion mine to see if we can get support for it.

So no motions yet.

Thank you.

At this point in time, we'll go to council member Simon.

Uh, like my other colleagues, I'd like to thank staff for all the hard work that you've put in.

Um staff, city attorneys.

It's really been, it's really been a big job, a big lift here.

And a lot of tough questions have been asked, a lot from the public.

So we you are appreciated.

The public as well wanted to thank you.

And of course, we have our tenant side, we have our property owner side, and um here in the city, we're trying to look at all sides and not just one.

We really want to look at all sides.

Big picture, we have to also look at what is affordable and what is fair to folks, and that's kind of where some of my questions were going.

Well, I guess it's my one question, really, was on the fair return process.

And um, when you're doing a pass-through, you know, how are you evaluating that?

And I think the mayor made brought an interesting point about if you are saving that money up, like you know you need a roof for 25 years, and you're saving that money up in a in a account someplace.

Does that even show up when you evaluate the process?

It sounds like it does not show up.

So, um, from the pass-through standpoint, I'll go to that one first.

I would agree with it, sounds like most of my colleagues here, and not a pass-through, and it should go through the fair return process.

I do believe that as a property owner, 25 years with a roof or whatever it is, we should be planning ahead and really saving for that.

Just like I have to do with my house or anyone else who has property, you have to plan for it.

Um, second would be the CPI process or the rent rental increase, me put it that way.

Um, you know, how do they survive?

How do they live if you're a senior or if you're someone who has a very limited rental, I mean, very limited increase in your income.

Five percent, I think is pretty rare for a senior or someone to make on their income.

Um further and further in the hole.

That's all I could imagine.

Or happening to a renter.

And when you're trying to take care of yourself, I heard another lady taking care of her mom at the same time.

That's got to be difficult.

So I would agree with my colleagues and a CPI and a percentage of a CPI.

I would be open to 65%, a CPI.

And as far as a cap, um, sounds like we've got a variety of ranges here.

I am also open to the three to three and a half percent range, leaning more leaning more towards the three.

But I do want to also, you know, keep in mind there is the fair return process.

So if any of these numbers are too low, my understanding is you need to go up, you can go up.

Just have to show that you need to go up.

And the last one is the mom and pop.

Um I'm actually, Tom, can you clarify one more time?

Just what do we have defined right now in the draft ordinance?

Um just feedback on whether you'd like to exempt any of the range of uh smaller unit types, you know, duplexes, triplexes, fourplexes, up to up to or below eight units, any of those combinations or none.

And what is a golden duplex?

A golden duplex is when the owner lives in one of the duplexes, so uh one of the duplex units, so is only renting out one.

Okay, that's already exempted under the ordinance.

So it's because there's an owner in one and a renter in the other unit.

The draft is golden, right?

The um yeah, in the draft, the golden one, okay.

I'm open to keeping the golden.

Yeah, so that one's in, okay.

Um would you do you have a position on no exemptions allowed?

Well, that's what we've heard here, or would you want to exempt any of the smaller categories?

I'm just keeping it as the golden no other exemption.

No, okay, okay.

Thank you.

Okay, so at this point in time, I'll give a couple of thoughts.

First, I'm a little bit disturbed that um we're not really addressing the core questions of housing supply or addressing uh homelessness, which have always been the main concerns that have been expressed as the rationale for this.

So when we talk about displacement concerns, I am I'm concerned that that information is not really reflected in the fact that we are supporting a lot of people already.

Um they would be explicitly excluded from this, and so I'm not quite sure again, trying to figure out what it is that we're addressing.

We can already see that the mayor's proposal decreases the cap from 10% at the state level to 5%.

That is a significant reduction that the mayor has proposed.

That is the mayor's policy proposal.

I just want the the record to be clear that that is a significant decrease from what the state uh has set up as the standard.

Um I do think that we need to think about these things in aggregate, because when we talk about banking, we can't separate, we shouldn't separate banking from the percentage uh cap or cost pass throughs because they all come together in terms of the ease for making sure that we decrease the number of fair return hearings, which can be quite burdensome from a cost perspective, and simply drive up the cost of this program.

In the end, I am concerned about the 1.6 million dollars of cost for the program, because I don't see how that specifically ties to a benefit.

And I I am sympathetic to the fact that these programs just tend to grow and become more expensive.

So I do think the pieces all need to work together.

We need to find compromise.

I do believe that the 5% that I've proposed is already a compromise.

And I don't, I just feel like right now all we're trying to do is see well who can come up with the lowest number, and that means you care more about people.

But what we're trying to do in a compromise is find balance between the different competing needs.

So that already reflects a compromise.

And to suggest that anything that moves away from 5% is the compromise, ignores the fact that the 5% already reflects a compromise.

So at this point in time, I'd have no interest in moving away from 5% without having a more comprehensive analysis of the other pieces that go with that.

So it's really a package.

It's this percentage and this banking, this uh fair return process.

I'm quite concerned about the fair return process because we have this colloquial understanding that we should be saving away.

But by definition, these reserve accounts are not reflected in net operating income.

That's just an accounting definition.

And so, if people are saving away and you're then measuring them on net operating income, how how is the incentive really working?

So I feel like we need to slow down and we need to make sure that this works the way that we expected to, so that we don't end up with the classic rent control problems, which are the removal of incentive to improve units, i.e., and the maintenance of units.

We don't need more litigation, more fighting, more bureaucracy in the city of San Leandro.

I am quite concerned about subleases.

I mentioned that during my question process.

Um there are plenty of stories about folks that take their rent control apartments and in turn sublease them.

I mean that's just go to San Francisco, go to other cities.

Um, and I think that we need to make sure that we address that among other concerns.

I've got a number of questions, I will forward them to you.

I've already spoken with you, Director Liao about that that as well as legal counsel.

So we'll we'll continue on uh on that.

Big picture.

You guys have done an amazing job.

There's been a lot of work done, and I think that there's a really good framework, but I think that there's a lot of interdependencies, and it is we need to be very careful about how those interdependencies come together and how those interdependencies reflect compromise, and so that's uh that's where I stand on this at this point in time.

But again, just to make the record clear, the mayor's proposal is as I've described before.

I do agree with councilmember Azevito that it should be means tested.

We keep selling this as protecting people in need, but that is not necessarily what we're doing here, and quite frankly, for half of the people, that's not what we will be doing.

And so with that, I'm gonna kind of yield back.

I know that we're going to run out of time here.

We have run out of time.

So we're going to need to do uh an extension, or we can just continue at our next work session in November.

It's up to the council.

Um I can't remember who was first in this.

I believe it was Councilmember Rivedos Walton.

Thank you.

I'd like to make a motion to extend to 11.

Okay, I'm gonna go to count to Vice Mayor next.

Well, I'm just I have you next in queue here.

Let me ask this, just for simplicity.

Is there anybody who seconds the motion?

So council member bolt would like to extend to 11 as a second, please vote.

Councilmember Bolt.

May we have your vote?

Aye.

Councilmember Azevedo, your vote?

Aye.

Thank you.

All votes are in.

The motion passes unanimously.

So was that purely to extend or were you in queue, Councilmember?

I wanted to keep speaking, but okay, please continue.

Just punch in.

There you go.

Do I punch in?

You're on.

I'm in the queue.

Okay.

So we have several, several proposals on the floor.

And I'm all except for one has uh voice support for 5%.

So I don't think that that's a compromise between this body.

Um so I think we're looking at probably somewhere in the I think the next number was like 3.75 between there and 2%, but actually no one supported a 2%.

So I'm somewhere into three and 3.75 is where I'm kind of when I was taking notes on folks' comments.

Um but stepping up from that, I think that we are at a point now where we have as much information as we can have.

Uh we've sent staff back several times to do lit reviews, to do to go find information, but the reality is that we cannot truly understand the magnitude of the problem if we don't have a rent registry.

And until that is set up, we don't have the data available to truly understand what's happening in San Leandro.

We are able to um project and make some pretty valid assumptions about what's happening based on what's happening in the county and what's happening with our with our neighboring cities.

This is not something that we are here kind of, you know, just in the last four to five years thinking about.

This has been in the works for a really long time, and the conversation in the community has been around um keeping Sal Leandro as affordable as we can, and so um I I would like us to see.

I would like to see us kind of think about where we're grouping in terms of these big three questions that staff have have posed.

Um mayor, respectfully, I did not realize that 5% was a mayor's proposal.

I thought it was a rules committee proposal.

Um didn't know that's where that came from.

Um I thought there had been either consensus or or not, but uh so I will clarify because that is what I had proposed at the priority session specifically.

I had proposed five percent and means testing.

Okay.

Um cities, at least our neighboring cities don't have that.

Um and I'm I'm I'm just that that to me is not something that I'm uh willing to entertain.

I am thinking about three to three point seven five.

Um I am not supportive of banking.

Um I do want to have a more nuanced conversation about the pass throughs.

Um, I think that that's something that uh capital capital improvements, um, is something that we can kind of dig deeper into.

Um, and that's uh, but I definitely don't I'm not supportive of a tiered system in terms of number of units and the number of uh and and the percentage that is allowed to be passed through.

I'm like I mentioned in my earlier comments.

I'm really concerned about the concept of double dipping where property owners have the ability to deduct on their taxes or to report a loss, and they're um they're able to get some uh either a tax break um and passing that on, and especially fees, which can be used as a business expense and um so you can actually deduct it from your business expenses.

Um I just don't I just don't see that being fair to uh tenants.

So with that, I would just like to kind of based on my notes on where kind of people were other than one person, I don't see anyone at 5%, somewhere between three and 375.

Uh in terms of CPI, based on the comments, I'm seeing 50%, I'm sorry, 60 to 65%.

Um the pass throughs, I'm still kind of people were kind of all over the place, so my notes don't really reflect that.

So maybe that's something that we can kind of dig deeper in the time.

Um for mama and for the rental unity rental unit property types, um, I see a lot of consensus around keeping the ordinance as is and not excluding.

Um, so that's kind of where I saw based on my notes on the comments.

Um, so I'm just putting it out there so that we can kind of start thinking through where we have some clusters of agreement.

Vice mayor, please.

Thank you.

I I guess I have a process question of um this as a work session to give direction to staff is is the intent to have a consensus about.

Yes, okay.

I'm getting a head nod, I'm not sure what it is.

Do all work sessions result in a consensus?

No, I don't think so.

So, but city manager, what would you like?

So the the question that the vice mayor is asking was what are was what was our goal?

So the goal this evening was to present our presentation, and these are the three questions that we would like to have consensus so that we can move this to the next step.

The mayor's correct as he said earlier, other input is also welcome from the body, but we are looking for some type of consensus.

I think leaning into what uh Council of Vivirus Walson is saying my notes reflect similar.

Um so if it's you know in the range of three, whatever it is, I don't need to put a number to it.

And if we can't get all three or more, that's also fine.

But we would love to move this meeting to a next meeting with something different than we walked in here with.

Okay, but I'm gonna discree with that latter point because it undermines specifically what I said, which is I think of this as a package, right?

Because if you pick one thing, it might mean that you have a different interest in a second item.

So that's why I really I believe that it's the totality of the pieces that we're trying to come as opposed to individually, because they are they run counter to each other.

So I will continue with council with Vice Mayor, please.

Okay, um that kind of makes sense to me.

I I think um I'm um I appreciate the clarification around the mayor's proposal because um really what the current or what uh rent stabilization ordinance first draft that came out of the rules committee was meant to be a starting point for stakeholders to engage so that we could come up with something um that would be viable and effective in in the city of San Leandro.

And my approach has been that each of the council members, the policy makers up here, have an opportunity to then share um what their perspective is and really like what their desire is based upon their constituents and and what their values and morals are.

Um and that's how we get to a um compromise.

Um I did not actually um in my initial comments, as I was really kind of processing um all of the information that we've been talking about, did not mention a um percentage cap and feels like the number that nobody else has said, no, I was gonna say 4% because nobody else has said 4%, and we're gonna anchor there.

Um but I I you know, uh thinking through where everybody else is right now, like if if we're going from 2% to 5% and hearing everybody's comments, I I am I am open to a compromise at closer to 3.75%.

Um I I still really do see the benefit of banking.

I I think that to the mayor's point about the totality of everything.

Like that was not one of these questions.

Um, and maybe it's because there was not a lot of public comment about banking, but I I do think about that even from tenants' rights advocates who are the ones that actually flagged it for me saying, you know what, like sometimes people will, because they're afraid of loss aversion, want to then increase every single year, even though they wouldn't normally have, because they have a good relationship with their tenants, and they say, you know what, like the CR you are having troubles, and we don't want to raise that, but now you feel like you have to.

I still do think that um uh I you know, I I personally think that there um should be exemptions for smaller rental properties.

I think about the San Leandro landlords, San Leandro small housing providers, many of them who are people of color, many of them who are minorities, many of them who um are sharing their increased costs of of real, you know, costs of um of having housing uh in the city, and and it isn't you know making millionaires into billionaires, although I'm sure there are some.

Um, but I I I you know that makes me I think about what that could mean for housing supply.

I also um we it's not mentioned here, but I do think that um for in terms of like a public hearing, especially at the beginning of this, I would like it if we actually are of of um uh uh review through a staff report, but I would love to be able to see more of a public hearing in three years when this really starts to, you know, once it's from when it passes, so that um we can really look at what works and what doesn't, because again, all of us are just working on the limited information that we have.

Um and then uh I think in terms of capital improvement pass-throughs, like I, you know, I worry about the quality of housing, but I understand um a lot of the arguments um against it, and and I'm willing to compromise on that.

I I think that makes sense.

Um I think I answered all three of the questions, maybe.

Okay, at this point time we'll go to council member Aguilar.

Thank you, Mayor Gonzalez.

I just wanted to reiterate with regards to the annual rental increase, uh, the annual rent increase cap.

So we wise it um the annual rent cap to be set at 65% of the regional consumer price index, not to exceed 3.5% in any year.

I believe that this formula will ensure that rent increases remain tied to actual economic conditions without burdening tenants with disproportionate increases.

Uh I think as a community, we believe that 5% annual increase is way too high.

Uh especially amid high inflation and stagnant wages.

This policy strikes has a fair balance between protecting renters and allowing reasonable returns for property owners.

Um, I do not support no rent banking.

Um do not allow rent banking under any circumstances is deferred to where unused rent increases should not be accumulated and applied in the future years.

Allowing such banking undermines the goal of stability and predictability for tenants and could lead to sudden unaffordable rental increases.

Um I do not support a means test.

Um I reject any proposal to include a means test on income study and the rent stabilization program.

Tenant protection should be universal and consistent, not based on income level means testing and introduces administrative complexity, which you know where there's potential discrimination and diverts attention from court policy goals of maintaining a fuller ability for all of our renters, inclusion on all rental properties um uh i i i would not include an exemption for mom and pop.

Um capital improvement pass-throughs, eliminate the tiered percentage-based capital improvement pass-through system, uh, instead apply a case-by-case fair return process for all rental properties regardless of the size with regards to the economic impact acknowledgement um you know i recognize that economics policy especially around housing is inherently polarizing while we must be mindful of housing providers financial realities of our first obligation is to the thousands of renters facing unstable housing costs rent stabilization is a necessary safeguard not an economic experiment and I think you know rejection of the mayor's recommendation I do not support the mayor's proposal as it lacks meaningful tenant protections and does not reflect an urgency for San Leandro's affordability crisis I think that you know with regards to the five percent um I don't think we talked about option you know it's not in here but option two I express full support for option two as presented during the policy discussions I think the more staff time we have the more robust and attention that we get with regards to this um and I I think you know with regards to we have an opportunity here in San Leander to to make an impact to support our renters I I've lost a lot of constituents who've moved to um neighboring cities central valley out of state um who really contributed to San Leandro and what makes us who we are and I don't I'm tired of losing folks to yeah cheaper rent and you know middle of uh of the middle of of the nation so I just I just want to make sure that we're protecting folks to you know so that folks have predictability stability of like Carrie Ann Steele had mentioned with regards to her kids graduating with her classmates being able to stay here and have predictability with regards to to rent rent stabilization so those are my comments thank you.

So we'll go to council member bolt next okay thank you um okay you guys twisted my arm.

I will compromise 65% CPI with a three percent cap.

The answer on the uh pass through for capital improvements absolutely not no uh exclusions for mom and pops no because then we got to define mom and pops and we're just we're just muddying the waters um to what uh council member ozevito asked if he could get support for the means test I don't I don't want to uh support that I don't I'm watching council member Oze Vito our brothers and sisters in the trades just moving further and further away and and not being able to afford rent because of these high rent increases um five percent uh that's what they're that's their they're basically giving up their raise um to the housing and that's not acceptable banking no that's just a just just another opportunity um to go after the money if you if you don't raise it as most of the landlords have told us they don't raise it by three percent it's really hard for me to follow these conversations because they stand up there and tell us all the time that they don't raise it more than two or three percent um and and these are the these are our friends in our community that are telling us this so really who we're trying to keep uh in check is the the bad players out there that are going above all the ones who are here talking with us are telling us that they don't raise it so there's no need for a banking um what's the point of the means testing if they're not raising it two or three percent every year we're we're just capping it at that if they're not doing that what's the point of the means test I mean I'm I'm just listening to what the landlords are telling us and this is this is what I hear and this is what they've told me so I'm willing to support them in this and just say hey look let's just leave it at three percent let's get the bad players big corporations that own all those those companies or own all those homes in our community let's lock them in so I will compromise uh six five percent of CPI three percent cap um no pass through for the capital improvement and no exclusions and and I'll put it in the form of a motion so we can try and move forward sound like I had enough people in there to to follow along with that because I compromised and I'll leave it there.

Okay so there's it's not an action item anybody else council member I don't know Simon were you planning to bunch pump in there but punch in there there thank you well after this extension I think uh council member Faveris Walton kind of summed it up pretty well and just and we're kind of repeating ourselves we are compromising a bit but overall I think the majority of the council is looking at a percentage of CPI or a cap um in the three to three and a half range so um I'm still at that 65 CPI I've heard threes here three and a half 3.75 so just somewhere in there I mean even 3.25 could be a compromise amongst everybody so I think you know that kind of moves us on that point and thank you for making that point because I think we're all there at least the majority is there.

Again as others have said no pass throughs um I do agree with the fair process but with the fair process I still have that concern about how are you determining if it's a fair process if you are saving money up for a roof but you don't even present that savings account how is that even a fair process so I'd like to go back to my point earlier in the meeting and rich excuse me city attorney had recommended if we could do an analysis to look at if we could look at our income I was I wouldn't say income our assets and our debt to better evaluate if there maybe is a better way to look at the fair process because right now it seems like something is missing.

Not critical but it would be nice to have that question answered no means test uh keeping mom and pop the way we have it in the ordinance and with that I I do think that there is a majority of the council in that is council member's walton said in the beginning of this at 10 30 I think that's kind of where we're at thank you.

Oh one other comment I do want to make too as I mentioned in rules and the mayor said today too is it's a bit off topic but we need more housing which is separate than all this we need to build more housing period so we have more rental units thank you okay anybody else online okay so at this point in time seeing no their hands raised I'll give my final thoughts on this I will stand by the position that 5% is a compromise and is a compromise because four years ago three years ago people were saying 10% 10% 10% is crazy 10% is crazy it can't be 10% I then proposed 5% that is by definition a compromise that is bringing it down all that's happened is now that I've said five, someone else is saying, Well, we we can if it's five, then we can go lower than five.

So that is why it is a compromise and reflects that that.

That five percent specifically reflects also the the concept that was written up there of no banking.

Five percent is a simplified approach that says we're gonna keep it simple, we're gonna have five percent, we're not gonna get into this banking, and quite frankly, you won't need to get into the fair return.

You squeeze that number so low that you get a lot more fair return hearings, it becomes administratively more expensive.

As much as we would like to say, and I think someone talked about Pete Bellou being a great um a great landlord.

People have said very clearly, regardless of how you figure it out, all the cost of this program will get passed through.

Period, full stop.

And so our job is to try to deliver as much benefit for as low cost as possible.

The means testing is specifically designed to make sure that the people that really need the help are getting the help.

Um the other thought that I will uh continue to add here is that we set up the rent registry with a very specific purpose.

That was set up specifically to enable the gathering of data, so that we could make an informed policy decision and not just pick some numbers out of the air.

Because there are plenty of cities that do not have CPI or a percentage of CPI, and so just to say, well, in in Oakland they do this, that's not really a good metric for what policy should be.

We should consider the totality of the examples that are out there.

So I still continue to believe that we are rushing through this process.

We set up the rent registry for the purpose of collecting data, and we're not waiting for that data to be collected so that we can make an informed decision.

Okay, at this point in time, I'm gonna turn to city manager and say, Do you have everything that you need?

Thank you, Mr.

Mayor.

What I have as my notes as takeaways for today, is that what the council as a majority body would like us to bring back is a version of this that sits somewhere between three and three point seven five percent with a cap.

I'm seeing head nods in that.

I also see as a collective body that there is a majority for no capital pass through without a the with allowing for a fair return as well.

I also see majority of with no means testing and no banking.

The rest is a little gray.

I just want to do councilmember Simon, did you have a position on banking?

Go ahead and just sorry.

Uh no banking, but did you mention Janelle the your city manager the CPI percentage of CPI?

So I'm not I don't have clear consensus on CPI.

I thought I heard a majority was between 60 and 70 CPI or three to 3.75.

I disagree with that assessment.

So I do not believe that's the consensus of the council.

I heard all of the people say that.

Well, we have three here, and Councilmember Bolt did say sixty-five percent.

Then that would be a majority, sixty-five percent.

That's a majority.

Which four doesn't matter.

65%.

Dylan, there's four, one, two, three, and doing.

Okay, so that's the majority of what council is directing.

Correct.

May heard Tom.

Oh one area of clarity just to um supplement city manager camera.

I did hear clearly, though, no exemption on small property for staff.

So I think that was, thank you.

Just one confirmed set.

For the next draft.

I would emphasize this is a draft.

So this will elicit or evoke further comments.

We know.

Yeah, because I do want to be clear, just so that's the guidance.

So I will close with this comment.

I'm quite concerned that a city like Alameda has the lower range than five percent, but if I'm not mistaken, they permit banking.

So where we say that we want to use other cities as a model, but yet we're not actually taking what those cities do.

We're actually providing something that's tighter than what other cities permit.

So that'll be my final thought.

And with that, we are adjourned.

It is 11 o'clock.

10 59.