Palo Alto explores new policies to help tenants

Seeking to address the plight of low-income residents in a city with famously astronomical rents, Palo Alto is considering a wide range of new programs designed to protect and assist tenants facing displacement.

Some of these programs — including, most notably, rental stabilization — have been brought up in the past, only to fizzle in the face of political opposition. Others, including limits on security deposits that landlords can charge and a “fair chance” ordinance that prohibits discrimination based on criminal backgrounds, would be discussed for the first time.

The wide-ranging effort kicked off on Wednesday night, when the city’s Planning and Transportation Commission unanimously endorsed two new initiatives to support renters: establishing a survey program that would allow the city to track its inventory of rental properties and expanding renter relocation assistance, with a particular focus on the “cost-burdened” households — those that spend more than 30% of their income on rent.

The commission split over a third program: expanding protections for renters facing eviction beyond those already included in Assembly Bill 1482, the 2019 legislation that capped rent increases and, in many cases, prohibited property owners from terminating tenancies without just cause. By a 4-3 vote, with Chair Bart Hechtman, Vice Chair Giselle Roohparvar and Commissioner Michael Alcheck dissenting, the commission voted to recommend extending just-cause protections to properties that had been built within the past 15 years as well as to renters who moved into their residences less than a year ago. Both of these categories are currently exempt from the state bill.

Other ideas that are on the table and that the commission plans to debate in the coming months include enacting rent stabilization and providing tenants with a right to counsel when dealing with eviction. The commission plans to discuss these ideas in the coming months before they go to the City Council for review and approval.

The new push to strengthen tenant protection is, in some ways, a revival of a debate that has proceeded in fits and starts since 2017, when three members of the council — Tom DuBois, Lydia Kou and former council member Karen Holman first proposed in a memo that the city consider rent stabilization and other measures to help renters, who make up 45% of the city’s households. The proposals in the memo, which included a cap on rent increases, were ultimately rejected by the council majority, which strongly opposed any new policies that border on rent control. The most vocal opponents of the proposal were former council members Greg Scharff and Adrian Fine, who argued at one hearing that instituting rent stabilization would “reduce housing availability and decrease housing quality.”

The debate grew more heated in 2018, when the three council members — this time, with support from former council member Cory Wolbach — submitted a new memo with a more modest set of reforms, including better enforcement of the city’s requirement for one-year leases and evaluation of stronger renter-relocation assistance. While the council agreed to study these ideas, they once again rejected an attempt by DuBois and others to reintroduce the topic of rent stabilization for further study.

Now, with Scharff and Fine no longer on the council and DuBois’ political camp enjoying a council majority, the topic of rent protection is set to return to the council agenda. Even though the council agreed in 2018 not to even study rent stabilization, the idea is one of seven that had been identified by the city as worth considering.

Lauren Bigelow, a fellow with Partnership for the Bay who is leading Palo Alto’s effort, outlined on Wednesday the seven strategies that her group believes the city should pursue. In the coming months, she and the city’s planning staff plan to conduct more outreach about these policies to property owners and landlords before the topic is expected to return to the council in late summer.

Some of these policies, including rent stabilization and right to counsel, face high hurdles because of, respectively, political division and high costs. But the commission agreed on Wednesday that others could — and should — be enacted as soon as possible.

The proposed survey is at the top of the list. The commission agreed that creating a registry of rental properties — akin to ones already in place in cities such as Mountain View and East Palo Alto — is critical for gathering data before any new initiatives are enacted. The commission also agreed that the city should pay for the survey rather than funding it through a fee that would be assessed to each rental unit.

“The policies that we ultimately come up with in the city need to be narrowly tailored to address the problem,” Hechtman said. “They don’t need to be broadly tailored to make us feel good.”

Commissioner Ed Lauing called the topic of renter assistance “the most important issue for land use in Palo Alto” and noted that protecting renters is “essential to our community.” According to data provided by Bigelow, 27% of the city’s renter households earn less than $50,000 per year, which creates a significant challenge in a city where the average rent is close to $3,000 per month and where about 14% of rental units are deed-restricted as affordable housing.

And while the overall percentage of “cost-burdened” rental households is at 37%, the rate is higher than 70% in every category where the household income falls under $75,000.

“This is about housing affordability and socioeconomic diversity. This has got to be our top priority,” Lauing said.

The city already has a tenant relocation assistance program that requires property owners to provide between $7,000 (for studios) and $17,000 (for apartments with three or more bedrooms) in assistance to households facing eviction. The program, however, only applies to buildings with 50 or more apartments, which make up about 22% of the city’s rental stock. The proposal that the city is evaluating would expand the range of properties that would be subject to this requirement.

While most commissioners supported the goal of the proposed program, both Roohparvar and Alcheck raised concerns about the unintended consequences of enacting new renter protections. Both worried about situations in which a property owner wants to redevelop the property to create more units but is deterred from doing so by policies that make it cost prohibitive — or procedurally difficult — to vacate the property.

Alcheck said he is deeply concerned about the impacts of any programs that can “make the outlook for future housing development even more bleak.”

“But my hope is that we appreciate this notion that as a city we have failed to address a major problem in our community and as a state we failed to address this very same problem,” Alcheck said. “We’re not addressing housing development, we’re not addressing the homeless situation and — in that vacuum — we’re left with one tool that has lots of consequences.”

Hechtman agreed and suggested that as the city moves to expand its requirements for relocation assistance, it should focus on those with low incomes.

“We really need to be cautious when we lower that threshold because we’re talking about multifamily properties that could potentially redevelop with more units,” Hechtman said. “We need to think about, ‘Are we going to create disincentives for a property owner with five-unit buildings to tear it down and create a 10-unit building if we’re going to burden them with these kinds of costs?’”

Prodded by Hechtman and Alcheck, the commission agreed to focus its expanded relocation-assistance programs on households with low or moderate incomes, rather than basing it on the number of apartments at a given property. Commissioner Bryna Chang also pushed back against suggestions that the new policy will deter redevelopment. A property owner who is evicting tenants as part of a redevelopment project should be able to pay for eviction assistance from the proceeds they will likely net from the additional units, as well as from the higher rent that they would likely charge in the newly built property, she said.

“We want redevelopment and we don’t want to lose housing,” Chang said. “But if someone evicts everyone in order to redevelop, they probably will go denser, so it will pay for itself.

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