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Seeking to provide a measure of security to renters in the city’s famously expensive housing market, Palo Alto leaders agreed on Monday, June 5, to expand eviction protections and to put a cap on security deposits.
The two measures are part of a broader work plan that the City Council has been implementing over the past two years to assist local renters, who make up roughly 47% of the city’s population. Last year, the council expanded the number of tenants who are eligible for relocation assistance during an eviction so that the policy would include all buildings with 10 or more dwellings (the prior law only applied to buildings with 50 or more). The city is also developing a new rental registry, a survey of all rental properties that will track rent increases, vacancies and other local trends.
The newly adopted eviction protection policy goes beyond the requirement Assembly Bill 1482, a 2019 law that created a cap on rent increases and new restrictions for “just cause” evictions. The law excluded some types of properties, including single-family homes and developments that had been constructed within the past 15 years. Palo Alto’s new law effectively eliminates the latter exemption, making all buildings – old and new – subject to the eviction rule.
The council also agreed to shorten the period of time that a tenant would have to reside at the apartment before they become eligible for the protection. Vice Mayor Greer Stone, a renter who strongly supported the new provisions, proposed reducing this period from 12 months to six months, consistent with a recommendation from the city’s Human Relations Commission. Most of his colleagues supported this suggestion, which will return to the council for formal adoption in August.
Both the eviction policy and the new limit on security deposits advanced by a 6-1 vote, with Council member Greg Tanaka dissenting. The new law on security deposits applies only to unfurnished apartments, where the deposits will now be limited to 150% of the monthly rent. That’s more restrictive than state law, which allows security deposits to be up to 200% of rent.
For Stone, the biggest source of frustration surrounded enforcement. The city’s planning staff indicated Monday that the city doesn’t have the resources to actively enforce the revised ordinance. And a report from the Department of Planning and Development Services explicitly states that the ordinance will be enforced privately and that any dispute “would be addressed between the tenant and the landlord.”
“The tenant could seek mediation support offered by the City or pursue legal action if warranted,” the report states. “City staff would not be engaged in ensuring compliance of these new provisions. This approach is similar to how the City addresses other local renter protection provisions of the code, such as tenant relocation assistance and the requirement to offer a one-year lease.”
Stone made a pitch for stepping up enforcement and requested that Planning Director Jonathan Lait return with more information about how much it would cost to have the city make sure that the rules are being followed.
“I continue to be completely concerned about leaving these protections at the hands of private enforcement when we know there’s an already incredible imbalance of power between landlords and renters. … We know what’s going to happen, and we know that imbalance exists, and we know who will be hurt the most by it. And it makes me uncomfortable that we’re just wiping our hands of it,” Stone said.
As the sole dissenter, Tanaka argued that the new rules will do nothing to address the city’s main housing problem: a lack of supply. The cap on security deposits could encourage landlords to hike up rents or discourage them from renting out their properties altogether, he said.
“By limiting the amount of deposit that the landlord can charge, what a lot of landlords will do in effect is basically increase the rent, which I don’t think is what we want. I think we want to make things more affordable, with lower rent,” Tanaka said.
Anil Babbar, representing the California Apartment Association, similarly suggested that the new law could constrain supply and urged the council to delay implementation so that it can further refine the local law and better align it with AB 1482.
“The changes staff has made to the local version of the ordinance jeopardizes Palo Alto’s future ability to attract developments, to meet the goals that had been set for housing,” Babbar said. “Notably, the removal of the 15-year exemption would discourage development from occurring in Palo Alto, which you desperately need.”
Others argued that the new tenant protections are exactly what the city needs. Council member Ed Lauing said that the security deposit cap addresses a key challenge faced by renters: the cash flow problems that can ensue when a tenant relocates and has to immediately incur not only moving costs but a security deposit that may equate to multiple months of rent.
The cash burden is exacerbated during the period when the previous landlord still possesses the security deposit. In Palo Alto, a tenant switching from one $4,000-a-month apartment to another would have to have $16,000 just for security deposits during this period.
“I think this is a modest way that we can help a renter transition from one unit to another,” Lauing said. “I’d be really supportive of that because the cash flow is the killer there.”
Lauren Bigelow, board chair at Palo Alto Renters Association, praised both changes. She called laws that address just cause evictions “some of the most balanced but impactful protections for a renter.”
“Without them, the idea that a renter can be doing everything right and still lose their home looms large,” said Bigelow, who helped the city put together its renter protection plan before she spearheaded the creation of the new advocacy group. “With these protections, there is transparency. People understand that nothing is guaranteed forever, but knowing the reasons you can lose your home gives renters parameters you can operate within.”
While the topics of rent control and the new rental registry have historically been divisive, the rules that the council adopted Monday advanced with little fanfare and relatively muted opposition. Council member Vicki Veenker talked about her experiences as a renter when she and her husband moved to Palo Alto in 1992 and suggested that rental properties play a critical role in welcoming people who enrich and diversify the community. Tenant protections, she said, are a critical component of solving the city’s housing crisis.
“We can count up our RHNA (Regional Housing Needs Assessment) housing units all we want, but if people can’t fairly access those units, it’s a hollow victory,” Veenker said. “I see our rental units as our city’s welcome mats.
“So protecting those who rent — nearly half our residents — from being evicted without just cause, or being able to reasonably limit moving costs is simply the right thing to do.”
Thanks to Mayor Kou whose colleagues memo on renter protections a couple of years ago highlighted these issues and kicked off this work.
@Tom DuBois, thanks for the much-needed historical perspective. Mayor Kou has always been on the side of renter protection dating back to the eviction of 88 middle-income tenants from The President Hotel while the so-called housing advocates were more than happy to side with the City and the hotel developer.
Too bad we the taxpayers are now stuck paying to replace those housing units the former city manager so happily eliminated.
“By limiting the amount of deposit that the landlord can charge, what a lot of landlords will do in effect is basically increase the rent, which I don’t think is what we want. I think we want to make things more affordable, with lower rent,” Tanaka said.
Security deposits aren’t a gift, but most landlords treat them as such. It is only supposed to be used to repair damage or cleaning fee if the tenant doesn’t do it. It’s really not relative to the amount of the rent except for the “how much money can I steal from this tenant after booting him out so that I can jack up the rent” factor.
Don’t be naive about the reasons a landlord wants to raise the rent. They do, simply because they can. And they want to keep pace with the going rate. A tenant who stays for 15 years — THAT’S the reason for the statewide cap. Today’s rental price, with a 10% increase, means a landlord can raise the rent 100% in ten years. That’s a bad deal for everyone. Except the landlord. A 15 year tenant is also entitled to receive all of the interest accrued in the separate savings account the landlord is supposed to keep it in. But the tenant usually has to sue the landlord to get the deposit and the interest back.
What our CC is doing by putting all of the burdens on the tenant/landlord relationship, forces tenants to STILL have to go to small claims court to receive the ransom they paid years ago. That only works if the tenant stays in PA. If they move to Nantucket, it’s almost impossible to file a small claims case. So, deposit theft is the norm, when it should be the exception.
These are excellent initiatives if you want landlords to exit the market and sell their properties for home ownership. If you would like a healthy rental market, for example if you can’t afford to buy a house, or you are only in the area temporarily, they are of course terribly destructive.
Renters are nearly one half of Palo Alto’s residents. The data is needed. The changes have been considered for quite awhile. Hats off to Mayor Kou and council member Stone for leading this revision to the ordinance.
Too bad the City Council didn’t act on behalf of the residents at the President Hotel in support of their remaining in situ.
A tenant can now just give 30 days notice, and tell the landlord to take the last month out of their deposit. The landlord is now left with only half a month deposit. (Or no deposit, if a recent state bill passes.) Even if tenants aren’t allowed to do this, court takes too much time and money. Seems democracy is two wolves and a lamb voting on what’s for dinner.
I am privy to a single mom who with two small children had her deposit w a 30 days notice at a sub par tiny apartment on Alma, denied.. It was a less then compatible situation . She left in good standing even when the upper unit
leaked w overflowed toilet water, she was not given her deposit back. She did not fight it. Just moved to the next a $1500 loss later. This is the reality. The current city of PA does nothing. Because? Maybe the amount of dollars spent on consultant fees supersedes the real needs of its residents to actually take a returnecbdeposit to the next dwelling . And she will not fight for what she paid,,why? Because her children come first, even with a dollar loss. And our city does little for rental resident protections. Currently I am at Mayfield/Related . It took 12 months to lease up w Seque finalizing unit release. At first it was $600
Deposit. Then it was doubled to $1200. This may not seem a lotto SFHO yet when poor folks are told one thing and then informed something else, it begins a distrust. And so it goes.
Homeowners didn’t know this was on the agenda. That was why there was little opposition.
Sad to hear this was passed. Sounds like Greer Stone didn’t take an economics course in his life. This is a path to ensure homeowners exit the rental market and housing becomes more limited.
Building housing on the backs of homeowners, instead of creating more housing is not the solution and Palo Alto city council should have known better than to do this.
When you create more housing, that gives renters options. By reducing security deposits, and not protecting homeowners, is not the path to creating up more rental housing, it’s the path to reducing rental housing.
Congrats to Greer Stone for not seeing the big picture.
How about starting a tenant registry?
To keep track of renters that pay late, bounce checks, trash places and vacate in the middle of the night, leave without paying rent, have pets when not allowed, sublet, run a airbnb, have too many roommates and all the other things that tenant’s do.
/marc
ADUs were proposed as a way to address housing supply, in part by allowing homeowners to rent out an ADU in the back yard.
Do you think there’s a snowball’s chance in Hell that a sane homeowner would rent out an ADU without iron clad assurances that an abusive tenant, or simply a tenant that you don’t want any more for whatever reason, can be evicted?
@marc665. How about a dwelling that is so cheaply put together that three years tenants are blamed paint peels Where interior doors made out of cardboard and fall off the hinges with broken closures. How greed got away with filling units with toxic materials of vinyl, plastic, fiberglass and petroleum. Even the light bulbs can’t be swapped out, where there are ghost light switches, electrical outlets blow appliances and electric cords dry out and crack. Where water pools in stairwells and mail gets lifted from mail boxes and doorways, even when the exterior of the bldg by D Baker and Ass is designed like a cage to keep residents in and visiting grandparents, out. How about no toddler play area or washers that break. 2017 Mayfield Place was designed to fail the poorest of people & resident families for the greed of Stanford Land-Related property profits. Stanford (Le) Land and it’s leased up partner are crushing the souls, spirit, morale current working folk’s potential to succeed. The area’s “visionaries” were blinded by greed and it’s swank Stanford Terrace. A bed of rocks was pushed on top of us . MP was supposed to raise the poor to a higher standard of living with integrated designed services and put the less fortunate on more equal footing. Yet. One side is an uncured tar parking lot the other is ECR all encompassed by the infinite mote of Co2 emissions. I don’t expect to get any of my deposit with interest back @Myfeelz. Why? Because I just know that mulit-Billion dollar Related will justify faulty, broken dumpy materials use 100% cheap plastic& petroleum interiors as tenant’s responsibility. And so the cycle of poverty for cooperate profits (and Stanford tax free profits) continue. https://getpocket.com/explore/item/how-inequality-imperils-cooperation?utm_source=pocket-newtab
@Joe Davis, the renter protections don’t apply to ADUs.
I think the concern about abusive tenants are legit. This is another situation in which the few ruin things for the many. Lousy, greedy landlords contribute to the need for protections and lousy tenants cause potential landlords to decide to not rent. And so that bad history isn’t repeated, let’s not forget the absurd pro-development policies of past Councils that created the jobs:housing imbalance that spawned myriad thorny problems.
“let’s not forget the absurd pro-development policies of past Councils that created the jobs:housing imbalance that spawned myriad thorny problems.”
@Annette. what you said bears repeating. The same pro-development councils also supported underparked developments so their backers could make even bigger profits from higher density while singing their absurd songs about no one wanted cars so parking spaces weren’t needed. They did everything in their [power to oppose any type of office cap or limitation on offices that would moderate the imbalance. They had US paying for residential parking permits when all those unwanted cars owned by new residents and all the commuters pushed into our neighborhoods.
They also wound up their supporters to scream about horrible homewoners and their Prop 13 rates while blatantly ignoring and/or deflecting any talk of the fact that commercial landlords ALSO benefit from Prop 13 while craising rents every year on properties they’ve owned LOTS longer than homeowners.
This we have all this acrimony, name-calling etc.
Older Palo Alto landlords should consider offering ‘lease-option’ provisions to their long-term tenants…in other words, partial credit for rent paid as a down payment on the dwelling.
Most of these older landlords have already seen their properties skyrocket in value and at their advanced ages, many of them don’t need the money or have heirs to leave the properties to.
Another alternative would be to donate their residential rental properties to the local churches who in turn could initiate both low-cost housing opportunities and sanctuary for the homeless population in Palo Alto.
Seattle has enacted even more extensive “renter protections” over the past decade, with the opposite of the intended consequences. Lowering allowed security deposits and changes such as limiting late fees have increased risk, forcing individual and small-scale landlords to sell their properties to hedge funds and REITs. These corporate landlords have substantially increased rents, raised minimum credit scores and incomes needed to even be considered as renters, and demolished older, cheaper units in order to rebuild them as high-end, much more expensive units.
PA’s “protections” seem to me to be just more virtue-signalling that in practice ends up making the lives of lower-income people more expensive and more difficult.
I welcome Nanette’s thinking of creative ways that can enhance the quality of the housing opportunities available in our city.