HAYWARD — The city has put on hold a process that allows landlords to apply to have their residential units exempted from rent control, a move that will offer some tenants protection in the Bay Area’s pricey real estate market.
The city’s rent stabilization ordinance allows landlords to apply to have a unit permanently exempted from rent-increase limits if a tenant voluntarily leaves and after the landlord makes improvements to the property that meet a financial threshold.
The 18-month emergency moratorium went into effect immediately after the City Council unanimously approved it Tuesday. The decision could affect residents in up 1,600 units across town.
“What this basically says is, ‘We are taking a pause on the decontrolled process,’ ” City Manager Kelly McAdoo said. “We are not eliminating it at this point.”
State law allows landlords in cities with rent control to adjust rent to market-level rates after a tenant willingly leaves a unit, but the rate is still governed by local rent-increase limitations once a new tenant moves in.
In Hayward, however, landlords can apply to make units permanently free of rent caps if a tenant voluntarily departs and if the landlord can demonstrate improvements at the property that range from $1,500 to $3,100, depending on its size — a provision that the council has temporarily put on hold.
The idea behind the moratorium is to give city staffers time to review how the process is working out, and to investigate whether the financial threshold may be too low, according to a staff report.
More than half, 57 percent, of Hayward renters spend more than 30 percent of their household income on rent, the report said. A household that pays more than 30 percent of its income on rent and utilities is considered rent-burdened.
Tom Silva, who has been a Hayward landlord since 1979, said the council’s action — which came after it heard from a string of public speakers — will discourage people from investing in Hayward real estate and result in fewer units available for rent.
“Really, really, really take a good hard look at your unintended consequences,” Silva said.
About 22,200 of Hayward’s 46,700 housing units are rentals, according to the city. Of those, 14,900 are covered by the city’s rent ordinance, but only about 9,500 are subject to rent-increase caps because about 5,400 of them are houses, which are exempted under state law.
The city has received about 7,900 applications for “decontrol” of rent-controlled units, which leaves just 1,000 to 1,600 that currently fall under rent-control.
“We need to keep as many affordable and low-rent units as we possibly can,” said Zachariah Oquenda, a tenant in Hayward who supported the moratorium. “Every unit matters.”
Along with the moratorium, the council took action to clarify that the ordinance’s “for-cause” eviction provisions apply to all 14,900 rentals covered under the ordinance, regardless of whether a unit has been exempted from rent control.
Councilwoman Sara Lamnin said the city was trying to strike a balance between the needs of landlords, who want to protect their investment, and the fears of tenants that they may be displaced because of rising rents.
“The intent is to say we need to work together to figure this out,” Lamnin said. “But in the meantime we need a little space around the ‘decontrols,’ and we need to make pretty clear a practice we already have in place about ‘just cause.’ “