Director Liao, a city staff member, presented the draft Rent Stabilization Ordinance to the San Leandro City Council on Monday, Oct. 13, asking the council for guidance on three policy choices including whether to keep a 5% annual rent-cap and whether to add a consumer price index (CPI) adjustment.

The presentation matters because staff estimates the draft ordinance would apply to more than 7,600 rental units in San Leandro and would create a new permitting, petition and hearing process that staff projects would cost the city several hundred thousand dollars in its first year to administer.

Liao said the city ran a 60-day public comment period from July 17 to Sept. 17, including two communitywide meetings (one online, one in person) and targeted stakeholder meetings with landlords and tenants, and that outreach materials were translated into Spanish and Cantonese. Liao said common themes from housing providers included concerns that the ordinance was moving too quickly, overlap with existing state and local tenant protections and rising operating costs; tenant commenters generally said the proposed 5% cap was too high and urged more protections for seniors, low-income renters and people with disabilities.

The draft ordinance as presented would: apply to an estimated 7,600+ units; set an initial annual rent-cap at 5% with one increase per year; allow three types of administrative petitions (capital improvement pass-throughs, fair-return petitions by owners, and tenant petitions for decreases in housing services); require unit registration and payment of program fees for landlords to be eligible for increases; and pair a rent registry with the stabilization program.

On exemptions, Liao identified state-level limits, most notably the Costa-Hawkins Rental Housing Act (1995), which exempts single-family homes and individually sold units and exempts units built after February 1995. The draft also would exempt mobile-home communities with their own ordinances, accessory dwelling units, owner-occupied duplexes, short-term rentals, long-term subsidized affordable housing projects (cited in the presentation as Maria Alta and La Vreda), emergency transitional housing (cited as L'Oreal and Durham Housing and a drop-in center in the staff presentation), and shared housing where a homeowner rents a room.

Capital-improvement pass-throughs would require an owner to file within six months of completing work, impose a minimum qualifying cost of about $10,000, and would terminate when the unit becomes vacant. Liao said pass-through calculations should be amortized using an accepted useful-life schedule (the presentation referenced using IRS amortization schedules or a 10-year option and said staff had selected a single approach but did not specify which one in the presentation). The draft caps capital-pass-through increases at 5% of a tenant’s current rent and requires landlords to document actual costs and to deduct reimbursements such as insurance before calculating a pass-through.

The fair-return petition process would allow landlords who say they are not earning a constitutional fair return to seek additional increases; staff said those petitions would rely on financial documentation comparing current net operating income to a defined base year (the presentation said the base year would be the current calendar year, anticipating progress more likely in 2026). Tenants may file petitions seeking rent reductions if housing services decline.

Staff outlined procedural timelines: completeness checks by the program administrator (city staff); hearings scheduled within 90 days of petition acceptance for capital pass-throughs unless a majority of tenants consent in writing; notice at least 15 days before hearings; hearing officers may proceed without a party present and may consider failure to produce documents; decisions issued within 30 days after a hearing ends; and appeals would proceed to the courts, with copies of judicial filings forwarded to the city program administrator. Liao also described a 30-day rescission window and filing requirement for buyout agreements and said remedies and penalties would reference the city’s existing code citations.

On administration, Liao said the city engaged consultant Baker Tilly to estimate staffing and costs and presented two options: Option 1 (baseline) would expand the rent-registry program to four total staff and add two new full-time positions for rent stabilization; the combined budget for rent registry plus stabilization was estimated at about $1.4 million, with an incremental cost to start the stabilization program of about $740,000 in the first year after subtracting $650,000 already approved for rent registry. Option 2 (enhanced) would add three additional staff beyond the registry positions, raise the total operating budget to about $1.6 million and yield an incremental first-year cost of roughly $903,000 after subtracting existing budgeted registry funds. Liao warned that staffing up and software integration would take time and that full compliance/cost recovery for registry work may take three to five years.

Staff identified program-fee options: an annual fee paid by housing providers (with a late fee that could be passed to tenants up to 50% and spread over two installments in the draft), and potential legal and enforcement costs handled by the city attorney. Liao said the human-services department is separately preparing a means-tested rental-assistance program funded by a state grant for extremely low-income tenants (at or below 30% area median income) and for those at risk of homelessness; staff and the city attorney’s office advised that means-testing within a rent-stabilization ordinance would pose legal risk because it would regulate rent increases based on tenant characteristics.

Liao closed by asking the council for guidance on three policy questions, beginning with whether the rent cap should remain at 5% and whether a CPI adjustment should be added, and signaled staff would return with more detailed cost and implementation proposals in a future work session.

The presentation was informational; no formal council action or vote on the ordinance was recorded during the Oct. 13 meeting.