Council approves wait‑list priority for tenants of expiring BMR units; landlord relocation assistance deferred for later study

The Cupertino City Council voted to amend the city’s Below‑Market‑Rate (BMR) administration procedures so tenants of BMR units that are expiring receive priority in the city’s centralized BMR wait list and receive formal notice of upcoming expirations. The council declined at this meeting to adopt the staff‑proposed relocation assistance (three months’ fair‑market‑rent, plus an extra month for special circumstances) payable by property owners; council directed staff to return with further legal analysis before acting on relocation assistance. The motion to adopt the wait‑list and notice provisions and defer relocation assistance passed 4–1, with Council member Wong voting no. The motion was made by Council member Mohan and seconded by Vice Mayor Moore.

Why the change: Staff told council there are expiring deed‑restricted units originally created under earlier inclusionary requirements; many pre‑1999 projects used shorter affordability terms and could return to market rents when their deed restrictions expire. Staff estimates 114 households in Cupertino will see BMR expirations by 2040, with an initial wave of approximately 39 units expiring in July 2026. Staff presented tenant demographics for the first three properties: most primary tenants are age 50 or older; about half have lived in their units four years or less; about 80% of units were described as in “good condition.”

Proposed policy and staff analysis: Senior housing coordinator Nikki Vu presented a dual‑component approach recommended by the Housing Commission: (1) give displaced BMR tenants three additional priority points on the city’s centralized BMR wait list and allow off‑cycle applications so they may reapply immediately; and (2) require relocation assistance paid by property owners equal to three months of HUD fair‑market rent (plus one additional month in special circumstances) and require landlords to provide notice of planned post‑expiration rental rates. Staff explained alternatives analyzed and why they were not recommended now: acquisition of entire buildings to preserve units was financially infeasible (staff cited a recent local acquisition costing approximately $66.7 million and estimated scaled preservation costs in the hundreds of millions), and rent stabilization for expiring BMR units is not permitted under state law as codified in AB 1482 (state Tenant Protection Act) which exempts expiring deed‑restricted units from local rent‑limit statutes.

Public comment and stakeholders: West Valley Community Services executive director Sujatha Venkatraman urged the council to prioritize protections for current residents, noting many are older adults or households with disabilities who are already rent‑burdened. Public commenters and commissioners offered alternatives including targeted development incentives to encourage owners to extend affordability, using BMR funds for long‑term land acquisition or community land trusts, and improving outreach to existing wait lists. Several residents described immediate hardship and asked for staff follow‑up.

Council action: The council approved the wait‑list priority, the definition of “displaced BMR renter,” and strengthened tenant notice provisions in the BMR administrative manual. Sections of the proposed resolution that would have created a mandatory relocation assistance payment by property owners (staff’s relocation assistance and enforcement sections) were removed from the adopted action and will return for future consideration after additional legal analysis. The motion to adopt the amended resolution carried 4–1 (Wong opposed). Staff said the first group of expirations is scheduled for July 2026 and emphasized the time sensitivity of outreach and notice requirements.

Next steps: Staff will amend the BMR administration manual to add the displaced‑tenant priority category, allow affected tenants to apply off‑cycle, and strengthen required tenant notifications. Council directed staff to return with legal analysis and options on landlord‑funded relocation assistance and other anti‑displacement incentives (including potential development incentives or targeted use of BMR funds) before making a decision on mandatory relocation payments.