Frequently Asked Questions
What do we mean by “Rent Control and Just Cause Eviction Protections”, exactly?
We use “Rent Control” to refer to a system which limits the rate at which rents can increase for current Tenants. There is an economic index called the Consumer Price Index (or CPI). It provides a rough measure of the cost of living in a given area. Most years, it increases by some small percentage (usually around 3% around LA). Our amendment would allow Landlords to increase rents once per year by 75% of the percentage increase of CPI during the previous year (known as the Annual General Adjustment, or AGA). So, if an apartment costs $1000 per month one year, and the CPI increases by 3% during that same year, the Landlord could charge $1000 + (75%*3%)*1000 = $1023 per month the next year, provided the Tenants don’t move out.
We do not use “Rent Control” to mean an absolute cap on rents. Our amendment would not set rents. It only regulates rent increases.
Our amendment would not in any way constrain the initial rent that a Landlord may charge when bringing a new unit to market, or when new Tenants move into a previously occupied unit. Cities are prohibited from doing so by a state law known as the “Costa-Hawkins” bill.
“Just Cause Eviction Protections” refers to a set of regulations that prohibits Landlords from evicting tenants without a good reason. Our amendment would still allow Landlords to evict tenants for common-sense reasons such as failing to pay rent, violating the lease contract, using the unit for an illegal purpose, etc. However, Landlords could not evict Tenants because they want to charge a higher rent to a new, wealthier Tenant, nor could they evict any Tenant as an act of harassment or retaliation, nor for any other reason which is not considered a “Just Cause”.
Also included under Just Cause Protections is the requirement that, in cases where Landlords evict Tenants for Just Causes which are not the fault of the Tenant (for example, to perform necessary and substantial repairs, or because the Landlord is selling the property and leaving the Rental Housing business), the Landlord provides financial Relocation Assistance to the Tenant to help them defray moving costs and put down a security deposit on a new Unit.
Our amendment contains a number of additional protections for Tenants, but these two regulations are the main thrusts of the proposal.
Does Pasadena need Rent Control?
Desperately. Over 50% of Pasadena Tenants are “rent burdened”, meaning that they spend over 30% of their household income on rent. 27% of Pasadena’s Tenants spend over 50% of their incomes on rent.
This issue is not confined to a small sector of Pasadena’s population. In fact, a significant majority (57%) of Pasadenans are renters. This economic burden is borne disproportionately by people of color. In Pasadena, 70% of Black households and 68% of Latinx households are renters.
The problem is especially dire for Pasadenans with lower incomes. A staggering 89% of Pasadena renters making between $10k and $50k per year are rent burdened, and 60% of renters in this income bracket spend over half their incomes on rent. Many families are forced to cut back on essential expenditures just to keep a roof over their heads.
The problem is growing worse each year. The median gross rent in Pasadena increased by 32% (from $1287 to $1669) between 2012 and 2018, while the CPI increased by 12% over the same period. The price of housing is outpacing other costs of living (food, transport, etc.), and it has vastly outpaced wages.
The City of Pasadena has acknowledged that severe cost burden is the greatest predictor of homelessness risk. Far too many Pasadenans are living paycheck to paycheck. Unable to accumulate any savings, many of our neighbors are just one emergency away from living on the street.
I always liked Pasadena because I thought it was a good place to live, I thought it was a good city to raise a family, but I found out that I was wrong about it since last month, when I received an eviction notice after 23 years of been a good tenant. I looked in the city website to see if I had any protection as a tenant, or if there was a law to help me to extend the 60 days that I was given, I was “lucky” that I have a surgery and could extend my time to one and a half months more. I also looked for a law that could make the owner help me with the moving expenses. Nope, there is nothing, not even a law to protect tenants from an owner that just wants to change the color of the tenants, or an owner who just wants to make the place cleaner so he can raise the price of the rent, twice as much or maybe more.
- Carlos Moreno (Father, Pasadena resident of 23 years.)
Do Pasadenans want Rent Control?
Yes! In a 2019 poll of 700 registered voters in Pasadena, 69% of respondents supported Rent Control and 82% supported Just Cause Eviction Protections.
55% of voters in Pasadena voted yes on Proposition 10 in the 2018 General Election, which would have repealed the Costa-Hawkins Rental Housing Act and hence given California municipalities greater freedom to enact Rent Control measures.
Why is the Annual General Adjustment set to 75% of CPI? Shouldn’t it track 100% of inflation?
There are a number of reasons for choosing 75%. Some are ethical, others pragmatic.
First, the CPI tracks an “average” cost of living. Much of this cost comes from prices of consumer goods and services. For example, the cost of a gallon of gasoline, a gallon of milk, or a ride on the Metro. The value of these items originates in the labor of the workers who produce them. According to the US Census Bureau’s 2015 Rental Housing Finance Survey, the national median number of hours spent per month by Landlords on property management is three. The value of rental housing, therefore, does not originate in the labor of the Landlord, and so there is no reason that the price of rental housing should increase at the same rate as actual goods and services.
Second, minimum wages have roughly tracked inflation over the past two decades, but the price of rental housing has vastly outpaced it. This has resulted in the tightening of a financial vice on working people. On one side is a wage floor which has been nearly stagnant for two decades when inflation-corrected (this has increased in Pasadena since 2016, but not nearly enough to keep up with rents). On the other are skyrocketing housing costs which eat up a larger and larger fraction of household income. It is not enough to stop tightening the vice and leave it at that, which is what we would achieve by fixing rent increases to inflation. We must actively loosen the vice, giving working families room to breathe and to save money for their futures. By limiting increases to a value below inflation, and assuming that the long term trajectory of wages will roughly track CPI, we loosen the vice.
We clearly need to undershoot inflation, but where does the 75% number actually come from? This brings us to the third motivation, and that is the examination of what has worked well for LA-area cities that have already implemented Rent Control. Both Santa Monica and West Hollywood have had Rent Control for decades, and these policies have protected their communities from rapidly increasing housing prices. Both cities have found that 75% CPI strikes a good balance between easing financial burdens on Tenants and providing Landlords a Fair Return. In short, we have chosen 75% because it works for Southern California.
Will Rent Control put Landlords out of Business?
This is a common counterargument, but it is not a realistic concern. Our amendment actually guarantees landlords a fair return on their housing investments. If they can demonstrate that their net income has dropped below their initial income (roughly a year before the law would come into effect), plus upward adjustments to account for inflation, they can petition for an increase in rent in excess of the Annual General Adjustment to reach a fair return.
In particular, this allows landlords to finance necessary repairs and periodic improvements to rental units with moderate and temporary rent increases if their net income has not increased enough to afford them out-of-pocket. The notion that Rent Controlled units invariably become run-down due to lack of market incentive to repair them simply does not apply to modern Rent Control measures with such rent adjustment mechanisms built in.
In conversation with Southern California cities that have already implemented Rent Control, we have learned that such upward adjustments are actually extremely rare. Due to the Costa-Hawkins bill, Landlords are able to charge market rates for all new units, and whenever new Tenants move into existing units. That means, in practice, Landlords’ incomes are significantly outpacing inflation, even with Rent Control measures in place. Rent Control does not stop landlords from making profits, it simply prevents tenants from being priced out of their homes.
Will Rent Control lead to a decrease in quality of rental units?
Exactly the opposite! The Pasadena Fair and Equitable Housing Charter Amendment actually creates a very strong incentive for landlords to properly maintain rental units. If tenants can show that their landlord has decreased any services (such as garbage collection or parking) or that the condition of the unit has deteriorated beyond standard wear and tear, or if the unit is uninhabitable according to state or local health and safety laws, the tenant can petition for a corresponding decrease in their rent.
Under current law, there is practically no financial incentive for landlords to maintain units in good living condition for tenants who are already living in a unit. The only recourse for tenants with serious habitability issues is to withhold rent, which puts them at risk of having an eviction case filed against them in court. Tenants then have to defend themselves, most times without a lawyer. It is a risk most families aren't able to take just to force their landlord to make necessary repairs.
Didn’t California already provide these protections through Assembly Bill 1482?
AB-1482, also known as the Tenant Protection Act of 2019, provided protection against rent gouging, or large, exploitative increases in rent on a short timescale. In particular, it caps annual increases at 5% + CPI, which is roughly 8% per year in LA. This may seem like a strong protection, but consider that a rent which increases by 8% each year will double in only nine years. We can virtually guarantee that the minimum wage will not keep up with that pace, even once inflation has been factored in. Our amendment would only see rents increase at roughly 2% annually, providing longer-term stability for Pasadena’s most financially vulnerable families. AB-1482 also allows upward rent adjustments twice a year. Our amendment would only allow one, giving Tenants more confidence in their financial projections.
AB-1482 also offers Just Cause Eviction Protections, but they only apply to Tenants who have resided in their units for a year or more. Our amendment would extend protections immediately to all Tenants.
Finally, and perhaps most importantly, AB-1482 is set to expire in 2030. Our central goal is to provide long-term stability to all Pasadenans, so that our city may become a community. The demand for Housing Justice doesn’t have an expiration date. Neither does our amendment.
Won't many rental units be exempt from Rent Control because of the Costa Hawkins Rental Housing Act?
Single family homes and units built after 1995 are exempt from local rent control because of the Costa Hawkins Rental Housing Act. However, we estimate that nevertheless at least 2/3 of the rental units in Pasadena will be rent controlled immediately upon passage of the Fair and Equitable Charter Amendment. From the most recent census data we estimate that about 21% of rental units in the city are single family homes. We also make a conservative estimate that about 13.5% of rental units were built after 1995. In the worst case scenario that there is no overlap at all between these two groups, this still accounts for only 1/3 of rental units in the city.
All units, even those exempted from rent control by Costa Hawkins, will benefit from the eviction protections, relocation assistance, and rental registry parts of the charter amendment.
The Pasadena Fair and Equitable Charter Amendment allows the rental board to extend rent control to more units once the Costa Hawkins Rental Housing Act is repealed or modified at the state level.
Who will oversee the program? To whom will they be accountable?
The program will be overseen by an eleven member Rental Housing Board, to be appointed by the City Council. In an effort to fairly represent tenant interests, the Board will consist of seven tenant members, one from each of Pasadena’s seven districts. None of these members may themselves own rental housing. The remaining four members do not need to be tenants, and may or may not own rental housing.
Before being considered for appointment to the rental board, perspective members must receive the written endorsement of at least 25 of their neighbors in their district.
This board will establish and publish details of rental regulations not specified in the language of the amendment. They will also appoint Hearing Officers to hear and adjudicate petitions for upward or downward adjustments of rents. Landlord petitions for upward adjustment have already been discussed, but Tenants may also petition for downward adjustments if Landlords have illegally increased their rent, or have failed to maintain habitable units.
Decisions of the Hearing Officers may be appealed to the Rental Board itself. If either a Tenant or a Landlord feels they have been wronged by a decision of the Board, they are free to appeal to a California Court. In this way, the Board is held accountable both by the public and by the State Judiciary.
How will the program be made transparent to the public?
To the maximum extent permissible by law, all hearings and meetings of the Rental Board will be open to the public, so no regulations or decisions will be made behind closed doors.
Our amendment establishes a Rental Registry which will collect data about Rental Units in the City. This database will provide the City with insight into the status of Rental Housing in Pasadena, and crucially, into the stock of affordable Rental Housing.
This data will include addresses, unit numbers, unit attributes (size, number of bedrooms and bathrooms, etc.), occupation history, history of maximum allowable rents and actual rents charged, and utilities, services, and other amenities.
The Rental Board will maintain an online portal, accessible to the public, which will publish as much of this data as possible without compromising the privacy of Tenants.
The Board may also publish information about violation of housing codes, or of the amendment itself, in an effort to bring transparency to the behavior of Pasadena Landlords.
The Board will periodically collect, analyze, and publish reports on the status of rental housing in Pasadena using this and other sources of data. In this way, the public can make determinations about the efficacy of housing regulations.
How will the program be financed? How will this money be used?
The Rental Board will be primarily financed by an annual Rental Housing Fee collected from Landlords of buildings covered by the law.
This fee may not generally be passed through to Tenants. However, if a Landlord can demonstrate that the fee has prevented them from making a Fair Return, they can file a petition for a commensurate upward adjustment in Rent.
The Rental Board may also fine Landlords who violate the law, and may put the resulting revenue towards financing its operations.
Finances will be used to compensate Rental Board members for their time, to pay staff members including Hearing Officers and administrative staff, and to pay for the costs incurred by managing the Rental Registry and its associated online portal. Additionally, this money will be used to cover legal fees incurred by the Board when defending itself and the law against litigation, or when enforcing the law.
Why is the rental board salaried? How was the amount of the salary chosen?
The members of the rental board receive a salary in order to ensure that working Pasadena tenants can afford to sit on the board. What we don't want is for the rental board to be staffed only by independently wealthy members, who will not represent the interests of ordinary Pasadena tenants.
An hourly wage of 2.5x Pasadena minimum wage was selected because that is how much it costs to afford a typical rent in Pasadena. According to the most recent census data, the typical rent for a 2-bedroom apartment in Pasadena is $1953. To afford that without experiencing rent burden (i.e. not spending more than 30% of your total income on rent), you would need to make $37.5 per hour working 40 hours per week. Pasadena minimum wage is currently $15 an hour, so 2.5 times minimum wage is exactly $37.5 per hour. Rental board members can work a maximum of 20 hours a week. That means the maximum annual salary they could receive is $39k. With 11 board members, and 35150 occupied rental housing units in the city, this corresponds to a fee of $11 per year per rental housing unit.
The Pasadena Fair and Equitable Housing Charter Amendment prohibits this fee from being passed through to tenants unless a landlord can show that it is preventing them from making a fair return in a petition before the rental board.
What about outside legal recourse for Tenants?
In addition to the petition process created in this amendment, Tenants may always file a civil suit against a Landlord who charges them excessive rent, or who otherwise violates the amendment article.
The Rental Board or City Attorney may bring a civil action against a Landlord on a Tenant’s behalf in response to such violations, allowing the Tenant to opt in or out.
Furthermore, if a Landlord violates any provision of the article or any regulation promulgated by the Rental Board, Tenants may raise that violation as an affirmative defense in an eviction case (unlawful detainer).
Will Landlords be able to legally offer lump sums to Tenants in exchange for vacating a unit?
Such agreements, known as “Cash for Keys” or “Tenant Buyout” agreements are allowed under our amendment. However, we have implemented regulations to make sure that Tenants who participate in these agreements are fully informed of their rights and are not coerced.
The Tenant must be informed of their rights under the amendment article before executing such an agreement, and all agreements must be provided to the Tenant on a standard form prepared by the Rental Board which must be signed and dated by both Landlord and Tenant.
This form will notify the Tenant that they have 45 days from the signature date to cancel the agreement with no penalty. It will also advise them that they have the right to refuse such an agreement, and to consult an attorney and/or the Rental Board before signing.
The Landlord must file the executed agreement with the Board.