How did the city of Oakland become a municipal exception or "outlier" when compared to every other major Bay Area city that operates a rent stabilization (rent control) ordinance?
For 30 years, rent-controlled cities such as San Francisco, San Jose and Berkeley have maintained limits on the amount a rental property owner could charge -- or pass through to -- a renter for capital improvements (e.g., new building paint job, new roof, new gating/fencing, landscape improvements).
San Francisco, San Jose and Berkeley require that a rental property owner share the cost of capital improvement projects between the owner and his/her tenants.
Inexplicably, Oakland has no such requirement. An Oakland rental property owner can pass 100 percent of capital improvement costs on to a tenant (above and beyond the tenant's set rent level).
Oakland's situation is exactly the opposite of Berkeley's capital improvement pass-through requirements. Under Berkeley's 1980 Rent Stabilization Ordinance, a property owner is required to first file a petition with the city before passing through costs on to tenants.
For example, a Berkeley property owner is required to provide financial documents, spreadsheets, etc., to verify capital improvement costs along with the property owner's current and projected rental net income revenue amounts.
Property owner pass-through costs are determined on a case-by-case basis based on the documentation provided to the Berkeley Rent Stabilization Program.
As of 2014, a Berkeley property owner can only impose an annual 7 percent pass-through amount limit above and beyond a Berkeley tenant's set rent level.
It's important to bear in mind that capital improvements increase the value of a rental property. Moreover, property owners receive state and federal tax exemptions, or write-offs, and rental property in the Bay Area continues to appreciate every year.
On Tuesday, the Oakland City Council will consider new legislation to address Oakland's capital improvement pass-through guidelines -- or lack thereof.
The City Council's pass-through language is designed to harmonize Oakland's Rent Stabilization Ordinance with those of other Bay Area cities.
It is past time for Oakland to join its fellow Bay Area cities and provide fair and reasonable pass-through guidelines for Oakland's 60,000 rental units.
Chris Kavanagh is an Oakland Greens member and former Berkeley Rent Board Commissioner. He lives in Oakland.