Seeking to provide a measure of security to renters in the city's famously expensive housing market, Palo Alto leaders agreed on Monday, June 5, to expand eviction protections and to put a cap on security deposits.
The two measures are part of a broader work plan that the City Council has been implementing over the past two years to assist local renters, who make up roughly 47% of the city's population. Last year, the council expanded the number of tenants who are eligible for relocation assistance during an eviction so that the policy would include all buildings with 10 or more dwellings (the prior law only applied to buildings with 50 or more). The city is also developing a new rental registry, a survey of all rental properties that will track rent increases, vacancies and other local trends.
The newly adopted eviction protection policy goes beyond the requirement Assembly Bill 1482, a 2019 law that created a cap on rent increases and new restrictions for "just cause" evictions. The law excluded some types of properties, including single-family homes and developments that had been constructed within the past 15 years. Palo Alto's new law effectively eliminates the latter exemption, making all buildings – old and new – subject to the eviction rule.
The council also agreed to shorten the period of time that a tenant would have to reside at the apartment before they become eligible for the protection. Vice Mayor Greer Stone, a renter who strongly supported the new provisions, proposed reducing this period from 12 months to six months, consistent with a recommendation from the city's Human Relations Commission. Most of his colleagues supported this suggestion, which will return to the council for formal adoption in August.
Both the eviction policy and the new limit on security deposits advanced by a 6-1 vote, with Council member Greg Tanaka dissenting. The new law on security deposits applies only to unfurnished apartments, where the deposits will now be limited to 150% of the monthly rent. That's more restrictive than state law, which allows security deposits to be up to 200% of rent.
For Stone, the biggest source of frustration surrounded enforcement. The city's planning staff indicated Monday that the city doesn't have the resources to actively enforce the revised ordinance. And a report from the Department of Planning and Development Services explicitly states that the ordinance will be enforced privately and that any dispute "would be addressed between the tenant and the landlord."
"The tenant could seek mediation support offered by the City or pursue legal action if warranted," the report states. "City staff would not be engaged in ensuring compliance of these new provisions. This approach is similar to how the City addresses other local renter protection provisions of the code, such as tenant relocation assistance and the requirement to offer a one-year lease."
Stone made a pitch for stepping up enforcement and requested that Planning Director Jonathan Lait return with more information about how much it would cost to have the city make sure that the rules are being followed.
"I continue to be completely concerned about leaving these protections at the hands of private enforcement when we know there's an already incredible imbalance of power between landlords and renters. … We know what's going to happen, and we know that imbalance exists, and we know who will be hurt the most by it. And it makes me uncomfortable that we're just wiping our hands of it," Stone said.
As the sole dissenter, Tanaka argued that the new rules will do nothing to address the city's main housing problem: a lack of supply. The cap on security deposits could encourage landlords to hike up rents or discourage them from renting out their properties altogether, he said.
"By limiting the amount of deposit that the landlord can charge, what a lot of landlords will do in effect is basically increase the rent, which I don't think is what we want. I think we want to make things more affordable, with lower rent," Tanaka said.
Anil Babbar, representing the California Apartment Association, similarly suggested that the new law could constrain supply and urged the council to delay implementation so that it can further refine the local law and better align it with AB 1482.
"The changes staff has made to the local version of the ordinance jeopardizes Palo Alto's future ability to attract developments, to meet the goals that had been set for housing," Babbar said. "Notably, the removal of the 15-year exemption would discourage development from occurring in Palo Alto, which you desperately need."
Others argued that the new tenant protections are exactly what the city needs. Council member Ed Lauing said that the security deposit cap addresses a key challenge faced by renters: the cash flow problems that can ensue when a tenant relocates and has to immediately incur not only moving costs but a security deposit that may equate to multiple months of rent.
The cash burden is exacerbated during the period when the previous landlord still possesses the security deposit. In Palo Alto, a tenant switching from one $4,000-a-month apartment to another would have to have $16,000 just for security deposits during this period.
"I think this is a modest way that we can help a renter transition from one unit to another," Lauing said. "I'd be really supportive of that because the cash flow is the killer there."
Lauren Bigelow, board chair at Palo Alto Renters Association, praised both changes. She called laws that address just cause evictions "some of the most balanced but impactful protections for a renter."
"Without them, the idea that a renter can be doing everything right and still lose their home looms large," said Bigelow, who helped the city put together its renter protection plan before she spearheaded the creation of the new advocacy group. "With these protections, there is transparency. People understand that nothing is guaranteed forever, but knowing the reasons you can lose your home gives renters parameters you can operate within."
While the topics of rent control and the new rental registry have historically been divisive, the rules that the council adopted Monday advanced with little fanfare and relatively muted opposition. Council member Vicki Veenker talked about her experiences as a renter when she and her husband moved to Palo Alto in 1992 and suggested that rental properties play a critical role in welcoming people who enrich and diversify the community. Tenant protections, she said, are a critical component of solving the city's housing crisis.
"We can count up our RHNA (Regional Housing Needs Assessment) housing units all we want, but if people can't fairly access those units, it's a hollow victory," Veenker said. "I see our rental units as our city's welcome mats.
"So protecting those who rent -- nearly half our residents -- from being evicted without just cause, or being able to reasonably limit moving costs is simply the right thing to do."