Perry: Raising the rent does not make housing more affordable

Two obscure, harmful provisions from San Jose Mayor Matt Mahan’s March budget message are coming back to City Council in the near future. Both will lead to unacceptable rent increases for tenants.

Because these were minor points in a 35-page document, the community was unable to mobilize opposition to them at the time. One is a proposed revision to San Jose’s inclusionary housing ordinance that comes to the council possibly as early as Nov. 18. The other is implementation of a utility pass-through program for master-metered rent-controlled buildings. That will be heard early in the new year.

It is ironic and cruel that the mayor is promoting both of these schemes in the name of addressing San Jose’s affordable housing crisis. High housing costs consistently rank in the top two concerns of San Jose and Bay Area residents every time they are polled  — and the other one, homelessness, is not unrelated to it. Mahan’s idea that raising rents will make housing more affordable is incomprehensible. In fact, the only conceivable reason for allowing it would be to reward real estate developers and landlords for political support.

The inclusionary housing ordinance revision would increase rent limits in most required affordable units in market rate projects from 60% of annual median income — which is already too high — to between 80% to 110%. The effect would be to raise most “affordable” rents in these buildings from about $2,300 to $4,000.

“Affordable” rents this high are actually above market rate, and tend to have high vacancy rates. The idea is to incentivize construction of these units, instead of having developers contribute an “in lieu fee” to fund affordable housing offsite. But the result will be hundreds fewer units available for renters who can only afford $2,600 or less. The mayor’s proposal endangers these affordable units at the very time when they are needed more than ever.

The utility pass-through program is called the ratio utility billing system. It allows landlords of rent-controlled units to pass along utility cost increases to renters even when there are no individual meters to measure their use. The lack of transparency involved creates incentives for landlords to abuse the process, which is why tenants call it the “ratio utility billing scam.”

Most responsible rent control ordinances outlaw this practice, as does San Jose’s, at least up until now. Once again, this would allow rents to go up at a time when 48% of San Jose renter families are already rent-burdened.

Raising the rent does not make housing more affordable. The mayor’s assertion that this will increase conservation is unproven, and actually defies common sense, since individual renters in a ratio utility billing system program have no control whatsoever over the size of their water bill.

Contrary to ideologues like Mahan and President Donald Trump, ending homelessness is a question of government ensuring an adequate supply of low-rent housing — not “changing behavior” of low-income people. If anyone needs to change their behavior, it is the elected officials who curry favor with billionaires and refuse to create the housing their residents need.

Economics 101 tells us market rate housing will never solve the affordability crisis. When rents stop increasing, developers stop building, until the shortage of supply drives back them up again. The solution is for tenants and community members to get organized, reject the special interest status quo and demand an affordable Silicon Valley for all.

Sandy Perry is vice president of the Board of South Bay Community Land Trust.