San Jose considers new changes to fines for landlords who violate rental laws

After a year of tweaking crucial San Jose tenant protections, the City Council on Tuesday could approve new penalty fees for landlords who flout the law.

But once more, the stage is set for the lawmakers to argue on the merits of penalizing landlords who break the rules on laws such as just cause eviction, the Ellis Act and rent control.

City housing officials determined the new fines based on four factors: “The type and severity of the violation, deterrence against future action, applicability to the entire complex or the individual household and escalation of fines for repeat violations.” A hearing officer will be assigned to each recipient of the citation to ensure fines are paid, though violators can contest any citation.

“Enabling the rent stabilization program to utilize the administrative citation process by setting the fee schedule and establishing the administrative citation manual will allow for proactive enforcement,” wrote housing director Jacky Morales-Ferrand in a memo to city leaders.

Housing officials hope the citations will ensure landlords comply with changes to the city’s slew of housing laws. But councilmembers have already received several letters condemning the housing department’s proposed fees. Several landlords say the new fines punish property owners and place an undue financial burden on them — instead of addressing the region’s affordability problems.

The housing department’s proposed fees include implementing fines for collusion or fraud to the maximum penalty — $10,000. Other fines for first time offenses were set at $5,000, which include violations for unlawful rent increases.

The two “just cause” notice violations were set at a starting fee of $500 to match the other notice categories. The city law requires San Jose landlords to provide a legitimate reason for not renewing a tenant’s lease, and they could face fines if they do not properly notify residents. A person who has committed a repeat violation within 36 months is subject to a 125 percent fee increase for the second violation. The fine for three or more of the same violation will be increased by 150 percent of the initial fine.

“The management of the San Jose Housing should apply resources to relieve the housing shortage problem rather than creating relentless barrage of ordinances on the existing owners under rent control, which does not solve the housing shortage nor the affordability problem,” said landlord Seigi Tadokoro in a letter. “Hopefully your procedures of warning and other measures to inform owners to cure administrative violations are fair before actual fees are issued.”

Despite the fee amount changes, housing officials do not expect a large volume of citations. Revenue generated from the citations will go into the city’s general fund.

Envision San Jose General Plan review

Also on Tuesday, lawmakers will hear an update on the city’s general plan, which guides the city’s growth for the next 20 years. A city task force every four years reviews and recommends changes to the policy.

The plan has specific goals for creating sustainable development. So far, San Jose has seen results based on its growth — building new dense, mixed-use development, seeing a decline in commercial and office vacancy rates, adopting Urban Village projects and implementing “multi-modal capital improvement projects” and new sustainability goals, according to Morales-Ferrand.

But the city is still focusing on creating new jobs, affordable housing units and encouraging use of public transit, bicycle and walking.

One of the plan’s biggest policy shifts involves changing the proposed developments for two urban villages — moving the residential capacity from Evergreen to downtown and moving the residential capacity in the East Capital/Foxdale plan to the Little Portugal Village site near Alum Rock.

“Both Little Portugal and downtown are locations that will host the future extension of BART,” said SPUR policy directors Michelle Huttenhoff and Kristy Wang. “The additional capacity is needed in these locations to support future ridership and to create dense, transit-oriented communities.”

The Envision San Jose 2040 general plan was adopted in 2011 with a focus on stimulating job growth in San Jose. The plan aims to add 382,000 new jobs over the coming decades.

The task force next year will review plans for the Diridon Station area, where Google wants to build a massive campus. Land use changes are contested among city officials, who’ve been hesitant to rezone industrial land into residential uses due to the city’s imbalance between jobs and homes.

The City Council will consider land use changes to the plan in Jan. 2020.

March 2020 real property tax transfer 

San Jose is stretched thin on resources for housing and homeless services, officials say, forcing lawmakers to find new ways to generate more revenue. Now, some leaders say a potential new tax can generate needed funds to meet those goals.

After local leaders approved placing a new real property transfer tax on the March 2020 ballot weeks ago, the City Council on Tuesday is set to approve the final draft of the ballot question that residents will vote on next year. If passed, the potential tax can generate up to $70 million annually to solve one of the region’s most challenging obstacles.

“We have the opportunity for the public to invest in the city to address our most pressing issues at this time,” wrote Mayor Sam Liccardo and Councilmembers Lan Diep and Pam Foley in a memo. “This general tax levy is a necessary but not sufficient means to boost the city’s general fund with additional resources to combat this affordable housing and homelessness crisis.”

The tax will apply to the sale of properties valued at $2 million or more, but city officials estimate that only 5 percent of all single-family homes, condominiums and townhomes in San Jose will be affected. Still, some leaders are calling for additional amendments to the tax — including exemptions to sales under $2 million, based on inflation. The change is meant to protect first time home-buyers in the future by not creating a “barrier entry” into the housing market.

Contact Nadia Lopez at [email protected] or follow @n_llopez on Twitter.