San Jose developer broke state law by overcharging renters

A prominent housing developer violated state law by gouging its renters living near San Jose’s Japantown. Now the company is paying it back.

Swenson, one of the largest housing developers in San Jose, admitted in a letter sent to tenants this month it illegally raised the rent above the state limit. The letter came more than a year after tenants and advocates raised concerns, according to people living at a home on Filomena Avenue owned by Swenson. Tenants will be reimbursed thousands of dollars for overpayment. Swenson owns thousands of local homes in Silicon Valley.

“We have concluded that rent increases for the above property since September 2021 were higher than permitted by law,” Swenson Chief Operating Officer Summer Ludwick said in the letter sent to the tenant. “To make things right, we are refunding, as a rent credit, the amounts you paid to us in excess of what we were permitted to charge and adjusting your rent going forward.”

A state law passed in 2019, AB 1482, limits annual rent increases to no more than 10% until 2030. The law aims to provide more tenant protections and applies to the majority of housing constructed more than 15 years ago. San Jose also has rules to prevent high rent increases, but the city’s rent control policies don’t cover single-family homes and duplexes.

In September 2021, Swenson imposed a new rent hike on roughly 20 households living on properties along Filomena Avenue, including single-family homes and duplexes, an advocate said. Some tenants, who are low-income residents working two to three jobs to make ends meet, said they faced a rent hike as big as 100%—a blatant violation of state law. Others in the neighborhood also rely on Swenson as their employer, making their situations even more challenging. In one case, the rent went from $645 to $950 last year and jumped again to $1,045 this September.

Now that tenant will get a refund of $4,295 and a new rent rate at $766. AB 1482 does not include any penalties for property owners who violate the law. The only recourse a renter has is to sue the property owner.

The Law Foundation of Silicon Valley helped several families navigate through the rent hike and brought up the issue with California Attorney General Rob Bonta, but it couldn’t help all of them.

“All of the remaining tenants we spoke with, but did not represent, were (Swenson) employees who were not interested in pursuing legal action, because they did not want to risk their jobs,” Karen Kontz, acting housing directing attorney at the foundation, told San José Spotlight.

Swenson representatives declined to comment on the letter and the rent increases.

Kelly Snider, an urban planning lecturer at San Jose State University, helped advocate for the families who didn’t want to get legal assistance. Snider said she spent days last year writing letters to the company, but never received a response. She also emailed and called public officials to intervene, including Mayor Sam Liccardo, San Jose Housing Director Jacky Morales-Ferrand and Santa Clara County Supervisors Susan Ellenberg and Otto Lee. Her efforts fell short—until this month.

“(The tenants) were overjoyed and (surprised) to get the letter,” Snider told San José Spotlight. “I was very happy, but (Swenson) could have done this a year ago when I contacted them.”

Liccardo’s office said it helped connect Snider with the Attorney General’s office, but has no further comment. Jeff Scott, a spokesperson for the city housing department, said San Jose has no authority to enforce AB 1482.

“Tenants would have to pursue civil remedies in court for any unlawful rent collected,” Scott told San José Spotlight.

Ellenberg and Lee declined to comment.

Bob Staedler, a land-use expert and San José Spotlight columnist, said the incident might have been an oversight. He blamed the lack of education on the new local and state rent control laws.

“There’s no way Swenson in their mind was thinking, ‘Oh, my goodness, I’m gonna make the biggest payday in the world,'” Steadler told San José Spotlight. “I think that they’re to be commended for fixing the mistake.”

But some living in Swenson’s properties said the damage is already done. One tenant, who had lived in San Jose for a few decades, said they had to uproot their family to another city because of the rent increase. San José Spotlight is not naming the person due to their fear of retaliation.

“It’s quite an upheaval,” they told San José Spotlight, adding they had to pull their kids out of school to move. “But we just had to pick up and leave.”

Snider added she’s frustrated with the lack of enforcement for violations of AB 1482. For tenants along Filomena Avenue, a lawsuit was unaffordable, she said.

“This is all about greed, wealth and money hoarding,” she said. “The law is so crystal clear for everyone in California, and yet, almost every landlord is unaware of it and the big ones like Swenson just violate it on purpose all the time.”