Rent Squeeze in San Leandro

Furious tenants flood councilmembers with calls, but rent control looks unlikely.

Late one night, Terry Cline found a man taping a rent increase notice to his door. Cline has lived in his San Leandro studio for two years, and his rent has only risen once–by a mild $20. But this time, the spike was alarming: Friedkin-Becker, the property management firm that runs Lakeside Village Apartments, had raised the rent on his studio apartment by $220 a month. “Like thieves in the night,” Cline calls it.

Talking with his neighbors at Lakeside, Cline soon found out he wasn’t the only one hit by large increases. At the 840-apartment complex, a studio is now going for $1,085, a one-bedroom for $1,230, and a two-bedroom–forget about it, unless you can fork over more than $1,515. Actually, the huge hikes were not limited to Lakeside. Despite media reports of a softening rental market, San Leandro has finally succumbed to the type of rent hikes that started hitting the rest of the East Bay years ago–and while San Leandro renters are up in arms over the increases, their politicians have resisted rent control measures with objections that sound all too familiar to the city’s northern neighbors.

Of course, San Leandro rents may still seem about average to Berkeley and Oakland tenants. And, certainly, San Franciscans won’t even blink at those prices. But in the not-too-distant past, San Leandro was a haven–perhaps the last one in Alameda County–of affordable housing. As little as one year ago, a one-bedroom apartment could still be had for $650, and even now you can find homes for sale under $300,000.

Rent inflation came late to sleepy San Leandro. The home of manufacturing companies like Coca-Cola, Kraft Foods, and Ghirardelli Chocolate, the town has a blue-collar image, and many longtime residents have held onto their homes and rental properties for many years, lending some stability to housing costs.

But the times, they are a-changing, even here. Those commuting to the South Bay and San Francisco have started to take notice of San Leandro’s lower rates; between the 1990 and 2000 censuses, San Leandro grew by more than 11,000 residents, increasing the town’s population to nearly 80,000.

“San Leandro is undergoing somewhat of a demographic shift,” says Tom Guarino, of the San Leandro Chamber of Commerce. “The elderly population is being replaced by younger families.” Guarino touts the opening of a professional office building and a new fifteen-screen movie theater downtown. A new golf course has been installed, Hilton is eyeing spots for two hotels, and the marina is poised for development.

The change has also brought investments from large property management companies such as Varsona, which operates 34 apartment complexes throughout the Bay Area. Some residents blame the rising rental rates on these megamanagers, which bought rental buildings at the height of the dot-com bubble, paid high prices for both the properties and the renovations, and then needed to recoup those costs from their tenants. In turn, the inflated rates awakened other landlords to the rents they could be getting.

Now, renters complain that they’re taking the brunt of development. Take the case of Dan Parker: for five years, he says he saw only minor rental increases on his one-bedroom at Lakeside. This year, though, he was offered a dubious option: either sign a year lease with a twenty percent rent increase, or remain on a month-to-month lease and accept a thirty percent hike. “They are trying to steal from us at this point,” Parker complains. “Thirty percent! That should be against the law.”

But in San Leandro, a thirty percent hike isn’t against the law. In fact, even a one hundred percent increase would be perfectly legal. There is no rent control in San Leandro, and until very recently, there was nothing standing in the way of rent increases of any amount. All tenants could do was put up or move out.

Even so, San Leandro city politicians recently got a rude wake-up call–or, rather, calls. “Everybody on the council got calls about rent going up $200 or even $500 over six months,” says councilmember Surlene Grant, whose district includes Lakeside. From October 2000 until January of this year, city officials recorded more than 160 complaint calls about large rent increases. Fifty-nine percent of the callers cited an increase of more than $200 per month. “Something needed to be done,” says Grant.

In March, the City Council made its first attempt to help tenants facing large increases. The council set up a rent review board modeled after the one in Alameda. Under San Leandro’s new ordinance, if a tenant wants to object to a rental increase of at least ten percent or $75, he or she can take it to the rental review board for mediation.

But San Leandro officials shied away from going as far as rent control. “I don’t think anybody on the council was ready to say, ‘Let’s be Berkeley,'” says Mayor Sheila Young. Unsurprisingly, the Rental Housing Owners (RHO) of southern Alameda County agree. “Apartments are businesses that have to make a reasonable income,” says Tom Silva of the RHO. “In Berkeley there is a fair amount of rundown property. Whenever there’s artificial price control, there’s a decline in the quality of the product in the market.”

Even Linda Dickinson of ECHO Housing, a nonprofit that provides tenant/landlord counseling in Alameda County, doesn’t think rent control is the way to go. Dickinson too believes that tight controls can cause landlords to cut corners, leading to blighted properties.

Tenant advocates disagree. Good rent control works, says Michael Grunwald, who worked as a volunteer lawyer for Tenants Action Project in Berkeley. Grunwald points out that Berkeley’s rent control penalizes landlords who don’t keep up their properties.

Rents remained relatively steady under Berkeley’s rent control. But then state legislators passed the Costa-Hawkins Act, which allowed “rent decontrol” during vacancies. Rents have soared between tenancies, says Grunwald.

Oakland is facing the same problem. Oakland has rent control but no just-cause eviction rule, meaning landlords can tack up those thirty-day notices any time they want a new, higher-paying tenant. “Rent control in Oakland is hardly worth the paper it’s printed on,” Grunwald says.

But some believe, dysfunctional rent control is better than none at all. “Without rent control, tenants basically have no rights,” says Laura Lane, staff attorney for the East Bay Community Law Center. “There’s no incentive on the landlord’s side to compromise. The landlord has all the chips.”

While rent review boards, like the one instituted in San Leandro, attempt to give the tenant a seat at the table, landlords don’t need to do much more than show up. Any agreement worked out in arbitration is nonbinding; there is nothing to prevent the landlord from turning around the next day and raising the rent.

For many Lakeside residents, even this small step toward slowing rental hikes has come too late. Increase notices, like the one Cline received, were posted just days after the City Council considered the rent review board. Thus property managers Friedkin-Becker avoided having to even show up at the review board to defend any of its increases. Friedkin-Becker refused to comment.

Many in San Leandro–the mayor, the council, ECHO Housing, the RHO–remain optimistic that the newly instituted board and the softening rental market might be enough to stem the tide of rising rents. It remains to be seen how convinced tenants will be. But then again, they might not be around long enough to complain.

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