Quick Take
The 70 low-income tenants at the St. George Residences in downtown Santa Cruz might no longer be priced out of their homes after a city council proposal to cap rent hikes there passed on first reading Tuesday. The city council will take a final vote on Sept. 24. The owner of the building is threatening to sue.
Dozens of low-income tenants in downtown Santa Cruz could be saved from rent hikes reaching as high as 200% after the city council gave initial backing to a proposal that would limit how much their landlord could upcharge between leases.
The St. George Residences on Pacific Avenue has offered subsidized rent to its tenants since Swenson Builders rebuilt the apartments following the 1989 Loma Prieta earthquake. However, the agreement to subsidize the rents is due to expire, with rent hikes set for Nov. 1, and many of the building’s 70 tenants say they are facing the prospect of homelessness.
On Tuesday, the Santa Cruz City Council unanimously supported a proposal to cap the forthcoming rent increases at St. George. The proposal’s sponsor, District 4 City Councilmember Scott Newsome, said the legislation would close a “loophole” in state legislation, 2019’s Assembly Bill 1482, which capped rent increases on multifamily rentals to the lower of 5% plus inflation, or 10%.
The caps mandated by AB 1482 do not apply to buildings with expiring rental restrictions, such as the St. George.
Newsome’s proposal aims to extend AB 1482’s tenant protections to these situations within the city of Santa Cruz, meaning the St. George’s landlord, Barron Ranches Inc., a company connected to Swenson Builders, could increase rent by only 5 to 10% as opposed to 200% in some cases.
An attorney representing Barron Ranches, Grass Valley-based William Van Roo, tore into the city’s proposal, calling it “a very short-sighted attempt to address an issue that will have severe negative impacts.” In a four-page memo addressed to city attorney Tony Condotti, Van Roo said the city did not have the authority to extend tenant protections to St. George, and painted the attempt as “an unconstitutional regulatory taking without just compensation.”
“If passed, not only will the ordinance be subject to legal challenge on constitutional grounds, the chilling effect the city’s actions will have on future affordable housing developments is incalculable,” Van Roo wrote. “No longer can any affordable housing developer or investor reasonably rely on any agreement reached with the city of Santa Cruz if it demonstrates its willingness to use its legislative powers to vitiate the terms of contractual agreements.”
Rafa Sonnenfeld, a lead for Santa Cruz YIMBY, said his group supported the city’s proposal. He said Santa Cruz YIMBY doesn’t “take this sort of recommendation lightly,” but said the proposal struck a good balance between protecting tenants and offering the landlord a “reasonable rate of return.”
Sonnenfeld said a Barron Ranches lawsuit against the city would be thin at best.
“I don’t know of a lawsuit against rent control being successful in California,” Sonnenfeld told Lookout. “I think they’re blustering and grasping at straws to spread some fear and uncertainty and doubt about the legality of the proposal.”
Van Roo did not return Lookout’s call for comment.
The Santa Cruz City Council is slated to take a final vote on Newsome’s proposal on Sept. 24. If passed, the new restrictions on St. George would go into effect Oct. 24, just before the planned rent hike Nov. 1.
FOR THE RECORD: This article has been updated to correct which organization Rafa Sonnenfeld represented. He was speaking on behalf of Santa Cruz YIMBY, not YIMBY Law.
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