Richmond’s landlords now must pay the highest annual housing fee yet while only being able to increase rents by the lowest percentage allowed since voters first passed rent control.
On June 28, the city’s Rent Board approved an almost 8.5% increase in the annual housing fee on all rentals while capping rent increases at 1.4% for the approximately 7,700 units under rent control.
The annual housing fee for the 2024-2025 fiscal year will increase to $238 for fully covered units. “Fully covered” refers to units subject to rent control, that were built before 1995 and that fall under just cause eviction rules. The fee for partially covered units, which are only subject to just cause rules, is $135. Landlords of partially covered units may pass the fee increase onto tenants.
Richmond has about 10,670 landlords who own approximately 18,000 rental units. The fees paid by these landlords fund the Rent Program’s budget, which will rise 9.5% to $3.9 million — the highest since the program was formed. The budget increase will pay for increased salaries, replenishment of the program’s reserve fund, and cover a general rise in other expenses.
The rent program’s 13-person staff runs the day-to-day administration, collects fees, educates the public about rent control and just cause rules, and answers to the mayor-appointed five-member Rent Board. The City Council approves Board members for two-year terms.
While the Rent Program is a department within the city of Richmond’s organizational structure, it is an independent entity.
In May, rent program staff anticipated a budget shortfall of $277,000 due to uncollected housing fees and unbudgeted cost pool charges — money the program pays to use city services.
Nicolas Traylor, the program’s executive director, told the Rent Board at its May monthly meeting that a budget shortfall threatens the board’s ability to control its budget.
“It sounds like we’re in a pickle,” board member Elaine Dockens responded.
She later told Richmondside, “I think the staff will be able to convince delinquent landlords to honor the invoices from the Rent Program” to eliminate the shortfall.
Indeed, the staff raced to close the gap before the end of the fiscal year on July 1 and managed to end up with a projected $217,000 surplus. The rent program ended the fiscal year in the black thanks to higher-than-expected revenue and the city refunding cost pool charges.
“The city is by law required to provide structural support to the rent program,” Traylor said. “We debated the city on the cost pool charges. The charges create a disincentive to collaborate. The more you work with the city, the more they charge you and the higher our budget.”
Traylor explained he is working with the city to develop a cooperation agreement where the city doesn’t charge the rent program for services and vice versa.
As of June 21, data from the Rent Program shows that nearly 3,847 landlords owed back fees.
Real estate attorney Daniel Butt, who has represented landlords and tenants in mediation, says, “[The Rent Program staff] grossly overestimated the number of annual fee-paying rental units. They still can’t collect easily.”
Ilona Clark, a landlord and nurse, spoke against the rising fees at the June 28 Rent Board meeting, accusing the rent program’s staff of being disorganized and deeming the online fee payment system a “fiasco.”
“I gave up [paying online] and came in with a check last year,” she said. “If you guys are having trouble collecting the fee, the [system] might be the reason why.”
Other landlords, who referred to themselves as “housing providers,” complained the rent increase of 1.4% is too low to cover their costs and make a profit.
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I fought really hard for rent control because I’m a renter.
— Jim Hite, Richmond Rent Board member
According to RentCafe, the average rent for an apartment in Richmond is $2,814; in Berkeley it is $3,300; and in San Francisco it is $3,287. All three cities have rent control and have set the current allowable annual rent increases on eligible units to 1.4%, 1.9% and 1.7%, respectively.
Kimberly Graves, a landlord seeking to evict a tenant, expressed concern about the $200,000 allocated in the Rent Program’s budget for contract services with the Eviction Defense Center. She believes this funding may give tenants an unfair advantage in legal disputes.
“This process was created to destroy the mom-and-pop landlords,” she said.
Similar Berkeley rent program drew grand jury criticism
Richmond’s rent program is structured similarly to the Berkeley Rent Stabilization Board, criticized 13 years ago after an official investigation.
In 2011, an Alameda County civil grand jury investigated the Berkeley rent program and published a highly critical opinion of its administration. The jury called the Berkeley rent program “a self-sustaining bureaucracy that operates without effective oversight and accountability.”
The grand jury found the program’s top executive pay, excluding benefits, was about 4.6% of the board’s annual budget of $4 million, with 21 employees. It negatively compared the salary/budget ratio (.35%) with that of the Berkeley police chief, who oversaw a $58 million budget and 296 employees.
Berkeleyside reported the Berkeley Rent Stabilization Board made minor changes after the critical grand jury report went public and issued a 29-page rebuttal, emphasizing the civil grand jury “found nothing illegal or unethical.”
In Richmond, Traylor’s executive director pay, which will be $204,000 next year, excluding benefits, is more than 6% of the new fiscal year’s budget.
Before becoming Richmond’s rent program executive director, Traylor worked for the Berkeley Rent Stabilization Board for 14 years. His last job for Berkeley’s rent program was as a division manager for public information and registration.
Richmond’s complex rent control ordinance needs staff to explain and guide people, Traylor explained in a webinar hosted by Richmond city councilmember Soheila Bana last year.
“Better to have help than to have all these rules and have no help,” he said.
To that end, the staff maintains a tally of all interactions with tenants, landlords, and the public. They have conducted more than 4,300 of these counseling sessions annually in recent years.
Richmond Rent Board member Jim Hite defends the program’s level of staffing. He said bureaucracy can be confusing, but the staff is trying to reduce costs.
“There is a misperception from the landlord community that the board is just for renters,” Hite said. “All that the rent program staff does is enforce the laws.”
In a pre-rent control era, Hite said one of his previous landlords kicked everyone out of his building on the pretext that the landlord’s children would move in. Instead, the owner evicted the tenants, made minor repairs, and jacked up the rent, said Hite.
“I fought really hard for rent control,” he told Richmondside, “because I’m a renter.”
Mike Vasilas, a landlord and former rent board member in 2022 and 2023, said voters ushered in the most punitive rent control possible against owners, and the board has made no effort to bring balance into the landlord/tenant relationship.
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“The board rubber-stamped everything that came in front of them from the staff. Everything was passed without even a discussion. That was hard to watch.”
— Mike Vasilas, a landlord and former Rent Board member
“The board rubber-stamped everything that came in front of them from the staff,” Vasilas claims. “Everything was passed without even a discussion. That was hard to watch.”
Though Vasilas feels wounded by his time on the board, he re-applied for his seat but never heard back when his term ended. His criticism may have some validity.
At the May meeting where the then-deficit was revealed to the Rent Board, executive director Traylor’s proposed solution, a double-digit increase in annual fees, garnered little pushback.
Board member Hite later told Richmondside that he and his colleagues generally approve staff recommendations because the staff considers the best interests of tenants and landlords.
“You’re wasting your time if you’re just railing against the law,” Hite said. “The whole point is renters and landlords need to work together. Renters need to take care of the apartments, and landlords need to look at the ordinance and see what’s in it for them.”
>Other landlords, who referred to themselves as “housing providers,”
Renters pay the landlord’s mortgage and profit on top while the landlord gets the equity. The renter is providing housing to the landlord, not the other way around.
Pat, I’d be curious, how do you think rental housing should work instead?
Fee increases should be tied to allowed rent increases. You want 3% more money out of a landlord? allow a 3% rent increase.
This article leaves the critical thinking up to the reader.
It is true that landlord annual housing fees were increased by almost 8.5% and the annual rent increase was pegged at 1.4%.
8.5% of the annual housing fee is an increase of less than $25 and assuming the median rent in Richmond assumed by the article is $2,814, a 1.4% increase for the landlord is $ 39.40.
True, it’s basically a wash and although the landlords have other expenses that continue to rise, renters face the same problems with their rising outlays in life.
How much did the landlord’s property value rise this year? How much did the renter’s income rise? What about taxes? There are so many components to this argument on both sides that will never be addressed as long as folks look only at their own situation without honoring the other’s point of view.
In my building, during the COVID crisis, my neighbors continued to pay their rent and for his part, the landlord didn’t raise the rent during this period.
Let’s respect each other’s position and act accordingly.
Disclaimer, this is my personal rant and doesn’t reflect in any way the position of the rent board.
Thank you
I agree with VoxPopuli.
We the landlords just have to pay all the increases like PGE, WATER, PROPERTY TAXES, SANITARY SERVICES, INSURANCES and all the repairs.
To be able to buy apts we have to give up a lot things, renters should step on landlords shoes to see if they would like.
People that are running this program are just looking for themselves and I’m sure they are renters, that’s why everything is for renters.