Title
First Reading of an Ordinance to Amend the San Leandro Municipal Code by Adding Chapter 4-46 to Establish Residential Rent Stabilization
Staffreport
COUNCIL PRIORITY
• Housing and Homelessness
SUMMARY
At its December 15 special meeting, the City Council reviewed an updated proposed budget for a combined Rent Registry and proposed Residential Rent Stabilization Program and the most current draft of the Residential Rent Stabilization Ordinance (Ordinance), and provided the following direction on the draft Ordinance for inclusion at its first reading:
1. Set the rent increase cap at the lower of 3% or 65% of the Consumer Price Index (CPI), and
2. Set the base year as 2025.
Separately from the draft Ordinance, the City Council also directed staff to pursue the Rent Registry and Rent Stabilization Program (Enhanced Enforcement) budget option. Staff will return to City Council in February or March 2026 with a presentation to review the final fee study and General Fund loan terms.
RECOMMENDATION
Staff recommends the City Council introduce first reading of the Ordinance amending the San Leandro Municipal Code to Add Chapter 4-46 Residential Rent Stabilization.
BACKGROUND AND ANALYSIS
Lack of affordable rental housing, lack of new rental housing construction, and displacement of tenants leading to homelessness or at-risk homelessness are key factors that high-cost regions like the San Francisco Bay Area, and cities and counties within them like San Leandro, continue to face. Enhancing housing protections for tenants has been a City Council priority since 2023. In April 2025, City Council adopted a Rental Registry Ordinance to help track long term rental housing data in San Leandro and for present and future City Councils to make more informed decisions on housing protections. In early 2025, City Council also made exploration of a residential rent stabilization ordinance a top priority under its Council Housing/Homeless Priority Work Plan for FY 25-26.
Below are highlights of key components of the proposed Residential Rent Stabilization Ordinance (Ordinance). Per City parcel data, City staff has estimated that approximately 7,693 rental housing units may be subject to the proposed Ordinance.
Definitions (Section 4-46-105)
• “Base Rent” means the Rent in effect for a Rental Unit on July 1, 2025... Base Rent shall be the reference point from which the Maximum Allowable Rent shall be adjusted upward or downward in accordance with this Chapter.
• “Base Year” shall mean the 2025 calendar year, or if a Fair Return Petition subsequently establishes a new Base Rent pursuant to this Chapter, the calendar year for which the Fair Return Petition is approved.
Exemptions (Section 4-46-110)
• Exemptions under the Costa Hawkins Act (1995)
o Single family homes
o Other units that can be sold separately from any other unit (like a condo or townhome)
o All units, regardless of type, issued a certificate of occupancy after February 1, 1995
• Mobile homes / lots regulated under the existing Mobilehome Space Rent Stabilization Ordinance
• Accessory Dwelling Units
• Golden Duplexes (owner occupied in one of the two units)
• Short-term rentals (Airbnb, VRBO, etc.)
• Deed restricted affordable rental housing (Marea Alta, La Vereda, etc.)
• Emergency/transitional housing (Lewelling Interim Housing, etc.)
• Shared housing (room in a house with shared kitchen/bath)
Limit on Rent Increases (Section 4-46-115)
• Starting January 1, 2027, a Landlord shall not charge Rent for a Rental Unit greater than the Base Rent plus increases allowed by this Chapter. Annually, a Landlord may increase the Rent for a Rental Unit by a maximum of: i) sixty-five percent (65%) of the annual percentage change in the CPI for the twelve (12) month period ending in April of each year, rounded to the nearest one-tenth of a percent (0.1%), or ii) three percent (3%), whichever is less. [Section 4-46-115(A)]
This means effective January 1, 2027, rent cannot exceed the rent in effect on July 1, 2025, adjusted by 65% of CPI or 3%, whichever is less, for both FY25-26 and FY26-27.
Considerations for the January 1, 2027 implementation include providing time for:
a. Establishing program budget
b. Hiring adequate program staff to address volume of inquiries
c. Developing educational materials/forms for tenants and landlords
d. Conducting outreach and education workshops
e. Launching rent registry software in July 2026
An earlier implementation date would impede staff’s ability to launch the rent registry software/platform in July 2026 and adequately outreach, educate, and engage with affected housing providers and tenants.
• No later than May 31 of each year, the Program Administrator must announce the maximum percentage increase by which Rent for eligible Rental Units may be adjusted effective on or after July 1 of that year.
• Only one increase is allowed per year (12 months)
• No “banking” of unused increases
• Vacancy decontrol: landlords can set new rent when a unit becomes vacant
o Vacancy decontrol is required under State law (Costa Hawkins Act)
• Rent increases are allowed only if the Rental Unit is registered and fees are paid.
Rent Adjustment Petition Process (Section 4-46-125)
• Landlord or Tenant may file a petition with the Program Administrator to request a rent adjustment (increase or decrease)
• The petition must be submitted on an official City form and include all required documentation
• Fees must be paid with the petition, which are set by the City Council.
• The Advance Notice Requirements are:
o Landlord must 1) notify tenants in writing at least 30 days before filing and 2) hold a meeting at an Americans with Disabilities Act (ADA) accessible location to explain the petition
o Tenant must notify landlord in writing at least 30 days before filing to allow time to correct the claimed decrease in Housing Services
• The Program Administrator initially reviews the petition for completeness and would notify petitioner of acceptance or denial.
• Hearing scheduled within 90 days of petition acceptance (may be extended by agreement)
• Program Administrator may attempt mediation and may require parties to attend at least one mediation session
• Decision & Outcome:
o Parties may seek assistance from attorneys or tenant representatives, but not required
o Decision by Hearing Officer issued within 30 days of hearing close, with written explanation
o Rent adjustment takes effect immediately unless stated otherwise.
• Appeal Process:
o Decision is final unless judicial review is filed within 60 days;
o Judicial filing must be served to Program Administrator.
Fair Return Petition (Section 4-46-130)
• Landlords can request rent increases if they are not earning a fair return
• Based on net operating income (NOI) compared to a base year
• Must provide financial documentation.
Decrease in Housing Services (Section 4-46-135)
• Tenants can request rent reductions if services decline
• Rent may be lowered to reflect the value of lost services
Notices (Section 4-46-140)
• Landlords must:
o Inform tenants that the unit is covered by the ordinance
o Provide informational brochures to new tenants
o Include ordinance details with rent increase notices to existing tenants
Program Fee (Section 4-46-175)
• Landlords pay an annual fee to fund the program
• If payment is thirty (30) days late, a late fee will be charged
• Up to 50% may be passed to tenants in two installments
• Late payments incur penalties
Annual Review (Section 4-46-180)
• City staff will report annually on program effectiveness
Implementation Date (Section 4-46-190) (NEW)
• All requirements established by this Chapter shall not become binding until January 1, 2027.
Previous Actions
• February 2023: City Council included housing protections under its Housing/Homeless Priority
• July 2023: City Council requested an assessment of housing protections not currently in San Leandro (stricter rent control, just cause & tenant anti-harassment, plus rental registry), existing housing protection programs & cost impacts to the City; directed the matter to the City Council Rules Committee
• February 1, 2025: City Council affirmed housing protections prioritization under Housing/Homeless Priority at its annual planning session
• March-April 2025: City Council adopted Rental Registry Ordinance
• March 17, 2025: City Council directed staff to proceed with exploring a rent stabilization ordinance as the top priority from other renter housing protections and Council introduced a Rental Registry Ordinance (first reading)
• October 13, 2025: City Council reviewed and provided guidance on the Draft Residential Rent Stabilization (RRS) Ordinance and reviewed the preliminary cost options to implement a Rental Housing Protection Program (Rent Registry Ordinance and draft RRS Ordinance).
• December 15, 2025: City Council held a special meeting to review the most updated 1) proposed budget options for a combined Rent Registry and proposed RRS Program and 2) Draft RRS Ordinance.
Committee Review and Actions
• January 2025 - City Council Rules Committee approved draft Rental Registry Ordinance to forward to City Council and reviewed other housing protection priorities including rent stabilization
• March 2025 - Staff presented rent stabilization and policy cost impacts to City Council Rules Committee
• May 2025 - Staff presented rent cap and capital improvement pass through considerations for City Council Rules Committee direction and a proposed rent stabilization ordinance timeline
• July 2025 - City Council Rules Committee reviewed preliminary draft Rent Stabilization Ordinance and opened a 60-day public comment period from July 17 through September 17.
Applicable General Plan Policies
Under Section 6.2 (Goals and Policies) in Chapter 6 of the 2023-2031 Housing Element, the following goals/policies apply:
Goal 4: Protect Residents from Displacement
o P.4.1 Minimize Displacement of Vulnerable Residents. The City shall make all neighborhoods places of opportunity while minimizing the involuntary displacement of vulnerable populations, such as low-income households, seniors on fixed incomes, and people with disabilities, due to increased housing costs.
o P.4.2 Strengthen Tenant Protections. The City shall explore options to strengthen measures for eviction prevention, limits on sudden or annual rent increases, and tenant relocation assistance
Environmental Review
The passage of the Ordinance is not a project according to the definitions in the California Environmental Quality Act (CEQA ) and, therefore, is not subject to the provisions requiring environmental review. Therefore, the proposed action is exempt from the requirements of the California Environmental Quality Act (CEQA) in that it is not a Project that has the potential for causing a significant effect on the environment under CEQA Guidelines Section 15061(b)(3).
Summary of Public Outreach Efforts
Comprehensive public outreach and engagement to key stakeholders occurred in late August/September 2025 during the 60-day public comment period (July 17 - September 17) for the preliminary draft Rent Stabilization Ordinance. For all or most Rules Committee and City Council meetings including tonight, the City emailed notices/flyers to its broad Housing Protections stakeholders database including housing providers, tenants and related advocacy organization in English (and Chinese and Spanish), posted noticing on the City website and posted information on social media.
Legal Analysis
The City Attorney prepared the proposed Residential Rent Stabilization Ordinance and has reviewed this staff report and presentation.
Financial Impacts
At the December 15 City Council meeting, the Council provided staff guidance to pursue the Rent Registry + Rent Stabilization (Enhanced Enforcement) Program Option (Rent Program), which includes 6 full-time employees and an estimated General Fund loan of $1.3 million to $2.2 million into a newly established Special Revenue Fund. City Council action to review the budget, final fee study, and General Fund loan to implement the Rent Program will occur around February / March 2026. The Rent Program funding will be included in the City operating budget annually beginning in FY 26-27 (and potentially in FY25-26) upon City Council approval of the annual budget and fees. Over the next 3 to 6 years, the General Fund loan will be repaid in full with interest, and staff anticipate the Rent Program will achieve full cost recovery through collected program fees.
ATTACHMENTS
A: Draft Ordinance of the City Council of the City of San Leandro Adding Chapter 4-46 to the San Leandro Municipal Code to Establish Residential Rent Stabilization
§ Ex A1: Municipal Code Chapter 4-46 Residential Rent Stabilization
B: January 12 City Council PowerPoint: Draft Residential Rent Stabilization Ordinance Presentation
PREPARED BY: Tom Liao, Director, Community Development Department