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Apartment Rent Ordinance

Overview of the Apartment Rent Ordinance

In 1979, the San José City Council appointed a task force to address issues in rental housing. In July 1979, the City Council adopted a rent stabilization ordinance for mobilehome parks and apartments, and created the City's Rental Dispute Program (now known as the Rent Stabilization Program) to administer the ordinance. In 1985 the City Council voted to separate the Rent Stabilization Ordinance into two separate ordinances - one for mobilehome parks, and another for apartments. 

The Apartment Rent Ordinance, found in Municipal Code Chapter 17.23, and its companion Regulations control rent increases on apartments that are covered by the ordinance.

Below is a short PSA regarding the ARO:

ARO PSA.png


Webpage Sections:


Updates

Ratio Utility Billing System (RUBS) Petition

Landlords may now petition for a one-time offset rent increase for Apartment Rent Ordinance (ARO) apartments currently passing through utility charges through a Ratio Utility Billing System (RUBS). The petitions must be filed between July 5, 2018 to October 31, 2018.

Existing written rental agreement, amendment, or addenda provisions for payment or pass through of utility service or similar charges or for ratio utility billing to the tenant that were executed by the landlord are void by either the date the Petition Examiner or Hearing Officer issues a decision or October 31, 2018 if a landlord does not submit a complete petition.

If landlords charge for water, sewer, garbage, gas, and/or electricity, a one-time increase may be added to the base rent. The one-time increase may equal to the average monthly utility charges in the 2017 calendar year, capped by the 2018 Santa Clara County Housing Authority Utility Allowance rates below:

Monthly Dollar Increase Allowances by Number of Bedrooms

UTILITY OR SERVICE

Studio

1 Bedroom

2 Bedroom

3 Bedroom

Water, Sewer, & Trash

$ 86

$ 91

$ 102

$ 149

Gas & Electricity

$ 36

$ 58

$ 70

$  84

To file a RUBS petition, landlords must submit the following supporting documents:

  • One-time Offset Increase Petition for RUBS
  • Lease Agreement and addenda with provision regarding pass through of utilities
  • Pre-filing Notice to Tenant
  • RUBS Petition Electronic Spreadsheet


The RUBS Petition may be submitted by mail to the Rent Stabilization Program at 200 E. Santa Clara St, San Jose, CA 95113 or electronically to with subject line “RUBS Petition – Your Property Address. 

Updates to the ARO Regulations

On April 24, 2018, the City Council approved an amendment to the ARO providing clarification that Ratio Utility Billing System (RUBS) is not allowed and additionally establishing a petition process to be described in the Regulations for landlords with existing RUBS contracts. The City Council requested staff to work with the Attorney’s Office to prepare a further amendment to the ARO clarifying that RUBS agreements will be allowed until October 31, 2018 or until the decision on a landlord’s petition for a one-time rent increase, whichever is sooner. This second amendment was adopted by the City Council on June 5, 2018, at which time the City Council directed staff to take an amendment to the Regulations establishing the petition process to the City Manager for approval.

Additionally, since the ARO and Regulations changed most of the longstanding petition procedures, questions about the new procedures have arisen and staff and the hearing officers have identified opportunities for improvement to customer service and processes related to implementation of the petition process by the Regulations. Staff also received feedback from a range of stakeholders while developing the amendments to the Regulations.

The amendments to the ARO Regulations  include:

  • Clarification of Timelines in the Petition Process: Through the Regulations, amendments were made to number of days a tenant or landlord may respond to a submitted petition. For example, for Incomplete Petitions in Section 5.03.1.b, the petitioner now has 30 days instead of 10 days to complete the petition or otherwise be considered withdrawn. For a response to a submitted petition, the responding party (tenant or landlord) will now have 14 days instead of 30 days from the mailing of the notice that a complete petition was received. This change was a recommended change from stakeholders including the Hearing Officers, landlords, and tenants who provided feedback that 30 days was too long of a timeframe to respond to a petition.

  • Clarifications to the Hearing Process under Chapter 6 and 7: Under these chapters, clarifications were made to the following: 1) the notice and timing of a hearing (7.11.1); 2) what Administration Decision should include (6.03); 3) the open session requirement for voluntary mediation hearings (7.04.1 and 7.04.4); 4) when a claim for violating a Voluntary Agreement may be filed (7.04.6); 5) the timeframe for Mediator/Hearing Officer’s decisions following an unresolved mediation hearing (7.04.7); 6) the three types of Ch. 7 hearings (7.05-7.05.3); and 7) what statutes constitute Housing Code Violations (7.09).   

  • City Will Hold the Official Hearing Record: Under Section 5.06, the City will be responsible for retaining the official Hearing records after the proceedings under any Chapter in the Regulations.

  • Addition of Chapter 13: On the May 22, 2018 City Council meeting, staff was directed to submit to the City Manager for approval a proposed amendment adding Chapter 13 to the ARO Regulations, which describes the offset petition process. The recommended changes will further amend the ARO so that utility pass through agreements executed with existing tenants before January 1, 2018 are not expressly void until the landlord’s offset petition is decided. The period for filing petitions will be from July 5, 2018 to October 31, 2018. Landlords who can demonstrate a standing business process of requiring pass throughs for all tenants since June 2017 may also participate in the offset petition process for those agreements executed between January 1, 2018 and May 1, 2018. 
 

Apartment Rent Ordinance Coverage 

Properties that are covered by San José's Apartment Rent Ordinance include apartments with three or more units that were built and occupied prior to September 7, 1979.

Rental housing developments exempted from the ordinance include single family homes,in-law units/granny flats/accessory dwelling units, duplexes, condominiums, townhomes, hotels, boarding houses rented to transient guests for periods of less than 30 days, nonprofit homes for the aged, school dormitories, rental units owned and operated by any government agency, any new rental units first rented after September 7, 1979, and properties in unincorporated areas of San José.


If you have an inquiry about a property outside of San José, please check with that specific city for more information about any regulations that may apply.

To determine if a property is rent stabilized, you can view a map of rent stabilized properties. Use the map to search for properties and view other information about a property. Click on the orange icon associated with the property address to see if it is rent stabilized, how many units it has, if it is covered by the Tenant Protection Ordinance or Ellis Act Ordinance, and what Tier it has been assigned by the Code Enforcement Department.



Please contact staff at (408) 975-4480 if you have questions or to confirm the status of a particular property.

Rent-Stabilized Map 


Allowable Rent Increase Under the Ordinance 

Under the Apartment Rent Ordinance, rent increases may only be given once in a 12-month period. The maximum annual allowable increase is 5%.  

Exceptions to the Allowable Rent Increases

Rent increases that are exempt from these requirements include an increase after the rental unit has been voluntarily vacated by the tenant, and an increase after eviction of a tenant. 

A landlord can petition to pass through costs to tenants for the following reasons:

  • Specific Capital Improvements: The total monthly amount imposed may not exceed 3 percent of the monthly rent charged and is not considered rent. The improvement must have been completed within 12 months prior to the filing of the petition.
  • Fair Return Increase: A special permanent rent adjustment may be approved by the City when the landlord offers proof that their operating expenses exceed income as is adjusted for by inflation.
Tenants may also file a joint petition with their landlord for a 5% increase in rent per additional occupant.

Tenants with a rent increase subject to review and/or service reduction claims or housing code violations may file a petition. 


Service Reductions
 

A service reduction has occurred when the level of service provided by the landlord has been reduced without a corresponding decrease in rent. The Ordinance allows tenants to request an administrative hearing for a service reduction claim. The tenant has the burden of proof to their claim by submitting evidence such as maintenance record requests, photographs, and/or testimony. If the claim is proven, the Hearing Officer will determine the percentage that the usability of the rental unit was reduced and the duration of the reduction. If the rent increase is unreasonable, the Hearing Officer may reduce a rent increase, order a credit against the paid and/or permanent or temporary reduction in future rent. 

Housing Code Violations
 

A housing code violation has occurred when there are health and safety defects which violate the San José Housing Code and/or California Civil Code Sections 1941.1 and 1941.2. The tenant has the burden to prove their claim by submitting evidence such as a Code Enforcement Inspection which is considered presumptive evidence.  Unless there is sufficient evidence to the contrary, violations listed in the report are considered to have been proven to exist. Issues of this type may also be classified as 'service reductions' under the City's ordinance. The Hearing Officer may reduce, disallow or reasonably condition any rent increase based on the severity of any Housing Code violations. 

Freedom to Exercise Rights
 

Apartment owners may not do the following in retaliation for tenants demanding their rights under the Ordinance: 
•Threaten to sue, evict or terminate the tenancy of the tenant(s). 
•Harass you until you leave. 
•Reduce your services. 
•Increase your rent. 
•Impose a security deposit or any other new charge. 

If any of these actions occur, provide a written complaint to the Rent Stabilization Program.