East Palo Alto defers vote on rule giving tenants right to buy rentals first

City Council says it needs more information on measure’s potential impact on city’s housing prices, real estate market in general

(iStock/Illustration by Steven Dilakian for The Real Deal)
(iStock/Illustration by Steven Dilakian for The Real Deal)

The East Palo Alto City Council postponed voting on a measure that would give tenants a head start in buying single-family homes and multi-unit buildings, saying it needs more information about how it may affect housing prices.

Council members asked staff for more research on the ordinance, a so-called “opportunity to purchase” act, and to report back on Jan. 18, the Mercury News reported. The act is intended to prevent displacement and create more affordable homeownership and rental opportunities by giving renters, affordable housing nonprofits and the city a chance to make offers on some multifamily properties before they hit the market.

“It has potential to really be great for the city, but I think those questions really have to be addressed,” Councilman Antonio Lopez said at the group’s Dec. 22 meeting.

The ordinance stipulates that if an owner of a rental residential property wants to sell, they would first have to notify tenants, qualified affordable housing nonprofits and the city. The seller can list a property on the open market if none of those groups makes an acceptable offer, although they would still need to give them a chance to match the best offer. If one of those groups matches the offer, then the seller must sell the property to them.

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Under East Palo Alto’s proposed act, if a qualified nonprofit or the city buys a rental property and keeps renting out units, they must remain affordable and the average rent can’t exceed 50 percent of the local median income, which was about $67,000 from 2015 to 19, according to census data. Only about 20 single-family homes and fewer than 10 multi-unit buildings would be subject to the ordinance each year, because owner-occupied single-family homes, duplexes, and triplexes would be exempt.

While tenants rights groups say such measures could help mitigate affordable housing shortages, some real estate and landlord groups say they would infringe upon property rights and lead to a drop in prices. City officials such as Romero have disputed those claims, saying that rental property owners can still sell at market prices.

San Jose, Oakland and Berkeley are also considering their own versions of such acts, although East Palo Alto is further along in terms of potential approval. San Jose will probably revisit the idea in the spring, while Oakland’s iteration will come before its city council next fall, the Mercury News reported. Berkeley officials will take up the issue sometime next year.

[San Jose Mercury News] — Matthew Niksa

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