San Mateo Renters, Officials Debate How to Keep City Affordable

Diane Fjelstad knew for months that her rent was going up. Her landlord had told her the increase was coming.

But when she finally read the official notice last year, she remembers feeling numb. She would have to pay $1,000 more per month for her two-bedroom apartment, a 54 percent hike.

"It was quite shocking," says Fjelstad, a retired psychiatric social worker. "I just immediately went into crisis management to figure out what I could do personally."

Fjelstad ended up dipping into her Social Security benefits to pay the new rent of $2,850. She loves her immaculately kept apartment, on the edge of San Mateo's downtown and walking distance to restaurants, shops and public transit, and decided it was worth it.

But she's worried that there's nothing to stop her landlord from increasing the rent again, to a level that would force her to leave. She acknowledges that her rent had not gone up for the 13 years she had lived in the 15-unit building, but says getting hit with such a huge jump all at once was difficult.

"I understand that rents go up. I would not be opposed to a reasonable rent increase. But certainly anything over 8 or 10 percent is just outrageous," said Fjelstad.

Landlord: Rent Is Below Market Rate

But Fjelstad's landlord, Victor Baiz, says her rent is still below the going rate. He estimates that similarly sized apartments in the area are renting for up to $3,800 a month.

Baiz manages the property, which he says was built in the 1960s or '70s and is owned by a family trust. He took over the management from his late sister last year and refinanced the building, which was in need of extensive maintenance, he says.

"Rents were increased across the board for long-term tenants that hadn’t had any rent increases for at least 13 years or so," said Baiz, an attorney who also lives in the building. "I'm trying to meet a massive mortgage and also improve the building for the quality of life of residents."

He says the higher rents have helped cover the installation of security cameras, a new garage door, roof repairs and other upgrades.

"The building needs a lot of work, and that costs a lot of money," said Baiz, who is considering additional rent increases.

Like most cities in the county, San Mateo does not have rent control or other tenant protections, such as "just cause" for eviction. San Mateo's proximity to San Francisco and Silicon Valley, the region's two main employment centers, is pushing housing costs to heights unimaginable a few years ago.

Rents Up Nearly 70 Percent

According to real estate service Zillow, the median rent in the city of San Mateo rose nearly 70 percent, from $2,320 to $3,913, between November 2010 and December 2015. The median home sales price in town now tops $1 million.

"We live on the billion-dollar corridor of tech companies that has driven up the cost of living and the cost of housing. That is just a fact of our reality," said San Mateo Mayor Joe Goethals, who grew up in the city. "Responding to that is something that we are trying to do with as much deliberation as we can."

Last year, the City Council declined to take up a temporary just-cause-for-eviction proposal by Deputy Mayor David Lim, opting instead to form a housing task force to study how the city can help ease the housing affordability burden, particularly for renters.

The council expects those recommendations within the next three months, and could decide later this year on more incentives and financing to create affordable housing, including the adoption of fees on new commercial developments. The new measures could also include limits on rent increases and evictions.

"We will consider all of our options, and everything is on the table," said Goethals. "Renter protections is one of the extreme measures that we could take."

The issue of tenant protections has come up elsewhere, too. The Alameda City Council voted last month to extend its moratorium on rent increases, and San Jose Mayor Sam Liccardo told KQED's Forum that his city will probably tighten its 1979 rent-control ordinance, which allows landlords to raise rents by up to 8 percent a year.

Mayor: Rent Measures Are 'Imperfect Tools'

Goethals says he considers rent control and just cause for eviction "imperfect tools." He mentions concerns that rent control may decrease the availability of affordable units on the market because tenants tend to stay even after they can afford to live elsewhere.

"I’m very concerned that some of the policies we want to implement would actually make housing more difficult and decrease the number of affordable units," said Goethals. "If it decreases the number of affordable units, it doesn’t help the city of San Mateo."

The city already requires new developments of 11 units of more to include 10 to 15 percent of that housing for low-income owners or renters. But Goethals said that to really make a dent in the housing crisis, the city must significantly ramp up its production of market-rate and affordable housing units.

A project Goethals wants the council to approve this year would build 400 units or more near downtown for city employees who make less than the area's median income.

As elsewhere in the Bay Area region, demand for housing in San Mateo County far outweighs supply. From 2010 through 2015, state statistics show, the county labor force grew by about 78,000 while the number of housing units increased by just 3,600.

That imbalance is drawing the attention of county officials, who are studying whether to implement renter protections and other strategies on housing.

"I’ve had town hall meetings where a hundred people came and shared stories about evictions, but we wanted real data on rent increases and the real experience of people," said Warren Slocum, a member of the San Mateo County Board of Supervisors.

Slocum is also co-chair of the Closing the Jobs/Housing Gap task force, made up of elected officials, developers, nonprofits and business representatives, which plans to survey renters who live in pre-1995 buildings that are eligible for rent control.

If the county were to adopt rent control or just-cause-for-eviction ordinances, the measure would apply only to unincorporated areas such as North Fair Oaks, adjacent to Redwood City, Atherton and Menlo Park. Housing advocates say the county action could set a precedent for cities considering similar measures.

Overcrowding in Working-Class District

Bertha Sanchez, 78, has lived in San Mateo since 1946 and says she's sympathetic to the plight of residents who are increasingly unable to afford rents. She has noticed overcrowding of homes on her street in the North Central neighborhood, traditionally a working-class area -- eight to 10 people living in a two-bedroom unit, for example.

"Sometimes, they even rent out mattress spaces for ... $200, even $300 a month" said Sanchez, referring to other ways she's heard people can afford to live in the area.

Sanchez, whose family owns a couple of rentals in the city, says they try to keep some of their rents under market rate. She would not be opposed to some sort of city regulation of rent increases, but believes any legislation should apply only to landlords who own more than 25 units.

"I do not agree with a blanket rent control," says Sanchez, co-president of the Home Association of North Central San Mateo.

Diane Fjeslstad, on the other hand, believes the city and county governments are failing residents because they are not addressing rent increases fast enough. Her personal experience was so shocking that it jolted her into working with groups pushing for rent control and just cause for eviction.

"I don't think it's good when a large segment of the population lives in fear of not having a home," Fjelstad said.