Larkspur Voters to Decide Future of Rent Control in Their City

Note: This story contains a clarification.

After heated city council meetings and a months-long referendum campaign rife with accusations of fraud, voters in Larkspur next week will decide the fate of rent control in their city.

They’ll be asked to vote on Measure D, a 7% rent cap.

“Rent control is almost a loaded word,” said City Councilmember Gabe Paulson, who championed the rent stabilization plan in the picturesque Marin County community. “It just creates an emotional reaction.”

Led by Paulson, the City Council voted last September to cap annual residential rent increases at 5% plus inflation, or 7%, whichever is lower, bringing the ceiling down from the state cap of 10%. The city manager estimates it will cost up to $400,000 in its first year and roughly $200,000 per year thereafter. Landlords would pay an estimated $100 to $200 annual fee per unit to cover the bulk of those costs.

That plan would have gone into effect last October, but opponents launched a petition to send a referendum on the plan to voters as Measure D. Former Larkspur mayor Bill Howard supports the referendum and called the city’s proposed rent cap “deeply flawed.”

“It’s just a dangerous thing to regulate the market,” he said.

The campaign to overturn the city’s ordinance has been loudly criticized by supporters of the city’s plan. Opponents spent over $90,000 to gather signatures for the referendum, employing some tactics that raised alarm bells for tenant advocates.

Residents complained to the city that the signature-gatherers were misrepresenting the petition, and Paulson said one resident even filed a police report. Doorbell camera footage shared with KQED by tenant advocates appears to show a signature gatherer wrongly telling a resident that supporting the petition would establish rent control in the city. The company hired to manage signature gathering, On the Ground Inc., did not respond to a request for comment.

“What really matters now is on March 5, will the 8,000 or so voters in Larkspur understand what’s really being voted on and what it means to them?” Paulson said.

He sees rent control as a necessary tool for keeping seniors on a fixed income and essential workers from being displaced amid the city’s housing shortage. The apartment listing website, Zillow, estimates “typical” rents in Marin County have gone up 33% since 2015, from $2,760 to $3,680.

“What everybody is waiting for is more housing,” Paulson said, adding that until that housing is built, “The question is how many people are we going to displace?”

The Tenant Protection Act, which the state legislature approved in 2019, covers most rental units that are more than 15 years old and caps rental increases at 10% annually. Local rent control ordinances are subject to the Costa-Hawkins Rental Housing Act, which excludes units built after 1995. In Larkspur, the city manager estimates that would leave 1,825 rental units subject to the city’s proposed cap.

Dorothy O’Leary is one of them and an avid supporter of Measure D.

A couple of years ago, a new owner, Prime Residential, took over the sprawling apartment complex where she lives. O’Leary said the company increased tenants’ rents every year since, and her most recent annual increase added $186 to her monthly bill.

“That might not sound like a lot to some people, but it’s significant to me,” she said. “They are maximizing rent increases at an exponential rate that people can’t tolerate, and all over the place, people started moving out.”

Daniel Goldstein, a spokesperson for Prime Residential, said that when the company took over the property, some longtime tenants were paying rents that were 30% to 50% below those at similar properties in the area. The spokesperson said Prime has undertaken significant renovations, including seismic retrofits, and average rents at the complex are less than 25% of median household income.

O’Leary and her neighbors began to organize and drew in residents from other apartment complexes to form what they’ve dubbed the Keep Larkspur Fair and Affordable movement. They put pressure on the City Council, O’Leary said, “begging for help.”

The 7% cap Paulson eventually put forward was a disappointment to the group because, she said, it was too weak. The tenants group is now gathering signatures to put a stronger rent control measure on the November ballot. It would limit annual increases to 3%.

But even the proposed 7% ceiling has met fervent opposition from property owners, with the No on Measure D campaign raising some $300,000.

Howard acknowledged that in the short term, the city’s proposed rent cap wouldn’t impact his rental business; he typically raises rents each year by 2% to 4%, which is already below the city’s proposed threshold. His opposition to the measure is rooted in what he sees as negative long-term impacts on the city’s housing market.

“The only way you’re going to beat the problems associated with the cost of housing and rentals is to build more housing,” he said, arguing that curbing owners’ ability to turn a profit ultimately discourages new construction and only exacerbates the housing affordability crisis.

“Why would somebody want to build something if they know that they’re going to get tagged for all kinds of controls?” he said. “Smart money doesn’t do that.”

Researchers have reached mixed conclusions on the subject (PDF). Some studies find rent control reduces tenant displacement in the short run but deters landlords from investing in maintenance and drives up rents in the long term; others find no impact on housing markets; some find people of color are more likely to benefit, while others conclude white, wealthier people are.

Larkspur’s rent control push is part of a broader trend across California as cities struggle to rein in rising housing costs. In 2016, a wave of rent stabilization measures went before Bay Area voters, with about half approved.

More recently, Fairfax became the first city in Marin County to enact a rent cap. In Contra Costa County, Antioch adopted, and Concord is poised to adopt its own limits. In three other Bay Area cities this year — Pittsburg, San Pablo and Redwood City — proponents are collecting signatures to put rent control measures on the November ballot. Voters statewide will also weigh in on a November measure that would allow cities to expand local rent control measures by repealing the Costa-Hawkins Rental Housing Act.

Russell Lowery, executive director of the California Rental Housing Association, has watched with disillusionment as the momentum builds for rent control — something he views as a counterproductive strategy.

“As people look for answers to California’s housing crisis, they look at good ideas and bad ideas,” he said. “This is one of the bad ideas.”

His organization decried a February Supreme Court decision that upheld New York’s rent control ordinance. He advocates for rental assistance programs, either public or private, as a better solution.

In response to the concerns of tenants and City Council members, the company that took over the management of O’Leary’s apartment complex tried this strategy. Prime Residential began offering 15% monthly discounts to tenants whose incomes fell below 50% of the area’s median income — or $65,250 for an individual — and limited their annual rent increases to inflation.

Goldstein said 100 households out of the 456 apartments are enrolled today.

In a report last year, some participants told city staff the subsidy offered a bit of relief, but they still wanted rent control.

Editor’s note: This story has been updated to clarify that the $100 to $200 estimated annual registration fees for landlords would be charged per unit.