It seems the Larkspur City Council is trying to reinvent the wheel when it comes to rent control.
Two council members serving on an ad hoc committee have been hemming and hawing for months about the details of an ordinance for the entire council to consider.
Larkspur City Manager Dan Schwarz has said several times during council meetings that drafting an ordinance isn’t difficult, but the council needs to determine the parameters.
The council has been down this road before. In 2020, they ultimately decided against rent stabilization for mobile home parks after almost a year of reviewing the issue.
Now, rent stabilization for multi-family rental units is on the table, and the need is urgent, according to some Larkspur residents. Since March, people have lined up to speak during the public comment period at city council meetings, the majority pleading for rent stabilization.
Joan Weinberg, 74, sobbed as she told the council about her struggles to meet the substantial rent increase at Skylark Apartments, her home for the last 30 years. And she’s not alone.
As leases come up for renewal at Skylark, a 455-unit complex, tenants are faced with a 10% annual increase, the maximum amount allowed by state law. Many say they can no longer afford the rent and will be forced to leave Larkspur and Marin County.
Pell Development, a family-owned business, built Skylark Apartments in 1969 and retained ownership for more than 50 years. Under Pell’s management, the rent increases were nominal, long-time tenants have said.
That affordability came to a screeching halt in February, when Prime Group, the parent company of Prime Residential, purchased the property from the Pell family for $300 million. The hefty price tag made it the third largest apartment sale during the first quarter, out of approximately 2,200 transactions in the United States, according to statistics cited by Real Page, a real estate industry software company.
Prime Residential, which owns and operates more than 17,000 multi-family units on the West Coast, immediately began raising rents. Skylark residents, fearing they would be priced out of their homes, quickly formed a tenants association at the end of February.
The 200-member association has partnered with the Marin Democratic Socialists of America to pressure the Larkspur City Council to pass rent control and just cause eviction ordinances, Caroline Njoki, president of the Skylark Tenants Association, said in an interview. In addition, they have received support from Legal Aid of Marin.
Lucie Hollingsworth, an attorney for Legal Aid, said her office has been inundated with calls from Skylark residents since Prime Residential took over.
“People have a valid fear of homelessness,” Hollingsworth said. “Larkspur is losing naturally occurring affordable housing. Rent stabilization would help preserve it.”
Naturally occurring affordable housing (NOAH) is defined as existing multifamily rental properties that are affordable without public subsidy. When the ownership of a NOAH property turns over, it can displace renters and create instability within communities, according to McKinsey and Company, a management consulting firm.
Skylark was considered a NOAH property until the sale in February. Not only is Prime Residential raising rents for lease renewals, but it is also renovating empty units and jacking up those rents dramatically. The property’s website shows renovated units start at $2,598 for a 588 square foot studio, with a three-bedroom apartment starting at $4,910.
And it’s not just Skylark residents feeling the pain. More than half of Larkspur’s 13,000 residents are renters, according to data from the United States Census Bureau.
Other Larkspur complexes are also raising rents by 10%, says Njoki. Supporters of rent stabilization have been knocking on doors and setting up tables at a shopping plaza to obtain petition signatures. Five hundred Larkspur residents, 400 of them renters, have signed the petition urging the council to pass a rent stabilization ordinance.
Schwarz reported at a council meeting that an ordinance would affect approximately 3,300 renters and 65 properties. Only properties built before 1995 are subject to rent control, based on state law. Single family homes and condos are also exempt.
In August, the city council finally put rent control on the meeting agenda. Of the four members present at the meeting, only Councilmember Kevin Haroff offered his full support for rent control, saying his views have changed over time.
“In the multi-family [rental] area, things have changed,” Haroff said at the meeting. “Landlords and owners alter the dynamics of the market in a way that renters can’t control. To me, that means we have to take action.”
The council decided that Haroff and Vice Mayor Gabe Paulson would serve on an ad hoc committee to review rent stabilization and that the issue would be a standing item on the meeting agendas. Haroff stressed “the importance of acting quickly and robustly.”
At a September city council meeting, Will Madison, chief operating officer of Prime Residential, announced that they had established their own means tested rental assistance program. A single person earning up to $65,000 a year and a family of four earning up to $95,000 a year could qualify for up to a 15% discount. In addition, he claimed that no evictions were in process and dozens of lease renewals with rent increases below 10% had been sent out.
Njoki, the tenant association president, is skeptical of the company’s program as an alternative to a city ordinance. Not all people will apply for Prime Residential’s rental assistance, according to Njoki. For instance, undocumented immigrants wouldn’t be comfortable applying. Njoki also disputes that no evictions are in process at Skylark.
Julie, a Skylark resident, spoke at the September meeting about Prime Residential’s “generous offer” to lower her initial rent increase from 10% to 9.92%. It will save her $24 a year.
For about two months, the ad hoc committee, true to Haroff’s word, seemed to be moving forward quickly. It held separate forums for renters and landlords in September and October to gather information. Also in October, a workshop was held on “options to regulate residential rent increases.”
During the public comment period at the Oct. 2 workshop, a gentleman walked to the microphone and introduced himself as Mike Kibler, litigation counsel for Prime Residential. He stated that his typical forum isn’t a city council meeting, rather it’s a courtroom. Prime Residential will litigate if a rent control ordinance is passed, although that’s not a threat, he said.
Kibler sent a letter to the city manager the following day, reiterating that Prime Residential authorized his firm to sue the city—for $100 million—if the city “moves ahead with implementing any form of local rent control.”
The letter refers to the numerous Larkspur tenants who have spoken out for rent control as “a few misinformed and self-interested residents.” Ironically, Kibler then opines that a local ordinance “would have a devastating impact on Prime’s anticipated return on investment in Skylark.”
Hollingsworth, the Legal Aid attorney, sent her own letter to the city stating that Kibler’s threats are baseless, noting that he provided no legal authority or precedence for a lawsuit. Courts have supported local rent stabilization ordinances in California, “including rulings that reject an owner’s argument based on return on investment,” Hollingworth said.
Aside from a forum for landlords in mid-October, it appears the ad hoc committee’s progress on an ordinance has stalled. Haroff spoke of proceeding cautiously at the workshop. Councilmember Catherine Way has expressed that the city will have to consider the cost of litigation when reviewing a rent stabilization policy. The issue is no longer a standing item on the meeting agendas, and another ad hoc committee has been formed to review a city rental assistance program.
The Pacific Sun’s request for interviews with the city council members resulted in a phone interview with Schwarz, who indicated he doesn’t know where the council stands on rent stabilization and the next meeting addressing the issue will be in January.
“The process needs to take as long as it takes,” Schwarz said.