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Memorandum <br />To: Alin Lancaster and Victor Gaitan <br />From: Jason Moody and Kaavya Chhatrapati <br />Subject: Analysis of the Impact of the Tenant Projection Act on Rental Property <br />Investment in Redwood City; EPS #251080 <br />Date: September 23, 2025 <br />The City of Redwood City (City) is considering a policy that would require landlords to <br />offer tenants the first right to return to a rental unit after a landlord has undertaken a <br />substantial remodel. Under this proposed right to return policy, landlords would be <br />required to re-offer the unit at the same rental rate that was in effect when the tenancy <br />was terminated, plus any increase(s) allowed by the Tenant Protection Act of 2019 (AB <br />1482, “TPA”) (TPA rent increase model), had the tenant continuously occupied the rental <br />unit. <br />Economic & Planning Systems, Inc. (EPS) was retained by the City to evaluate how the <br />proposed right to return policy with the TPA rent increase model affects landlords’ <br />financial incentive to reinvest in the City’s rental housing stock. The intent is to assesses <br />the degree to which the TPA’s allowable rent increases, and other provisions, including <br />the City’s Relocation Assistance Ordinance, provide enough incentive for landlords to <br />reinvest in their rental units, or if additional policy tools may be warranted. In particular, <br />the study examines the following key questions: <br />•Does the maximum rent increase allowed by the TPA -- five percent (5%) per year <br />plus CPI up to ten percent (10%) – deter landlords from making necessary <br />investments in their property, after accounting for tenant relocation expenses and <br />“right-to-return” provisions? <br />•How does the financial return from TPA compliant rent increases compare to <br />other jurisdictions that allow landlords to recover a portion of their improvement <br />costs with higher rents but also maintain stricter rent control provision (e.g., San <br />Francisco, Oakland, Berkeley, Richmond)? <br />•How much capital investment can landlords absorb under typical scenarios and <br />more costly building improvement scenarios? <br />•How do typical remodel costs based on building permit data compare to <br />financially feasible investment scenarios modeled in this analysis? <br />•How might the City address outlier cases such as older buildings with low rents <br />and significant rehabilitation needs? <br />Attachment G9.A. - Page 75 of 84 <br />180