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Economic & Planning Systems, Inc. Page 7 Historic Rent Trends As another measure of how TPA allowable rent increases might affect the investment decision of landlords, EPS gathered date on market rate rents in Redwood City from 2016 through 2025. As shown in Table 5, inflation, adjusted (“real”) rents in Redwood City were flat or declined in six of the last ten years, yielding an average real change of – 1.3% per year. Over the same period, nominal (not inflation, adjusted) rents increased by +1.8% per year. In effect, rent movements largely mirrored inflation over the last decade rather than producing sustained real gains to landlords. For policy context, this pattern indicates that the TPA operates in practice as a cap rather than a target: while the statute permits CPI + 5% (capped at 10%), the local market has not delivered sustained real increases approaching that level over the past decade. The empirical record should frame expectations around reinvestment and pass-through debates: realized rent growth has been modest in real terms, and legal allowances should not be interpreted as typical market outcomes. Table 5. Historic Redwood City Market Rents—Inflation, Adjusted vs. Nominal, 2016–2025 Inflation Adjusted Nominal 2025 $2,588 2% $2,588 5% 2024 $2,494 1% $2,494 4% 2023 $2,446 -2% $2,446 1% 2022 $2,425 - 6% $2,425 1% 2021 $2,384 0% $2,384 7% 2020 $2,288 - 11% $2,288 - 10% 2019 $2,399 1% $2,399 3% 2018 $2,314 2% $2,314 4% 2017 $2,239 0% $2,239 2% 2016 $2,177 -1% $2,177 1% Average Growth - 1.3% 1.8% Additional Investment Feasibility Considerations The cash flow modeling in this memorandum is intentionally conservative. It evaluates feasibility on a pre-tax basis, treats capital outlays as full costs, assumes a ten-year time horizon for recouping costs, and ignores the financial benefits the property investment has on asset value. In practice, long-term owners of stabilized multifamily assets realize after-tax and balance-sheet benefits that the NPV screens do not fully capture. These benefits help bridge the gap between the conservative 5.5 percent discount rate applied to the analysis, a rate that reflects the expected return from alternative investments such as equities, and the higher returns that investors may seek to compensate for the added risk of typical real estate investments. The likely tax advantages and related financial benefits not captured in this analysis include, without limitation, the following. 9.A. - Page 81 of 84 186