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The proposed Ordinance significantly exacerbates this problem. By imposing an additional cap on annual rent increases (60% of CPI, maximum 5%) and by rolling back rents to October 29, 2025 levels, the Ordinance further limits the revenue available to affordable housing owners at exactly the time when operating costs continue to escalate unconstrained. The practical consequences of this worsened compression are predictable and serious: • Staffing Reductions: On-site management and maintenance staffing reductions, diminishing the quality and responsiveness of resident services. • Reduced Community Amenity Hours: Curtailment or elimination of community room, computer lab, and other resident amenity hours as payroll and operating costs are cut. • Deferred Maintenance: Deferral of capital repairs and preventive maintenance, leading to deteriorating physical conditions that ultimately harm the low-income residents the Ordinance seeks to protect. • Reserve Shortfalls: Failure to fund required replacement reserves at contractually mandated levels, potentially triggering defaults under regulatory agreements and loan documents and jeopardizing the long-term viability of the development. Unlike market-rate landlords, affordable housing developers cannot respond to cost compression by raising rents. Water bills, sewer charges, trash-hauling fees, and insurance premiums arrive at market rates with no relief mechanism. The Ordinance provides no offset for these costs, no hardship petition process that accounts for the regulatory-agreement-constrained revenue structure of affordable housing, and no exemption from the annual rental housing fee — a fee that, for affordable housing owners, is an unrecoverable cost absorbed entirely from already-compressed operating budgets. Over the 15- to 55-year term of a typical regulatory agreement, this steady erosion of operating margin poses a fundamental threat to the financial stability of properties that the City depends upon to house its lowest-income residents. Passage of this Ordinance, without an exemption or meaningful relief for affordable housing, will accelerate that erosion. V. RECOMMENDED AMENDMENTS We respectfully request that the Council amend Chapter 42 to add an express exemption — or at minimum a harmonization provision — for low-income housing developments operating under long-term affordability restrictions. Specifically, we recommend one or more of the following: • Exempt from all provisions of Chapter 42 any rental unit subject to a recorded regulatory agreement with a federal, state, or local government agency that restricts rents to affordable levels for a term of not less than 15 years and requires just cause for eviction as a condition of the regulatory agreement. • At a minimum, exempt from the rent stabilization provisions of Sections 42.6 and 42.15 any unit whose rent is determined pursuant to a regulatory agreement with a government agency, on the grounds that the regulatory