Agda Pkt 2026.07.07 Special Council Meeting

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REDWOOD CITY 9212 Economic & Planning Systems, Inc. 19 Redwood City Housing Impacts The impact of a rent growth cap on reinvestment in rental properties built before 1995 will depend, in part, on the rate of inflation. By way of example, over the past ten years, inflation in the nine-county Bay Area averaged 3.1 percent annually, while average rents in Redwood City, not adjusted for inflation, increased from approximately $3,272 in 2016 to $3,717 in 2025, an increase of about 14 percent. If the proposed Ordinance had been in place, covered properties would have had on average a maximum allowable annual rent increase of 1.9 percent. So even under a conservative assumption that market rents increased only at the same rate as general inflation, in year 10 the average rent would have been about 11 percent lower under the proposed Ordinance than without it. To the extent that inflation, or market rents, increase faster than three percent, this discrepancy would be even larger. Rent Pressures and Displacement Redwood City’s low-income households have experienced significant displacement pressures caused primarily by rising house prices and the influx of higher income households. The proposed Ordinance may contribute to the City’s anti-displacement efforts (described in Chapter 2) by preserving naturally affordable housing and limiting the growth of rent burdens. A survey completed for Redwood City’s 2021 Live/Work Policy Analysis estimated that approximately one-quarter of Redwood City residents had been displaced between 2016 and 2021.24 Although Redwood City has experienced growth in median income over the past decade, most of the growth has come from households with annual incomes above $150,000; the City experienced a net decrease in households in every income category below $100,000. Furthermore, the analysis demonstrates that there has been a mismatch between the demand for housing affordable to very low-, low-, and moderate-income households and the production of such housing.25 As a result, displacement has become a pressing issue facing the Redwood City community. As shown in Figure 2, during the onset of the COVID-19 pandemic, rents decreased from a high in 2019 until 2021. After a spike in rents between 2021 and 2022, the rents have fallen slightly over the past four years. In addition, the City has a lower rent burden than the State but a higher rent burden than the County, as shown in Table 6. It is important to note that while the real rents adjusted to 2026 dollars have fallen, this does not necessarily correlate directly with increased affordability since incomes may not keep up with inflation. Despite minor decreases in rent over the past five years, about half of Redwood City’s households remain rent-burdened (spending more than 30 percent of income on 24 Redwood City Live/Work Policy Analysis 25 Microsoft PowerPoint - Redwood City Disparate Impact Draft Report_07.29.21 8.A. - Page 147 of 168 157