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The Mercury News: East Palo Alto punts on measure that gives renters first dibs on real estate deals

This was originally published in The Mercury News.

PUBLISHED: December 23, 2021 at 6:15 a.m. | UPDATED: December 23, 2021 at 10:12 a.m.

Faced with vehement opposition by some landlords, East Palo Alto’s City Council put off voting on an ordinance that would give some renters a chance to buy their building before it hits the market.

The Opportunity to Purchase Act, intended to stop deep-pocketed investors from scooping up properties, raising rents, and displacing tenants, would allow renters, affordable housing nonprofits or the city first dibs on certain properties going up for sale. But on Wednesday evening, City Council members decided they needed more information about how the ordinance might affect housing prices and the real estate market.

“I think it has potential to really be great for the city,” said Councilman Antonio López, “but I think those questions really have to be addressed.”

Similar ordinances are in the works in Oakland, Berkeley and San Jose, as cities search for creative ways to ease their affordable housing shortages. But groups of vocal opponents throughout the Bay Area are up in arms over the proposals, arguing the rules will chill the real estate market and impinge upon owners’ freedom to do what they want with their property.

The council Wednesday directed staff to conduct more research into the potential outcome of the ordinance, and report back Jan. 18.

Under the proposed East Palo Alto ordinance, owners of multi-family buildings and certain rental properties would have to notify their tenants, a qualified nonprofit and/or the city and give them a chance to make an offer before putting the property on the market. If the owner received an offer from one of those groups, he or she would be free to reject it in favor of a better one.

But the owner would then have to give the tenant, nonprofit or city a chance to match that better offer — and if they did, the owner would have to sell to them. If the tenant, nonprofit or city bought the property, they would have to keep rents below a certain threshold.

Owner-occupied single-family homes, duplexes and triplexes would be exempt from the rule, as well as property transfers between family members.

Councilman Carlos Romero also suggested exempting second homes and rental homes owned by people who live in East Palo Alto. That way, he said, the ordinance would target the “absentee” landlords from out of town who own almost a third of the city’s housing stock.

The City Council brought in Nora Lake-Brown, a consultant with David Paul Rosen & Associates, to speak about the economic implications of the policy. Because East Palo Alto’s real estate market is so hot, she said, the proposed ordinance likely would have little impact on housing prices.

Property owners found to have knowingly or willfully violated the ordinance would be fined 10% of the sale price of their property for a first offense, 20% for a second offense and 30% for subsequent offenses.

Nearly 300 people tuned in to a virtual East Palo Alto City Council meeting earlier this month, during which public comment on the ordinance lasted until midnight. Supporters told council members the ordinance might be their only shot at buying a home, while landlords accused council members of taking away their property rights.

Opponents of the measure held a protest Sunday outside City Hall.

Romero on Wednesday accused some opponents of spreading “outright lies.”

“The ordinance we are considering is not one that will devastate the property market,” he said, “or for that matter will destroy all private property in the city.”


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