By: Danielle M. Leidner-Peretz, Founder of DLP Government Relations LLC

The Industrial Revolution, the computer age, the internet and dot-com boom, and now artificial intelligence. Each transformative moment moved humanity forward and dramatically changed how we live and work. San Francisco and the Bay Area are no strangers to the booms and busts of the technology era and they are feeling its impacts once more.

This time, the catalyst is artificial intelligence, and San Francisco is once again grappling with what happens when economic growth outpaces housing supply and infrastructure. San Francisco’s answer: a “sweeping” new “rent emergency” reform package from Mayor Lurie, part of his Family Opportunity Agenda.

Some emergency situations arise unexpectedly and necessitate immediate response; others may be systemic problems, an accumulation of years of underproduction, that suddenly, or perhaps not so suddenly, can no longer be ignored.

San Francisco, like other California cities, has experienced decades of lagging housing production. Unsurprisingly, existing housing shortages have been exacerbated as AI companies contribute to renewed growth and demand in San Francisco. The simple solution is more housing development. The problem is equally obvious: building takes time. The City acknowledged these dynamics through its Family Zoning Plan. In the meantime, the fallback immediate response is further rent regulation.

What does this package include? More than $30 million in funding and six proposed ordinances intended to address unfair evictions, sudden rent spikes while providing renters with legal resources and educational information to understand their rights. Several proposed ordinances directly affect rental operations including non-payment of rent evictions, rent banking, and costs associated with exiting the business.

Supervisor Fielder’s proposed ordinance would establish an eviction non-payment of rent monetary threshold requiring unpaid rent to exceed one month’s Fair Market Rent (FMR) based on federal (HUD) guidelines for an equivalent sized unit in the San Francisco metropolitan area. The threshold is not based on the renter’s actual monthly rent owed. While establishing a threshold appears straightforward, its application can be more nuanced. Section 8 renters present one such distinction. How would the threshold be applied to Section 8 renters? Since they are responsible for only a portion of the rent, it potentially creates a situation where a renter can fail to make payments for several months, leaving housing providers short-changed well beyond what is intended under the ordinance.

This concept is not new, having been adopted in several localities including the City of Los Angeles and Los Angeles County’s unincorporated areas and is the subject of ongoing litigation. Why advance legislation that is based on an unresolved legal question?

Rent banking is another component of the City’s Rent Ordinance that is being temporarily modified. Currently, housing providers may defer annual allowable rent increases and apply them later, allowing for flexibility when a renter is experiencing financial hardship or a change in circumstances.

Supervisor Sauter’s proposed ordinance would cap the combined annual banked rent increases and capital improvement increases at 10% for rent-controlled units through December 31, 2029, unless extended. Interestingly, the banked rent increases and capital improvement increases exceeding 10% would not be lost but could only be applied on or after January 1, 2030. The cap would apply to banked rent increases based on rent increase notices provided to renters on or after September 15, 2026. The cap would also apply to pass-throughs based on Capital Improvement petitions filed with the Rent Board on or after September 15, 2026.

The Mayor’s proposal also impacts housing providers seeking to exit the industry by increasing Ellis Act tenant relocation fees beginning January 1, 2027, by 25%, from approximately $11,110 to $13,888 per eligible renter, with the household cap increasing from $33,330 to approximately $41,664. Additional fees are required for renters who are seniors or disabled. Current fees are already subject to automatic inflationary increases. At what point do local requirements impede a housing provider’s ability to exercise their right to exit the rental industry?

The package also includes an additional $3 million to the City’s Tenant Right to Counsel program for full scope eviction representation, $27 million to assist extremely low-income families whose federal Emergency Housing Vouchers are expiring as they transition to other programs, and an ordinance introduced by Supervisor Dorsey that would require owners to provide renters with annual notification/posting related to rent increase limits, just-cause eviction rules, and a disclosure of when their units first received a certificate of occupancy. The Mayor’s Office of Housing and Community Development will also be launching a “Know Your Rights” campaign.

At the time of writing, these ordinances are pending Committee consideration.

San Francisco is among the most expensive cities to live in with a Rent Ordinance that has been in place since 1979. Does a longstanding housing shortage with renewed pressure constitute an “emergency” necessitating additional regulation?

Rental regulations are often viewed as the appropriate recourse, but what is often not fully contemplated is whether these policies preserve existing affordable housing or facilitate an exodus of the very housing providers providing it. Building more housing of all types is essential. So is preserving the affordable housing that already exists.

Danielle M. Leidner-Peretz is the Founder of DLP Government Relations LLC, specializing in expert advocacy and ethical insight. She offers strategic counsel across a range of policy issues, delivering tailored, results-driven solutions for navigating complex government and regulatory challenges. She previously served as the Director of Government Relations for the Apartment Association of Greater Los Angeles. For more information, go to www.dlpgovernmentrelations.com.