Price gouging ban sparks controversy, confusion from Berkeley Rent Stabilization Board

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Michael Drummond/File

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California Gov. Jerry Brown’s extension on the price gouging ban stimulated much debate and confusion at the Berkeley Rent Stabilization Board meeting Tuesday night.

Brown declared a state of emergency in multiple counties Oct. 9 in light of the North Bay fires, which destroyed about 1,500 buildings. According to the California Apartment Association’s website, the state’s anti-price gouging ordinance was activated after Brown’s declaration and bans sellers across the state, including property owners, from raising their prices by more than 10 percent. Although the ban originally stipulated a 30-day limit, Brown signed an executive order to extend it until April 18, 2018.

Price gouging refers to the unreasonable raising of prices of goods, services and commodities following a sudden increase in their demand, which can occur during and after natural disasters that cause mass destruction. During the meeting Tuesday, the board acknowledged the ordinance’s lack of clarity about its enforcement in rent-controlled jurisdictions.

“I think this is a really big deal, because what does this mean?” said rent board vice chair Paola Laverde-Levine at the meeting. “How does this affect everybody? How does this affect (us) here in Berkeley, where we’re seeing rents going up by 45 percent?”

Board members also discussed the possible issuance of a press release to publicize the extension. Rent board Commissioner Jesse Townley said at the meeting that property owners need to know about the ordinance.

But Staff Attorney Matt Brown and Executive Director Jay Kelekian expressed concern over the decision to advertise the ordinance because of its legal and enforcement ambiguity. They said it was still unclear how the law applies to rent-controlled cities and interacts with preexisting laws and contracts in Berkeley. Kelekian said he would rather wait until the board has a stronger understanding of the ordinance before advertising its extension.

Brown and Kelekian added that they’re in the process of working with other rent-controlled jurisdiction cities to draft a letter to the state attorney general about how to interpret the ordinance.

“We don’t want to give incorrect advice,” Kelekian said at the meeting. “First of all, we want to make sure that the rent control cities are in agreement about how to interpret the various different scenarios, and the state attorney general agrees with this.”

At the meeting, Laverde-Levine referenced Santa Rosa City Council’s decision to pass an anti-price gouging law that was more restrictive than the state’s as an example of what Berkeley could do with the ordinance. Santa Rosa’s law prohibits landlords from charging new tenants a rent higher than the one before Oct. 9 upon the eviction of a previous tenant, according to the California Apartment Association’s website. The law also clarifies that all rental units, including single-family homes, must abide by the ordinance.

“I find it very interesting that price gouging is considered 10 percent,” Laverde-Levine said at the meeting. “We see (increased rent) all the time and that’s not considered price gouging, that’s considered market rate. … I just find that shameful.”

Contact Adrianna Buenviaje at [email protected] and follow her on Twitter at @adriannaDC.

Clarification(s):
A previous version of this article may have implied that Santa Rosa’s prohibition on charging new tenants higher rents than the tenant before Oct. 9 always applied. In fact, the prohibition only applies when the previous tenant was evicted.

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  • lspanker

    No comments yet? Wonder why…

  • lspanker

    Lemme guess, “price-gouging” is the new liberal term for “supply and demand”, correct?

    Berkeley liberals are the biggest bunch of economic illiterates on the planet outside of the rulers of such places as Zimbabwe, Venezuela and Cuba. They fight any attempt to increase the housing supply in Berkeley tooth and nail, unless it’s subsidized housing for the homeless, and wonder why rents go up…