Should San Jose Limit Rent Hikes for Struggling Small Businesses?

We have seen rent control destroy housing in New York—you either have rent controlled apartments or high priced apartments—the policy has created a two tiered city, the very rich and the very poor dependent on government policy to survive.  Now there is a movement to do the same to small business—rent control for them.

“In a letter to city officials, Julie Borinas Driscoll said that in addition to seeking federal aid through the Small Business Administration, San Jose should figure out other ways to limit rent increases for mom-and-pop shops.

“Otherwise,” she wrote, “there will be no small businesses, backbone to our nation’s economy around. Small business is important in America.”

While some municipalities—most recently New York City—have flirted with the idea of commercial rent control to stave off gentrification, it has no known precedent in the U.S. In California, the proposal would require a change in state law.

If I wanted to destroy the last of the middle class in California that is what I would do.  Owners of the property will let it run down, create under the table payments, or just rent to big cor[orations that can afford to pay market rates.  This is another example of Socialism in America—stealing from property owners.  Totalitarianism is on the march in the former Golden State.

Money

Should San Jose Limit Rent Hikes for Struggling Small Businesses?

By Jennifer Wadsworth, San Jose Inside,   10/10/17

 

A local community leader wants San Jose to explore ways to sustain small businesses, which, like the people who staff them, face soaring rents in Silicon Valley.

In a letter to city officials, Julie Borinas Driscoll said that in addition to seeking federal aid through the Small Business Administration, San Jose should figure out other ways to limit rent increases for mom-and-pop shops.

“Otherwise,” she wrote, “there will be no small businesses, backbone to our nation’s economy around. Small business is important in America.”

While some municipalities—most recently New York City—have flirted with the idea of commercial rent control to stave off gentrification, it has no known precedent in the U.S. In California, the proposal would require a change in state law.

In the 1980s, Berkeley enacted commercial rent caps, which prompted 20 other cities in the state to consider similar ordinances. But the state Legislature responded in 1987 with SB 692, which outlawed rent caps on all non-residential commercial property.

Driscoll’s proposal was included with other public correspondence on Wednesday’s Rules and Open Government Committee, but there’s no formal recommendation as of yet. She also submitted a letter to Santa Clara County’s Board of Supervisors.

A general partner of the Borina Trust and Enterprises, Driscoll said she felt compelled to pitch her idea after seeing Gene’s Fine Foods in neighboring Saratoga close after four decades in business. Its 20-year lease was up and the landlord was poised to raise rent to market rate, according to KTVU. The news report noted, however, that Gene’s owner, who unsuccessfully tried selling the store, had already decided to retire anyway.

San Jose’s De La Cruz Deli met the same fate this past spring, closing the last of its 12-store chain after 41 years in business. Owner Randy Nelson told the Mercury News that, along with rising labor costs, he faced a 50 percent rent hike.

Whether through commercial rent control or not, Driscoll said local governments should figure out a way to help struggling small businesses to prevent similar losses. She said disadvantaged small businesses could benefit from some combination of rent caps, impact fees from high-rise development, corporate subsidy tax and federal grants.

Otherwise, she warned: “We run the risk of losing every small privately owned business in Santa Clara County because of rents doubling, exorbitantly, whereas, it is no longer profitable to economically stay in business.”

Jennifer Wadsworth is a staff writer for San Jose Inside and Metro Newspaper. Email tips to jenniferw@metronews.com or follow her on Twitter at @jennwadsworth.

About Stephen Frank

Stephen Frank is the publisher and editor of California Political News and Views. He speaks all over California and appears as a guest on several radio shows each week. He has also served as a guest host on radio talk shows. He is a fulltime political consultant.