Please, what is the relevant CPI under AB 1482?

First, what is the CPI? It's the Consumer Price Index and it is the basis for measuring the inflation rate. The CPI is also used as the basis for allowable rent adjustments under California rent control programs; there is wide variance between the municipalities in using  the CPI. The CPI has also become a central issue in the application of the new state law, the Tenant Protection Act of 2019, also known as AB 1482.

There appears to be some ambiguity to the relevant CPI to use for buildings covered by AB 1482. The new law holds that the maximum rent increase in any 12-month period is 5% + the CPI for the region or 10%, whichever is lower.

According to the Assemblyman who championed the new law, Daniel Chiu, the currently applicable CPI's (that is, from April 2018 - April 2019) are as follows:

• Los Angeles and Orange Counties: 3.3%
• Riverside and San Bernardino Counties: 2.8% (as calculated March to March)
• San Diego County: 2.2% (as calculated March to March)
• Alameda, Contra Costa, Marin, San Francisco, and San Mateo Counties: 4.0%
• The rest of California: 3.3%

Chiu points to the website published by the Department of Industrial Relations, Consumer Price Index for All Areas in California which reports the "All Items for All Urban Consumers" price index. The state website also provides a calculator to assist consumers in calculating the relevant percentage for the relevant time period. 

See:  https://a17.asmdc.org/issue/ab-1482-frequently-asked-questions

Thus, the maximum percent rent increase for tenants covered by AB 1482 in the Bay Area counties is currently 9% (e.g. 5% + 4% = 9%). Some landlord advocates and organizations are actually advising that a 4.01% rent increase is the maximum increase and this is a correct percentage calculation.

However, in a statement recently issued by the Oakland Rent Adjustment Program (an excerpt is produced below) concerning rent caps under AB 1482, they advise:

"Most units in Oakland are covered by Oakland's rent control law. For more information about who is covered, see O.M.C. 8.22.000 or our website. However, AB 1482 may apply to units that are not covered in Oakland. These units cannot receive more than two rent increases in one year, and rent increases on these units are capped at 5% plus the CPI (3.5% for 2019-2020) - for a total of 8.5%."

The rent board is, impliedly, arguing that the relevant CPI for buildings in Oakland exempt from City rent regulations is the CPI adopted by the Oakland Rent Adjustment Program which is 3.5% for the period beginning March 2018 to March 2019 and which is published in July 2019.

Pursuant to O.M.C. 8.22.020, the Oakland Rent Adjustment Program CPI is defined as:

"CPI—All Items" means the Consumer Price Index—All items for all urban consumers for the San Francisco—Oakland—San Jose area as published by the U.S. Department of Labor Statistics for the twelve (12) month period ending on the last day of February of each year.

"CPI—Less Shelter" means the Consumer Price Index—All items less shelter for all urban consumers for the San Francisco—Oakland—San Jose area as published by the U.S. Department of Labor Statistics for the twelve (12) month period ending on the last day of February of each year.

As guided by O.M.C. 8.22.070B(3):

"Calculation of the CPI Rent Adjustment. Beginning in 2002, the CPI Rent Adjustment is the average of the percentage increase in the CPI—All items and the CPI—Less shelter for the twelve (12) month period starting on March 1 of each calendar year and ending on the last day of February of the following calendar year calculated to the nearest one tenth of one percent."

The All Item Index CPI for the Bay area is 3.53% while the All Items Less Shelter Index is 3.54%. 

The data for these calculations takes some time to locate on the U.S. Bureau of Labor statistics website to locate but if one visits the CPI database page and selects one-screen data search and uses non-seasonally adjusted data, one can secure the relevant statistics.

CPI                 All Items All Items Less Shelter

Feb. 2018 281308 240742

Feb. 2019 291227 249269

 % Change 3.53% 3.54%

Avg. 3.53%

Applying rounding principles, one would round down to 3.5% which is the percent allowable rent increase published by the Oakland Rent Adjustment Program for July 2019.

See: https://www.bls.gov/cpi/data.htm

This statement lead me back to the law published under AB 1482 ( Cal. Civ. Code sec. 1947.12 ) which states the following:

"'Percentage change in the cost of living' means the percentage change from April 1 of the prior year to April 1 of the current year in the regional Consumer Price Index for the region where the residential real property is located, as published by the United States Bureau of Labor Statistics. If a regional index is not available, the California Consumer Price Index for All Urban Consumers for all items, as determined by the Department of Industrial Relations, shall apply."

Strictly read, the region is the U.S. West Region CPI which currently is 2.9%. Thus, a 5% rent increase plus 2.9% sets the maximum rent increase at 7.9%. Also notice that no guidance is provided as to mathematical rounding (i.e. how many decimals can be applied to the percentage calculation?)

Thus, due to the ambiguity in the law, some landlord attorneys are advising following a strict reading of the code and advising landlords to impose a rent increase that is 7.9% or lower for those buildings covered by AB 1482 to avoid a tenant litigation relating to this ambiguity. 

See: AB 1482- Mr. Chiu are You Confused?

Another instructive website for landlords provides the relevant CPI for the census AREAS in California but they also state the following:  "NOTE: The maximum allowable rent increase may be challenged and capped at 7.9%" 

See:  Relisto - Table of Allowable Rent Increases

Thus, I suppose that the Oakland Rent Board is arguing that their municipal AREA allowable CPI rent increase of 3.5% is applicable due to the ambiguity in the wording of the state law. The basis of the definition still uses the San Francisco - Oakland - Hayward Bay area but is for a different time period (Feb. to Feb. vs. April to April) and is likely to be challenged by landlords and their attorneys. Certainly, a 7.9% maximum allowable rent increase is an easier "pill to swallow" than an 8.5% rent increase.

Condo Conversions in Oakland - A New Wind is Blowing

The East Bay Times article published on December 17, 2019 discusses a revision to the condo conversion ordinance being considered by the Oakland City Council. 

See: Oakland may tighten 40-year old condo conversion laws.

For a discussion of the most recent reports and version of the proposed new ordinance, click here:

This link, which reports City Council meetings, summarizes the proposed ordinance below and provides the latest revision to the proposed ordinance and a report about the process that the building Owner will need to follow to convert their building to condominiums.

The summary states the following:

"Subject: Modifications To Condominium Conversion Ordinance From: President Pro Tempore Kalb Recommendation: Adopt An Ordinance Amending Oakland Municipal Code Chapter 16.36, Condominium Conversions, To:

(1) Extend The Conversion Rights Requirement To Two- To Four-Unit Residential Buildings;

(2) Require That A Conversion Rights Agreement Be Recorded At Latest 60 Days After The Building Permit For The Generating Residential Building Is Issued;

(3) Enhance Tenant Rights And Notice Requirements To Tenants; And

(4) Make Other Modifications; And To Direct City Administrator Or Designee To Study Alternative Methods Of

(A) Ensuring One-For-One Replacement Of Rental Units In The City As A Result Of Condominium Conversions And

(B) Increasing Affordable Home Ownership And Reducing Displacement Of Renters Subject To Conversion; And Adopt CEQA Exemption Findings.