By Matthew Artz Oakland Tribune

OAKLAND -- After more than a quarter-century in their Oakland apartment, Clifton and Mercedes Harrison had their kitchen and bathroom completely remodeled. Shortly thereafter, the couple received a 112 percent rent increase from their landlord that, if upheld, will force them and their 7-year-old granddaughter to find a new home.

The couple's predicament is at the heart of a heated battle over Oakland's rent control law, which allows landlords to pass on to tenants the entire cost of capital improvements in the form of increased rent over a five-year period.

With rents soaring throughout much of the city, tenant advocates say landlords are exploiting the provision to force out long-term tenants paying below market rent. Compounding the problem, they say, the city refuses to track the rent increases, making it impossible to gauge just how many tenants are being displaced.

Property owners counter that the law is rarely abused and that without it they would have no financial incentive to properly maintain the city's roughly 60,000 apartments subject to rent control.

"It means the housing stock will deteriorate and you won't have people doing investments for seismic retrofits," said Luke Blacklidge, a property owner who sits on the board of the East Bay Rental Housing Association.

The City Council's Community and Economic Development Committee is taking up the issue Tuesday as the council considers tightening Oakland's rent control law amid growing concern that low-income renters are being priced out of the city.

One proposal, similar to a law in San Francisco, would cap monthly rent increases stemming from capital improvements at 10 percent to safeguard tenants such as the Harrisons from being forced from their homes.

The Harrisons' rent is slated to jump from $1,057 to $2,245 for the next five years for their two-bedroom apartment in the desirable Adams Point neighborhood.

By the time their rent reverted to the former rate in 2019, the couple, who live on a fixed income, would have paid an additional $71,000 to their landlord. That is roughly equivalent to the full cost of the kitchen and bathroom upgrades, which will likely remain after the Harrisons have stopped renting the apartment.

"We feel like we're getting robbed," Clifton Harrison, a retired legal assistant, said from his top-floor apartment that has eye-catching views of the city. "We stayed here because we thought we had protections, but when I read the rent law cover to cover, I realized it's not the protection we thought we had."

Under the law, capital improvements include all sorts of upgrades that Oakland's rent law considers to primarily benefit tenants, even if tenants don't want them. Examples include a new roof, paint job and seismic retrofit. Or in the Harrisons' case: new bathroom tiles, kitchen flooring, cabinets, marble countertops, lighting, a refrigerator and a dishwasher.

Because capital improvements are the most frequent justification Oakland property owners use to impose rent increases above otherwise allowable limits, they have become the flash point in the battle over Oakland's rent control law.

"The big concern we have right now is that they are being used to drive long-term residents out of Oakland," said Martina Cucullu Lim, an attorney specializing in tenant rights with Centro Legal De La Raza.

In Oakland, rent increases on occupied units are tied to the consumer price index. But once a unit is vacated, it can be rented at market rate. While the CPI has inched upward in recent years, rents in Oakland have soared 25 percent over the past two years, according to the apartment research firm RealFacts.

It is difficult to gauge whether property owners are abusing the law because unlike nearly every other city in California with rent control -- including Berkeley, San Francisco and San Jose -- Oakland doesn't require property owners to file a petition for a capital improvement-based rent increase.

The city learns about the rent increases only when tenants protest them to the city's Rent Adjustment Board.

From 2009 through 2012, there were 176 contested capital improvement rent increases, city records show. Landlords received about three-quarters of their requested monthly rent hikes, nearly half of which exceeded 10 percent.

Property owners point to the relatively small number of petitions as evidence the system is working well and doesn't need tinkering. Requiring owners to petition for rent increases, they say, would overwhelm Oakland's understaffed rent board.

"Why would you rewrite the law when there is no demonstrable problem?" Blacklidge asked. "The city shouldn't get involved in tracking rent increases between two agreeable parties."

Cucullu Lim, who met recently with the Harrisons, said she has seen several cases of landlords "over-repairing" units in an apparent bid to drive up rents. Often tenants choose not to contest the rent hikes either because they don't think they can prevail at the hearing or they're reluctant to anger their landlord.

Requiring landlords to petition for the rent increases, she said, would make it easier for vulnerable tenants because "they would be participating in a process instead of being the one complaining."

The city's rent board has proposed changes to the law. Property owners would still be able to pass through the full costs of improvements, but the cost would be spread out over 20 years with annual increases capped at 10 percent.

Kathleen Solares, who is the Harrisons' landlord, said that was problematic because inflation would eat away at the value of the pass-through over two decades.

"If a capital improvement is extended out that long, that is money coming out of my pocket," she said. "Nobody could stay in business that way."

A tenant coalition, which includes local unions and nonprofits, has proposed allowing property owners to pass through only one-quarter of the expenses. Councilman Dan Kalb has proposed that tenants and landlords share the costs, as is the law in Los Angeles.

Whatever the council decides, it could be too late for the Harrisons, who will likely have to appeal their rent increase under the current rules. They can't bear to think of losing.

"This is not just an apartment to us," Clifton Harrison said. "It's a part of us. We love living here and we love living in this city."

The dispute between the Harrisons and Solares started over problems with the bathroom ceiling and has grown increasingly contentious. Solares, who is advertising a similar ground floor unit in the building for $1,850, said she was trying to satisfy the couple's requests and she hadn't increased their rent in several years.

"I feel badly that this is a family I have known. I've watched their children be raised there," she said. "They have my sympathy. I don't know what else I can offer."

Contact Matthew Artz at 510-208-6435.