The City of Santa Barbara’s rent stabilization ordinance nearly fell apart on Tuesday over whether to exempt affordable deed-restricted and Section 8 housing from the law. 

Councilwomen Wendy Santamaria and Meagan Harmon were at a standoff, with Harmon saying she wouldn’t support the ordinance without the exemptions, and Santamaria not supporting it with the exemptions. 

Harmon argued that it would be harmful to put further restrictions on affordable deed-restricted and Section 8 housing.

“We need landlords to participate in Section 8,” Harmon said. “It is a huge, huge risk to put us in a position to influence folks not to participate in that program.”

Santamaria argued that exempting those units puts the city’s most vulnerable residents at risk, and worried that there aren’t enough systems to ensure those units are habitable.

“So we’re saying we don’t want to protect tenants in Section 8 and affordable housing units when it comes to habitability, is that what I’m hearing?” Santamaria asked Harmon directly.

Harmon argued that there are already systems in place to address habitability concerns for Section 8 and deed-restricted housing.

Santamaria countered that those systems aren’t working, and she wanted those tenants to be able to take habitability issues to a Rent Stabilization Board. 

“The lowest income, who are living in these units, while they have their own mechanisms to check habitability and administer their payment standards, we have to be realistic. Our affordable housing providers are not code enforcement,” Santamaria said.

“They cannot necessarily enforce that when a unit is uninhabitable. We need the city to be able to protect on that front.”

In the end, Harmon won the debate, by splitting up approval into two votes; the first was approving the draft ordinance with minor language changes, and the second, approving the deed-restricted and Section 8 exemptions from the ordinance. 

Adding the exemptions passed in a 4-3 vote, with Santamaria, Mayor Randy Rowse and Councilman Oscar Gutierrez opposed. 

Approval of the draft ordinance also passed in a 4-3 vote, with Rowse and Councilmen Eric Friedman and Mike Jordan voting against it.

The ordinance will have to return to the council next week for adoption, following the changes.

The debate over exempting deed restricted and Section 8 housing from the ordinance came after months of Rob Fredericks, executive director of the Housing Authority of the City of Santa Barbara, urging the council to do so.

Notably, Section 8 and deed-restricted units are already regulated by federal laws, participants’ income and other regulatory agreements.

“Adding another rent regulation system does not create additional affordable housing,” Fredericks told the council on Tuesday. “It restricts revenue needed for resident services that we provide, maintenance, reserves, long-term preservation of homes already committed to affordability.”

However, other housing advocates disagreed.

Megan Grindstaff, a managing attorney with the California Center for Movement Legal Services, argued that Section 8 and deed-restricted tenants need the mechanisms in the ordinance to petition for lower rent if they face habitability concerns. 

“Voucher tenants need a venue to go to when the homes that they spend their hard-earned money to live in are unsafe and unsanitary,” Grindstaff said. 

The ordinance, set to take effect Jan. 1, would limit how much landlords can raise rents, create a rental-property registry and form a rent-stabilization board to oversee the program. 

Rent increases would be limited to once within a 12-month period at 60% of the rise in the Consumer Price Index (CPI), with a maximum of 3%, whichever is lower.

The ordinance wouldn’t apply to units built after Feb. 1, 1995; single-family homes; condos and townhomes; owner-occupied duplexes; mobile home parks; government-owned and -operated units; or deed-restricted affordable housing. 

If a landlord makes a capital improvement to the unit, they can petition to raise rent by 10% or $100 a month, whichever is less.

Under the ordinance, the city also would form a Rent Stabilization Board with seven members. At least four members on the board must be tenants, and the three other seats have no restrictions, meaning these are no designated seats for housing providers.

The rental registry would be a citywide program to track data around rental housing. All rental units, not just those covered under the ordinance, would have to be registered.

One big question regarding the ordinance remains how much will it cost.

Along with adopting the ordinance, the council is set to approve $500,000 from Measure I funds to go toward staffing, startup costs and the fee study.

The original $2 million estimate to run the program, and the $154 fee per unit, is expected to significantly increase, according to the city staff report.

The results of the fee study are set to go to the council on Dec. 15, giving tenants and landlords 16 days, during the holiday season, to understand what the program would cost them.

There would be a phased approach to program enforcement, according to Barbara Andersen, senior assistant to the city administrator.

Landlords with rental units covered under the ordinance have to register their units by April 1, while rental units not covered must register by Oct. 1, 2027.