Price Gouging

City officials have been alerted to the possibility of price gouging by persons offering housing for rent in the City of Santa Rosa. Price gouging may also include eviction of existing tenants of rental properties so landlords may take advantage of fire victims whose insurance companies may pay rental rates in excess of what was previously charged for existing tenants.

Penal Code Section 396 (“Section 396”) controls price increases for rental housing when a jurisdiction is under a declaration of emergency. As written, it applies for an initial period of thirty days after declaration of an emergency by the Governor and generally prohibits charging a price that exceeds by more than ten percent the price of an item before the declaration of emergency. On October 18, 2017, the Governor issued Executive Order B-43-17, which waives the thirty day limitation and provides that Section 396’s prohibition against price gouging remain in effect until April 18, 2018. On November 28, 2018, the Governor extended the protections against price gouging under Penal Code 396 through May 31, 2019.

To further enforce the City’s intent to address price gouging, an ordinance was adopted to prohibit such actions. Until the current state of emergency is terminated (or May 31, 2019), whichever occurs later), the City’s price gouging ordinance would generally prohibit any person from renting or leasing a hotel or motel room, or any dwelling unit, including a vacation rental unit, in the City for more than 10% above the price charged immediately prior to the issuance of the City’s proclamation of the existence of a local emergency. The ordinance also states that, it would be unlawful for any person to evict an existing tenant or terminate an existing lease or month-to-month rental agreement and subsequently rent or lease the same dwelling unit, including a vacation rental unit, in the City for more than the average retail price. Both of these instances would be unlawful unless the person can prove that the excess is directly attributable to additional costs resulting from the labor or materials necessary to provide the rental or in certain other limited circumstances.