You should raise the rent, for all the good reasons you explained.
1. One rent increase in three years should be acceptable to any thinking tenant, especially since San Diego market rents have risen. And I suspect they have gone up more than you think.
2. You can point out in your rent-increase letter that your costs have gone up.
3. You can point out higher rent comps in the neighborhood to justify yourself.
4. You can point out that no further rent increases are contemplated for at least_____years.
A rational tenant will not be prompted to move because of your proposed rent hike. Of course, some people might move out of spite, even if it is to their own disadvantage.
