SR-1102-001f:\atty\mu ni\strpts\mjm\rentcontrolamend.wpd
City Council Meeting 10-23-2001
Santa Monica, California
TO: Mayor and City Council
FROM: City Staff
SUBJECT: Proposed Charter Amendments to Article XVIII, the Santa Monica Rent
Control Law
Introduction
At its meeting of October 9, 2001, the City Council discussed the Rent Control Board's
determination that Article XVIII of the City Charter, which establishes Santa Monica's
Rent Control Law, should be amended to ensure continued protection of tenants and to
reflect current legal and economic circumstances. In response to the Rent Control
Board's determination, the Council directed legal staff to prepare a draft of a proposed
Charter Amendment for consideration at its next meeting. The attached proposed
amendment responds to that directive.
Backqround
The voters adopted Article XVIII in 1979. Since then, the state legislature has acted to
significantly restrict the right of cities to protect local health, safety and welfare through
municipal rent control laws. In 1985, the legislature adopted the Ellis Act, which gives
landlords the right to withdraw rental properties from the market for the purpose of
1
going out of the rental business. In 1995, the legislature adopted the Costa Hawkins
Act which phased out local vacancy controls. Both of these state enactments were
directed at and significantly impacted Santa Monica's system of rent controls. In both
instances, the City Council and the Rent Control Board responded by adopting
measures intended to ensure that Santa Monica tenants had the maximum protections
allowed by law. Nonetheless, state measures have drastically impacted Santa
Monica's tenants and its affordable housing stock.
Following the passage of the Ellis Act, a number of landlords opted to take their units
off the market and go out of the rental business. Most followed through and actually
did cease rental of the units. Some did not; they used the provisions of the Ellis Act to
cause tenants to vacate and then re-rented, either on the open market or to relatives or
friends.
Most recently, the adoption of the Costa Hawkins Act, imposing state-mandated
vacancy decontrol, has created a substantial financial incentive for landlords to cause
tenants to vacate their units. Many have encouraged tenants to leave with buyouts.
Some have forced tenants out through harassment. In response, the Council adopted,
and has several times amended, the Tenant Harassment Law. It prohibits landlords
from maliciously undertaking certain actions detrimental to tenants.
At present, the language of Article XVIII does not reflect the impacts of the Ellis and
Costa Hawkins Acts.
2
flieri iecinn
The attached proposed charter amendment was prepared using a draft submitted by
Rent Control Board staff as a starting point. The proposal includes most of the
substantive changes requested by the Rent Control Board. Two were not included:
elimination of Section 1801(c)(4) and increased salary and benefits for Board members.
Legal staff was reluctant to draft these amendments in advance of the public hearing
and Council deliberation. If the Council wants to add them, they can be addressed at
the meeting.
The proposed amendments would add language reflective of both the landlords' rights
created by the Ellis Act and Costa Hawkins and tenants' problems created by both. It
would also incorporate into the Charter certain requirements presently contained in the
Board's regulations and would clarify existing law. The proposed changes are listed
below by section.
Section 1800 states the purpose of the Rent Control Law. The proposed language
would reference the currently proposed amendment and clarify the law's purpose.
Section 1801 contains definitions. The proposed language would add to the definition
of "Housing Service" the right to have the same number of occupants as were entitled
to occupy the unit on the base date. Rent Board staff has suggested this amendment
to address the situation in which an original tenant moves out and the remaining tenant
can neither afford the rent alone nor persuade the landlord to accept a new tenant. If
4
the proposed language were adopted, the remaining tenant could petition for a rent
decrease. Similar language already appears in the Board regulations, and the
proposed language would likely also require implementation through regulations.
Section 1804 governs maximum rents. The proposed language would modify Section
1804(b) to reflect the requirements of Costa Hawkins. It would also address situations
in which a landlord rents at a specified amount but offers a discount in the first year.
Rent Board staff explains that such discounts take various forms. For instance, the
initial monthly rent actually paid by the tenant might be $1,500, but the rental
agreement specifies the rent as $2,000 per month with a$500 discount for the first
twelve months. However, in the second year, the landlord increases the rent by $500
claiming that the base rent is $2,000 (rather than $1,500). Likewise, a rental
agreement might provide for monthly rent of $2,000 for the first ten months and no rent
in months eleven and twelve. These terms would artificially increase the "initial rental
rate" or base rent ceiling to $2,000 (instead of the $1,667 per month the tenant actually
paid for the first year). Rent Board staff believes that this practice adversely impacts
tenants who suffer a substantial increase in the second year of their tenancy and so
may be forced to vacate.
Section 1806 governs evictions. The proposed modifications would create a cause of
action for wrongful eviction and attempted wrongful eviction. Rent Board staff advises
that similar tenant protections are established and effective in San Francisco. Other
proposed changes would incorporate landlords' Ellis rights into the Rent Control Law
5
and require landlords to file copies of notices terminating tenancies with the Board.
Three day notices to pay or quit would be excluded from the requirement. This
amendment would track similar provisions already in place in Berkeley and West
Hollywood. It would allow the Board to monitor evictions for owner occupancy. The
proposed modifications to Section 1806 would also clarify that violations of the Section
may be asserted as an affirmative defense in an unlawful detainer action. The Rent
Board staff explains that this change is declarative of existing law. Also, letter
designations would be added to subparts of Section 1806 to facilitate citation.
Finally, a new Section 1821 would be added, incorporating into the Charter a basic and
general prohibition against tenant harassment which would continue to be implemented
by ordinance.
Budqetary and Financial Consequences
No direct financial consequences are foreseen. If amendment to Article XVIII caused
an increase in enforcement activities by Rent Control Board staff or City staff,
enforcement costs could increase. Additional Rent Control Board expenditures could
be covered through the adjustment of fees. Additional City staff expenditures would
likely have to be covered from existing General Fund revenues.
6
Recommendation
Staff recommends that the City Council consider the proposed draft, conduct a public
hearing, and either revise or approve the proposed Charter Amendment.
PREPARED BY: Marsha Jones Moutrie, City Attorney
Barry Rosenbaum, Senior Land Use Attorney
7