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SR-CC/RCB-1 ~ 'to . . , ~ " AJJ 10 Cc.,/Z-C&#/ \ \ b ~- a 0 \ Jill' .. CA: RMM : SMM: 5 s C~ti Counc~l Meet~ng 7-10-84 Santa Mon1.ca, Ca1iforn1.a . SUPPLE~ffiNTAL STAFF REPORT NUMBER 1 l l TO: Mayor and City Council FROM: C1.ty Attorney SUBJECT: Proposed Amendment to Rent Control Law INTRODUCTION Since the preparat~on_ of the Staff Report containing the C1.ty Attorney's proposed amendments to the Rent Control Law, the City Attorney has met w1.th Rent Control Board Cornm1ssioner Penny Nagler, Board Admlnistrator Howell Tumlin, and Board Attorney Joel Levy. The City Attorney recommends that certain mod1.fica- t10ns to our proposals be made. These changes are briefly descr1bed below. The text of the proposed Charter Amendment, as mod1.f1ed, 1S attached as Exhibit liB" . PROPOSED MODIFICATIO~S l. Le~1slat1.ve Find1ngs. It is recommended that City Charter Sect10n 1800, whl.ch st a tes the purpose of the law, be amended to chang e the term "fa1r return on investment" to "fair return. " Th1.S 1.5 cons1stent with the suggested changes to S ect10n 1805 (e) . 2. Ch11d Care Exemption. We suggest modif1catl.on of Section 1801(5) so that the third sentence read s "Th~s exempt1.on shall on1" ~l.JP J Y to units as they become vacant and shall only opera"':.e a 10,., the specified use w1thout the necessity of ob- ta1n1fg ! e; .)vdl permit under this Artl.c1e." 3. Board Personnel. A mod1ficat1on to Section 1802(b) 1.S suggested so that the Board has responsibl.lity for decl.sions to lay:off and recall its employees. It is also suggested that lan- guage be ad ded to specl.fy that Board personnel regulatl.ons prevail over l.ncons1. stent provisions of the Municl.pal Code. As modl.fied, Sectl.on 1B02(b) would read: (b) Personnel. Except for the elected or appointed Commissioners, the Adm1nistrator and attorneys employed to represent or advl.se the Board, all employees of the Board are within the 1 4dJ.ft, rqlCD#/ JUL 10 11M , ~- . . , classified civJ.l service of the City. The Board shall appo~nt an Administrator to adminl.ster and supervise the exerC1.se. of J. ts powers and duties, who shall be' d1.rectly responsl.ble to the Board. All employees of the Board, except the i Adminl.stratar and attorneys, shall be l . h1.red, termJ.nated, suspended, and demoted .1n accordance with the prov.1s.1ons of ArtJ.cle XI of the Charter and implement- ~ng provis~ons of the Munic~pal Code. The Board shall classify employee posi- tions, establish employee salarJ.es and benef1ts, evaluate the performance of its employees, and be ~esponsible for the layoff and r~call of its employees, pur- suant to resulations and procedures that it establishes. The Board may enter into and approve a Memorandum of Understanding wi th repr ese nta ti ves of its employees concernJ.ng their wages, benefi ts, hours of work, and terms and condi tions of employment in accordance WJ.th state law. The C1 ty Council shall have no power to aboliSh posi tJ.ons established or classi- fied by the Board under thJ.s Article, notwl.thstandJ.ng any other section of this Charter. Any regulation, polJ.cy, ~ t-1emorandum of Understand1ns of the Board consJ.stent with thl.s subsect10n shall preva11 over inconsl.stent prov1.sions of the Municipal Code and other ordJ.nances ~ resolutions of the City Councl.l. 4. Board Contracts. A modification is suggested so that the Board would have sole authority to employ all types of professional consultants. The second sentence of Section 1802{d) would read: "ProvJ.ded, however, that the Board shall have sole and final author1ty 1:.0 f~mploy attorneys, legislative lobby~sts, and other professJ.o lals _ and to approve contracts for such profess1onal s,:rvices. or Given the current exceptions to competi- tJ. ve b1dding in the to':.'ln.l.C1-pa 1 Code, the language proposed 1n our 1nit1al staff report effectively provided the exempt10n specif1ed in ~he revised language. The purpose of the revJ.sed language is to insulate the Board from poss1ble future changes in ord1nances and resolut1ons regulating compet1tive b1ddingr it would not ef- fect a change in current procedures. 5. Meet1n9S' It is suggested that Section l803(h) be modified by replacing the second and th1rd sentences wi th the fOllowing sentence: "All regular and special meet1ngs shall be called and conducted in accordance WJ. th state law." 2 . . . . . Y'. 6. Rent Increases. We suggest a minor modification to Sect~on 1 BO 5 ( E.' ) ; the phrase "necessary and reasonable" sho u Id be inserted before the phrase "capital improvement. " . 7. Rent Increases for Vacant Units. The intent of new Sect~on l805(f){3} ~s that no rent ~ncrease can be taken if, at ~he t1me of the rent increase not1ce, any unit on the property 15 vacant and has been vacant for three consecut~ve months. This intent 1S clarified by the addition of the words "is and" to the landlord's cert1ficate required under the se ction. B. Changes Declarat~ve in Nature. It is suggested that a new Sect10n 1814 be ad ded to spec1fy that a charter change that incorporates an ex 1st1ng Board regulation 1S declarat1ve of ex- i st 10g law. The proposed lang uage is as follows: Sect10n 1814. EX1st1ns Board Pract1ces. To the extent that the amend- ments to Article XVIII adopted at the same time as th is Section incorporate rules, regulat1ens, polic1es, and prac- tices of the Rent Control Board eXl.sting on the date of the adopt1on hereof, such amendments are declarat1ve of eX1sting law and do not impose any new requ1re- ments or limit any exist~ng ones. 9. Typograph1cal Changes. Several ml.nor changes have been made in text and under11n1ng to correct typographical and edl.ting errors. RECOMMENDATION It is respectfully recommended that the City Council direct the C1ty Attorney to prepare a resolution submitting the proposed Amendm ent to Art~cle XVIII of the City Charter for the approval of the voters, as modif1ed and shown in Exhibit "B", "Ill. th such chang es as the City Council may direct. PREPARED BY: Robert M. Myers. . City Attorney Stephen S. Stark, Assistant City Attorney Karl M. Hanhel.ffi, Deputy C~ty Attorney - Marsha J. Moutrl.e, Deputy City Attorney - 3 . * . . . , , " . l l EXHIBIT B (This exhibit contains all the changes noted on Exhib~t A. New changes are noted as follows: Addit~ons are CAPITALIZED; delet10ns are horizontally e~efs~~~ek.) - - . . . . . . 1 TEXT OF PROPOSED CHARTER AMENDMENT. . , SECTION 1- Sect~on 1800 of the City Charter is amended to r<e ad as follows: Sect~on 1800. Statement of Purpose. A grow~ng shortage of hous~ng un~ts result~ng ~n low vacancy rate and rapidly ris~ng rents exploltlng this shortage const1tute a ser10US hous~ng problem affect1ng the l1ves of a substantial portion of those Santa Monlca residents who reside in resident~al housing. In add~tion, speculat10n 1n the purchase and sale of existlng res~dentlal hous~ng unlts results in further rent increases. These cond~tions endanger the public health and welfare of Santa Monica tenants, especially the poor, minorities, students, young famill.es, and senior citizens. The purpose of this Article, therefore, 1S to allevlate the hardshl.p caused by this serious hous~ng shortage by establlshlng a Rent Control Board empowered to regulate rentals in the City of Santa Monica so that rents wlll not be increased unreasonably and so that landlords will recelve no more than a fal.r return e~-~hei~-inves~fflen~. In order to accomplish th1S purpose, thlS Artl.cle provides for an elected Rent Control Board to ensure that rents are at a fair level by requlrlng landlords to Justify any rents in excess of the rents in effect one year prior to the adoption of thLs Article. Tenants may seek rent reductions from the rent 1.n effect one year prior to the adoption of this Article by establ1shlng that those rents are excessive. In addition to giving tenants an opportunity to contest any rent l.ncrease, this Art1cle attempts to provide reasonable protect~on to tenants by controlling removal of controlled rental units from the housing market and by requlrlng Just cause for any eviction from a controlled rental unlt. SECTION 2. Section 1801 of the City Chart~r is amended to read as follows: Sectlon 1801. Definitl.ons. The following words or phrases as used 1n th1S Article shall have the followlng meanings: - ~ ( a) Board: The term "Board" refers to the elected Rent Control Board established by thl.s Article. ( b) Commlssioners: The members of the Board and Interim Board are denominated Commissioners. ( c) Controlled Rental Unl.ts: All residential rental units in the Clty of Santa Monica, 1ncluding mobile homes, and mobile home spaces, and trailers and trailer spaces, except those found 1 . ',. . . . . . by the Board to be exempt under one or ~ of the followin9 prov~sions: (I) Rental units in hotels, motels, inns,- tourist homes and rooming and board~ng houses which are rented primarily to transient guests for a per10d of less than fourteen (14) days. l l (2) Rental un~ts 1n any hospital, convent, monastery, extended medlcal care faclllty, asylum, non-proflt home for the aged, or dormitory owned and operated by an instltutlon of higher education. (3) Rental un1tS Which a government unit, agency or author1ty owns, operates, manages, or ~n Wh1Ch governmentally subsidlzed tenants reside only if appl1cable Federal or State law or admin1strative regulation specially exempt such unlts from munlcipal rent control. (4) Rental units in owner-occupied dwellings with no more than three (3) units. For purposes of this section: ~ The term "owner" means ~ natural person wh~ ~~ at least ~ fifty 1?O} per cent ownership lnterest 1n the EUlldlng and resIdes on the property as hlS or her prlnclpal place of res~dence. (il) An exemption under this sectlon shall ~~plre EY operatlon of law when the owner ~~ases to reside on the Eroperty as h~s ~~ her prlnc~pa! place of residence; thereafter, ~ll units on the property shall be sUbJect to all provls~ons of thlS Artlcle. (11i) Notwlthstand1n9 any other provision of !his Article, ~ exemption under thlS section shall not excuse !he owner from the requirement of obtalnln9 ~ permlt to remove ~~ unlts from the rental housins market in accordance wlth thlS Artlcle. (5) Rental units and dwellings constructed dft~r the adoption of this Article; thlS exemption does not apply t) unlts created as a result of conversion as opposed to ne... c...""'n:st cuction. (6) Where ~ unit is actually used for purposes of providing, on a Eon-~rofit E~sis, Chlld care or other resldential soc~al serVlces in accordance w1th applicable laws. ThlS exemptlon shall exp1re when the use u~on which exemption is based ceases. Th1s ~xemptlon shall only apply t~ units ~ka~-a~e AS THEY BECOME vacant a~-~he-t~me-e~-a~~~:ea~~efl7 and shall only ~Eerate to allow the specified use w~thout the necess1ty of ~bta1nln~ ~ remova! permit under this Art1cle. Th1S exemption shall no~ be construed to authorize the eviction of any tenant Eor to authorize the charging of rent in excess of that permltted under thlS Article. The Board may adopt regulatlons to determlne whether a unlt qual1fles for ~ exemptlon under th1s sect10n. 2 . . . . . . . . (7) Exemptions are not automatic but shall pe granted ~ the Board upon applicati.on EY. the owner pursu<:.nt to Board rules, provided that if the Board does not act upon a ~ompleted appl1catlon for ~xemption with1n ninety (90} days of lts fll1n~ 1t shall be deemed approved. ( d) Houslng Service: HOUS1h3 serv lces include, but are not lim1 ted to repa lrs, maintenance, pal.ntlng, providing light, hot and cold water, elevator service, w1ndow shades and screens, storage, In tchen, ba th and laundry faClll.tles and privl1eges, Janitor services, refuse removal, fur nl.sh1.ng s, telephone, parklng, and any other benef1.t, pr1vl.lege or faci11ty connected w1th the use or occupancy of any rental unit. Services to a rental un1.t shall lnclude a proport1.onate part of services provided to cammon fac1.ll.tles of the bU1.1ding 1.n which the rental unlt 1S conta1.ned. ( e) Landlord: An owner, lessor, sublessor or any other person entitled to rece1.ve rent for the use and occupancy of any rental unit, or an agent, r~presentative or successor of any of the foregolng. - (f) Rent: All per10dic payments and all nonmonetary conslderation including but not limited to, the fair market value of goods or services rendered to or for the benefit of the I and lord under an agreement concern1ng the use or occupancy of a rental Uhlt and premises l.ncludl.ng all payment and consideratlon demanded or pal.d for parking, pe t s , furniture, subletting and securlty deposits for damages and cleaning. (g) Rental Housing Agreement: An agreement, oral, written or implled, between a landlord and tenant for use or occupancy of a rental unit and for housl.ng services. (h) Rental Units: Any bu~lding, structure, or part thereof, or land appurtenant thereto, or any other rental property rented or offered for rent for living or dwelling house un1.ts, and other real properties used for 11.Vlng or dwell~ng purposes, together w1.th all housing services connected with use or occupancy of such property such as common areas and r ecrea tl.onal fac~litl.es held out for use by the tenant. ( i) Tenant: A tenant, subtenant, lessee, sublessee or any other person entl.tled under the terms of a rental hous1.ng agrlEement to the use or occupancy of any rental un:Lt. ( j) Recognized Tenant Organl.Zatlon: Any group of tenants residing 1.n controlled rental units in the same building or in different buildings operated by the same management company, agent or landlord, who requests to be so designated. (k) Rent Ceiling: Rent ceiling refers to the limit on the maXl.mum allowable rent Which a landlord may charge on any controlled rental unit. 3 . 1 . . i ' . . ( 1) Base Rent Ceiling: The maximum allowable rent establ~shed in Section 1804(b). (m) Property: All rental un~ts on ~ parcel or -,lot ~ cont1suouS parcels or lots under common ~wn~rsh1p. l SECTION 3. Sect10n 1802 of the C1ty Charter is amended to l read as follows: $e~ti~~ll$~tl I 11aietimlie~tl~~att~11.~atd. JJrd>ll<lt~tli1h.~ tbitiyl(~~}ld~Y$lattetlitela~d>Fii~ald>!li~i$l!tii~l~J It~tl~ltt tv~t~ilI4!li~~I~ittld>tl$~~i~I~~~i~al$~~111~Fw~i!tlaltit~l$emi4t t~tetimlie~tl~cmitd>ll$c.tdj I 1~d>I~et$~~ls~~111~~I~wwvi~t~dlt~li~e t!ietiml~~~il~c~ttd>11.v<lt~ldil~$$lbeld>tI4teli.I~I~ultlq~~liti.d e144i~tld>tli~.I~ityl~!I$~~t~lmvmi~al I Itieltmietiml'vatdl$~.11 e*4t4i'elt~~ltvlld>wi~IIF~w~t$I.~dld~ti~$lu~iillti4It$t~a~~tl$~at~ i$lel~ditdli~la~dd>t~a i~lwit~tlbeljtd>+i$l~a$Id>!I$e~ti~~ll$~$1 (dl .ndr4'$~m$$[d>ftl~~1 (1t I It~4mit4Ite4i$tttii$~I$fl~111~~dtt~11.~lt.~i'1Idiii' ~~d~tl$e~ii~nll$~$(~}! tit I l$e4*I~timi!all~emaltl'$lundetl$e~iid>~11$1~l (~) I l$e$*li~iu~~iit~lt.1i~tl~~~~tl$~~ti~~ll$lll Sect~on 1802. Inte9rity and ~utonomy of Board. The Rent -- Control Board shall be ~ integral Eart of the 90vernment of the C~ty, but shall exerc~se its powers and dut~es under this Art~cle independent of and w~thout 1nterference from the C1ty Council, C).ty Manager, and City Attorney_ W~th respect to the internal ~r9an1zation and affa~rs of the Board: (a) Budget. The Board shall, prior to the beginning of ~ach fiscal year, ~uly ~ hold ~ publ1c h7arin~ on,a proposed. Eudset and ~dopt ~ annual budget. The C1ty Counc1l and the C1ty Mana~er shall have no authority to oversee, s~Ferv1se, or approve !91S budset. ~po~ final adoption, the budset shall be in effect for theens~1ng f1scal ye~r and the amounts stated therein shall be and become appropriated by the Board for ~~e respective obJects and purposes t~erein specified. ~t any meet1ng after the ~dopt1on of the budge~ the Board may amend or supplement the bud~et ~ the aff1rmative votes of at least three members. C~pies of the ~dopted budset and any amendments or supplements ~hall be f1led W1th the City Clerk, City Controller, and City Manaser. Necessary adJustments to qity administrative procedures shall be made. ----- (b) Personn~l. ~x~ept for ~he elected ~ appointed Commiss~oners, THE Administrator, and attorneys employed to represent or adv1se the Board. all employees of the Board are withi? the-classified civil service of the City. The Board shall 4 . r . . appo~nt an Administrator to administer and ~upervise the exercise ~ its powers and duties who shall be directly respons~ble to the Board. All employees of the Board, except the Administrator ~ attorneys, shall be ~ired, terminated, su~pended. AND demoted, ~a~6-effT-a~a-reea~~e~ in accordance with the provisions of Article XI of the Charter and implementing provisions of the < .Munic~pal Code. The Board shall ~lassify ~mployee positions. < establish ewployee salaries and benefits, a~d evaluate the performance of ~ts eITployees~ND BE RESPONSIBLE FOR THE LAYOFF -- -- -- AND RECALL OF ITS EMPLOYEES, PURSUANT TO REGULATIONS AND PROCEDURES THAT IT ESTABLISHES. The Board may' enter into and approve ~ MeMorandum of Understand1ng with representat~ves of its e~ployees concerning their wages, benef~ts, hours of work, and terms and condit~ons of employment in accordance with state law. The C1ty Council shalr-have no power-to abolish pos~t~ons ---- establ1shed or classified br the Board under th~s Art~cle, notw1thstandin9 any other section 2! this Charter. ANY REGULATION, POLICY, OR MEMORANDUM OF UNDERSTANDING OF THE BOARD CONSISTENT WITH THIS SUBSECTION SHALL PREVAIL OVER INCONSISTENT PROVISIONS OF THE MUNICIPAL CODE AND OTHER ORDINANCES OR RESOLUTIONSIDP THE CITY COUNCIL. --- -- --- (c) Board Legal Work. Legal staf~ hired by the Board shall represent and adv1se the Board, its Commiss1oners, and its staff ~ any C1V1l matters, actions, or proceedings in which the Board, its Co~missioners, ~ 1ts staff, in ~ by reason of the~r off1c~al capac1ty, ~ concerned ~ ~ ~ party. The Board may, in its sole discretion, and without approval of the City Council, reta1n private attorneys to furn1sh legal advice 2E representation in part1cular matters, actions ~ proceedings. (d) Contracts and Purchases. The Board shall complr w1th the provisions of the C1ty Charter providing for ~ central1Z~ purchas1ng ~sten and compet1t1ve b~dding, and shall procure ~oods and serV1ces ~ do other City agencies. Provided, however, that ~he Board shall have ~ole and final ?uthority to EMPLOY ATTO&~EYS, LEGISLATIVE LOBBYISTS, AND OTHER PROFESSIONALS, AND TO APPROVE contractS wi~h-a~d-emp~ey-~ne FOR SUCH profess1onal--- -- serV1ces. ~~e~~6~~~-a~~or~ey~-a~d-%e~isla~i~e-le58yis~sT (e) Conforming Regulations. If any portion of this Article is declared 1nvalid ~ unenforceable by decision of ~ court ~ competent iurisd~ction or rendered invalid or unenforceable EY state or federal lesislation, the Board shall n~ve authority to enact replacement regulations consistent with the intent and purpose of the invalidated provision and applicable law. Such replacement regulations shall supercede invalidated or unenforceable provisions of this Article and 1nconsistent ordinances 2! the Citz Council to the extent n~cessary to resolve any 1n~onsistency. 5 . . . . . . SECTION 4. section 1803 of the City Charter is amended to read as follows: Section 1803. Permanent Rent Control Board. . (a) Compositl.on: There shall be in the City of Santa t Monica a Rent Control Board. The Board shall consist of five l elected Commissioners. The Board shall elect annually as chairperson, one of its members to serVe in that capac1ty. (b) Eligibility: Duly qualified electors of the City of Santa Monica are el~gible to serve as Commissioners of the Board. (c) Full Disclosure of Holdings: Candidates for the position of Commissioner shall submit a ver~fied statement listing all of thel.r interests and dealings in real property, including but not limited to its ownership, sale or management, during the previous three ( 3) ye ars . ( d) Election of Commissioners: commissioners shall be elected at general municipal elections in the same manner as set forth in Article XIV of the Santa Monica Charter, except that the first Comml.ssioners shall be elected at a specl.al municl.pal election held wl.thin nl.nety (90) days of the adoption of this Article. The elected Commissioners shall take office on the first Tuesday following their election. (e) Term of Off~ce: Commissl.oners shall be elected to serve tenns of four years, beginnl.ng on the first Tuesday following thel.r election, except that of the first fl.ve Comml.ssioners elected in accordance with Section l803(d), the two Comml.ssioners receiving the most votes shall serve until Aprl.l 15, 1985 and the remaining three Commissioners shall serve untl.l April 18, 1983. Commissioners shall serve a maximum of two full terms. (f) Powers and Dutl.es: The Board shall have the following powers and duties: ( 1 ) Set the rent ceilings for all controlled rental unl.ts. ( 2 ) Require registration of all controlled rental unl.ts under Section 1803(q). - - (3 ) Establish a base rent ceiling on rents under Section 1804 (b). (4) To make adJustments in the rent ceiling in accordance with Section 1805. (5 ) Set rents at fair and equitable levels in order to achieve the intent of this Article. 6 - . . . . , (6) Hire and pay necessary staff, including hearing examiners and personnel to issue orders, rules and regulations, conduct hearings and charge fees as set forth below. . (7 ) Make such studies, surveys and investigations, conduct such hearings, and obtain such information as is < necessary to carry out its powers and duties. l (8) Report annually to the City Council of the City of Santa Monica on the status of controlled rental housing. (9 ) Remove rent controls under Section 1803(r). (10 ) Issue permits for removal of controlled rental units from rental housing market under Section IB03(t). (11 ) Admlnister oaths and affirmations and subpoena witnesses. (12 ) Establish rules and regulations for deducting penalt1es and settling ciyil claims under Section IB09. (13 ) Seek crim1nal penalties under Section IBIO. (14 ) Seek injunctive AND OTHER CIVIL relief under Sect10n 1811. (15 ) Char~e and collect !e9istration fees, includin9 penalties ~ late payments. (g) Rules and Regulations: The board shall issue and follow such rules and regulations. includlng those which are contained in this Article, as will further the purposes of the Article. The Board shall publicize its rules and regulations prior to promulgation in at least one newspaper of general clrculation in the City of Santa Monica. The Board shall hold at least one (1) publlC hearing to consider the views of interested parties prior to the adoption of general adjustments of the ce1lings for maximum allowable rents under Section 1805 and any dec1S1on to decontrol or reimpose control for any class of rental unlts under Section 1803(r}. All rules and regulations, internal staff memoranda, and wrltten correspondence explaining the decisions, orders, and policies of the Board shall be kept in the Board's off1ce and shall be available to the public for iflspection and copying. The Board shall publicize this Article so that all res1dents of Santa Monica will have the opportunity to become informed about their legal rights and duties under Rent Control in Santa Monica. The Board shall prepare a brochure which fully describes the legal rights and duties of landlords and tenants under Rent Control in Santa Monica. The broch ure will be available to the public, and each tenant of a controlled rental unit shall rece1ve a copy of the brochure from his or her landlord. 7 . . . . (h) Meetings: The Board shall hold .tl~+4+tlf~titt+~~~t J.~J such regularly scheduled meetings ~ ~ necessary to ensure the tlmely performance of ~~~ duties under thlS Artlcle. wlt t*~ff S~~eia~-mee~~~~~-~~ai~-6e-eailea-a~-~he-re~~~~t-ef-a~ lea~~-~h~ee-eefflffli~~~e~er~-e~-~he-Beara~--~~e-Beara-~hai~-heid-~t~ ifl~tia~-~ee~in~-ne-ie~er-t~afl-15-eay~-after-~a~~~g-effiee~ ALL REGULAR AND SPECIAL MEETINGS SHALL BE CALLED AND CONDUCTED IN < -- l ACCORDANCE WITH STATE LAW. - - (i) Quorum: Three Commissioners shall constitute a quorum for the Board. (J) Voting: The affirmative vote of three Commissioners of the Board is required for a decision, including all motions, regulatlons, and orders of the Board. (k) Compensation: Each Commissioner shall receive for every meeting attended seventy-five dollars ($75.00), but in no event shall any Commissioner receive in any twelve month period more than forty-seven hundred and fifty dollars ($4,750) for serV1ces rendered. _ (1) Dockets: The Board shall maintain and keep in its office all hearing dockets. (m) Vacancies: If a vacancy shall occur on the Board, the Board shall w1thin thirty (30) days appoint a qua11f~ed person to fill such a vacancy until the followlng municipal election when a qualified person shall be elected to serve for the remainder of the terIll. (n) Financing: The Board shall finance its reasonable and necessary expenses by charging landlords annual registration fees t+~!+tt.t!~*ifmt;,,~.itS,~;!+;tllilt;+i*;;t4Itltt!tttil!tlriil, .ft.tl++.,~t~i ~~t~~+ The Board may d~rect that all or part ~~ such fees ~ay be passed throu9h from landlords to tenants and may establish applicable cond~tions and procedures. The Board is also empowered to request and receive funding when and if lllljllllijIIII11!liillllllll!!!lllllllfllllilllifIJ!Ifil!!:~::: (0) Recall: Commissioners may be recalled in accordance with the provisions of Article XIV of the Santa Monica Charter. (p) Staff: The Board shall employ and pay such staff, including hearing examiners and inspectors, as may be necessary to perform its funct~on efficiently in order to fulfill the purpose of this Article. B - - ----- . ~ . . (q) Registration: Within sixty (60) days after the a,!option of this Artic le, the Board shall require the registration of all controlled rental units, which shall be re-registered at times deemed appropriate by the Board. The initial registration shall include the rent in effect at the time on the date of the adoption of this Article, base rent ce~ling, l the address of the rental unit, the name and address of the < landlord, the housing services provided to the unit, a statement indicating all operat~ng cost increases since the base rent ceiling date, and any other information deemed relevant by the Board. The Board shall require the landlord to report vacancies in the controlled rental units and shall make a list of vacant controlled rental units available to the public. If the Board, after the landlord has proper notice and after a hearing, determines that a landlord has wilfully and knowingly failed to reg~ster a controlled rental unit, the Board may author~ze the tenant of such a non-registered controlled rental unit to w~thhold all or a portion of the rent for the unit until such time as the rental unit is properly registered. After a rental unit is properly registered, the Board shall determine what portion, if any, of the withheld rent is owed to the landlord for the period in which the rental unit was not properly registered. ~~ether or not the Board allows such withholding, no landlord who has failed to register properly shall at any time increase rents for a controlled rental unit until such units are properly registered. (r) Decontrol: If the average annual vacancy rate in any category, classification, or area of controlled rental units exceeds five (5) percent, the Board is empowered, at its discretion and in order to achieve the obJectives of this Article, to remove rent controls from such category, classification or area. The Board may determine such categories, classifications, or areas for purposes of decontrol consistent with the objectives of this Article. In determining the vacancy rate for any category, classification or area of controlled rental units, the Board shall consider all available data and shall conduct its own survey. If units are decontrolled pursuant to this sucsection, controls shall be reimposed if the Board finds t~at 'he average annual vacancy rate has thereafter fallen belo~ ~~ve '5) p~rcent for such category, classification or area. (s) Secur1ty Depos1ts: Any payment or deposit of money the pr~mary function of which is to secure the performance of a rental agreement or any part of such agreement, including an advance payment of rent, shall be placed in an interest bearing .~t~~*i+i:t;T~:;*t.;ll~lil;I~;;$t~li$;t!*~~I;~~I~~4*1~~lttt4~' ~Tfw~f4tl~* until such time as it is returned to the tenant together w~th all accrued interest or +*itit+~]t~llt used b~ the landlord in accordance with state law. ~+ ~*t+t+ 1,*I+'l~ iti!it!!11:tlitti11!iJt!!lli!littliftiii ttf!!litJtl1r!i:.,t~~. ~ . r . . . ' , , ttlttiit::t!~llttitt~~tt:4ttt~*tt~tt!ttiit\:tititttfl~1~~:I~~:~*t may regulate the amount and use of security deposits cons1stent with the purposes of this Article and state law. . (t) Removal of Controlled Unit Fram Rental Housing Market: < (1) Any landlord who desires to remove a controlled . rental unit from the rental housing market by demolition, conversion or other means is required to obtain a permit from the Board prior to such removal from the rental housing market in accordance with rules and regulations promulgated by the Board. In order to approve such a permit, the Board is required to ~.*+ +,~~I~fltl+lf~++~t~,~lft+~t,~+t f1nd tt!*~ttt.~+'~tl!~ttt11*lt+~l~tt~ttt!tt~lti~~tlt!t~~ttll*illttt~ tt!!;~ltlt;liIli!ffliill!l!t!tlft!li~ltltlt*ii;tJjt;ltfIt~~tll. t~11 1~.tlt~+lt'~~t41Itflt*+ltt:t~~ll+41t~tt'+I*~~t tt!l~t$~!t:~tf+'lll'fff ilt~+'+~ p 1 ~fl~~ i ili'lt~+ ~iltl~f it) that the landlord cannot make a fair return ~* ~~t+,tT+*t by retain1ng the controlled rental unit. (2) Notw1thstanding the foregoing provisions of this subsection, the Board may approve such a permit: ill ( i ) If the Board finds that the controlled rental unit is un1nhab1table and is incapable of being made habitable in an economically feasible manner, or ft! (ii) If the permit is being sought so that the property may be dev~loped with multifamily dwelling units and the permit app11cant agr~es as a condition of approval, that the units will not '):;; e>, ;mpt from the provisions of this Article pursuant to SectIon 1801 \c) and that at least fifteen (15) percent of the controlled rental units to be built on the site will be at rents affordable by persons of low income. - . ill The Housin9 Element 2! the General Plan of the Ci~y of Santa Monica shall at all times contain ~ provision that ne1ther the City ~ounc1l nor any City agency shall approve an app11cation for tentat1ve subdivision tract map or parcel ma~ nor 1ssue ~ Residential Build1ng Report fo~ ~ converted unit unt11 and unless the applicant first obtains ~ removal permit ~ r~quired EY this Section. 10 -- ~- . r . . . , (4) The Board shall render its final decis10n w1thin one hundred ~nd tW€1ty (120) days of the filins of ~ completed applicat10n under this section. . SECTION 5. Sect10n 1805 of the C1ty Charter is amended to read as fo 1 lows : l t Section 1805. Ind1vidual and General Adjustment of Ceilings on Allowable Rents. (a) General AdJustment: The Board may, after holding those public hearings prescr1bed by Section 1803 (g) , set and adjust upward or downward the rent ceiling for all controlled rental un1ts 1n general and/or for particular categories of controlled rental units deemed appropriate by the Board. Such an adjustment. however, need not take effect immediately, and the Board may dec1de that new rent ce1lings shall not take effect until some reasonable date after the above-stated time periods. ( b) Annual" General',AdJustment: Each year the Board shall generally adJust rents as follows: (1) Adjust rents upward by granting landlords a ut~11ty and tax increase adjustment for actual increases in the C1ty of Santa Monica for taxes and ut1lities. ( 2 ) AdJust rents upward by granting landlords a maintenance increase adJustment for actual increases in the City of Santa Mon1ca for maintenance expenses. ( 3 ) Adjust rents downward by requiring landlords to decrease rents for any actual decreases in the City of Santa Monica for taxes. In adjusting rents under this subsection, the Board shall adopt a iriiI!itrt~rtii1iitii\tirit!riittft!lfft~ti~t!t!itJtt!tttt~l+p~+ (c) Petitions: U~on rJceipt of a petition by a landlord and/ or a tenant, the rraXiI'uIYl ..:"ent of individual controlled rental units may be adjusted upward or downward in accordance with the procedures set forth elsewhere in this Section. The petition &~all be on the form provided by the Board and shall include ~ declaration ~ the landlord that the unit meets ~ll requirements of Section 180STfT. NotwithstandIng any other provision of this Section, the Board or hearing examiner may refuse to hold a hearing and/or grant a rent adjustment if an individual hearing nas been held and decision made with regard to maximum rent within the preV10US six months. (d) Hearing Procedure: The Board shall enact rules and regulat10ns governing hearings and appeals of individual 11 :. '. . . adJustment of ceilings on allowable rents which shall include the followJ.ng: (1) Hearing Examiner: A hearing examiQer appointed by the Board shall conduct a hearing to act upon the petition for J.nd1vidual adJustment of ceilings on allowable rents and shall have the power to administer oaths and affirmations. . l (2) Notice: The Board shall notify the landlord if the petition was filed by the tenant, or the tenant, if the petition was fJ.led by the landlord, of the receipt of such a pet1tion and a copy thereof. (3) Time of Hearing: The hearing officer shall notify all parties, as to the time, date and place of the hear1ng. (4) Records: The hearing examiner may requ1re either party to a rent adjustment hearing to provide it with any books. records and papers deemed pert1nent in addition to that information contained in ~egistration statements. The hearing examiner shall conduct a current building inspection and/or request the City to conduct a current building inspection if the hearing examiner fJ.nds good cause to believe the Board's current information does not reflect the current condition of the controlled rental unit. The tenant may request the hear1ng exam1ner to order such an inspection prior to the date of the hear1ng. All documents required under this Section shall be made available to the parties involved prior to the hearing at the off1ce of the Board. In cases where information filed in a petition for rent ceiling adjustment or in addJ.tional subm1ssions filed at the request of the hearing examiner is inadequate or false, no action shall be taken on said petition unt11 the deficiency is remedied. (5) Open Hearings: All rent ceiling adJustment hearings shall be open to the public. (6) Right of Assistance: All parties to a hearing may have assistance in presenting evic~nce dnd develop1ng their pos1t1on from attorneys, legal wo_~ers, rec~9nized tenant organiza tion representatives or any ot.iler pE::crsons designated by said parties. - (7) Hearing Record: The Board shall make available for inspection and copying by any person an official record which shall constitute the exclusive record for decision on the issues at the hearing. The record of the hearing, or any part of one, shall be obtainable for the cost of copying. The record of the hearing shall include: all exhibits, papers and documents required to be filed or accepted into evidence during the proceedings; a list of participants present: a summary of all testimony accepted in the proceedings: a statement of all materials off1cially noticed: all recommended decisions: orders 12 ---- . . . ' . . and/or rulings~ all final decisions, orders and/or rulings, and the reasons for each final decision, 0rder and/or ruling. Any party may have the proceeding tape recorded or othe~ise transcribed at his or own expense. . (8) Quantum of Proof and Notice of Decision: No . indiv~dual adJustment shall be granted unless supported by the . preponderance of the evidence submitted at the hearing. All parties to a hearing shall be sent a notice of the decision and a copy of tne findings of fact and law upon which said decision is based. At the same time, parties to the proceeding shall also be notified of their right to any appeal allowed by the Board and/or to judicial review of the dec1sion pursuant to this Section and Sect10n 1808 of this Article. (9) Consolidation: All landlord petitions pertaining to tenants in the same building will be conso11dated for hearing, and all petitions filed by tenants occupying the same building shall be consolidated for hearing unless there is a showing of good cause not,to consolidate such petitions. (10) Appeal: Any person aggrieved by the decision of the hearing examiner may appeal to the Board. On appeal, the Board shall affirm, reverse or mod1fy the dec1sion of the hearing exam1ner. The Board may conduct a de novo hear1ng or may act on the basls of the record before the hearing exam1ner wlthout holding a hearing. (11) Flnality of Decision: The decision of the hearing examiner shall be the fl.nal decision of the Board in the event of no appeal to the Board. The decision of the hearing examlner shall not be stayed pending appeal~ however, in the event that the Board on appeal reverses or modifies the decision of the hearing examiner, the landlord, in the case of an upward adjustment in rent, or the tenant, in the case of a downward adJustment of rent, shall be ordered to make retroactive payments to restore the parties to the position they would have occupied had the hear1ng examiner's decision been the same as that of the Board. (12 ) Time for Decision: The _ule!! and regulations adopted by the Board shall provide for final a,::tion on any 1nd1vidual rent adjustment petition witt,in one-hundred and twenty (120) days, following the date of filing of the individual rent aOJustment pet1tion. (l3) Board Action in Lieu of Reference to Hearing Examiner: The Board, on its own motl.on or on the request of any landlord or tenant, may hold a hearing on an individual petition for rent adJustment without the petition first being heard by a hearing examiner. (14) Decisions decreasing rents shall remain in effect until~ Board flnds that the landlord has corrected the - -- - - 13 . ,. . . defect warranting the decrease. The Board shall, EY regulation, establish procedures for making comp11ance det~rminations. (e) In making individual and general adjustments of the rent ceiling, the Board shall consider the purposes of this Article and the requirements of law. The Boara may adopt ~ its < fair return standard any lawful formula, includins but not < l1m1ted to one based on investment or net operating income. The Board shall consider all factors relevant to the formula it employs~ such factors ~ 1nclude: .,~/t~.+l]~pt~t+lltlf~4.lt~t '+llt,+,t4*tlf~t*~l*~tl,~~ ~~~l+~l ~ increases or decreases in operating and maintenance expenses, the extent of utilities pa1d by the landlord, NECESSARY AND REASONABLE capital improvement of the controlled rental unit as dist1nguished from normal repair, replacement and maintenance, increases or decreases in living space, furniture, furnishings, ~tl equipment, or services, substantial deterioration of the controlled rental un1t other than as a result of ordinary wear and tear, failure on the part of the landlord to provide adequate housing services or to comply substantially with applicable housing, health and safety codes, federal and~state income tax benefits, the speculative nature of the investment, whether or not the property was acquired or is held as a long term or short term investment, .*~ the landlord's rate of return on investment, the landlord's current and base date Net Operating Income, and any other factor dee~ed relevant ~ the Board 1n prov1d1ng the landlord a fa1r return.- +11i'lt~'I~'~lll~+1~tit~+'llff~~4l1~';t' *~~tt;1~lt~t~1t~ttf~ll~tt~~;tt*ttt~~+tl*+~~++.ttlt~I~~+1 ~,4l~t~ tttt;t!!ilitt~!ttilli!Itlltit!t!t liitftlr!ttt!iltllirt!!ttitft nut 1 ! 'CD," /, ,,', ::1>' nm~: nm 1 i' "", J - :Hi I let> ttt~ftflt~l tIJlt+l ~l ~ + rl ,c ~. t ,f + I ~l ~ 1(41- l4>t!. J'r}t~cp~ ~~ t <B III It ( ~I;' . l '( I hi: ,~;( .(~~ -.< ~h. ~I t l~. .(~ .~ ~ ..l ~. ~lll ~i I .(.l. f ~I 11 ~1 .( '( 4* :0. r~\ Y II .(ll II ~( 'c (>I (ll ~(( ~Y ~4~+lcp~I.~~Jtl4>4Icp ljll+ ~ t~ll J III (f) No landlord shall increase rent under this Article if the landlord: 14 " . . . (1) Has failed to comply with any provision of this Article and/or regulations issued thereunder by the Boaed, includ1ng the provis1ons requiring the payment ~ registrat10n fees and registration penalties, or U . (2) Has failed to comply substantially with any applicable state or local housing, health or safety law. No ~ landlord shall increase rent unless the notice increasing rent contains ~ statement in substantially ~h~ following form: "The undersigned <,landlor~) certifies that this property complies s~bstantially with all state and local ~ousin9' health and safety laws." If a landlord fa1ls to comply with this subsection, the tenant ~ay refuse to pay the-rmproperly noticed increase, maY-- seek administrative or civ1l rernedles under this Ar~icle, and may raise the landlord's noncompliance ~ ~ affirmat1ve defense in any resulting unlawful detainer action. ill Has, at the time of serving ~ notice s:!. ~ 1Dcrease, held a unit vacant for three (3) consecutive months or longer w1thout good cause deter~ined b~ the Board. No landlor~ shall increase ~ unles~ the not1ce ;ncreasing rent contains ~ of the follow1ng state~ents, or their substa~tial . equ1valents: "The undersi~ned (landlord) certifies that ~ un1t ~ the ~ property as the unit subject to this rent increase not~ce IS AND has been vacant for three (3) consecutive months or long~r.~or "The ~ndersigned (landlord) certifies that one or - more unl ts .2!! the property r,5 ~D hC3:,s; been vacant f,?r :three l3 ) consecut~ve months or longer, and the Santa Monica Rent Control Board ~ determined that there is good cause for such vacancy." If a landlord fails to comply with this subsect1on, tenants on the-same property ma)' refuse tc;--pay the improperly noticed - 1nCrease, may seek administrative ~ civil ~emed1e~.under this A~ticle, and may raise the landlords noncompliance ~ ~ aff1rmative defense in any resulting unlawful detainer action. (9) The Board shall provide ~n eXp'e~ited procedure for consideration of rent increases for capital improve~ent~ where both the landlord and the current tenant(s) of the effected units CO'I1Cur in the nature of the _capital improvement to be made or ~~ready made. All other rent increases ~ capital improv~me~t shall proceed according to re~ular administrat1ve procedur~. SECTION 6. Section 1806 is amended to read as follows: - Section 1806. Eviction. No landlord shall take action to terminate any tenancy including service of any notice to ~uit or other eviction not1ce or bring any action to recover possession or be granted recovery-of possession of a controlled rental unit unless: (a) The tenant has failed to pay the rent to which the landlord is entitled under the rental housing agreement and this Art1cle. IS . . . . . (b) The tenant has violated an obligation or covenant of his or her tenancy other than the obligation to surren~er possession upon proper notice and has failed to cure such violation after having received written notice thereof from the landlord in the manner required by law. < (c) The tenant is committing or expressly permitting a l nU1sance in, or is causing substantial damage to, the controlled rental unit, or is creating a substantial interference w1th the comfort, safety, or enjoyment of the landlord or other occupants or neighbors of the same. ( d) The tenant 1S convicted of using or expressly permitt1ng a controlled rental unit to be used for any illegal purpose. (e) The tenant, who had a rental housing agreement which had terminated, has refused, after written request or demand by the landlord, to execute a written extension or renewal thereof for a further term of like duration and in such terms as are not inconsistent with or violative of any provisions of this Article and are materially the same as in the previous agreement. ( f) The tenant has refused the landlord reasonable access to the controlled rental unit for the purposes of making necessary repa1rs or improvements required by the laws of the United States, the State of California or any subdivision thereof, or for the purpose of showing the rental housing to any prospective purchaser or mortgagee. (g) The tenant holding at the end of the term of the rental housing agreement 1S a sub-tenant not approved by the landlord. (h) The landlord seeks to recover possession in good faith for use and occupancy by herself or himself, or her or his children, or parents. It*1,"t~1~~~t~tttfftltt$tt't+4t! ZP~l*+ttt*+ll~ ~ 1.4>4tt,t For purposes of evict~ons under this subsection: ill ~ "landlord" shall be defined ~ ~ natural person who has at least ~ 50 percent ownersh1p interest ~ the property. ~ ~ eviction may take place !! any landlord ~ ,~pumerated relat1ve already occupies ~ un1t ~ the property. ill The notice ~~rminating tenancy shall contain the nawe, address and relationship to the landlord of the person intended to occupy. (4) 'I'he landlord or enumerated relative must intend in sood faith to move into the unit within 30 days after the tenant vacates and to occupy the unit as a primary residence for at least six months~ The Board may adopt-regulations gqverning the deterrn1nation of good fa4th. 16 - ------- - -- ',,' I" . . 1il If the landlord or relative specified on the notice terminatin9 tenancy fails to occupy the ~ within 30 days after the tenant vacates, the landlord shall: (i) Offer the unit to the tenant who vacated it. l (ii) Pay to said tenant all reasonable expenses l incurred in movin9 to and70r from the un1t. (6) No eviction pursuant to this subsection shall be allowed in any condomin1um ~ stock cooperat1ve unit wh1ch has been converted fro~ ~ apartment ~ other rental unit after April 10, 1979, unless the Rent Control Board has issued a removal perIT'it or declared ~ vested ri9"ht for said un1t. As used in this subpart, ~ unit shall be deeMed converted after April 10, 1979, if on April 10, 1979, the recorded tract ~ap or parcel map for the property showed the unit ~ included ~ the property. (i) The landlord seeks to recover possession to demolish or otherwise remove the controlled rental unit from rental residential housing use after having obtained all proper permits from the City of Santa Monica. Notwithstanding the above provisions, possession shall not be granted if 1t 15 determined that the eviction is in retaliation for the tenant reporting v10lations of this Article, for exercising rights granted under this Article, including the right to w1thhold rent upon authorization of the Board under Section l803(q) or Section 1809 or for organizat1on other tenants. In any notice purporting to terminate tenancy the landlord shall state the cause for the termination, and in any act10n brought to recover possession of a controlled rental unit, the landlord shall allege and prove compliance with this Section. Any violation of this Section shall render the landlord liable to the tenant in a civil action for actual and punitive damages. SECTION 7. Section 1809 of the City Charter is amended to read as follows: (a) Any landlord who demands, accepts, receives, or retains any payment of rent in excess of the maximum lawful rent, in violation of the provisions of this Article or any rule, regulation or order hereunder promulgated, includin9 the provisions ensuring compliance with habitability ,standards and re~istration fee requirements, shall be liable ,+l~'~+t*~ft~ pt~t~~,~ 1n a civil action to the tenant from whom such payments are demanded~ accepted, received or retained, for reasonable attorney.s fees and costs as determined by the court, plus ~~~les in '*I.*tl~~I~~lt+t+I~~,~t+~t~~ll4t+1 t*$~~l t~tlt*t++lill t+.tl~~ the amount by which the payment or payments demanded, accepted, received or retained exceeds the maximum lawful rent. 17 --..... ~- ., - ~ civil penalty ~ treble the amount of excess charges shall be awarded a9ainst the landlord upon ~ showin9 that the landlord has acted willfully ~ with oppression, fraud 2E malice. (b) In lieu of filing a civil action, .+ljt~f~4,4If~tl~* $'~4~~*ll.$tl f'l~ ~ tenant may file ~ adrninistrat1ve complai~t. The Board shall establish by rule and regulation a hearing \ ~+i+tt.t+.ti*.t~fft*+I.~;~~ti+fftft'wt~+!tt,tf+~ftt:~fl!tl!rt~t++~ t~lw~t~~'4tlt~I$+~if~,ll~~tl ('l~ I~rt+tl~'~~ ~ t+ ~~,. ~ ill Upon the filins of the complaint~ the Board shall 1nform the parties of the availability of mediation services ~ funded or controlled ~ ~~~ ~~ard. W~thi~ 60 days of the 1i11n9 of the ~omplaint, ~ upon wr1tten reJect~on of rnediat10n services ~ e1ther the la~~lord ~ ~~n~nt, the Board shall ~ ~ date for he~rin9 of the compla1nt. 11l ~ any administrative ~earin9 under this . Section, a landlord who demands, accepts, receives or reta1ns any payment or rent in excess, of the maximum -lawful rent shall be l~able for damages in the-amount of ~ excess and may be liable for ~ penalty of ~ to $500. The tenant may deduct the penalty and award of d~~age~ from future rent payments in the manner provided bY-the Board. An order autho~izin~ rent withpolding under this Article shall surV1ve the sale or other transfer of ~h~ prqperty and shall be bindin~ upoO-SUccessors of the 'landUord aaainst whom the order was made. If a tenant authorized to wrthhold-rent-under th1S Article vacates the property, the- landlord snarl pay to such tenant a sum equa~ !S the balance of the rent that the tenant could have withheld. ---- - (c) If the tenant from whom such excessive payment is demandedl accepted I received or retained in violation of the foregoing provisions of this Article or any rule or regulation or order hereunder promulgated fails to bring a civil or administrative action as provided for in section 1809 (a) and 1809 (b) within one hundred and twenty (120) days from the date of occurrence of the violation, the Board may settle the claim arising out of the violation or bring such action. Thereafter, the tenant on whose behalf the Board acted is barred from also bringing an action against the landlord in regard to the same violation for wh1ch the Board bas made a settlement or brought action. In the event the Board settles said claim, it shall be ~ntitled to retain the costs it incurred in settlement thereof, ahd the tenant against whom the violation has been committed shall be entitled to the remainder. (d) The appropr~ate court in the jurisdiction in which the controlled rental unit affected is located shall have Jurisdiction over all actions brought under this Section. 18