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sr-092579-7aSanta Monica, California. September 18, 1979 T0: FROM: SUBJECT Mayor and City Council City Manager Rent Control Proposed Budget SEP 2 5 1979 Introduction This report transmits the budget adopted by the Rent Control Board at their meeting September: 8, 1979. Also transmitted is a proposed resolution for adoption by the :City Council amending the Rent Control budget for 1979-80 fiscal year. Background Section 1803 (n) of Article XVIII Rent Control, provides... "The Board shall finance its reasonable and necessary expenses by charging landlords annual registration fees in amounts deemed reasonable by the Board." Further., the City is required to fund said reasonable and necessary expenses for the first six months of the Board`s operation. (See attached: Rent Control Charter Amendment.) The Board has reviewed and adopted the proposed budget as provided in Ordinance No. 1127. The proposed budget is intended to cover costs from October 1979 through June of 1980. Discussion The budget amendment as proposed reflects those expenses considered reasonable and necessary by the Rent Control. Board. There are other costs which the City is assumed to absorb. These costs. fall mainly'in the area of space, overhead and litigation expense. CEP 2 5 1979 Mayor and City -0ouncil - September 1$, 1979 -2- No provision is made for rental of office space or meeting rooms. Rent Control currently occupies approximately 1,750 square feet in City Hall. Similar space in a downtown store front could range from $.65 to $.90 per square foot or $10,.237.50 to $14,175.00 for the nine months. Inasmuch as no other City Department is currently charged rent nor was any. Department forced out of City Hall due to the. creation of rent control, a case can be made for not including this cost in the budget. The same can be said for meeting space. No Board or Commission is charged for the Council Chambers and no such charge is suggested. Many rent control meetings have been held in the East Conference Room of the Civic Auditorium. The normal charge for this room is $250.00 per meeting. If this charge is not to be made, it should be specifically waived by the Council as was the case during the. first six months of operation. More difficult than the above is the question of indirect costs incurred by other departments.. These costs are ones which would not be incurred if Rent Control did not exist. Indirect costs have been estimated at $52,433.00 for the nine months. (See attached: Calculation of Indirect Costs Applicable to Rent Control Administration..) Indirect costs of some departments are recovered by their contributions to the General Fund; i.e. the Airport, the Civic Auditorium, Transportation, and the enterprises. Another potentially large expenditure area which. has not been fully treated too is that of the Attorney's Office litigation expenses. During the recent Airport litigation, the Council appropriated more than $50,000.00 in Airport funds for the defense of the. suit. In view of .the legal history of rent control to date, Mayor and City Council -3- September 18, 1979 it would seem prudent to include sufficient funds for civil litigation or, alternatively, at such time as the $30,000.00 which the Board has proposed is exhausted, appropriate the additional needed funds. One problem with the latter choice is the obvious fact that the City General Fund will carry the burden of the Board until such time as the annual fee is adjusted to reflect the costs. On the other hand, inclusion of such projected contingency costs might raise charges that the City is "pumping up" the Rent Control budget in order to unrealistically raise the fee landlords .must pay. In any event, the Council must be aware that there will be a cash flow lag between the time the fee is imposed and the time it is collected. The General Fund will be making-up this lag time but will be reimbursed as fees are collected.. It would be safe to say that the cash flow will always be behind expenditures due to unpredictable elements such as the percentage of bad debts, uncollectables and exemptions. No effort has been made to compare the proposed budget with other rent control agency budgets. Santa Monica's Rent Control Charter Amendment is .somewhat unique in terms of the degree of detail mandated. Comparison with Los Angeles, for. example, is somewhat like comparing American football with soccer; both are played on a rectangular field and both involve a ball but the similarities end there. Mayor and City Council -4- - September 18, 1979 Alternatives 1. Adopt the budget as proposed by the Rent Control Board and absorb additional costs; if arty, in the General Fund. 2. Adopt the budget as proposed by the Rent Control Board and direct the Finance Director-to seek reimbursement from the Rent Control Board for all costs incurred in 'excess of those budgeted or when a shortf all in revenues occur. 3. Amend the proposed budget to increase or decrease the reasonable and necessary costs. Recommendation Alternative 2: Adopt the attached Resolution as proposed by the Rent Control. Board and direct the Finance Director to seek reimbursement for all expenditures in excess of the appropriation, if any. Prepared By: Charles Kent McClain City Manager CKM:dv1 Attachment Santa Monica, California, September 13> 1979 T0: City Manager FROM: Reht Control Staff SUBJECT: Rent Control Administration Budget Introduction This report transmits the budget adopted by the Rent Control Board at their meeting of September &, 1979. It is submitted for consideration by the City Manager and the Mayor and City Council. Contingent upon necessary approvals, this report also transmits a request fora City Council resolution amending the Rent Control Budget to the City's 1979-1980 Budget. Background Proposition "A" enacted by the voters of the City of Santa Monica on April 10, 1979, sets forth the powers and duties of the Rent Control Board in financing implementation of the Charter Amendment. It stipulates that the City of Santa Monica appropriate funds for reasonable expenses of the Board during the six month period following adoption of the article and after that, "the Board shall finance its reasonable and necessary expenses by charging landlords annual registration fees in amounts deemed reasonable by the Board". Financial self-sufficiency is thus required by October 1, 1979• It is the Board's desire to expeditiously adopt a fee and a collection process to ensure the commencement of a flow of revenues after the October 1 termination of City funding. As a first step in the fee collection process, the Board has reviewed and adopted a budget in accordance with Section 4612 of Ordinance No. 1127 (CCS). This final budget is transmitted herewith for consideration by the City Manager and the City Council. To; City Manager -2- Discussion September 13, 1979 The budget adopted by the Board sets projected expenditures for the nine month period of October 1, 1978 through June 30, 1980 at $447,638. Projections of this figure to a twelve month period for purposes of comparison yields an annual division total of $596,851. It is anticipated that future budget adoption and fee collection activities will doincide with the City's fiscal year, Line item figures in the budget were obtained based on Rent Control expenditure patterns to date, expenditures of comparable City departments, input from City staff and review and revision by the Rent Control Board. Projections were based on the needs of the office as it currently operates in implementing the Charter Amendment. Therefore, any alteration in the law through legal or legislative action may impact the budget as well. The Board is required by law to charge landlords an annual registration fee to finance its reasonable and necessary expenditures, as projected in the attached budget. While they have yet to make some policy decisions affecting the establish- ment of a registration fee, the fee will be set at a level such that anticipated revenues will cover projected expenses. The mechanisms of fee collection are currently being developed and billing can begin as early as the second week in October. Contingent upon review and revision of the Rent Control Administration budget as outlined in Section 4612 of Ordinance No. 1127 (CCS), staff requests a resolution by the City Council amending the City's 1979-80 budget to reflect the new division's projected expenses and anticipated revenues. v To`; City Manager Recommendation -3- September 13, 1979 This report transmits the budget adopted by the Rent Control Board to the City Manager and a request fora resolution by the City Council amending it to the City of Santa Monica's 1979-80 budget Prepared by; Janice Warne There is no staff recommendation. Attachments: Budget Summary Budget Worksheets Summary of Estimated Indirect Costs Rent Control Charter Amendment Ordinance No. 1127 (CCS) Resolution of the City Council of the City of Santa Monica Amending the 1979-80 Budget CITY OF SANTA MONICA, CALIFORNIA DIVISION DESCRIPTION AND OBJECTIVES PROGRAM DIVISION ACTIVITY REMT CONTROL ADMINISTRATIOM DIVISION DESCRIPTION: THIS DIVISION IS RESPONSIBLE FOR IMPLEMENTATION OF THE RENT CONTROL CHARTER AMENDMENT. SPECIFIC GOALS: I. REGISTER ALL CONTROLLED RENTAL UNITS ANNUALLY. 2. VERIFY AND PROCESS COMPLAINTS OF NON-COMPLIANCE AND HOLD HEARINGS. 3. VERIFY AND PROCESS ItJDIVIDUAL APPEALS qND HOLD HEARINGS. 4. PROVIDE TELEPHONE INFORMATION AND REFERRAL. 5. PROVIDE DATA gNALYS ISFOR RENT CONTROL BOARD FOR PERIODIC RENT ADJUSTMENTS. ACCOUNT N0. 700-265-000 RECOMMENDED BUDGET 447,635 SUPPLEMENTAL ACTIVITIES COST ALL SUPPLEMENTAL ACTIVI T.I ES COSTS ARE INCLUDED IN THE RECOMMENDED BUDGET, PERSONNEL FUNDS FY 78-.79 0 60,000 FY 79-80 17S 447.638 ALL BUDGET FIGURES ARE FOR A NINE MONTH PERIOD FROM OCTOBER 1, 1979 TO JUNE 30, 1980 t CITY OF SANTA MONILA, CALIFORNIA BUDGET DETAIL AND PROJECTIONS PROGRAM DIVISION ACTIVITY ACCOUNT N0, RENT CONTROL ADMIN LSTRATIDN 700-265-000 /BUD-R EUSD/LINE / OBJECT /REQUEST REC 011MEND FlPPROV ED / FUTURE YEARS PROJECTIONS FY 78-79 ITEM / DESCRIPTION /FY 79-80 /FY 79-80 /FY 79-80 / FY 80-81 /FY 81-82, /FY 82-83 / 36,000 2 SALARIES & WAGES 258,074 1,200 4 UTILITIES 2,300 10,000 5 OFFICE SUP & EXP 22,200 300 6 ADVERTISING 800 7 RENT 3,500 1,000 8 PERSONAL AUTO EXP 2,350 9 CONF, MEETINGS, TRAVEL & DUES 600 Iz INS s suR BoNO 15,836 3,400 15 DEPT OPERATING SUP 19,050 6,100 17 CONTRACTUAL SERVICES 64,700 19 OTHER EXPENSES 47,863 2,000 29 EQUIPMENT 10,365 60,000 DIVISION TOTAL 447,638 DESCRIPTION OF LINE ITEMS: 2. SEE PAGE S 7. THIS AMOUNT INCLUDES RENTAL OF A KEYPUNCH MACHINE, 12. THIS AMOUNT INCLUDES UNEMPLOYMENT INSURANCE, WORKERS' COMPENSATION, HEALTH AND DENTAL BENEFITS AND COMPREHENSIVE LIABILITY INSURANCE, 15. THIS INCLUDES $10,000 FOR SPECIAL FORMS AND $8,000 FOR PUBLICATION OF INFORPUaT IONAL BOOKLET. 2 BUDGET DETAIL AND PROJECTIONS 17. THIS INCLUDES $14,400 FORA CONSULTANT WORKING IN THE CITY'S DATA PROCESSING DEPARTMENT, $I2 ,000 FOR WORK TORE DONE BY THE CITY'S DATA PROCESSING DEPARTMENT, $10,000 FOR WORK TO BE DONE BY THE CITY ATTORNEY'SOFF ICE, $20,000 FOR OUTSIDE LEGAL FEES AS NECESSARY AND $7,800 FOR SECURITY PERS ONNEL AT BOARD MEETINGS, ., 19. THIS INCLUDES $30,063 FOR RETIREMENT BENEFITS AND $17,800 FOR THE RENT COIJTROL BOARD ALLOWANCES, 29. SEE PAGE 4. 3 CI7Y OF SANTA MOIJICA, CALIFORPIIA CAPITAL OUTLAY PROGRAM ITEM OR PROJECT 1. Typewriter (2) 2. Typewriter Stand (3) 3~ Desk (12) 4. Chair (12) 5. Reception Chair (8) 6. 4-Drawer File Cabinet (7) DIVISION ACTIVITY RENT CONTROL ADMINISTRATION / REQUEST / RECOMMEND ! APPROVED/ FY 79-EO FY 79-SO FY 79-80 1,174 300 2,000 800 1,067 640 ACCOUNT N0. 700-265-000 ITEM / REQUEST / RECOMMEND / APPROVED / OR PROJECT FY 79-80 FY 79-80 FY 79-80 J• 2-Drawer File Cabinet (4) 267 8. Adding Machine 150 9. Hand Calculator (4) 167 10. Cassette Recorder (2) 200 11. Computer Terminal 3,100 12. Cable for Installation of Terminal 500 TOTAL CAPITAL OUTLAY 10,365 DESCRIPTION OF CAPITAL OUTLAY ITEMS: I-8 These items will be necessary [o furnish the Rent Control Administration Offices. 9-10 Equipment for use in investigative and hearing work. 11-12 Terminal installation in Rent Control Office for on-line use and updating of data base stored in City computer. 4 CITY OF SANTA MONICA, CALIFOP,N IA BUDGETED POSITIONS AND SALARIES SUMMARY PROGRAM DIVISION ACTIVITY ACCOUNT N0. . RENT CONTROL ADM INISTRATION 700-265-000 / REQUEST / RECOMMEND / BUDGETED / REQUEST / RECOMMEND / APPROVED / OBJECT / REQUEST /APPROVED / 79-80 79-80 POSITIONS FY 79-80 FY 79-80 FY 79-80 / DESCRIPTION /FY 79-80 /FY 79-80 / 1 RENTAL HOUSING ADMIN. 2 1,214 PERM. EMPLOYEES 222,358 I ADMINISTRATIVE ASSIST. 16,303 OVERTIME 2,500 1 OPERATIONS MANAGER 16,176 STANDBY 3 HEARING EXAMINERS 40 655 , TEMPORARY 33,216 3 INVESTIGATORS 36,013 OTHER 1 SENIOR SECRETARY 10,861 TOTAL SALARIES 1 SECRETARY 8,976 qND V/AGES 258,074 3 INTERMEDIATE CLERKS 25,011 I ASSISTANT PLANNER 13,422 i DEPUTY ATTORNEY III 9,746 2 DEPUTY ATTORNEY I 23,981 17.5 T07AL 222,358 5 CITY OF SANTA MONICA, CALIFORNIA DIVISION DESCRIPTION AND OBJECTIVES PROGRAM DIVISION ACTIVITY RENT CONTROL ADMINISTRATION DIVISION DESCRIPTION: THIS DIVISION IS RESPONSIBLE FOR IMPLEMENTATION OF THE RENT CONTROL CHARTER AMENDMENT. SPECIFIC GOALS: 1. REGISTER ALL CONTROLLED RENTAL UNITS ANNUALLY. 2. VERIFY AND PROCESS COMPLAINTS OF NON-COMPLIANCE AND HOLD HEARINGS. 3. VERIFY AND PROCESS INDIVIDUAL APPEALS AND HOLD HEARINGS. 4. PROVIDE TELEPHONE INFORMATION AND REFERRAL. 5. PROVIDE DATA ANALYSIS FOR RENT CONTROL BOARD FOR PERIODIC RENT ADJUSTMENTS. ACCOUNT N0. 700-265-000 RECOMMENDED BUDGET 447,638 SUPPLEMENTAL ACTIVITIES COST ALL SUPPLEMENTAL ACTIVITIES COSTS ARE INCLUDED IN THE RECOMMENDED BUDGET. PERSONNEL FUNDS FY 78-79 0 60,000 FY 79-IIo 17.5 447;638 ALL BUDGET FIGURES ARE FOR A NINE MONTH PERIOD FROM OCTOBER 1, 1979 TO JUNE 30, 1980 t CITY OF SANTA MONICA, CALIFORNIA BUDGET DETAIL AND PROJECTIONS PROGRAM DIVISION ACTIVITY ACCOUNT N0, RENT CONTROL ADMINISTRATION 700-265-000 /BUD-REVSD/LINE / OBJECT /REQUEST RECOMMEND APPROVED / FUTURE YEARS PROJECTIONS FY 78-7g ITEM / DESCRIPTION /FY 7g-80 /FY 79-80 /FY 79-80 / FY 80-81 /FY 81-82., /FY 82-83 / 36,000 2 SALARIES & WAGES 258,074 1,200 4 UTILITIES 2,300 10,000 5 OFFICE SUP & EXP 22,200 300 6 ADVERTISING 800 7 RENT 3,500 1,000 8 PERSONAL AUTO EXP 2,350 9 CONF, MEETINGS, TRAVEL & DUES 600 12 INS & SUR BOND 15,836 3,400 15 DEPT OPERATING SUP 18,050 6,100 17 CONTRACTUAL SERVICES 64,700 19 OTHER EXPENSES 47,863 2,000 2g EQUIPMENT 10,365 60,000 DIVISION TOTAL 447,638 DESCRIPTION OF LINE ITEMS; 2. SEE PAGE 5 7. THIS AMOUNT INCLUDES RENTAL OF A KEYPUNCH MACHINE, 12. THIS AMOUNT INCLUDES UNEMPLOYMENT INSURANCE, WORKERS' COMPENSATION, HEALTH AND DENTAL BENEFITS AND COMPREHENSIVE LIABILITY INSURANCE. 15. THIS INCLUDES $10,000 FOR SPECIAL FORMS AND $8,000 FOR PUBLICATION OF INFORMATIONAL BOOKLET. 2 BUDGET DETAIL AND PROJECTIONS 17. THIS INCLUDES $14,400 FORA CONSULTANT WORKING IN THE CITY'S DATA PROCESSING DEPARTMENT, $12,000 FOR WORK TO BE DONE BY THE CITY'S DATA PROCESSING DEPARTMENT, $10,000 FOR WORK TO BE DONE BY THE CITY ATTORNEY'S OFFICE, $20,000 FOR OUTSIDE LEGAL FEES AS NECESSARY AND $7,800 FOR SECURITY PERSONNEL AT BOARD MEETINGS; , 19• THIS INCLUDES. $30,063 FOR RETIREMENT BENEFITS AND $17,800 FOR THE RENT COIJTROL BOARD ALLOWANCES, 29• SEE PAGE 4. CITY OF SANTA MONICA, CALIFORNIA CAPITAL OUTLAY PROGRAM ITEM OR PROJECT 1. Typewriter (2) 2. Typewriter Stand (3) 3• Desk (12) 4. Chair (12) 5. Reception Chair (8) 6. 4-Drawer File Cabinet (7) DIVISION ACTIVITY RENT CONTROL ADMINISTRATION / REQUEST / RECOMMEND / APPROVED/ FY 79-80 FY 7g-80 FY 79-80 1,174 300 2,000 _800 1,067 640 ACCOUNT N0. 700-265-000 ITEM / REQUEST / RECOMMEND / APPROVED / OR PROJECT FY 79-80 FY 7g-80 FY 79-80 7• 2-Drawer File Cabinet (4) 267 8. Adding Machine 150 , 9. Hand Calculator (4) 167 10. Cassette Recorder (2) '2G0 ll. Computer Termina l 3,100 12. Cable for Installation of Terminal 500 TOTAL CAPITAL OUTLAY 10,365 DESCRIPTION OF CAPITAL OUTLAY ITEMS: 1-8 These items will be necessary to furnish the Rent Control Administration Offices 9-10 Equipment for use in investigative and hearing work. 11-12 Terminal installation in Rent Control Office for on-line use and updating of data base stored in City computer. 4 PROGRAM / REQUEST / RECOMMEND 79-80 79-80 1 1 1 3 3 1 i 3 CITY OF SANTA MONICA, CALIFORNIA BUDGE TED POSITIONS AND SALARIES SUMMARY DIVISION ACTIVITY RENT CONTROL ADMIN ISTRATION BUDGETED / REQUEST / RECOMMEND / APPROVED POSITIONS FY 7g-80 FY 79-80 FY 79-80 RENTAL HOUSING ADMIN. 21,214 ADMINISTRATIVE ASSIST. 16,303 OPERATIONS MANAGER 1b,176 ' HEARING EXAMINERS 40,655 INVESTIGATORS 36,013 SENIOR SECRETARY 10,861 SECRETARY 8,976 INTERMEDIATE CLERKS 25,011 / 1 ASSISTANT PLANNER 13,422 '-z DEPUTY ATTORNEY III 8,746 2 DEPUTY ATTORNEY I 23,981 17.5 TOTAL 222,358 ACCOUNT N0. 700-265-000 / OBJECT / REQUEST /APPROVED / / DESCRIPTION /FY 79-80 /FY 79-80 / PERM. EMPLOYEES 222,358 OVERTIME 2,500 STANDBY TEMPORARY 33,216 OTHER TOTAL SALARIES AND WAGES 258,074 5 ,- CALCULATION OF It1DIRECT COSTS APPLICABLE TO RENT CONTROL ADM INISTRATION DIVISION AMOUNT _ DIVISION COSTS °~ CHARGED CHARGED City Council 79/80 Budget 36,966 .Supplemental Costs ~ 2,107 Total 39>D73 X, 7~ 2,700 City Manager 79/80 Budget 171,280 Supplemental Costs 23,972, Total ~ 195,252 X 3°/ 5,860 City Clerk 79/EO Budget 177,992 Supplemental Costs 15,653 - Less: Recodification of - Municipal Code -24,275 Capital Purchases -12,000 " Total 157,370 X 4°r, ' .6,300 Accounting 79/80 Budget 376,064 Supplemental Costs 61,288 Less: Capital Purchases -7,000 Total 430,352.. X 3a 12,900 Data Processing 79/80 Budget 388,563 Supplemental Costs 52,638 Depreciation of Furn. & Equip. 15,000 Less: Installment Pmt. on Computer -60,000 Total 396,201 X 6ti 23,800 ` -2- DIVISIQN AMOUNT DIVISION COSTS % CHARGED CHARGED Personnel 79/80 Budget 258,483 Supplemental Costs 32,876 Total 291,359 X 2% 5,800 Purchasing 79/80 Budget 113,283 Supplemental Costs 7$,22$ Less: Warehouse & Print Room Salaries (these will be charged when these services are used) -35,000 Total 96>511 X 2% 1,900 City Hall Building 79/80 Budget 284,958 Supplemental Costs 11,455 Less: Capital Purchases -30 000 ' Total 266,413 X 4% 10,650 Total (Annual Basis) Factor for 9 months (9/12 = .75) a $69,.910 x •75 $52,.433 Prepared by: Ray Randolph RENT CONTROL CHARTER AMENDMENT. Article XVIII is enacted as follows: ARTICLE XVIII. RENT CONTROL Section 1800. Statement of Purpose. A growing shortage of housing units resulting in a low vacancy rate and rapidly rising rents exploiting this shortage constitute a serious housing problem affecting the lives of a substantial portion of those Santa Monica residents who reside in residential housing. In addition, speculation in the purchase and sale of existing residential housing units results in further rent increases. These conditions endanger the public health and welfare of Santa Monica tenants, especially the poor, minorities, students, young families, and senior citizens. The purpose of this Article, therefore, is to alleviate the hardship caused by this serious housing shortage by establishing a Rent Control Board empowered to regulate rentals in the City of Santa Monica so that rents will not be increased unrea- sonably and so that landlords will receive no more than a £air return on their investment. In order to accomplish this purpose, this Article provides for an elected rent control board to ensure that rents are at a fair level by requiring landlords to justify any rents in excess o£ the rents in effect one year prior to the adoption of this Article. Tenants may seek rent reductions from the rent .in effect one year prior to the adoption of this Article by establishing that those rents are excessive. In addition to giving tenants an opportunity to contest any rent increase, this Article attempts to provide reasonable pro- tection to tenants by controlling removal of controlled rental units from the housing market and by requiring just cause for any eviction from a controlled rental unit. Section 1801. Definitions. The following words or phrases as used. in this Article shall have the following meanings: (a) BOARD: The term "Board" refers to the elected rent control board established by this Article. {b) CO~~MISSIONERS: The members of the Board and Interim Board are denominated Commissioners. (C) CONTROLLED RENTAL UNITS: A11 residential rental units in the City of Santa Monica, including mobile homes and mobile home spaces and trailers and trailer spaces, except: (1) Rental units in hotels, motels, inns, tourist homes and rooming and boarding houses which are rented primarily to transient guests for a period of less than fourteen (14) days. (2) Rental units in any hospital, convent, monastery, extended medical care facility, asylum, non-profit home for the aged, or dormitory owned and operated by an institution of higher education. (3) Rental units which a government unit, agency or authority owns, operates, manages or in which governmentally-sub- sidized tenants reside only if applicable Federal or State law or administrative regulation specifically exempt such units from municipal rent control. (4) Rental units in owner occupied dwellings with no more than three (3) units. (5) Rental units and dwellings constructed after the adoption of this Article; this exemption does not apply to units created as a result of conversion as opposed to new construction. (d) HOUSING SERVICE: Housing services include but are not limited to repairs, maintenance, painting, providing light, hot and cold water, elevator service, window shades and screens, storage, kitchen, bath and laundry facilities and privileges, janitor services, refuse removal, furnishings, telephone, parking and any other benefit, privilege or facility connected with the use or occupancy of any rental unit. Services to a rental unit .shall include a proportionate part of services provided to common facilities of the building in which the rental unit is contained. (e) LANDLORD: An owner, lessor, sublessor or any other person entitled to receive rent for the use and occupancy o£ any rental unit, or an agent, representative or successor of any of the foregoing. (f) RENT: All periodic. payments and all nonmonetarv consideration including but not limited to, the fair market value of goods or services rendered to or for the benefit of the landlord under an agreement concerning the use or occupancy of a rental unit and premises, including all payment and consideration demanded or paid for parking, pets, furniture, subletting and security deposits for damages and cleaning. (g) RENTAL HOUSING AGREEMENT: An agreement, oral,. written or implied, between a landlord and tenant for use or occupancy of a rental unit and for housing services. (h) RENTAL UNITS: Any building, structure, or part thereof, or land appurtenant thereto, or any other rental property rented or offered for rent for living or dwelling house units, and other real properties used for living or dwelling purposes, together with all housing services connected with use or occupancy of such property such as corunon areas and recreational facilities held out for use by the tenant. (i) TENANT: A tenant, subtenant, lessee, sublessee or any other person entitled under the terms of a rental housing agreement to the use or occupancy of any rental unit. (j) RECOGNIZED TENANT ORGANIZATION: Any group of tenants, residing in 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 maximum allowable rent which a landlord may charge on any controlled rental unit. (1) BASE RENT CEILING: The maximum allowable rent established in Section 1804(b). Section 1802. Interim Pent Control Board: No later than thirty(30) days after the adoption of this Article, the City Council of the City of Santa Monica shall appoint a five-member Interim Pent Control Board. No person shall be appointed to the Interim Rent Control Board unless he or she is a duly qualified elector of the City of Santa Monica. The Interim Board shall exercise the following powers and duties until the Permanent Board is elected in accordance with the provisions of Section 1803 (d) and assumes office; (1) Require registration of all controlled rental units under Section 1803(q). (2) Seek criminal penalties under Section 1810. (3) Seek injunctive relief under Section 1811. -2- Section 1803. Permanent Rent Control Board: (a) COMPOSITION: There shall be in the City of Santa Monica a Rent Control Board. The Board shall consist of five elected Commis- sioners. The Board shall elect annually as chairperson one of its members to serve in that capacity. (b) ELIGIBILITY: Duly qualified electors of the City of Santa Monica are eligible to serve as Commissioners of the Board. (c) FULL DISCLOSURE OF HOLDINGS: Candidates for the position of Commissioner shall submit a verified statement listing all of their interests and dealings in real property, including but not limited to its ownership, sale or management, during the previous three (3) years. (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 P?onica City Charter, except that the first Commissioners shall be elected at a special municipal election held within ninety (90) days of the adoption of this Article. The elected Commissioners shall take office on the first"Tuesday following their election. (e) TERM OF OFFICE: Commissioners shall be elected to serve terms of four years, beginning on the first Tuesday following their election, except that of the first five Commissioners elected in accordance with Section 1803 (d ), the two Commissioners receiving the most votes shall serve until April 15, 1985 and the remaining three Commissioners shall serve until April 18, 1983. Commissioners shall serve a maximum of two full terms. (f) POWERS AND DUTIES: The Board shall have the following powers and duties: (1) Set the rent ceilings for all controlled rental units. (2) Require registration of all controlled rental units under Section 1803(q). (3) Establish a base 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) 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) P1ake such studies, surveys and investigations, conduct such hearings, and obtain such information as is necessary to carry out its powers and duties. (8) Report annually to the City Council of the City of Santa Monica on the status of controlled rental housinq_. (9) Remove rent controls under Section 1803(r). (10) Issue permits for removal of controlled rental units from rental housing market under Section 1803(t). (11) Administer oaths and affirmations and subpoena witnesses. (12) Establish rules and regulations for deducting .penalties and settling civil claims under Section 1809. (13) Seek criminal penalties under Section 1810. (14) Seek injunctive relief under Section 1811. -3- (g) RULES AND REGULATIONS: The Board shall issue and follow such rules and regulations, including 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 circulation in the City of Santa Monica. The Board shall hold at least one(1) public hearing to consider the views of interested parties prior to the adoption of general adjustments of the ceilings for maximum allowable rents under. Section 1805 and any decision to decontrol or re-impose control for any class of rental units under Section 1803(r). All rules and regulations, internal staff memoranda, and written correspondence explaining the decisions, orders, and policies of the Board shall be kept in the Board's office and shall be available to the public for inspection and copying. The Board shall publicize this Article so that all residents 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 brochure will be available to the public, and each tenant of a controlled rental unit shall receive a copy of the brochure from his or her landlord. (h) MEETINGS: The Board shall hold at least forty-eight (48) regularly scheduled meetings per year. Special meetings shall be called at the request of at least three Commissioners of the Board. The Board shall hold its initial meeting no later than 15 days after taking office. (i) QUORUM: Three Commissioners shall constitute a quorum for the Board. (j) VOTIPdG: The affirmative vote of three Commissioners of the Board is required for a decision, including all motions, regulations, 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 services 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 within thirty (30) days appoint a qualified person to fill such a vacancy until the following municipal election when a qualified person shall be elected to serve for the remainder of the term. (n) FINANCING: The Board shall finance its reasonable and necessary expenses by charging landlords annual registration fees in amounts deemed reasonable by the Board. The first annual registration fee shall be set by the Board within thirty days after assuming office. The Board is also empowered to request and receive funding when and if necessary, from any available source for its reasonable and necessary. expenses. Notwithstanding the preceding provisions of this paragraph, the City Council of the City of Santa Monica shall appropriate sufficient funds for the reasonable and necessary expenses of the Interim Board and Board during the six month period following adoption of this Article. (o) RECALL: Commissioners may be recalled in accordance with the provisions of Article XIV of the Santa Monica City Charter. (p) STAFF: The Board shall employ and pay such staff, including hearing examiners and inspectors, as may be necessary to perform its -4- functions efficiently in order to fulfill the purposes of this Article. (q) REGISTRATION: Within sixty (60) days after the adoption of the Article, 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 ceiling, the address of the rental unit, the name and address of the landlord, the housing services provided to the unit, a statement indicating all operating 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 know ingly failed to register a controlled rental unit, the Board may authorize the tenant of such a nonregistered controlled rental unit to withhold 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. Whether 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 ids 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 subsection, controls shall be reimposed if the Board finds that the average annual vacancy rate has thereafter fallen below five(5) percent for such category, classification or area. (s) SECURITY DEPOSITS. Any payment or deposit of money the primary 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 account at an institution whose accounts are insured by the Federal Savings and Loan Insurance Corporation until such time as it is returned to the tenant or entitled to be used by the landlord. The interest on said account shall be used by the landlord to offset operating expenses and shall be a factor in making individual rent adjustments under Section 1805. In lieu of complying with this requirement, the landlord may pay interest directly to the tenant in accordance with the requirements of any state law. tt) REMOVAL OF CONTROLLED RENTAL UNIT FROM RENTAL HOUSING MARKET: Any landlord who desires to remove a controlled rental unit from the rental housing market by demolition, conversion or other means is requires to obtain a permit from the Board prior to such removal from the rental housing market in accordance with rules and regulations promulgated -5- by the~Board. In order to approve such a permit, the Board is required to make each of the following findings; (1) That the controlled rental unit is not occupied by a person or family of very low income, low income or moderate income. (2) That the rent of the controlled rental unit is not at a level affordable by a person or family of very low income, low income, or moderate income. (3) That the removal of the controlled rental unit will not adversely affect the supply of housing in the City of Santa T4onica. (4) That the landlord cannot make a fair return on investment by retaining the controlled rental unit. Notwithstanding the foregoing provisions of this subsection, the Board may approve such a permit: (1) If the Board finds that the controlled rental unit is uninhabitable and is incapable of being made habitable in an economically feasible manner, or (2) If the permit is being sought so that the property may be developed with multifamily.dwellinq units and the permit applicant agrees as a condition of approval that the units will not be exempt from the provisions of this Article pursuant to Section 1801(c) and that at least fifteen (15) per cent of the controlled rental units to be built on the site will be at rents affordable by persons. of low income. Section 1804. Maximum Allowable Rents. (a) TEMPORARY FREEZE: F.ents shall not be increased during the one hundred-twenty (120) day period following the date of adoption of this Article. (b) ESTABLISHMENT OF BASE RENT CEILING: Beginning one-hundred- twenty (120) days after the adoption of this Article, no landlord shall charge rent for any controlled rental units in an amount greater than the rent in effect on the date one year prior to the adoption of this Article. The rent in effect on that date is the base rent ceiling and is a reference point from which fair rents shall be adjusted upward or downward in accordance with Section 1805. If there was no rent in effect on the date one year prior to the adoption of this Article, the base rent ceiling shall be the rent that was charged on the first date that rent was charged following the date one year prior to the adoption of this Article. (c) POSTING: As soon as the landlord is aware of the maximum allowable rent, the landlord shall post it for each unit in a prominent place in or about the affected controlled rent units. The Board may require that other information it deems relevant also be posted. Section 1805. Individual and General Adjustment of Ceilings on Allowable Rents. (a) The Board may, after holding those public hearings prescribed by Section 1803(8), set and adjust upward or downward the rent ceiling for all controlled rental units- in 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 -6- Board may decide that new rent ceilings shall not take effect until some reasonable date after the above-stated time periods. (b) Each year the Board shall generally adjust rents as Poll~ws: (1) Adjust rents upward by granting landlords a utility and tax increase adjustment for actual increases in the City of Santa Monica for taxes and utilities. (2) Adjust rents upward by granting landlords a maintenance increase adjustment for actual increases in the City of Santa Monica for maintenance expenses. (3) Adjust rents downward by requiring landlords to de- crease rents for any actual decreases in the City of Santa Monica for taxes. In adjusting rents under this subsection, the Board shall adapt a formula of general application. This formula will be based upon a survey of landlords of the increases or decreases in the expenses set forth in this subsection. (c) PETITIONS: Upon receipt of a petition by a landlord and/or a tenant, the maximum rent of individual controlled rental units may be adjusted upward or downward in accordance with the procedures set forth elsewhere in this Section. The petition shall be on the form provided by the Board. 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 has been held and decision made with regard to maximum rent within the previous s-ix months. (d) HEARING PROCEDURE: The Board shall enact rules and regulations governing hearings and appeals of individual adjustment of ceilings on allowable rents which shall include the following: (1) Hearing Examiner: A hearing examiner appointed by the Board shall conduct a hearing to act upon the petition for individual adjustment of ceilings on allowable rents and shall have the power to administer oaths and affirmations. (2) Notice: The Board shall notify the landlord if the pe- tition was filed by the tenant, or the tenant, if the petition was filed by the landlord, of the receipt of such a petition and a copy thereof. (3) Time of Hearing: The hearing officer shall notify all parties as to the time, date and place of the hearing. (4) Records: The hearing examiner may require either party to a rent adjustment hearing to provide it with any books, records and papers deemed pertinent in addition to that information contained in registration 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 finds 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 hearing examiner to order such an. inspection prior to the date of the hearing. All documents required under this Section shall be made available to the parties involved prior to the hearing at the office of the Board. In cases where information filed in a petition for rent ceiling adjustment or in additional submissions filed at the re- quest of the hearing examiner is inadequate or false, no action shall be taken on said petition until the deficiency is remedied. -7- (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 evidence and developing their position from attorneys, legal workers, recognized tenant organization representatives or any other persons 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 o£ the hearing, or any part of one, shall be obtainable for the cost of copying. The record bf 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 officially noticed; all recommended decisions; orders and/ or rulings; all final decisions, orders and/or rulings, and the reasons for each final decision, order and/or ruling. Any party may have the proceeding tape recorded or otherwise transcribed at his or her own expense. ' (8) QUANTUM OF PROOF AND NOTICE OF DECISION: No individual 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 the 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 decision pursuant to this Section and Section 1808 of this Article. (9) CONSOLIDATION: A11 landlord petitions pertaining to tenants in the same building will be consolidated for hearing, and all petitions filed by tenants occupying the same building shall be consol- idated 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 fhe Board. On appeal, the board shall affirm, reverse or modify the decision of the hearing examiner. The Board may conduct a de novo hearing or may act on the basis of the record before the hearing examiner without holding a hearing. (11) FINALITY OF DECISION: The decision of the hearing examiner shall be the final decision of the Board in the event of no appeal to the Board. The decision of the hearing examiner 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 a upward adjustment in rent, or the tenant, in the case of a downward adjustment o£ rent, shall be ordered to make retroactive payments to restore the parties to the position they would have occupied had the hearing examiner's decision been the same as that of the Board's. (12) TIME FOR DECISION: -The rules and regulations adopted by the Board shall provide for final board action on any individual rent adjustment petition within one-hundred and twenty (120) days following the date of filing of the individual rent adjustment petition. (13) BOARD ACTION IN LIEU OF REFERENCE TO HEARING EXAPRINER: The Board, on its own motion 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. -8- (e) In making individual and general adjustments of the rent ceiling, the Board shall consider the purposes of this Article„and shall specifically consider all relevant factors including but not limited to increases or decreases in property taxes, unavoidable increases or decreases in operating and maintenance expenses, capital improvement of the controlled rental unit as distinguished from normal repair, replacement and maintenance, increases or decreases in living space, furniture, furnishings or equipment, substantial deterioration of the controlled rental unit 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 e?ith 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, and the landlords rate of return on investment.. It is the intent of this Article that upward adjustments in rent he made only when demonstrated necessary to the landlord making a fair return on investment. (f) No rent increase shall be authorized by this Article because a landlord has a negative cash flow as the result of refinancing the controlled rental unit if at the time the landlord refinanced the landlord could reasonably have foreseen a negative cash flow based on the rent schedule then in existence caithin the one year period following refinancing. This paragraph shall only apply to that portion of the negative cash flow reasonably forseeable within the one year period following refinancing of the controlled rental unit and shall only apply to controlled rental units refinanced after the date of adoption of this Article. (g) No rent increase shall be authorized by this Article because a landlord has a negative cash flow if at the time the landlord acauired the controlled rental unit, the landlord could reasonably have foreseen a negative cash flow based on the rent schedule then in existence within the one year period following acquisition. This paragraph shall only apply to that portion of the negative cash flow reasonably foreseeable within the one year period following acquisition of a controlled rental unit and shall only apply to controlled rental units acquired after the date of adoption of this Article. (h) No landlord shall increase rent under this Section if the landlord: (1} Has failed to comply with any provision of this Article and/or regulations issued thereunder by the Board, or (2) Has failed to comply substantially with any applicable state or local housing, health or safety law. Section 1806. Eviction: No landlord shall 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 Article. (b) The tenant has violated an obligation or covenant of his or her tenancy other than the obligation to surrender 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 nuisance in, or is causing substantial damage to, the controlled rental unit, or -9- is creating a substantial interference with .the comfort, safety, or enjoyment of the landlord or other occupants. or neighbors of the same. (d) The tenant is convicted of using or expressly permitting a controlled rental unit to be used for any illegal purpose. (e) The tenant, who had a rental housing agreement which has 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 purpose of making necessary repairs 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 unit to any prospective purchaser or mortgagee. (g) The tenant holding at the end of the term of the rental housing agreement is a sub-tenant not approved by the landlord. (h) The landlord seeks to recover possession in good faith for use and occupancy of herself or himself, or her or his children, parents, brother, sister, father-in-law, mother-in-law, son-in-law, or daughter-in-law. (i) The landlord seeks to recover possession to demolish or other- wise remove the controlled rental unit form 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 it is determined that the evicticn is in retaliation for the tenant reporting violations of this Article, for exercising rights granted under this Article, including the right to withhold rent upon authorization of the Board under Section 1803 (g) or Section 1809 or for organizing other tenants. In any action brought to recover possession of a controlled rental unit, the landlord shall allege and prove com- pliance with this Section. Section 1807. Non-waiverability: Any provision, whether oral or written iil or pertaining to a rental housing agreement whereby any provision of this Article for the benefit of the tenant is waived, shall be deemed to be against public policy and shall be void. Section 1808. Judicial Review: A landlord or tenant aggrieved by any action or decision of the Board may seek judicial review by appealing to the appropriate court within the jurisdiction. Section 1809. Civil Remedies: (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, shall be liable as hereinafter provided 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 damages in an amount of five hundred dollars ($500) or three (3) times the amount by which the payment or payments demanded, accepted, received or retained exceeds the maximum lawful rent, whichever is the greater. -10- (b) In lieu of filing a civil action as provided for in Section 1809(a), the Board shall establish by rule and regulation a hearing procedure similar to that set forth in Section 1805(d) for determination of the amount of the penalty the tenant is entitled to pursuant to Section 1809(a). After said determination, the tenant may deduct the penalty from future rent payments in the manner provided by the Board. (c) If the tenant from whom such excessive payment is demanded, accepted, 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) caithin one-hundred and twenty (120) days £rom the date of occurence 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 which the Board has made a settlement or brought an action. In the event the Board settles said claim, it shall be entitled to retain the costs it incurred in settlement thereof, and the tenant against whom the violation has been committed shall be entitled to the remainder. (d) The appropriate court in the jurisdiction in which the controlled rental unit affected is located shall have jurisdiction over all actions brought under this Section. Section 1810. CRIMINAL REMEDIES. .Any landlord violating this Article shall be guilty of a misdemeanor. Any landlord convicted of a mis- demeanor under the provisions of this Article shall be punished by a fine of not more than five hundred dollars ($500) or by imprisonment in the county jail for a period not exceeding six months, or by both such fine and imprisonment. Section 1811. INJUNCTIVE RELIEF. The Board, and tenants and landlords of controlled units, may seek relief from the appropriate court within the jurisdiction within which the affected controlled rental unit is located to restrain or enjoin any violation of this Article-and of the ruies, regulations-, orders and decisions of the Board. Section 1812. PARTIAL INVALIDITY. If any provision of this Article or application thereof to any person or circurnstances is held invalid, this invalidity shall not affect other provisions or applications of this Article which can be given effect without the invalid provision or application, and to this end the provisions of this Article are declared to be severable. This Article shall be liberally construed to achieve the purposes of this Article and to preserve its validity. -11-