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sr-030811-13c13-C March 8, 2011 Council Meeting: March 8, 2011 Santa Monica, California CITY CLERK'S OFFICE -MEMORANDUM To: City Council From: Councilmember McKeown Date: March 8, 2011 13-C: Request of Councilmember McKeown that the Councii direct staff to explore issues raised in the Rent Control Board memo to Council of February 22nd, including the amount and structure of relocation assistance in certain no-fault evictions and the eligibility of tenants for such assistance, such as extension to non-controlled units where tenants gained no-fault eviction protections with the passage of Measure RR; and return with recommendations and suggested potential changes to City ordinances for Council consideration. 13-C March 8, 2011 CITY ~~ sANTA I>noNtcw RENT CONi'ROL BOARD MEMOFi DATE: 1=ebruary 22, 2011 TO: Santa Monica City Council Members FROM: Tracy Condon, Rent Control Board Administrator '( RE: Expansion of Relocation Assistance and Tenant Harassment Protections and The Ellis Act's Impact-2010 Report At their February 10`h meeting, the Rent Control Board moved to recommend that the City Council amend Chapter 4.36 of the Santa Monica Municipal Code to increase and expand relocation assistance to tenants displaced in evictions for owner occupancy and removal of units from the rental market. The proposed amendment, as set forth in the attached staff report, updates the relocation assistance amounts to reflect the significant increase in market rents since the removal of vacancy control in 1999 in accordance with state law. The proposed amendment also expands eligibility for relocation assistance to include tenants who established. their tenancy prior to an owner occupied exemption from rent control. The Council may also wish to consider the basis and applicability of relocation assistance to tenants in other non-controlled units. Current relocation assistance is primarily based on the costs of relocation in t990 when market rents for new tenancies were still subject to the vacancy control measures of the Santa Monica Rent Control Law. Santa Monica's current relocation assistance is also significantly lower than the amounts required in West Hollywood and. Los Angeles, the other principal- rent control jurisdictions of Southern Calffornia. The proposed'increases reflect the higher costs of market rents in Santa Monica while still being within the reasonable band of the relocation amounts of neighboring jurisdictions. In addition to the proposed increases in relocation assistance, the Board also moved to recommend. amendment of Chapter 4.56 of the Municipal Code to protect tenants eligible for just cause evictien protections as a result of the passage of Measure RR. Board General Counsel Miehaelyn Jones, Staff Attorney Hakhamanesh Mortezaie and I are available to meet with city staff to discuss these recommendations and to assist in the drafting of proposed language for the amendments to the Municipal Code. At their February meeting, the Board also reviewed the attached report on the impact of the Ellis Act during 2010. In addition to reviewing Ellis withdrawal and re-rental activity since 1986, the report details redevelopment and reuse of withdrawn properties and Recommended Expansion of Relocation Assistance and Tenant Harassment Protections briefly discusses the work of the EIIis Task Force.. This year, the report includes brief anecdotal information about how the displaced tenants have been impacted. The Rent Control Board thought you would find this report interesting as you consider their recommendations on the expansion of relocation assistance. Thank you for your consideration. Attachments cc: Santa Monica .Rent Control Board Commissioners Rod Gould, City Manager Marsha Moutrie, City Attorney SANTA MONICA RENT CONTROL BOARD STAFF REPORT TO: Commissioners FROM: Hakhamanesh Mortezaie, Staff Attorney RE: Expansion of Relocatiori Assistance and Tenant Harassment Protections FOR: Board Meeting of February 10, 2011 Introduction On July 22, 2010, the Santa Monica City Council placed on the ballot Measure RR. The Measure incorporated the Board's May 24, 2010 recommendations to the City Council for an amendment to the Charter to expand just cause eviction protections to all tenants in multi-family properties in the City of Santa Monica, to require written warnings to tenants to cure conduct before it results in grounds for eviction and to expand owner occupancy eviction protections to senior, disabled and terminally ill tenants. The Santa Monica electorate approved Measure RR in the November 2, 2010 election. The Measure became effective on December 17, 2010.: The Board's May 24, 2010 recommendations to the City Council also included a recommendation to increase and expand relocation assistance beyond that which is currently provided under the Santa Monica Municipal Code. Since amendment of the City's relocation provisions did not require an amendment of the Charter, the Council. did not incorporate these recommendations into.Measure RR. With the enactment of Measure RR, staff respectfully submits this report to suggest recommendations for the increase and expansion of the City's relocation assistance provisions and tenant harassment protections.' The recommendations contained herein would increase the relocation fees in evictions for owner occupancy or removal from the market. They apply to tenants of rent-controlled units, and tenants who established their tenancy prior to an owner occupied exemption from rent control. The proposed increases reflect the changes to the City's rent levels that have occurred since the adoption of the 1990 relocation amounts, which are the basis of the current relocation fees. Since the passage of . Measure RR, the Board has also received inquiries from tenants in non-controlled units about their eligibility for relocation if they are evicted for owner occupancy. The City Council may also wish to consider the basis and applicability of any relocation fee to tenants in non-controlled units. Board staff are available to meet with City staff to discuss any recommendations approved and submitted by the Board to the City Council for consideration. qG Staff Report -February 10, 2011 Expansion of Relocation Assistance and Tenant Harassment Protections Discussion 1. Increase and Expansion of the City's Relocation Assistance Requirements Santa Monica Municipal Code chapter 4.36 provides relocation assistance to tenants in rent-controlled units in specified no-fault evictions permitted under the Santa Monica Rent Control Law (Santa Monica City Charter Article XVIII, "RCL"). The current relocation amounts reflect a 1990 fee annually adjusted for inflation. The 1990 amount was based on the difference between the average Maximum Allowable Rent (MAR) in a.rent-controlled unit and the average market rent. The 1990 amount reflected. a Santa Monica with a more affordable rental stock predicated on the controls on increases in rent effectuated by the 1979 RCL. In 1995, the California Legislature adopted the Costa Hawkins Law, which eliminated the RCL's vacancy control provisions. Costa Hawkins allows landlords to raise rent- controlled rents to market upon the vacancy of units. As a result, every year has witnessed a deterioration of the affordability of the City's rental housing for new tenants. The Board's 2009 Market Rent Report found that none of the median rents for units that have received market rate increases are affordable to a family even making 100% of median income. Before Costa Hawkins, there were nearly 13,000 units affordable to new tenants with less than 100% of median income. Today, there are only approximately 2,000 units affordable to these tenants: The elimination of vacancy control has resulted in 58% of rent-controlled units being rented at market rates. The significant increase in market rents has impacted neighborhood stability. Most market rent units have turned over at least twice in fhe 11 years since Costa Hawkins eliminated vacancy control. Tenants evicted from their rent-controlled Santa Monica apartments have a dramatically diminished chance of affording the rent at a new tenancy in their own city. Despite the fact that Santa Monica market rents are among the highest, if not the highest, in the region, the City's relocation assistance amounts are the lowest among the region's three principal rent control jurisdictions. Jurisdiction Minimum Relocation Amount Maximum Relocation Amount Los An eles $7,300 $18;300 West Holl ood $5,100 $17,000 Santa Monica $5,650 $11,550 Staff Report -February 10, 2011 Expansion of Relocation Assistance and Tenant Harassment- Protections Staff recommends amendment of the City's relocation assistance amounts to reflect this city's high cost of market rents for new tenancies. The recommended amounts below allow Santa Monica tenants evicted from their units through no fault of their own to have an extended period of housing stability in their own city. The amounts below are based on 30-36 months of rental disparity between the average MAR and the average market rent plus security deposit, with the higher amount for qualified tenants. Disparity between Proposed Proposed Pre Average Regular Qualifieds Costa MAR and Tenant Tenant % of ApE Hawkins Market Average Market 30 mos. 36 mos. Security Relocation Relocation Total Size MARSH Rents MARz Rent Disparity Disparity Deposit3 Assistance4 Assistance^ Unitsr 0 $ 703 $1,141 $ 957 $184 $ 5,520 $ 6,624 $2,282 $ 7,800 $ 8,900 15% 1 799 1,514 1,214 300 9,000 10,800 3,028 12,050 13,850 52% 2+ 1,024 2,000 1,590 410 12,300 14,760 .4,000 16,300 18,750 33% Currently, the City's relocation assistance is based on MARS for vacancy controlled units and therefore provides higher relocation assistance to tenants who are senior, disabled or who have a minor child residing with them if their tenancy was established prior to the elimination of vacancy control in 1999. The proposed relocation assistance above, however, is based on an average MAR calculated from the weighted average of vacancy controlled MARS and market rent MARs in the rental housing stock..Accordingly,-staff recommends higher relocation assistance to qualified tenants who are defined as households with seniors, persons with disabilities and minors, regardless of the date on which they commenced their tenancy. In its May 24, 2010 meeting, the Board also recommended that relocation assistance be provided to tenants evicted in a 3-unit-or-less proper{y that has an owner occupied exemption from the RCL. The enactment of Measure RR provided just cause eviction.protections to these tenants. Staff, therefore, recommends that the proposed relocation assistance also be provided to tenants who established their tenancy prior to an owner occupied exemption from the RGL and who are subject to an eviction for Board 2009 Market Rent Report, z Weighted average of Pre Costa Hawkins MARS and Market Rent based on their percentage of controlled units in the Board 2009 Market Rent Report. ' Consistent with the current relocation ordinance, security deposit is based on iwo times the market rent to provide the. displaced tenant with first and last month rent at a new tenancy. ° Rounded to the nearest $50 multiple. e Qualified tenant to be defined as any household which includes a senior citizen, a person with disability or a minor child. Staff Report - Febmary 10, 2011 Expansion of Relocation Assistance and Tenant Harassment Protections Page 4 withdrawal of units from the rental market pursuant to Santa Monica City Charter Article XXIII Section 2304(a)(g). 2. Tenant Harassment Santa Monica Municipal Code chapter 4.56 prohibits landlords from malicious conduct which constitutes tenant harassment. The Code's definition of tenant harassment includes failure to perform repairs, interruption or termination of housing services, intimidation, and threat of physical harm and discrimination when done with malice. The chapter, however, only applies to rental units subject to the RCL. Measure RR extended the RCL's just cause eviction protections to tenants in non- rent-controlled multi-family properties. Accordingly, staff recommends amendment of the definition of rental housing unit in section 4.56.010(f) to include both units subject to the RCL and units subject to Santa Monica City Charter Article XXIII. Recommeridation Staff recommends that the Board direct staff to forward this report to the City Council and request that they draft ordinances to accomplish the stated objectives. D1C Intr~ucti®n Through 1985, Santa Monica could ensure the continued availability of existing rental housing stock by forbidding apartment buildings' removal from the rental market unless the Rent Control Board granted a removal permit. This changed in 1986 when the Legislature enacted the Ellis Act, under which cities must now allow landlords to withdraw their property from the rental market, so long as certain provisions are made for displaced tenants' relocation. This report surveys the Ellis Act's cumulative effect in Santa Monica over the 24 years since its enactment, with special emphasis on Ellis activity during the calendar year January through December 2010. By itself, the statistical data tells a compelling story. Since the Ellis Act was enacted, 2,566 units have been withdrawn from the rental market, of which several hundred were later returned, for a net loss to date of 1,944 units. This report will show, year by year, how many units were removed from the rental market, how many were returned, and what many of the withdrawn properties were used for- some developed as affordable housing, but many more as luxury condominiums out of most displaced tenants' economic reach. But lost in the pure statistical data is the human story. What happens to the tenants who are displaced? Where do they go, and how does the displacement affect them? We recently surveyed some displaced tenants, and their responses were sobering. Many tenants have been displaced from the Santa Monica community altogether. One such tenant, a senior citizen who had lived in the same unit for 37 years, was unable to find affordable housing locally and now pays twice as much rent in a different city. This tenant, who described the displacement as "stressful," elaborated that "it has basically destroyed my life-stress, depression, unsatisfactory relocation-loss of a great deal." Another tenant, who had lived in the same unit for 25 years, moved to Koreatown, where he or she pays a higher rent for a smaller apartment. That tenant, too, expressed extreme distress at the loss not only of affordable housing, but also of community: When reviewing the current year's statistics, it is useful to keep these human stories in mind. A historically low number of units (ten) were withdrawn from the rental market in 2010, and 29 previously-withdrawn units were returned to the controlled rental market, for a net increase of 19 units. It is easy to view this as good news, and to forget that, though only ten units were withdrawn, those units had been occupied by real individuals and families whose lives have been upended. Nor does the number of units withdrawn in 2010 tell the full statistical tale; although only ten units were withdrawn, many more are in process. Ellis activity actually rose sharply last year, with 13 notices being filed to withdraw some 58 units. Most of those units will be finally withdrawn in 2011, and with tentative signs that the economy is improving, the upward trend in Ellis withdrawals is likely to continue in 2011. Page I i Ellis Activity, January thr~la eceber 21 Completed Withdrawals Were Historically Low Properties are actually withdrawn from the rental market when all the units reach the date of withdrawal as defined by the Ellis Act.t Only ten units (four properties) completed the withdrawal process in 2010, including one property for which the process had begun in 2009. This was low by historical standards. But 56 units (ten properties) were still pending withdrawal at the end of 2010, and those withdrawals are expected to be completed this year. Notices of Intent to Withdraw Increased from Last Year After three years of steady decline, Ellis activity rose in 2010. Withdrawal notices, which had dropped from 32 notices affecting 201 units in 2007 to only five notices affecting 14 units in 2009, are now up, with 13 notices filed affecting 58 units. The change is illustrated in the chart at the top of the next column. California Government Code § 7060 et seq. A property is usually deemed withdrawn from the rental market four months after the owner delivers a withdrawal notice to the Board, but the withdrawal period can be extended to a year for units occupied by tenants who are senior or disabled. It is also possible for a property owner to rescind an Ellis withdrawal notice and allow current tenants to remain in place, which further diminishes the value of focusing primarily on the notice itself. This report focuses on completed withdrawals to support the report's goal of informing the public about the actual loss of rent- conirolled units in Santa Monica. Properties Returned To the Rental Market In 2010, 29 previously-withdrawn units (six properties) returned to residential rental use. With only ten units newly withdrawn, this resulted in a net increase of 19 rental units. ithdraWat and Rerentl Activity Since 196 Historic Overview From its inception in July 1986 through December 31, 2010, the Ellis Act was used to withdraw 2,566 units (527 apartment buildings and houses) from the rental market. Of these, 622 units (124 properties) have returned to the market under rent control. Thus, as of December 31, 2010, 1,939 units (403 properties2) remain withdrawn. z Five properties returned to the rental market with a differern number of controlled units than were withdrawn. This accourns for the five-unit Page 17 The graph on page 3 illustrates the number of units withdrawn, along with the number returned to the rental market, each year from 1986 through calendar year 2010. As the graph demonstrates, the number of units withdrawn in 2010 remains historically low, continuing a decline that began in 2008. The number of units returned to the rental market, meanwhile, is at or near the historic average. Thus there was actually a net gain last year in the number of controlled rental units. The 2009 report warned that units previously withdrawn and returned to the market might again be withdrawn when the economy improves. Although the recession's effect continues to linger, it appears tYlat there has been a slight easing of the credit markets and an uptick in property development. Thus, although there is no evidence of significant re-withdrawal of previously withdrawn units this year, last year's cautionary note continues to appear justified despite last year's net gain in units. 2010's Completed Ellis Withdrawals were Historically Low As the graph on page 3 shows; Ellis activity has fluctuated over the years, influenced, in part, by changes in state law and shifting economic conditions: • 1986-1990: 881 units were withdrawn and just 39 rerented for a net loss of 842 units over five years-an average of 168 units per year-in the years immediately following the Ellis Act's enactment. discrepancy in the number of units withdrawn and returned to residential rental use. 1991-1998: There was a sharp decrease in withdrawals during the economic recession of the early 90s and a relative flattening of the rate of withdrawal as property values struggled to recover through the decade.3 During this period, 428 units were withdrawn and 151 rerented for a net loss of 277 units over eight years--an average of 35 units per year. 1999-2002: Southern California real estate prices began a dramatic rise during this period, creating an economic incentive for the development of new, market-rate housing,° and Ellis activity increased. Five hundred sixty four units were withdrawn and 223 rerented for a net loss of 341 units over four years-an average of 85 units per year. 2003-2004: Ellis activity slowed following a change instate law restricting rent levels on units rerented following withdrawal, with 118 units withdrawn and 30 units rerented for a net loss of 88 units-an average of 44 units per year. But the slowdown was temporary. 2005-2007: As the real estate bubble rapidly inflated, driven by low interest rates and lax lending standards, development and related Ellis activity increased. As the number of withdrawals went up, the number of units returned to the rental market went down. The number of rerentals, which had climbed steadily between 1999 and 2002 plummeted. From 2005 to 2007, 379 units were withdrawn and 79 rerented for a net loss of 300 units-an average loss of 100 units per year. s Stephen Day Cawley, California Housing Policy. p. 92 (2005, UCLA Graduate School of Management), online at http://www.spa.ucla.edu/ca I policy/fi Ies05/cauleyt extwchrt.pdf ^ See Cawley, generally Page 12 2008-2009: In 2008 and continuing into 2010: In 2010, although the real estate 2009, corresponding with the decline in market began to show signs of recovery the real estate market and the extreme and credit eased somewhat, Ellis tightening of credit, Ellis withdrawal withdrawal activity continued to reflect activity slowed considerably, returning in the slow market of previous years. In 2009 to pre-1999 levels. In 2008, 114. .2010, 10 units were withdrawn and 29 units were withdrawn and 16 units units returned to residential rental use returned to residential rental use fora for a net gain of 19 units: This is only net loss of 98 units. In 2009, 71 units the second net gain since the Ellis Act were withdrawn (most as the result of became law in 1986, and the first since withdrawal notices filed in 2008) and 59 1992. units were returned to residential rental The chart on the next page provides an use for a net loss ofjust 12 units-at annual breakdown of units withdrawn and that time, the lowest number of units lost rerented. (The periods described above are since 1995. separated by bold horizontal lines.) Page ~ 3 t ~ i,Xeor. ~' :Propekfres ~,~ ,Ntrt[rdrd~v2; . -;~ ~,` Untts'4ihthdreii~ . ~ , Uiiitr.RereMed Chan'e , 11986 14 86 0 -86 i 1987 13 80 0 -80 1988 21 165 0 -165 '1989 57 188 25 -163 1990 76 362 14 -348 ;1991 21 88 1 -87 ;1992 12 43 68 +25 j 1993 9 23 5 -18 ! 1994 7 76 17 -59 1995 3 9 7 -2 j 11996 10 67 14 -53 '1997 8 51 25 -26 i 1998 17 71 14 -57 '1999 31 125 31 -94 2000 36 212 48 -164 2001 25 110 86 -24 ;2002 28 178 58 -60 i 2003 15 54 8 -46 2004 15 64 22 -42 12005 24 119 38 -81 { 2006 28 122 2 -120 12007 29 138 35 -103 12008 16 114 16 -98 2009 8 71 59 -12 ~ ;2010 4 10 29 +19 Tofals i 527 2,56b 622 -1,944 ®st-~lis Activity A property's withdrawal from the rental market is rarely an end in itself; more typically, properties are Ellised in order to make room for development. Some properties are used for new multi- family residential redevelopment, while others are converted to some non- residential use, such as business and commercial development, schools, childcare centers, and churches. A smaller number are turned into parking lots or vacant lots, or used for non-rental residential occupancy (i.e. family occupancy). Some properties are left vacant but otherwise unchanged. The table on the following page summarizes post-Ellis use for all 403 currently withdrawn properties from 1986 through the present, and divides the totals into two periods: from 1986 through 1997 and after 1998. As the table makes clear, the largest reuse category overall continues to be condominium development, followed by family occupancy/no activity and single family dwellings. Page 14 aVeraii surrsmary o~+Post- EllisUse of Vlfithdrawre Properties gotais 19s6 - 19..97 Wethdrawals Post-Ellis Pdew Use 19ss - 2®®~ iWithdrawais Post-Eiiis New Use A artments 18 4% S 3°fo ° 12 ` 8°/o A artments/Mixed Use 20 ? ' 5% ' 13 8% 7 4% Condominiums 115 28% 49 30% `66 42% Condominiums/Mixed Use 1 1% 1 1% ' 0 0% Sin ie Farnil Dwellin 's 70 ' ; 17°/a : 22 14% 48 29% Commercial 57 I 14% 40 2!5% 17 10% Parkin Lat 12 3°!0 9' 6°!° 3 ` 2% School/ChiEdcare/Church 19 5°fa '` 12 7% 7 4% Vaeaht Lot IZ 3% SO 5% 2 ' 1°/a Totals 324 - 162 100% 162 100% Famij Occu anc /No Activit 79 20% , Grand Totals 403 ! 100%' end of 2010. On these 109 sites, 689 The Largest Percentage of Ellised Properties Are Replaced with Multi-.Family Residential Developments. This Has Yielded a Net Increase in Residential Units, But a Decline in Affordability units withdrawn under EIIis were demolished and 1,209 units have been built (634 condominiums and 575 apartments). On the remaining 19 sites in development, 156 withdrawn units are to be demolished and 177 units are to be built (138 condominiums and 39 apartments). According to City records,51536 withdrawn properties (38°/a of the 403 properties that remain withdrawn) have been--or are in the process of being-- developed as new multi-family housing including both condominiums and apartments. In 22 instances, two or more withdrawn parcels were combined into a new development. Therefore, the total number of new residential developments is 128. 109 of these 128 developments (roughly 85%) were completed by the s Information on redevelopment, reoccupancy and conversion is drawn from the City's Permih Plus System. a One withdrawn property, built as condominiums, has continued condominium use after its withdrawal As the graph on page 6 shows, 845 withdrawn units have been, or are slated to be, demolished and replaced with 1,386 condominiums and apartments on the same properties, resulting in increased density on those sites and a net increase in units overall. A high percentage of the increase in units is attributable to just 12 mixed-use projects (ground floor commercial space and upper floor apartments) in the downtown and Main Street areas, where 70% of the new apartments built are part of mixed-use projects. On these properties, 162 withdrawn units are being replaced by 432 apartments. One mixed-use condominium project was completed in 2008. On this property, Page 15 two withdrawn units were replaced by 32 condominiums. Although, as the below chart shows, the number of units added to the housing stock is greater than the number removed, a few points are worth noting. rerented within five years of Ellis withdrawal (see last year's report) are market-rate units, resulting in the practical loss of a high percentage of affordable housing. Second, while the rate of Ellising and redevelopment has increased from last year, it is still relatively low by historical 39 ~~ Units To Be Units Demolished Units Built First, the units lost are all rent- controlled units that had been used for residential rental, while the majority of those built or slated to be built in their place have been for-sale units. Of these, many are market rate, and sometimes luxury units, that are beyond the economic reach of those tenants who have been displaced. Many of the apartment developments come online as market-rate units. Even 168 apartments that were brought under rent control last year because they were standards, and the increase comes only after an extended period of economic contraction. Thus, an increase in housing supply that could, in theory, suppress housing costs over the long term may not apply. Third, it is unclear what the long-term effect of this gradual but persistent reduction of rental units coupled with an increase in those that are owner occupied will be. Santa Monica has long been amajority-renter community, and it Page I b still is, but that may be changing. According to the U.S. Census Bureau, 78% of Santa Monica housing units were rentals in 1980. By 2009, that figure had declined to 72°/a. The relative merits of renting and owning have been debated extensively elsewhere and will not be considered here.' But it seems likely that the high percentage of renters in Santa Monica has played an important role in the city's cultural development. The City has long been home to a vibrant arts community and has increasingly attracted i several high- zso tech ~ zoo employers. ~ Many of the ,~ young people ~ drawn to such ~ too careers move ~ from place to 50 place as they .advance ! ° Many Withdrawn Properties Are Developed as Single-Family Homes Forty-five of the 403 currently withdrawn properties (97 units) were demolished and replaced by single- family dwellings or are pending single- family dwelling construction. Twenty- five withdrawn properties (99 units) were remodeled into single-family-dwellings, or are in the process of conversion.g Overall, 17°/a of the redeveloped withdrawn properties have been converted into Residentiai Units Replaced By Single-Fatuity Dwellings single-family r!0 Properties) professionally and they rely upon a supply of good-quality but affordable rental housing. $ A Santa Monica in which people are less mobile because they are tied to owned real estate may, over time, lose the appeal that it has long had to many of the people who have made the city what it is today. ~ "Rethinking Home Ownership' Time, September 8, 2010 a "Employee turnover: Labour lost" The Economist, July 13, 2000 dwellings or demolished and rebuilt as single-family homes, suggesting that some owners have found it more economical to buy a multi- unit property and convert it to asingle-family home than to buy an existing single-family home. Withdrawn Properties and Affordable Housing Despite the loss of rent-controlled units detailed in this report, affordable housing has been, and continues to be, developed in Santa Monica as the result of a City law that affordable units be produced in conjunction with market- e On one property four units were converted into two and then the property was subdivided to create two single-family dwellings. Page 17 1g6 Units . became -r 70 Single-Family Dwelings rate development. That law, an amendment to the City Charter enacted by the voters in a 1990 measure known as Proposition R, requires that at least 30% of all newly-constructed multi- family residential housing in the City should be permanently affordable to and occupied by low and moderate-income households: It further requires that at least one-half of the affordable units be made available to low-income households (not exceeding 60% of area median income) and the remainder be affordable to moderate-income households (not exceeding 100% of area median income). According to the City's Housing Division, of the 537 apartments built in FY 2008-09, 248 have been deed- restricted as affordable: 167 to moderate-income households, 18 to low-income households, and 63 to very- low-income households. Many of these were produced on properties that had been Ellised. More information about the City's affordable-housing program is provided in past Ellis Activity reports, which are available online or at the Rent Control Agency in Room 202 of City Hall, and in an Information Item that Housing Division staff provided to City Council in .March 2010. A complete copy of that Item is available at: http://www01.smgov. neUhousing/reports /Prop_R_Report_FY08-09. pdf Redevelopment of Ellised Properties has been Clustered in Areas Defined by Zoning and Income The map on page 9 displays the geographic distribution of the apartments, condominiums and single family homes that have been developed (or remodeled), or are being developed. As the map shows, most multi-family apartment developments have been in the central part of the city, while single- familydevelopment has largely been concentrated in more affluent, low- densityareas. Condominiums have been developed largely in parts of the city zoned for higher density, but close to the most affluent, low-density neighborhoods. Apartments: The red and rust colored dots on the map show the 26 post-Ellis apartment projects. By the end of 2010, 24 apartment developments with 575 units had been constructed (replacing 36 withdrawn properties with 224 units). Two more apartment projects with 39 units are in development (replacing two withdrawn properties with 12 units). Twelve of the 26 apartment developments are mixed-use projects with commercial space on the ground floor (rust dots). The map shows that with just one exception, these mixed- use projects have been built in the downtown and Main Street areas and they account for 70% of the new apartment units built or in development (432 of 614). Condominiums: The prevalence of blue dots on the map shows the majority of residential redevelopment on withdrawn parcels has been condominiums. By the end of 2010, 85 condominium projects with 634 units had been completed (replacing 95 withdrawn properties with 465 units). Seventeen more projects with 138 units Page i 8 are in development (replacing 20 withdrawn properties with 144 units). As the blue dots show, condominium developments have. been built throughout the areas of the city that are zoned for multi-family development, with the highest concentration in the corridor between Wilshire Boulevard and Montana Avenue east of 14th Street. Single-Family Homes: The green dots show that the redevelopment of multi-unit properties into single-family homes has occurred primarily in the Ocean Park neighborhood, on Pacific Coast Highway and north of Montana in Page 19 the area zoned for single-family homes. About 25% of Ellised Properties have been Developed for Other Uses Commercial: Fifty seven withdrawn properties (comprising 315 units) have been changed from residential to commercial uses. On 32 of these properties, the residential structures were demolished to make way for commercial development. On the remaining 25 properties, formerly residential structures have been repurposed for commercial use. Parking Lots and Vacant Lots: Twenty four withdrawn properties (comprising 133 units) have been left effectively empty. Of these, 12 are now being used as parking lots, and the other 12 are just vacant lots that are currently unused for any purpose. Schools/Childcare Facilities/Community Care Facilities/Churches: Nineteen withdrawn properties (comprising 88 units) have been turned to a community use. On eight of these properties, the withdrawn residential buildings were demolished and replaced: five as schools or childcare centers, one as a community care facility, and one as a church. On the remaining 11 properties, the formerly residential buildings were converted to one of these community uses. current status of all 403 properties that remain withdrawn since inception of the Ellis Act. The colors in the left side of the pie slices correspond with the dots on the map on page 9. The Ellis Task Force Family Occupancy/No Building Permit Activity: Approximately 20% of withdrawn properties (79) remain standing with no building permit activity. City ordinances require owners who want to occupy their withdrawn properties to apply for a reoccupancy permit. Thirty of these properties are being used for family and/or non-rental occupancy as indicated on the owner's reoccupancy permit application. The remaining 49 properties either have been, or will be, looked at by the Ellis Task Force. Re-flee of ithravvn Properties Sur~rnary The diagram above right shows the To prevent owners from fraudulently evicting tenants under the pretext of withdrawing their properties from the rental market, the Ellis Act imposes certain restrictions on the ability to return units to the rental market after they are withdrawn. For example, if a unit is returned to the rental market less than five years after it was withdrawn, the rent for that unit remains controlled at its pre-withdrawal level. If a unit is returned to the rental market less than two years after it was withdrawn, the owner may also be subject to civil liability. These restrictions are imposed by state law. In Santa Monica, local law requires that withdrawn units be issued a Page 110 reoccupancy permit before they may again be used for any purpose. The Ellis Task Force, a coalition of staff from the Rent Control Board, Planning, Code Compliance, and the Consumer Protection Division of the City Attorney's Office, was formed in 2007 to ensure compliance with these state and local laws. Rent Control staff can, and does, take steps on its own to ensure compliance with the Ellis Act. If, for example, staff learns that a withdrawn unit has been rerented sufficiently soon after withdrawal that a rent limitation applies, the rent limitation will be enforced. Recently, for example, staff learned that a landlord was illegally rerenting her units at market rates after evicting the previous tenants under the Ellis Act. Staff brought the violation to the attention of the City Attorney, who filed a civil enforcement action, which was ultimately settled. Under the terms of the settlement the landlord was required to pay $100,000 to the tenant and $20,000 to the city. But the reoccupancy permit requirement is outside the Board's purview, and Rent Control staff lack the authority to enforce it. That authority lies with Building & Safety, who can initiate enforcement, and with the City Attorney, who can follow through with prosecution in the event of noncompliance. Nonetheless, Rent Control staff does monitor Ellised properties-even those that are expected to be redeveloped as non-rental property-in order to ensure compliance with the Rent Control Law. As a result of that ongoing monitoring, the Task Force has discovered several properties that appear to be reoccupied, but for which reoccupancy permits have not been obtained. The noncompliance has been brought to the appropriate authorities' attention, and efforts are being made to correct it. ~Oi1CtU5'1®1'1 Ellis activity, which had nearly stopped in 2009, has begun to increase and appears to be gathering momentum as the economy shows signs of recovery. Even so, 2010 saw a net gain in the number of controlled units, a lagging effect of the near total absence of Ellis activity the year before. But it is anticipated that Ellis activity will continue the increase that started last year, with the result that Santa Monica will see a gradual but perhaps escalating erosion of the existing affordable, controlled housing stock. Page I 1 7