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r10699City Council Meeting 7 -24 -2012 ATTACHMENT A Santa Monica, California RESOLUTION NUMBER 10699 , CS) (City Council Series) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA SUBMITTING TO THE VOTERS A MEASURE PROPOSING TO AMEND THE RENT CONTROL CHARTER PROVISIONS RELATED TO THE COMPUTATION OF THE ANNUAL ADJUSTMENT TO RENT CEILINGS AT THE GENERAL MUNICIPAL ELECTION TO BE HELD ON TUESDAY, NOVEMBER 6, 2012, AND AUTHORIZING CITY COUNCIL MEMBERS TO FILE WRITTEN ARGUMENTS FOR OR AGAINST THE PROPOSITION AND DIRECTING THE CITY ATTORNEY TO PREPARE AN IMPARTIAL ANALYSIS OF THE MEASURE WHEREAS, City Charter Section 1805, which governs the annual adjustment to the ceilings on allowable rents for rent controlled units, was last amended by the voters in 1985; and WHEREAS, among other things, Section 1805 allows the Rent Control Board, after holding a public hearing, to adjust the rent ceiling up or down for all controlled rental units or for particular categories of units and to postpone the effective date of the change; and 1 WHEREAS, for nearly thirty years, the Rent Control Board has implemented Section 1805 by using a complex methodology known as the "component ratio to gross rent" formula; and WHEREAS, over the years both the Rent Control Board and its staff have observed that actual changes in expenses may be determined for only a small portion of landlords' expenses considered under the current methodology; and WHEREAS, the survey process is both costly and time consuming; and WHEREAS, the Rent Control Board and its staff believe that the present formula is so complex that it can make results unpredictable and that it is very difficult for the public to understand; and WHEREAS, an amendment to the way that annual adjustments are made will correct the shortcomings existing in the current law. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES RESOLVE AND PROCLAIM AS FOLLOWS: SECTION 1. A General Municipal Election has been called for November 6, 2012, for the purpose, among other things, of electing certain City Council members. SECTION 2. At the General Municipal the City Council of the City of Santa Monica also wishes to submit a measure proposing an amendment to the City of Santa Monica City Charter to the voters. 2 SECTION 3. At the General Municipal Election called for November 6, 2012, the following measure shall be submitted to the qualified electors of the City of Santa Monica: PROPOSITION " ": Shall the City Charter be amended to allow the annual rent control general adjustment to be Yes based on 75% of the annual percentage change in the Consumer Price Index, but limited to an adjustment between 0% and 6 %; and to give the Rent Control Board discretion, after a public hearing, to impose a dollar limit, within the 0 -6% range, calculated using the same formula No employed when imposing a limit under the existing general adjustment formula? SECTION 4. The City Clerk shall transmit to the City Attorney, in accordance with applicable law, a copy of the proposed measure. The City Attorney shall prepare an impartial analysis of it, which shall not exceed 500 words in length. The impartial analysis shall be filed by the date set by the City Clerk for the filing of primary arguments. In accordance with applicable law, not less than 10 calendar days before the City Clerk submits the official election materials for printing, the City Clerk shall make a copy of all applicable elections materials available for public examination in the City Clerk's office. SECTION 5. The City Council authorizes its members, as follows, to file written arguments for or against the measure described above and which is contained in Exhibit 1 to this Resolution, which Exhibit is incorporated by reference herein: ici FOR: Councilmember Pam O'Connor AGAINST: All written arguments filed by any person in favor of or against any measure, including any rebuttal arguments, shall be accompanied by the names and signatures of the persons submitting the argument as required by applicable law, and any names, signatures and arguments may be filed until the time and date fixed by the City Clerk in accordance with applicable law, after which no change may be submitted to the City Clerk unless permitted by law. SECTION 6. The City Clerk shall cause the text of the measure, which is contained in Exhibit 1, together with the City Attorney impartial analysis, and any arguments for or against the measure, as well as any rebuttal, to be mailed to all qualified voters with the sample ballot. In addition to other notices and publications required by law, the City Clerk, not less than forty (40) days and not more than sixty (60) days before the General Municipal Election, shall cause the text of the measure to be published once in the official newspaper and in each edition thereof during the day of publication. The City Clerk is authorized to give such notices and to fix such times and dates as are required by law or which are appropriate to conduct properly the election. SECTION 7. The provisions of Resolution Numbers 10680 (CCS), 10681 (CCS), and 10682(CCS) are referred to and incorporated into this resolution for more II particulars concerning the conduct of General Municipal Election to be held on November 6, 2012, and in all respects the election shall be held and conducted as provided for by applicable law. The City Clerk is authorized and directed to procure and furnish any official ballots, notices, printed materials and all supplies or equipment that may be necessary in order to properly and lawfully conduct the election. SECTION 8. The City Clerk shall certify to the adoption of this Resolution, and thenceforth and thereafter the same shall be in full force and effect. APPROVED AS TO FORM: t IVIARSFIA JONES �MqUTRI � City Attorney 5 EXHIBIT 1 PROPOSAL OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA TO AMEND THE CITY CHARTER Section 1803. Permanent Rent Control Board. (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 (4) public hearing to consider the views of interested parties prior te the adGption of general adjustments of the de- aisienbefore deciding whether to impose a dollar- amount ceiling on a general adjustment under Section 1805(b) or deciding to decontrol or reimpose 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. Section 1804. Maximum Allowable Rents (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 paiRt from which fair rents shall be adjusted upward or downward accordanGe 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. For tenancies commencing on or after January 1, 1999, which qualify for a vacancy rent increase pursuant to state law, the base rent ceiling is the initial rental rate in effect on the date the tenancy commences. As used in this subsection, the term "initial rental rate" means only the amount of rent actually paid by the tenant for the initial term of the tenancy. The base rent ceiling is the reference point from which the rent ceiling shall be adjusted upward or downward in accordance with Section 1805. -. - .D - public hearings prescribed by 88Gtion '0 the Fent GeiliR9 for all controlled Fental units iR general and/or fer partiGular categories 0 controlled rental units deemed appropriate by the eard. Such an a-justment, 2 periods No later than June 30 each year, the Board shall announce the percentage by which rent ceilings for eligible units will be generally adjusted effective September 1 of that year. (1) The adjustment shall be equal to seventy five percent of the percentage increase in the Consumer Price Index (All Urban Consumers, Los Angeles, Riverside, Orange County region, or any successor designation of that index that may later be adopted by the U.S. Bureau of Labor Statistics) as reported and published by the U.S. Department of Labor, Bureau of Labor Statistics, for the 12 -month period ending as of March of the current year. (2) In determining the allowable percentage increase, numbers of .04 and below shall be rounded down to the nearest tenth decimal place and numbers of .05 and above shall be rounded up to the nearest tenth decimal place. (3) Subparagraph 1 of this subsection notwithstanding, in no event shall the general adiustment be less than zero percent or greater than six percent. (b) DOLLAR - AMOUNT CEILING: 3 decreases in the City of Santa nn,.. iGa for taxes. The Board may, in its discretion, impose a dollar- amount limit to any annual general adjustment. The dollar- amount limit shall be calculated using the following methodology: (1) The Board shall determine the eighty fifth percentile of the maximum allowable rent of all controlled units; (2) The Board shall then determine the eighty fifth percentile of maximum allowable rent of all controlled units with a base rent established before January 1, 1999; (3) The dollar- amount limit shall be the average of the two rents arrived at under paragraphs (1) and (2) multiplied by the annual general adjustment determined under paragraph (a) of this Section. (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. In making an individual downward adjustment, the Board may consider decreases in living In space, furniture, furnishings, equipment, or services; substantial deterioration of the controlled rental unit other than as a result of ordinary wear and tear; or failure on the part of the landlord to provide adequate housing services or to complV substantially with applicable housing, health and safety codes. In making an individual upward adjustment, the Board may adept employ as its fair return standard any lawful formula, including but not limited to one based on investment or net operating income. The Board shall consider all factors relevant to the formula it employs; sSuch factors may include: increases or decreases in operating and maintenance expenses, the extent of utilities paid by the landlord,- necessary and reasonable capital improvement of the controlled rental unit as distinguished from normal repair, replacement and maintenance,- increases or decreases in living spaces,— furniture, furnishings, equipment, or services, substantial deter'erat;GR ef the GGRtrolled rental unit other than as a result Gf erdinary wear and tear, failure on the part of the landlord to provide adequate heusing SeFV'Ges or to comply substantially with applicable housing, health and safety , federal and state income tax benefits;- the speculative nature of the investments; whether or not the property was acquired or is held as a long term or short term investments, —the landlord's rate of return on investments; the landlord's current and base date Net Operating Incomes; and any other factor deemed relevant by the Board in providing the landlord a fair return. 5 Adopted and approved this 24th day of July, 2012. R hard Bloom, Mayor I, Maria M. Stewart, City Clerk of the City of Santa Monica, do hereby certify that the foregoing Resolution No. 10699 (CCS) was duly adopted at a meeting of the Santa Monica City Council held on the 24th day of July, 2012, by the following vote: AYES: Councilmembers Holbrook, McKeown, O'Connor, O'Day, Mayor Pro Tem Davis, Mayor Bloom NOES: None ABSENT: Councilmember Shriver ATTEST: Maria M. Stewart; City Jerk