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SR 09-10-2019 7C City Council Report City Council Meeting: September 10, 2019 Agenda Item: 7.C 1 of 4 To: Mayor and City Council From: Lane Dilg, City Attorney, City Attorney's Office, Administration Subject: Introduction and First Reading of an Ordinance Amending Santa Monica Municipal Code 4.36.020 To Improve Clarity and Add an Additional Basis for Payment of Permanent Tenant Relocation Expenses Recommended Action Staff recommends that the City Council: 1. Introduce for first reading the attached ordinance amending Santa Monica Municipal Code Section 4.36.020 to improve clarity and precision and to add an additional basis for mandatory payment of relocation expenses; 2. Amend the Affordable Housing Production Program Administrative Guidelines (Attachment B) and the Housing Trust Fund Guidelines (Attachment C) to provide affordable-housing-referral priority for income-qualified households displaced as a result of constructive eviction associated with owner-occupancy, rent-decontrol of their apartments. 3. Direct staff to explore whether such households could also qualify for affordable - housing priority for federally funded housing vouchers. 2 of 4 Executive Summary For more than three decades, the City of Santa Monica has mandated relocation assistance to displaced tenants. On August 27, 2019, the City Council adopted a 13- item introduced by Councilmember Winterer and directed staff to develop the necessary ordinances and/or resolutions to require relocation benefits for those tenants in duplexes and triplexes who are constructively evicted due to owner occupancy decontrol of their units and to provide those income-qualified tenants who must relocate priority on the City’s affordable housing waitlist. Staff now proposes an ordinance in response to that direction, as well as changes to the Affordable Housing Production Program (AHPP) Administrative Guidelines and Housing Trust Fund (HTF) Guidelines to provide for the requested priority on the City’s affordable-housing waitlist. Discussion Tenant relocation requirements promote housing stability by providing landlord -paid relocation assistance to tenants who are displaced by no fault of their own. Tenant relocation assistance was first established by the City Council in 1986. Currently, Chapter 4.36 of the Santa Monica Municipal Code, Tenant Relocation Assistance, requires a landlord to pay a permanent relocation fee to a tenant whenever the landlord seeks to withdraw the tenant’s unit from the rental market pursuant to the Ellis Act or seeks to recover possession of the tenant’s unit for owner occupancy. 3 of 4 The proposed ordinance addresses an additional circumstance that Council has identified in which relocation fees are necessary to ensure residential stability for tenants whose leases are terminated at no fault of their own. Specifically, the proposed ordinance would require a landlord to pay relocation assistance whenever a duplex or triplex is decontrolled based on the owner’s decision to occupy one of the units and tenants in the remaining units are not evicted but are subject to rent increases beyond those permitted pursuant to City Charter Section 1805. Permanent relocation fees are paid in the amount set forth by Council by resolution and were most recently adjusted on January 22, 2019, pursuant to Resolution No. 11159. Pursuant to Council direction, amendments are also proposed to the AHPP Guide lines and HTF Guidelines to provide a referral priority for affected, income-qualified tenants. The priorities for federally funding housing vouchers will require further investigation. As a result, staff seeks Council direction to further explore whethe r priority could be granted for any of the housing vouchers administered by the Housing Authority. Past Council Actions Meeting Date Description 02.13.1990 (Attachment D) Tenant Relocation Assistance Staff Report 02.27.1990 (Attachment E) Tenant Relocation Ordinance 04.12.2016 (Attachment F) Tenant Relocation Assistance Staff Report 04.26.2016 (Attachment G) Tenant Relocation Assistance Ordinance 02.14.2017 (Attachment H) Tenant Protection Laws Staff Report 03.28.2017 (Attachment I) Tenant Protection Laws Ordinance 08.28.2018 (Attachment J) Tenant Relocation Ordinance Financial Impacts and Budget Actions There is no immediate financial impact or budget action necessary as a result of recommended action. 4 of 4 Prepared By: Lane Dilg, City Attorney Approved Forwarded to Council Attachments: A. CAO - Ordinance - Relocation Assistance - 09.10.2019 B. AHPP Amendment for constructive eviction C. HTF Amendment for constructive eviction D. Tenant Relocation Assistance Staff Report 02.13.1990 (Web Link) E. Tenant Relocation Ordinance - 02.27.1990 (W eb Link) F. Temporary and Permamnent Tenant Relocation Benefits Staff Report 04.12.2016 (Web Link) G. Tenant Relocation Assistance Ordinance 04.26.2016 H. Tenant Protection Laws Staff Report 02.14.2017 (Web Link) I. Tenant Protection Laws Ordinance 03.28.2017 J. Tenant Relocation Ordinance 08.28.2018 (Web Link) K. Written Comments City Council Meeting: September 10, 2019 Santa Monica, California ORDINANCE NUMBER _________ (CCS) (City Council Series) AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA AMENDING SANTA MONICA MUNICIPAL CODE 4.36.020 REGARDING RELOCATION EXPENSES WHEREAS, tenants living in rental units exempt from the City’s Rent Stabilization Ordinance pursuant to Charter Section 1801(c)(4) are at risk of being displaced from those units due to no fault of their own due to large increases in rent that they are unable to pay; and WHEREAS, Government Code Section 7060.1(c) authorizes local governments to mitigate any adverse impact resulting from tenants being permanently displaced from their homes through no fault of their own; and WHEREAS, finding replacement rental housing in the City or surrounding communities is very difficult irrespective of income; WHEREAS, judicial decisions interpreting Government Code Section 7060.1(c) consistently authorize monetary payments as a form of mitigation for displaced tenants; and WHEREAS, the City’s long established temporary and permanent relocation benefits are vital to Santa Monica tenants, especially to those who must vacate their homes through no fault of their own, and such benefits are consistent with Government Code Section 7060.1 and decisional precedents; and WHEREAS, relocation benefits must be sufficient in amount to reasonably mitigate the multitude of adverse impacts faced by tenants being permanently or temporarily displaced from their homes through no fault of their own; and WHEREAS, enhanced relocation benefits are necessary to cover increased costs associated with relocations for senior citizens, disabled persons, or persons caring for minor children; and WHEREAS, the City Council is authorized to set permanent and temporary relocation benefit fees by resolution; and WHEREAS, on January 8, 2019, the City Council adopted Resolution No. 11158 (CCS) establishing permanent and temporary relocation benefit fees; and WHEREAS, these permanent and temporary relocation benefits are reasonably necessary and do not impose a prohibitive price on landlords’ right to exit the rental housing business. SECTION 1. Santa Monica Municipal Code Section 4.36.020 is hereby amended as follows: 4.36.020 When permanent relocation fee required. (a) A landlord shall pay a relocation fee to a tenant whose tenancy is terminated or caused to be terminated in any of the follo wing circumstances: A relocation fee shall be paid in accordance with the provisions of this Chapter by any landlord who terminates or causes the termination of a tenancy for any of the following reasons: (1) The landlord has filed a notice of intent to withdraw the tenant’s rental housing unit seeks to withdraw all rental housing units from the rental housing market pursuant to as provided in Government Code Section 7060 et seq. (2) The landlord has filed a notice of intent seeks to recover possession of the tenant’s a rental housing unit pursuant to Section 1806(a)(8), 1806(a)(9), 2304(a)(8), or 2304(a)(9) of the City Charter. (3) The landlord has filed an application for removal permit pursuant to City Charter Section 1803(t) seeks to recover possession to demolish or otherwise withdraw the tenant’s rental housing unit from the rental housing market. a rental housing unit, excluding single-family homes as defined in Charter Section 2302, from residential rental housing use, including units that were illegally converted to residential use, after having obtained all proper permits from the City, if any such permits are required. For purposes of this subsection, a tenant’s rental housing unit does not include a single-family home as defined in City Charter Section 2302 but does include any unit that was illegally converted to residential use. (4) The landlord has been granted an exemption from provisions governing controlled rental units as provided for by Charter Section 1801(c)(4) and, at any time thereafter, has notified the tenant of intent to increase the rent in an amount exceeding that which would have been permitted pursuant to City Charter Section 1805. (b) A relocation fee required pursuant to this Chapter shall be due and payable to a tenant after the tenant receives shall be paid in accordance with the provisions of this Chapter to a displaced tenant who serves a landlord with a notice to terminate tenancy after having received written notice from either the landlord or the Santa Monica Rent Control Board of any circumstance set forth in subdivision (a) above. that the landlord has filed a notice of intent to withdraw residential rental units pursuant to Government Code Section 7060.4 and Santa Monica Rent Control Board Regulation 16002(a) or an application for removal permit pursuant to Santa Monica Charter Section 1803(t). (c) A relocation The fee required by this Chapter shall be due and payable to a displaced tenant whether or not the landlord actually utilizes the rental housing unit for the purposes stated in the notice of eviction. described in subsection (a). SECTION 2. Any provision of the Santa Monica Municipal Code or appendices thereto inconsistent with the provisions of this Ordinance, to the extent of such inconsistencies and no further, is hereby repealed or modified to that extent necessary to effect the provisions of this Ordinance. SECTION 3. If any section, subsection, sentence, clause, or phrase of this Ordinance is for any reason held to be invalid or unconstitutional by a decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council hereby declares that it would have passed this Ordinance and each and every section, subsection, sentence, clause, or phrase not declared invalid or unconstitutional without regard to whether any p ortion of the ordinance would be subsequently declared invalid or unconstitutional. SECTION 4. The Mayor shall sign and the City Clerk shall attest to the passage of this Ordinance. The City Clerk shall cause the same to be published once in the official newspaper within 15 days after its adoption. This Ordinance shall become effective 30 days from its adoption. APPROVED AS TO FORM: _________________________ LANE DILG City Attorney ATTACHMENT B AHPP Guidelines amendment Section 7.A. Priority Households In establishing the list of households eligible to occupy affordable residences, the Housing Division shall adhere to the following priorities: 1) First Priority Persons who have been permanently displaced or face permanent displacement from their housing residences in Santa Monica as a result of any of the following: a) Eviction or constructive eviction pursuant to Santa Monica Municipal Code Section 4.36.070 (Ellis Act, owner-occupancy, or removal permit) eviction b) Earthquake, fire, flood, or other natural disaster c) Funding reductions in Santa Monica housing voucher assistance programs d) Governmental Action, such as Code enforcement e) Closure of a mobile home park 2) Second Priority Persons who are: a) Residents of Santa Monica b) Working in Santa Monica at least 36 hours per week ATTACHMENT C HTF Guidelines amendment Local Preference (1) First priority shall be given to persons who have been permanently displaced or face permanent displacement from housing in Santa Monica as a result of any of the following: (a) A redevelopment project undertaken pursuant to California’s Community Redevelopment Law (Health and Safety Code Sections 33000, et seq.) – applicable only to projects funded by the Low-Moderate Income Housing Asset Trust Fund; (b) Eviction or constructive eviction pursuant to Santa Monica Municipal Code Section 4.36.070 (Ellis Act, owner-occupancy, or removal permit) eviction; (c) Earthquake, fire, flood, or other natural disaster; (d) Cancellation of Section 8 contract by property owner; or (e) Governmental Action, such as Code enforcement. (2) Second priority shall be given to persons who are either: (a) Residents of Santa Monica and/or (b) Working in Santa Monica at least 36 hours per week for at least 6 months. APARTMENT ASSOCIATION OF GREATER LOS ANGELES AAGLA “Great Apartments Start Here!” 6 2 1 S . WES T M ORE L A N D A V E ., L O S A N G E L E S, C A 9 0005 | 21 3 .38 4 .4 1 31 | AAG L A .OR G Danielle Leidner-Peretz Director, Government Affairs & External Relations danielle@aagla.org 213.384.4131; Ext. 309 September 9, 2019 Via Electronic Mail Hon. Mayor Gleam Davis, and Members of the Santa Monica City Council City Hall 1685 Main Street Santa Monica, California 90401 Re: Permanent Tenant Relocation Expenses for Triplexes and Duplexes (Agenda Item 7.C.) Dear Mayor Davis and Members of the City Council; This letter is written to express the Apartment Association of Greater Los Angeles’ (AAGLA) strong opposition to the proposed ordinance under consideration by the Council which would require owners of buildings of three units or less, who are exempt from the City’s rent control provisions as set forth in the City Charter, to pay relocation fees to renters when the renter is provided written notice of a rent increase in excess of the amount permitted pursuant to the Rent Stabilization Ordinance. The proposed ordinance is in direct conflict with the City Charter as these owners are exempt from the rent control ordinance, and as a result, are permitted to increase rent at their discretion. The proposal serves to override the City Charter by, in effect, imposing rent control upon rent-controlled exempt properties. Furthermore, the ordinance as drafted, necessitates the payment of relocation fees triggered merely by the owner’s notice of “intent to increase the rent” in excess of the permitted Rent Stabilization Ordinance amount. Accordingly, this language creates a presumption that the renter will be moving without any evidence of such intent and that the renter is vacating the unit specifically due to the rent increase. If the Council moves to adopt this ordinance, it should be amended to require that following receipt of a notice of a rent increase, the renter must provide the owner with written notice of intent to vacate the unit due to the rent increase. Additionally, small, “mom and pop” rental housing providers often have limited financial resources to make large, lump sum relocation payments to renters that may be better financially situated. Relocation benefits should be based on actual financial need (e.g., income, liquidity a nd Item 7-C 09/10/19 1 of 2 Item 7-C 09/10/19 APARTMENT ASSOCIATION OF GREATER LOS ANGELES AAGLA “Great Apartments Start Here!” 6 2 1 S . WES T M ORE L A N D A V E ., L O S A N G E L E S, C A 9 0005 | 21 3 .38 4 .4 1 31 | AAG L A .OR G assets test) and only for renters in good standing under their lease. The threshold for assessing need should include household income of either 200% Federal Poverty Level or 80% Average Median Income (AMI). The amount of relocation assistance should be based on actual rent paid or U.S Department of Housing and Urban Development (HUD) Fair Market Rent. Thank you for your time and consideration of these matters. If you have any questions, please call me at (213) 384-4131; Ext. 309 or contact me via electronic mail at danielle@aagla.org. Very truly yours, Danielle Leidner-Peretz Item 7-C 09/10/19 2 of 2 Item 7-C 09/10/19