SR 09-24-2019 7A
City Council
Report
City Council Meeting: September 24, 2019
Agenda Item: 7.A
1 of 2
To: Mayor and City Council
From: Lane Dilg, City Attorney, City Attorney’s Office
Subject: Second Reading and Adoption of 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 City Council adopt the attached Ordinance.
Executive Summary
At its meeting on September 10, 2019, the City Council introduced for first reading 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.
The ordinance reflects Council’s direction to address surcharges authorized by the Rent
Control Board as follows:
(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 the sum of any increase that would have been permitted
pursuant to City Charter Section 1805 and any surcharges authorized by the
Rent Control Board.
The ordinance is now presented to City Council for adoption.
2 of 2
Prepared By: Elsa Kapsinow, Executive Assistant to the City Attorney
Approved
Forwarded to Council
Attachments:
A. CAO - Ordinance - Relocation Assistance - 09.24.2019 - 2nd Rdg
B. Written Comments
City Council Meeting: September 24, 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 permanentl y 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
to read 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 following circumstances:
(1) The landlord has filed a notice of intent to withdraw the tenant’s rental
housing unit from the rental housing market pursuant to Government Code Section
7060 et seq.
(2) The landlord has filed a notice of intent to recover possession of the
tenant’s 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) to demolish or otherwise withdraw the tenant’s rental
housing unit from the rental housing market. 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 the sum of any increase that would have been permitted
pursuant to City Charter Section 1805 and any surcharges authorized by the Rent
Control Board.
(b) A relocation fee required pursuant to this Chapter shall be due and payable
to a tenant after the tenant receives written notice from either the landlord or the Santa
Monica Rent Control Board of any circumstance set forth in subdivision (a) above.
(c) A relocation fee required by this Chapter shall be due and payable to a
tenant whether or not the landlord actually utilizes the rental housing unit for the
purposes 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 portion 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
1
Vernice Hankins
From:eltheous <eltheous@roadrunner.com>
Sent:Monday, September 23, 2019 2:25 PM
To:councilmtgitems
Subject:Imposing Relocation Fees on Owner Occupied Triplexes
Re: AMENDING SANTA MONICA MUNICIPAL CODE 4.36.020
At the September 10, 2019 City Council Meeting the Rent Control Board Admin. Tracy Condon was asked to amend the
draft to clarify what the law says. Among other things, city council members asked where was the provision for banking
previous annual rent adjustments made by rent control board. This second reading doesn’t include this information.
Further, the justification for the law on the first draft was that it was to prevent large increases of rent when new
owners occupy a property and make it rent control exempt. Given that California passed a law that rent can’t be raised
more than 5% (plus CPI which is less than building maintenance CPI) this is no longer a concern. There is also no reason
to make this law retroactive against landlords for rent increases they asked for years ago for owner occupied non rent
controlled units.
The law also punishes tenants as it almost requires landlords to take the annual rent raise on both their tenants. It also
doesn’t let the landlord not raise one tenant’s rent (who perhaps just lost their job) while raising another tenant’s rent
(making more income than the landlord) to compensate.
There is no means testing a tenants as to whether they can afford to move. Nor does a tenant have to prove they are
poor by showing income tax returns. I know of many tenants that have apartments at 25% of market and simply keep
their apartments as investments. They often live in other places, such as with their lover/spouse, in another state, etc.
There is nothing to keep these tenants from cashing in the next time they’re given a rent raise. Inglewood actually
decided it was unfair to ask small landlords to pay relocation fees in this last month.
Even worse, the way this law is drafted, the second a landlord sends out a rent increase notice, they owe the relocation
fee — even if the landlord is willing to withdraw the relocation fee. This law also doesn’t state how long a tenant has to
object to a rent increase. The way it is currently drafted, it appears the tenant has forever.
I guess Santa Monica is depending on the fact that small landlords don’t have enough income to bring a lawsuit (as
tenants almost never vacate where they have a charming unit on a 3‐unit property and a landlord who doesn’t raise
rents much). Actually, this law is doing a disservice to rent controlled tenants who are now entitled to relocation fees as
Pacific Legal Foundation is willing to bring lawsuits. Additionally, the Federal Supreme Court is now willing to expedite
property cases through the federal court system and begin deciding when state and city governments are overreaching
with fines, etc. (and relocation fees in Santa Monica are already on shaky legal ground as they’re based on a law that
originally only applied to Single Room Occupancy hotel residents)
Lastly, you are inviting an F.B.I. investigation and wiretaps of city government officials.
Item 7-A
09/24/19
1 of 1 Item 7-A
09/24/19
ROSARIO PERRY, A PROFESSIONAL LAW CORPORATION
312 PICO BOULEVARD SANTA MONICA, CALIFORNIA 90405
PHONE: 310.394.9831
FAX: 310.943.4500
ROSARIO@OCEANLAW.COM
EMAIL
September 24, 2019
Lane Dilg, City Attorney, City of Santa Monica
Santa Monica City Council Members
1685 Main St., Santa Monica CA 90401
Re: Second Reading and Adoption of Ordinance Amending Santa Monica
Municipal Code 4.36.020 to Improve Clarity and Add an Additional Basis for
Payment of Permanent Tenant Relocation Expenses
Dear City Attorney and City Council members,
I am writing on behalf of the Action Apartment Association of the City of Santa
Monica in regards to your proposal to amend Santa Monica Municipal Code 4.36.020 to
mandate the payment of relocation assistance by housing providers who are exempt from
rent control under the Santa Monica City Charter.
The Santa Monica City Charter was voted on by the people of the City of Santa
Monica and functions as the constitution of the City of Santa Monica. Article 18, Section
1801(c) (4) of the Santa Monica City Charter specifically exempts owner-occupied
properties of the three units or less from rent control. They are not “controlled rental
units” under the Charter. Your proposed amendment to Santa Monica Municipal Code
4.36.020 attempts to impose the payment of a “relocation fee” on exempt housing
providers if they increase the rent by more than an amount permitted under City Charter
Section 1805. The City Council, on its own, does not have the power to amend the City
Charter in this manner to mandate the payment of relocation assistance by housing
providers who are exempt from rent control under the charter. This proposed amendment
to the City Ordinance described as SMMC “4.36.020 (a)(4)” is therefore ultra vires and
outside the scope of the City Council’s authority to enact. The City Council clearly
cannot pass an ordinance eliminating an exemption that is provided for in the Charter.
Furthermore, this proposed amendment impermissibly burdens the exercise of a
housing provider’s exemption rights under the City Charter. For example this year’s
permissible Annual General Adjustment is 2 percent, or $45, whichever is less. Forcing
exempt Housing Providers to pay as much as $32,000 in relocation assistance nullifies all
of the economic value of the exemption. If the housing provider raises the rent by $100
per month, matching the prevailing market rent, it would take 26 years for a housing
provider to recoup the $32,000 relocation expense. If the housing provider has to
increase the rent again on the new tenant by another $100 per month, to match the
prevailing market rent, then this would be another $32,000 in relocation assistance. It
would take 52 years for the housing provider to recoup those two relocation payments.
This proposed amendment is therefore confiscatory.
Furthermore, there is no provision or mechanism in the proposed amendment
which ensures that housing providers will be able to receive a “fair and reasonable
return” on their property, as required by the California Supreme Court in Birkfenfeld v.
City of Berkeley (1976) 17 Cal.3d 129. Birkenfeld and all cases thereafter have insisted
on this requirement. For example, a housing provider might be required to make seismic
upgrades, or other such upgrades and expenses, and the proposed amendment would not
ensure any “fair and reasonable return” on the housing provider’s property.
Finally, the proposed amendment violates the substantive due process
requirements of the 14th Amendment to the US constitution, as there is no rational basis
for the discrimination provided for in this ordinance. This ordinance singles out the
owners of small owner-occupied 3-unit or less properties for draconian treatment, while
all newly constructed multifamily developments remain totally exempt from any
relocation payments. This means that “mom-and-pop” housing providers will have to
pay massive relocation assistance payments when they raise the rent, while large-scale
owners and developers pay nothing in relocation assistance when a tenant vacates due to
a rent increase.
Sincerely,
Rosario Perry
REFERENCE:
Ordinance No. 2615
(CCS)