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m20220803_Spec 1 August 3, 2022 CITY OF SANTA MONICA CITY COUNCIL MINUTES AUGUST 3, 2022 A special meeting of the Santa Monica City Council was called to order by Mayor Himmelrich at 6:00 p.m., on Wednesday, August 3, 2022, via teleconference pursuant to Assembly Bill No. 361 signed by, Governor Gavin Newsom at https://primetime.bluejeans.com/a2m/live-event/wxedpjbw. Roll Call: Present: Mayor Sue Himmelrich Mayor Pro Tem Kristin McCowan Councilmember Phil Brock Councilmember Gleam Davis Councilmember Lana Negrete Councilmember Oscar de la Torre (arrived at 6:28 p.m.) Councilmember Christine Parra Also Present: City Manager David White City Attorney Douglas Sloan City Clerk Denise Anderson-Warren CONVENE On order of the Mayor, the City Council convened at 6:00 p.m., with all members present except Councilmember de la Torre. PUBLIC INPUT FOR CLOSED SESSION: There was no public comment on closed session items. CLOSED SESSIONS On order of the Mayor, the City Council recessed at 6:03 p.m., to consider closed sessions and returned at 6:30 p.m., with all members present, except Councilmember Brock to report the following: 3.A. Conference with Labor Negotiator: Government Code Section 54957.6 -- Agency Designated Representatives: City Manager David White and Chief People Officer Lori Gentles; Bargaining Units: ATA- Administrative Team Associates; IBT-California Teamsters Local 911; FEMA-Santa Monica Fire Executive Management Association; FIRE- Santa Monica Firefighters Local 1109 IAFF; MEA-Municipal Employees Association; AFSCME Local 4819, Management Team Association; PALSSU-Public Attorneys’ Legal Support Staff Union; PAU- Public Attorneys Union; POA-Santa Monica Police Officer Association; SMART TD-The International Association of Sheet Metal, Air, Rail, and Transportation Division, Local 1785; STA- Supervisory Team Associates; Coalition of Santa Monica City DocuSign Envelope ID: B4838F2A-E16D-4378-9261-D80CCD673777 2 August 3, 2022 Councilmember de la Torre arrived at 6:28 p.m. Employees The City Attorney advised this matter was heard with no reportable action taken. STAFF ADMINISTRATIVE ITEMS: BALLOT MEASURES Councilmember Brock returned at 6:31 p.m. 11.A. Adoption of Resolution Nos. 11452 (CCS) and 11453 (CCS) for Proposed Ballot Measures on the November 8, 2022 Election Amending Articles XVIII of the City Charter, was presented. Recommended Actions 1. Per Rent Control Board direction, adopt the attached resolution (Attachment A) placing a measure on the November 8, 2022, ballot that would amend Article XVIII of the City Charter to revise requirements for owners to evict tenants for owner-occupancy; revise election procedures; and reduce the Annual General Adjustment, while maintaining the landlord’s ability to petition for an individual rent adjustment; and 2. Per Council direction, adopt the attached resolution (Attachment B) placing a measure on the November 8, 2022, ballot that would amend Article XVIII of the City Charter to authorize the Rent Control Board to freeze or modify otherwise-allowed annual general adjustments to rent ceilings during a declared state of emergency by the President of the United States, the Governor, the County of Los Angeles or upon a declaration of a local emergency by the City Council or Director of Emergency Services, while maintaining the landlord’s ability to petition for an individual rent adjustment; and 3. Authorize City Councilmembers to file written arguments for or against and direct the City Attorney to prepare an impartial analysis for each measure. Members of the public Wendy Bryan, Abby Arnold, Theresa Marasco, Danielle Peretz, Ann Thanawalla, Michelle Gray, John Alle, Denny Zane, Christina Navarro, Jason Mathbaum, Richard Moore, Elizabeth Lerer, Sonia Sultan, Willow Evans, Carolyn Torosis, Michael Soloff, Phyllis Dudick, Bill Davids, and Denise McGranahan commented on the recommended action. Questions asked and answered of staff included: what is the recommendation from staff; is there a trade-off between Administrative considerations for February 1st versus March 1st; what about the Rent registration fee that is passed through to tenants; explain the difference in the options being considered; explain the sunset clause, and shouldn’t it be considered when there is an election; is the idea of sunsetting so that we can come back with more conversation about Rent Control; with regard to the sunset clause, does there need to be a sunset clause in order to have a Study Session about Rent Control; regarding the registration fees, is it true DocuSign Envelope ID: B4838F2A-E16D-4378-9261-D80CCD673777 3 August 3, 2022 that it is because the Rent Control Board is self-sufficient, and if the registration fees are not increased, won’t that impact the Rent Control’s budget; is it right that all the Council can do is recommend the Rent Control Board limit or decrease the registration fees; is it correct that the fees increased this year, and what was the pass-through amount; is it possible to expand who the waiver goes to; is there no way to decrease the 14% increase this year, and reduce the pass-through amount; is this proposal going to incur more cost for the Rent Control Board’s cost; if the cost of Rent Control’s budget exceeds the amount paid by fees, how does the agency make up the difference; have the rates for city utilities gone up, and is there a way to roll back those increases; the fee that is charged to landlords to make sure they get a fair amount of return, is that a deposit, that is returned to them; when do the tenants have to pay the adjustment; does anyone backfill for the landlord if there is a hardship; can the full increase go past the cap; is the amount based on the total return from the building, not just the unit; how many appeals have there been from landlords in the past year; is the process for landlords to file an appeal onerous, or are the landlords doing well; how are mortgage cost incurred into the increased fees; are the landlords expected to keep their expenses for the property back to 1978, or does the Rent Control Board keep track of those expenses and income; why is a sunset clause not acceptable; is there some way to accommodate people who did the right thing and didn’t increase rents during the pandemic; is the sunset long enough, or should it be longer to give enough time to do a full dive into the conversation about increases; if nothing is done, after the sunset, does it revert back to the current formula, with $140 cap; if this doesn’t get done in time for the 2024 ballot, should the sunset clause be longer to secure the fee and give more time to have discussions about the entire Rent Control system; if Rent Control is based on 75% of the Consumer Price Index (CPI), why would we assume that there is going to be a 6% increase, since it is going to be two years from now; what part does the City Council play in making suggestions and changes to the Rent Control Board, and how do we hold staff accountability if we can’t give direction; and, if a 3% cap, how hard would it be for the Rent Control Board to change it and go higher. Considerable discussion ensued on topics including, but not limited to: it’s a good idea in 2023 to have discussions about Rent Control to allow plenty of time to have the discussions; make sure that on Option 3, that it’s not just the tenants fees that aren’t being increased, but the landlords as well; there needs to be a way to give balance to also help landlords as well as tenants; the sunset clause is only to get the conversation started; this is an opportunity to make Rent Control better by taking the next two years to look outside the box and find ways to improve Rent Control; if a sunset clause is truly needed; there should be at least one community meeting, and a minimum of one meeting between the City Council and the Rent Control Board to address the rent control fees; supporting the sunset clause forces DocuSign Envelope ID: B4838F2A-E16D-4378-9261-D80CCD673777 4 August 3, 2022 staff and all those involved to have a full conversation about Rent Control, and it allows enough time to be able to place something on the November 2024 ballot; how to ensure renters stability over the long-term; a sunset clause does not preclude future Councils from making the changes and modifications, and could possibly create the same stress that is happening now; there’s not an incentive to have the conversation, if there’s not a sunset clause; and, supporting the sunset because there has been direction given to staff previously that hasn’t been fulfilled, so there is concern that this matter may not be addressed in a timely manner. Motion by Councilmember Davis, seconded by Mayor Pro Tem McCowan, to adopt the staff recommendations, with the following changes: 1) Adopt Option 2, as set forth in the staff report, which adjust the timing of the general adjustment cap to February 1, 2023; and, 2) allow a provision that those landlords who did not take advantage of the opportunity to raise rents to the full 6 percent, but raised them to 3 percent or less, that they be allowed to do a calculation that allows them a 3 percent or less over the course of the year. Substitute motion by Councilmember de la Torre, to approve the assessment proposed in the alternate plan, which would give a 0% rent increase to those renters that are below the median bar, and for those above the median bar a 4% increase for 2-years, with a $93/cap, with non-profits, Section 8 tenants, Home Purchase Plan (HPP) units or those who receive subsidized rent from the city, should be exempt. The motion failed to get a second. Substitute motion by Councilmember Brock, seconded by Councilmember Parra, to amendment to the main motion, to include Option 1, the sunset clause. The substitute motion was withdrawn by the maker. The main motion, as amended was approved by the following vote: AYES: Councilmembers Parra, Davis, Negrete, Brock, de la Torre, Mayor Pro Tem McCowan, Mayor Himmelrich NOES: None ABSENT: None Motion by Councilmember Brock, seconded by Councilmember de la Torre, to direct staff in mid-2023, to have a robust discussion amongst all interested stakeholders and parties as to any Rent Control reforms that should be undertaken. That should include the Rent Control board, all stakeholders, including all residents of all rent levels. The results of that might be added to a ballot measure 2024. Staff should poll all Councilmembers to get feedback on expectations on what they would like to have addressed as part of the robust discussion. DocuSign Envelope ID: B4838F2A-E16D-4378-9261-D80CCD673777 5 August 3, 2022 The motion was approved by the following vote: AYES: Councilmembers de la Torre, Brock, Negrete, Davis, Parra, Mayor Pro Tem McCowan, Mayor Himmelrich NOES: None ABSENT: None Direction was given to staff to identify funds that can be used to give relief to rent-burdened tenants beginning September 1st when the 6 percent general adjustment kicks in, and that a program be initiated expeditiously, as September 1st is approaching quickly; and that they identify funds, come up with a program, and begin to disburse funds at the earliest possible moments. Also encourage all tenants who may need assistance to contact the city as soon as possible. Mayor Himmelrich agreed to write the argument in Favor of on all measures, with Councilmember de la Torre. ADJOURNMENT On order of the Mayor, the City Council meeting adjourned at 9:33p.m. in memory of Marissa Rubin, Christal Anderson and Vin Scully. ATTEST: APPROVED: Denise Anderson-Warren Sue Himmelrich City Clerk Mayor DocuSign Envelope ID: B4838F2A-E16D-4378-9261-D80CCD673777