Title
Introduction of Ordinance Amending the Alameda Municipal Code by Amending Article XV (Rent Control, Limitations on Evictions and Relocation Payments to Certain Displaced Tenants Ordinance [Rent Ordinance]) to Implement Senate Bill 567 (State Rent Control Laws) by Adopting a Written Finding That the Just Cause Provisions of the Rent Ordinance Are More Protective Than Civil Code Section 1946.2, Clarifying the City’s Authority to Enforce State Rent Control Laws, and Rephrasing the Definition of Rental Units Creating Consistency with State Law. (Rent Stabilization 20723849)
Body
To: Honorable Mayor and Members of the City Council
From: Yibin Shen, City Attorney
EXECUTIVE SUMMARY
In addition to the City of Alameda’s (City) local Rent Control Laws, since January 1, 2020, state law (AB1482) has established certain rent control protections state-wide. State law has just cause provisions that are less protective of tenants’ rights than the City’s just cause provisions in the Rent Ordinance. State law also limits annual rent increases to no more than 5% + local CPI (CPI = inflation rate), or 10% whichever is lower, which generally permits higher rent increases than local law. One notable exception is that state law’s rent increase limitations apply to rental properties built after 1995, while local law is precluded from regulating rents in such properties pursuant to the Costa-Hawkins Rental Housing Act.
State law recently has been amended (SB 567) to authorize the city attorneys of local jurisdictions to enforce state rent control laws. Prior to SB 567, no local enforcement of state law was authorized, and tenants were generally required to file private legal actions to vindicate their rights under state law.
As to state law’s just-cause eviction protections, SB 567 provides that State law supplants local law, unless (i) the City’s just cause provisions are consistent with State law’s just cause provisions, (ii) the City’s just cause provisions concerning the reasons for eviction are more limited than State law, and provide for higher relocation assistance than does the State law, and (iii) the City’s Rent Ordinance has a written finding that the local law is more protective than State law.
Although the Rent Ordinance satisfies (i) and (ii), it currently does not satisfy (iii). Staff is recommending that the written finding be included in the Rent Ordinance. Staff is also recommending that for purposes of clarification, the definition of “dwelling unit” be rephrased to create greater consistency with state law and that the Rent Ordinance specifically reflect state law’s direction that the City Attorney is authorized to enforce State rent control laws.
This report also discusses how the Rent Program plans to implement this change in the law.
BACKGROUND
In addition to the City’s local Rent Control laws, since January 1, 2020, state law (AB1482) has established rent control protections state-wide. Under State law-Civil Code, section 1946.2 (“CC 1946.2”)--a landlord may not terminate a tenancy for a tenant who has continuously and lawfully occupied residential real property for 12 or more months without just cause. Just cause includes, for example, default in the payment of rent, a breach in a material term of a lease, committing waste, criminal activity, or refusal to allow a landlord to enter the premises following proper notice. Just cause also includes “no fault” just cause such as an owner move in or withdrawing the rental unit permanently from the rental market. Where a tenancy is terminated based on “no fault”, State law provides for some relocation assistance, generally the equivalent of one month’s rent.
The City’s Rent Ordinance likewise provides that a landlord may not terminate a tenancy except upon just cause and those local just cause grounds generally parallel the just cause provisions in State law. See subsections A-I, Section 6-58.80, Alameda Municipal Code (“AMC”). Local law, however, is more protective of tenant’s rights, for example, there is no requirement that a tenant continuously occupy the rental unit for 12 or more months in order for the just cause provisions to apply. Similarly, the City’s relocation benefits for tenants who must vacate due to an owner move in or the withdrawal of the rental unit from the rental market are much more generous than State law. For example, for a tenant in a one bedroom unit, the relocation payment is $7,000. For households with minor children, with disabilities, or of a certain age, the payments are higher (one bedroom, $9,000).
With respect to Rent Increase limitations, under State law-Civil Code, section 1947.12 (“CC 1947.12”)- a landlord may not increase rent by more than 5% plus the percentage change in the cost of living, or 10%, whichever is lower. This provision does not apply to certain residential real properties including (i) housing subject to rent control by a local agency that restricts annual rent increases in an amount less than under State law, (ii) housing that has been issued a certificate of occupancy within the previous 15 years, (iii) single family residences condominiums (subject to some exceptions, for example if the owner is a corporation).
The City’s Rent Ordinance also limits annual rent increases and, for the most part, it is more restrictive than State law. For example, for multi-family properties for which a certificate of occupancy was issued prior to February 1, 1995, a landlord may not increase rents by more than the Annual General Adjustment, defined as 70% of the percentage change in the cost of living, with a floor of 1% and a ceiling of 5%. See Sections 6-58.60 and 6-58.65, AMC. However, rents at a multi-family property built after 1995 could not be limited by local law nor would a single family residence owned by a corporation, as the Costa-Hawkins Rental Housing Act precludes local rent regulation of such units. In these instances, state rent control law would apply.
To the extent that State law is more restrictive than local law, before SB567, the City does not currently have the authority to enforce state law. Currently, when Rent Program staff becomes aware that a landlord has increased rent on a rental property not subject to local law but above that permitted by State law, Rent Program staff informs the landlord and tenant of that state law violation.
Recent State legislation (SB 567) that will be effective April 1, 2024, for the first time, provides for local enforcement of state law, by authorizing the city attorney in a jurisdiction in which a rental unit is located, to enforce state rent control laws. Additionally, however, SB 567 provides that as to CC 1946.2 (the just cause provisions) State law and local law cannot both apply. Accordingly, in order to continue to apply the City’s more restrictive just cause provisions, the Rent Ordinance must be amended to affirmatively declare that the City’s Rent Ordinance provisions as to just cause are more protective than State law.
DISCUSSION
SB 567 provides that the provisions of CC 1946.2 (the state just cause protections) do not apply to residential real property subject to a local ordinance requiring just cause for eviction if the local ordinance was adopted or amended after September 1, 2019 and is more protective than CC 1946.2 in which case the local ordinance shall apply. The local ordinance is more protective if (1) the just cause provisions are consistent with CC 1946.2 (which the Rent Ordinance is); (2) the local ordinance further limits the reasons for termination of a tenancy, provides for higher relocation assistance or provides additional tenant protections that are not otherwise prohibited by any other provision of law (the Rent Ordinance does all three); and (3) the local government has made a binding written finding within the local ordinance that the ordinance is more protective than CC 1946.2. Currently, the Rent Ordinance does not contain such a binding written finding, accordingly staff is recommending that the Rent Ordinance be amended to include such a finding.
Concerning CC 1947.12 (limiting annual rents), as amended, there is nothing in SB 567 akin to the finding required under CC 1946.2 so that the more restrictive provisions of either state or local law may continue to be enforced. Moreover, by reason of SB 567, as of April 1, 2024, the City will be able to directly enforce those provisions of CC 1947.12. Staff is recommending the Rent Ordinance be amended to reflect that the City Attorney has the authority to enforce State law rent control provisions, as provided by SB 567.
The Rent Program currently categorizes rental properties as either “fully regulated” or “partially regulated,” based on whether a 1995 state law, the Costa-Hawkins Rental Housing Act, exempts the units from the City’s limitations on rent increases. Fully regulated properties include multifamily properties built prior to February 1995, and represent about 83 percent of the rental units in Alameda. These units are subject to all provisions of the Rent Ordinance, including the Annual General Adjustment (AGA) that caps rent increases. Partially regulated properties include multifamily properties built since February 1995 as well as single-family homes, condominiums, and townhouses regardless of construction date. These properties are subject to some Rent Ordinance provisions, including “just cause” eviction protections and a reduced annual program fee, but they are not subject to the AGA.
SB 567, along with the proposed ordinance, would create a new class of rental units that are exempt from the City’s rent control limits but subject to local enforcement based on statewide rent control limits. For example, if a landlord were to increase rents for a multi-family property built between 1995 and 2009 more than permitted under CC 1947.2 (5% + percentage change in cost of living, or 10%, whichever is lower), the City Attorney’s Office, including the Rent Program, could undertake enforcement actions to bring the landlord into compliance with the State law.
The Rent Program estimates that, for now, this would apply to a modest number of rental units built prior to 2009: about 150 to 300 single-family homes, condominiums, and townhouses that are rented to tenants and owned by a corporation, an LLC, or a real estate investment trust, as well as about 10 rental units at multifamily properties built between 1995 and 2009. Still, this number will increase in the future. That is, because the exemptions to CC 1947.12 apply to properties built within a rolling 15-year window, newly constructed multifamily properties (for example, those at Alameda Point and on the City’s northern waterfront) will eventually be subject to the statewide rent control limits.
Rent Program staff is still considering options for how best to approach this new class of rental units administratively. As a first step staff will update the Alameda Rent Registry database with data from the Alameda County Assessor’s office on each property’s year of construction. Initially, staff will take a complaint-based approach and only initiate enforcement action when a tenant in a rental unit covered by state but not local rent control reports a rent increase in excess of the state limit. In the future, staff may return to Council with a recommendation of a new fee structure, in which these units are charged an annual program fee between the amounts for partially regulated and fully regulated units, based on assumption that they will require more staff time than a unit entirely exempt from any rent increase limits.
Finally, as a clean-up measure, staff is recommending that the wording of the definition of “Rental Unit” be revised to make it clear that the phrase “other than the exemptions set forth in Section 6-58.20” applies to “Dwelling Units,” to create consistent with SB 567. (Section 6-58-20 refers to several types of “dwelling units” that are exempt from the reach of the Rent Ordinance.)
ALTERNATIVES
• Introduce the Ordinance amending the Rent Ordinance as described in this Agenda Report.
• Decline to introduce the Ordinance and provide direction, if any, to staff.
FINANCIAL IMPACT
There is no direct fiscal impact to introducing, and then adopting, this Ordinance. Potentially, there could be an uptick in enforcement actions due to SB567’s grant of authority to the City Attorney to enforce certain provisions of State rent control law.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
Adoption of the Ordinance will make a minor revisions to the Alameda Municipal Code.
ENVIRONMENTAL REVIEW
The California Environmental Quality Act (CEQA) applies only to projects. Adoption of this Ordinance is general policy and procedure making, will have no effect on the environment, and hence is not a project under CEQA. CEQA Guidelines, Section 15378 (b) (2). No additional environmental analysis is required.
CLIMATE IMPACT
There are no identifiable climate impacts or climate action opportunities associated with the subject matter of this report.
RECOMMENDATION
Introduce an Ordinance amending the Alameda Municipal Code by amending Article XV (Rent Control, Limitations on Evictions and Relocation Payments to Certain Displaced Tenants Ordinance [Rent Ordinance]) to adopt a written finding that the just cause provisions of the Rent Ordinance are more protective than Civil Code section 1946.2, to clarify enforcement of State law, and to rephrase the definition of Rental Units.
Respectfully submitted,
Michael Roush, Special Counsel
Bill Chapin, Rent Program Administrator
Financial Impact section reviewed,
Margaret O’Brien, Finance Director