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Consider Directing Staff to: 1) Determine Whether Council Can Enact an Ordinance to Pass Through a Portion of the Housing Program (Rent) Fee to Tenants; 2) Clarify the City’s Collection Efforts for Landlords who do not Pay the Fee by December 31, 2017; and 3) Clarify that the Fee May be Passed Through as Part of a Rent Increase. (Mayor Spencer and Vice Mayor Vella) [Not heard on December 19, 2017 or January 2, 2018]
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COUNCIL REFERRAL FORM
The Council can take any of the following actions:
1) Take no action.
2) Refer the matter to staff to schedule as a future City Council agenda item.
3) Take dispositive action if sufficiently noticed such that the public and Council have been provided sufficient information by the published agenda, and no formal published notice of a public hearing is required.
Name of Councilmember requesting referral: Mayor Spencer and Vice Mayor Vella
Date of submission to City Clerk (must be submitted before 5:00 p.m. on the Monday two weeks before the Council meeting requested): December 4, 2017
Council Meeting date: December 19, 2017
Brief description of the subject to be printed on the agenda, sufficient to inform the City Council and public of the nature of the referral:
The City has sent out invoices (attached) to landlords concerning the Housing Program Fee, which has caused confusion for some landlords who thought half of the fee could be passed onto tenants. The cover letter provides that the Fee, which covers the program costs for fiscal year 2017/2018, must be paid by December 31, 2017, creating an urgent situation.
City staff intends to bring forth in the Spring of 2018 a proposed Program Housing Fee for fiscal year 2018/2019. This Fee, if adopted by the Council, would be billed in the May/June time frame and would be due by the end of July 2018, in the same manner as the City’s process for its business license tax.
Per the City Attorney, Ordinance 3180 that became effective in June 2017 established a Housing Program Fee that landlords would pay in order to provide funding for the City rent program. The Ordinance also provided that up to 50% of that Fee could be “passed through” to tenants in 12 equal installments and that this pass through would not be considered “rent” for purposes of determining a rent increase. Council also adopted a resolution (Resolution 15171) to the same effect. City Council later rescinded Ordinance 3180 following the gathering of the required number of voter signatures concerning a referendum petition as to the Ordinance; the rescission became effective in October 2017. By reason of the rescission, the authority of landlords to pass through a portion of the Housing Program Fee has been eliminated. The City’s authority to impose and collect the fee, however, remains in effect because the City, under its Constitutional police power, has the independent authority to do so through Resolution 15171, notwithstanding the rescission of Ordinance 3180. When a City Council rescinds an ordinance as an action in response to a referendum petition, the general rule is that the Council is prohibited from adopting the same or a substantially similar ordinance for one year. There may be limited exceptions, however, to that general rule.
1) Direct staff to determine whether the City Council could adopt a new ordinance, without waiting for a year, that would allow landlords to pass through a portion of the Housing Program Fee to tenants, in 12 equal installments and, if so, to bring such an ordinance to the Council for its consideration. Also, review whether the pass through could be retroactive. If not, have Council determine whether or not to charge the landlords the fee due December 31.
2) Direct staff to clarify what the City’s collection efforts will be for landlords who do not pay the Fee by December 31.
3) Direct staff to clarify that for now the Housing Program Fee, as any other operating expense, may be indirectly passed through to tenants as part of a rent increase.
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