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File #: 2019-6891   
Type: Regular Agenda Item
Body: City Council
On agenda: 5/21/2019
Title: Introduction of Ordinance Amending the Alameda Municipal Code by Amending Article XV of Chapter VI to Eliminate "No Cause" (Notice to Vacate) as a Grounds for Eviction from Ordinance No. 3148 (City of Alameda Rent Review, Rent Stabilization, and Limitations on Evictions Ordinance). (Rent Stabilization 265)
Attachments: 1. Exhibit 1 - Open House Comments, 2. Ordinance - Redlined, 3. Ordinance - Clean, 4. Presentation, 5. Online Survey Comments, 6. Correspondence - Updated 5-21

Title

 

Introduction of Ordinance Amending the Alameda Municipal Code by Amending Article XV of Chapter VI to Eliminate “No Cause” (Notice to Vacate) as a Grounds for Eviction from Ordinance No. 3148 (City of Alameda Rent Review, Rent Stabilization, and Limitations on Evictions Ordinance). (Rent Stabilization 265)

 

Body

 

To: Honorable Mayor and Members of the City Council

 

EXECUTIVE SUMMARY

On March 1, 2016, the City Council adopted the Rent Review, Rent Stabilization, and Limitations on Evictions Ordinance (Ordinance 3148), which was effective on March 31, 2016. Section 6-58.140 A. (Notice to Vacate) of Article XV (Rent Stabilization and Limitations on Evictions Ordinance) provides that a landlord may evict a tenant and terminate a tenancy for “no cause.” If so evicted, a tenant would be owed relocation expenses. On April 2, 2019, City Council directed staff to prepare an ordinance that would delete the “no cause” ground for eviction from Ordinance 3148, and as such, a landlord would no longer be allowed to evict for “no cause.”  That ordinance is provided for City Council consideration.

BACKGROUND

On March 1, 2016, the City Council adopted Ordinance 3148. Ordinance 3148 contains various provisions, including setting forth all permissible grounds for eviction.

It appears that the “no cause” ground for eviction in a rent-controlled jurisdiction is unique to Alameda. Other rent-controlled jurisdictions have “just cause for eviction” ordinances, containing all permissible grounds for eviction, each of which requires a landlord to articulate a basis for eviction consistent with the specified grounds contained within such an ordinance. The “no cause” for eviction provision is codified at Section 6-58.140 A. (Notice to Vacate) of Article XV (Rent Stabilization and Limitations on Evictions Ordinance) and provides that a landlord may evict a tenant for “no cause.” The tenant under this circumstance is owed relocation expenses and the unit’s rent level is restricted in that the rent charged to the next tenant is limited to no more than 5% above the rent in effect at the time of the eviction.

During the 2015 community process that resulted in the adoption of Ordinance 3148, landlords identified the ability to terminate tenancies for “no cause” as a key concern, primarily due to the cost and burden of the eviction process, especially in the context of nuisance evictions or “problem tenants.” On the other hand, tenants expressed concerns that there may be an abuse of the “no cause” ground.  Therefore, Ordinance 3148 capped the number of “no cause” terminations of tenancy per property per year, and addressed concerns about economic evictions, i.e., those undertaken purely for financial reasons, by limiting the rent that could be set for the subsequent tenant following a “no cause” eviction.

In the spring of 2017, the City Council adopted Ordinance 3180, which made a number of changes to Ordinance 3148, including eliminating the “no cause” provision as grounds to terminate a tenancy. The City Council had heard testimony regarding the use of the “no cause” ground for eviction and its impact on tenants, in addition to available statistics and facts surrounding its use. This information affirmed the underlying principle that a legal process exists through the court system for a landlord to make his/her case that there are grounds “for cause” to evict a tenant (e.g., non-payment of rent, violation of lease terms, etc.) and that a “no cause” basis to terminate a tenancy is not necessary and can be subject to abuse.

Subsequently, a referendum petition was successfully circulated to set aside Ordinance 3180. In addition, an initiative petition was successfully circulated to place most of the provisions of Ordinance 3148 into the City Charter, including the “no cause” ground for eviction (Measure K). In light of those matters, the City Council elected to repeal Ordinance 3180. The Council also placed Measure K on the November 2018 ballot. The voters rejected Measure K by a 60.3% to 39.7% margin.

Following the November 2018 election, on April 2, 2019, the City Council provided direction to staff concerning various amendments to Ordinance 3148, including eliminating “no cause” as grounds for eviction. As part of its direction, the City Council requested that staff return with a stand-alone ordinance eliminating the “no cause” ground for eviction.  Staff indicated that it would return with the requested ordinance on May 21, 2019, as that would provide an opportunity to outreach to, and gather input from, landlord and tenant stakeholders.

DISCUSSION

“No Cause” Eviction Protections

As noted above, most rent-controlled jurisdictions prohibit “no cause” evictions.  This is because most rent-controlled jurisdictions provide for a maximum annual rent increase (a rent increase “cap”) and without a prohibition on “no cause” evictions, tenancies could be terminated solely to increase rents (in California, rent increases are not limited when a tenant vacates a unit).  In addition, some jurisdictions without rent control are adopting stand-alone “just cause” eviction protection ordinances.  Those ordinances require that terminations of tenancies be solely “for cause” or for no fault of the tenant (owner move-in or withdrawal from the rental market).

This trend towards strengthening tenant protections is a result of the current affordable housing crisis in California.  Removal of “no cause” terminations is consistent with where the State may move in the near future, with legislation being introduced requiring “just cause” eviction protection for tenants throughout California.  AB 1481 (Bonta) passed out of the Assembly Judiciary Committee on April 29, 2019.  That legislation has five co-sponsor organizations and a number of supporters.  In addition, as noted in an earlier staff report, in December 2018, the Association of Bay Area Governments (ABAG) and the Metropolitan Transportation Commission (MTC) published the CASA Compact, a 15-year emergency plan to address the affordable housing crisis in the nine-county Bay Area. One element calls on all Bay Area jurisdictions to adopt “just cause” eviction protections that prohibit no cause evictions.

As part of administering Ordinance 3148, Rent Stabilization Program staff records the number of no-fault evictions, including the number of terminations for “no cause.” Since Fiscal Year (FY) 2016-17, the number of “no cause” terminations filed with the Rent Stabilization Program has increased (26 in FY 2016-17 and 31 in FY 2017-18). With two months remaining in this fiscal year (FY 2018-19), the Rent Stabilization Program has logged 35 “no cause” terminations (although the latter number has yet to be confirmed and finalized via monitoring and quality control reviews). Any “no cause” termination notice that is later withdrawn is not included in these statistics. Moreover, in FY 2016-17 and FY 2017-18, “no cause” terminations accounted for about 39% of all no-fault notices of termination filed with the Rent Stabilization Program. Although two months remain in FY 2018-19, “no cause” terminations account for about 66% of all no-fault eviction notices filed with the Rent Stabilization Program.

Landlords are not required to submit “for cause” eviction notices to the Rent Stabilization Program.  This practice would remain unchanged by the proposed ordinance. “For cause” terminations include failure to pay rent, breach of the lease, nuisance, and failure to give access. Therefore, there is no data available concerning the number of “for cause” notices served in the City of Alameda (City).

The ability to terminate a tenancy for “no cause,” albeit with limitations on the number and the ability to increase the rent for the subsequent tenant, is an option which is frequently used by landlords.  Eliminating “no cause” as a basis for terminating a tenancy will require landlords to utilize the court system to evict tenants “for cause” or terminate tenancies for “no fault,” (owner move-in and withdrawal from the rental market) consistent with Ordinance 3148.  Landlords will continue to have recourse to the court system and tenants will be afforded more protection if terminations of tenancy are limited to “for cause” and “no fault.”  In the event of “no fault” terminations, tenants will continue to be entitled to relocation benefits, and under the recently adopted Ellis Act policy, if a unit is permanently withdrawn from the rental market, tenants are provided additional notice and a right to return to the unit if it is placed back on the rental market within five years.

The attached ordinance is drafted to eliminate “no cause” as a basis for terminating any tenancy in the City.  Although the effective date of an ordinance is thirty days after final adoption (here, July 5 assuming the attached ordinance is introduced on May 21, with adoption [second reading] on June 4), any action to terminate a tenancy based on “no cause” for which a landlord has not secured by July 5, a final court judgment ordering the tenant to vacate will be of no effect because on or after that date, a landlord’s right to take any  action to terminate a tenancy based on “no cause” will have been eliminated.

The section below discusses alternatives to eliminating “no cause” as a basis for terminating any tenancy in the City. 

Other Amendments to Ordinance 3148

In addition to direction on eliminating “no cause” as a ground for terminating a tenancy, City Council directed staff to prepare an ordinance establishing a maximum allowable rent increase and an ordinance that would provide a number of housekeeping and clarifying amendments to Ordinance 3148.  Staff anticipates returning to City Council at its July 2, 2019 meeting with those ordinances.  This will provide time for staff to conduct outreach to the stakeholder community and prepare the required analysis and recommendations. 

Community and Stakeholder Outreach

As part of its direction to prepare an ordinance eliminating “no cause” evictions, the City Council approved a timeframe that allowed for community input and outreach.  An Open House was held on Thursday, May 2, 2019, with 80-90 community members attending.  The Open House provided an opportunity for the community to comment on, and respond to, the policy issues that the Council is considering as part of its deliberations regarding amendments to Ordinance 3148.

Those policy issues include:

1.                     Eliminating “no cause” as a ground for eviction;

2.                     Establishing a Maximum Allowable Rent Increase;

3.                     Revising the Capital Improvement Plan Policy; and

4.                     Revising Relocation Benefits.

A summary of the comments received at the Open House is attached as Exhibit 1. For those unable to attend the Open House, an online survey was published at <http://www.alamedarentprogram.org/community-input>. Feedback will continue to be collected online, by phone, and by email until 4:00 pm on May 13.

In addition to the Open House and online outreach, staff met with members of the Alameda Renters Coalition (ARC) steering committee and the Local Government Committee (LGC) of the East Bay Realtors Association.  Staff plans to hold another community meeting in early June and meet with both ARC and the LGC on the proposed amendments included in Exhibits 2 and 3 of the April 2, 2019 special City Council meeting staff report (<https://alameda.legistar.com/LegislationDetail.aspx?ID=3896444&GUID=FA858794-A601-41C2-9794-5012DB7A1642&Options=&Search=>).  Input received at the community and stakeholder meetings will be considered as part of this staff report, as well as the July 2 staff report addressing the policy concerning maximum allowable rent increases and other amendments to Ordinance 3148.

ALTERNATIVES

During the course of the community and stakeholder meetings, staff heard a consistent concern expressed by small landlords, and property management companies who represent small landlords, regarding the importance of landlords who live on the same property/in the same building as their tenants to retain the ability to evict tenants for no cause.  These small landlords, owners of duplexes to fourplexes, who share a property with their tenants, felt strongly that the building was their home, as well as the home of their tenants. Some landlords noted that older Victorian homes, that were originally built as single-family homes and later converted to multi-tenant buildings, often do not have the same level of privacy or security as buildings built as multi-unit properties and that co-existing with tenants is therefore more complicated.  Other landlords stated that an inability to evict for no cause would result in them taking unit(s) off the market.  Staff estimates that there are approximately 806 rental units in duplexes, triplexes and fourplexes where the landlord lives on the property along with tenants.

One alternative would be to consider exempting properties with two to four units, but only where the landlord lives on site, from the prohibition on “no cause” evictions.  Moreover, as a small landlord exemption, the exemption would not be available to landlords who own any other real property in the City of Alameda.  Tenants residing in those properties could continue to have the limited protections provided under the existing ordinance, such as a limitation on the number of no cause evictions during a 12-month period and eligibility for relocation benefits.  While this would provide on-site landlords with more flexibility in managing their units, it would create two classes of tenants, those who benefit from more robust “just cause” eviction protections and those who do not, by virtue of the type of rental housing in which they reside. This scenario would impact tenants living in shared housing situations with their landlords, as they would not be afforded the same “just cause” protections as tenants living in other types of rental units.

While there may be other ways to define “small” landlords, landlords themselves make a distinction between those who own one to four units and those who own five or more units.  One to four units are considered residential property and are financed differently than properties with five or more units which are considered commercial property.  In addition, the focus of the concern is on landlords who live on the property rather than simply landlords who own one to four units.  Therefore, if City Council were to consider a carve-out of the prohibition on “no cause” evictions for certain properties, staff would recommend a narrow category that was solely for duplexes, triplexes and fourplexes where the landlord lives in one of the units.

Other alternatives to adopting the ordinance eliminating no cause as a ground for eviction include: 1) delaying action for a specified period of time to determine if the State will adopt legislation that will apply throughout California, or 2) deciding not to move forward with the amendment at this time.

FINANCIAL IMPACT

There is no impact to the General Fund from eliminating the “no cause” ground for eviction from Ordinance 3148. The Rent Stabilization Program is a full cost-recovery program as landlords are charged an annual fee to cover the cost of administering all aspects of the Rent Stabilization Program.  However, as the City Council takes action to amend Ordinance 3148 over the next several months, it is important to note that changes in the Rent Stabilization Program may impact the scope and cost of the Program.  Therefore, at the conclusion of the amendment process, it will be necessary to conduct a new Fee Study and adjust the City/Housing Authority Staffing Services Agreement work plan and budget as needed.

MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE

The proposed ordinance amendment is consistent with the requirements of the Alameda Municipal Code.

ENVIRONMENTAL REVIEW

Adoption of the proposed ordinance amending Ordinance 3148 is exempt from review under the California Environmental Quality Act (CEQA) pursuant to the following, each a separate and independent basis: CEQA Guidelines, section 15378 (not a project) and Section 15061(b)(3) (no significant environmental impact).

CLIMATE IMPACTS

 

There are no climate impacts from adopting an ordinance to eliminate “no cause” as a ground for termination of tenancy.

 

RECOMMENDATION

 

Introduce an Ordinance amending the Alameda Municipal Code by amending article XV of Chapter VI to eliminate “no cause” (Notice to Vacate) as a grounds for eviction under Ordinance No. 3148 (City of Alameda Rent Review, Rent Stabilization, and Limitations on Evictions Ordinance).

 

CITY MANAGER RECOMMENDATION

 

This Ordinance provides the next step in the update of the Rent Stabilization Ordinance.  The City held an open house on Thursday, May 2nd and had an estimated turnout of between 70 and 90 individuals.

 

Respectfully submitted,

Debbie Potter, Community Development Director

 

Financial Impact section reviewed,

Elena Adair, Finance Director

 

Exhibit:

1.                      Summary of Comments received at May 2, 2019 Community Open House

 

cc:  Eric J. Levitt, City Manager