Title
Recommendation to Accept the Fiscal Year 2018-19 Annual Report for the City’s Rent Program; and
Adoption of Resolution Establishing a Revised Temporary Relocation Payment Schedule. (Rent Stabilization 265)
Body
To: Honorable Mayor and Members of the City Council
EXECUTIVE SUMMARY
The City of Alameda’s (City) Rent Control, Limitations on Evictions and Providing Relocation Payments to Displaced Tenants Ordinance requires the Housing Authority, as the City’s Rent Program Administrator, to prepare annually a report assessing the effectiveness of the Rent Program and recommending changes as appropriate. The Fiscal Year (FY) 2018-19 Report is attached (Exhibit 1). The City Council adopted several ordinances over the past three months that have made substantial revisions to the City’s Rent Program. The Report contains information and data regarding program services provided in Fiscal Year 2018-19, under the previous regulations, and, therefore, makes no recommendations regarding program changes. The next annual report, covering FY 2019-20, will provide data on the first full year of administering the City’s new Rent Program and will include recommendations on any changes at that time.
In September 2019, the City Council adopted Resolution 15583 establishing a relocation payment schedule for tenants who are permanently or temporarily displaced through no fault of their own. As part of adopting the resolution, Council requested that staff do further research on several aspects of the permanent and temporary relocation payment schedules and report back to the City Council. Specifically, the Council directed staff to determine whether other rent regulated jurisdictions provide enhanced relocation benefits to qualified households (seniors, those who have a disability, and those who have minor children) and to do further analysis of the daily per diem rates for temporary relocation to ensure that those rates accurately reflected costs for temporary housing, meals and boarding pets. As a result of that work, staff continues to recommend enhanced relocation benefits for qualified tenant households and recommends adopting a resolution that revises the per diem rates for temporary relocation payments.
BACKGROUND
Fiscal Year 2018-19 Annual Report
Rent Ordinance 3148, effective March 2016, provided that the Housing Authority, as the City’s Program Administrator, prepare an annual report assessing the effectiveness of the Rent Program and recommending any changes, as appropriate. For the Council’s and the community’s review, staff submits the third annual report covering July 1, 2018 through June 30, 2019. The City’s new rent ordinance retains the requirement for an annual report and, therefore, Rent Program staff will continue to assess program effectiveness and prepare recommended changes for Council consideration annually.
Relocation Payment Schedule
On September 3, 2019, the City Council repealed Ordinance 3148, adopted in 2016, and adopted Ordinance 3249, which establishes a new rent control and limitations on evictions program. Ordinance 3249 provides that the permanent and temporary relocation payment schedule will be established by resolution. At the same meeting, the City Council also adopted a resolution establishing permanent and temporary relocation payment schedules.
The new permanent relocation payment formula provides standard relocation assistance to support displaced tenants in finding alternative rental housing. Under this formula, payments are tied to the amount of the first and last months’ Fair Market Rent as established by HUD for the Oakland-Fremont HUD Metro Area based on the number of bedrooms, plus market rate moving and storage expenses, and an estimated amount of taxes that the tenant will be required to pay, because such payments are taxable. In addition, the revised formula provides for enhanced permanent relocation payments for “qualified tenant households,” i.e., households with a tenant who (i) is 62 years of age or older; (ii) is a person with a disability (as that term is defined); or (iii) has one or more minor children.
The temporary relocation payment schedule is based on per diem rates for housing, meals and boarding pets.
As part of adopting the resolution, City Council directed staff to determine whether other rent regulated jurisdictions provide enhanced relocation benefits to tenant qualified households and to do further analysis of the per diem rates for temporary relocations to ensure that those rates accurately reflect costs for temporary housing, meals and boarding pets.
Highlights from the 2018-19 Annual Report are summarized below, along with staff’s analysis and recommendations regarding the permanent and temporary relocation payment schedules.
DISCUSSION
Fiscal Year 2018-19 Annual Report Highlights
Rental Market Trends
Nearly half of all tenant households in the City continue to be “rent-burdened” based on data available from the 2017 U.S. Census American Community Survey (AMC) 1-year estimates, which indicates that 49% of tenant households spend at least 30% of their income on rent. The economic burden for tenants is also reflected in their average household income of $72,063, compared to owner-occupied households whose average income is $124,171 (2017 data).
Other rental market data includes:
• 1.4% rental vacancy rate (Source: 2017 AMC, 1-year estimates)
• $2,558 average apartment rent (Source: January 2019 RENTCafé)
• 43% of rental units are owned by landlords with a mailing address in the City; 45% have addresses outside of the City and in California, while 12% have an address outside of California. (Source: FY 2017-18 Fee Collection)
• Compared to 2016, there was a sharp increase in the number of multi-family units (not properties) sold in 2017, followed by a 37% decrease in the number of multi-family units sold in 2018. (Source: Alameda County Assessor)
Community Engagement
Outreach continues to be a priority for the Rent Program with information provided to the public at informational workshops and advertised online and through publications and local magazines. The program website continues to be upgraded and receives an average of 1,500 visitors each month.
Data highlights include:
• Program staff addressed an average of 259 monthly inquiries from the public;
• Program staff provided 38 informational workshops and four fair housing seminars to a total of 101 attendees;
• Staff received and responded to 19 Public Records Act requests
Rent Increases
In FY 2018-19, the Rent Program had a 53% increase in rent increase submissions (288 total), resulting in four times as many cases appearing before the Rent Review Advisory Committee (RRAC) (68 in FY 2018-19 compared to 17 in FY 2017-18). At the RRAC meetings, the RRAC facilitated agreements between tenants and landlords for nearly one-third of the cases heard (19 total). Where agreements were not reached, the RRAC issued advisory decisions for 11 cases and binding decisions for 37 cases. Those decisions were binding under the Ordinance because neither the landlord nor the tenant filed a petition to have the rent increase considered by a Hearing Officer. A petition was filed concerning one RRAC decision and the appeal was heard by a hearing officer. The Hearing Officer’s decision was consistent with the decision reached by the RRAC. No advisory decisions were appealed to the City Council. While there was a significant increase in RRAC cases, staff’s mediation work led to agreements, prior to a RRAC hearing, for nearly half (125 total) of all cases eligible for a RRAC hearing and resulted in rent increase rescissions for 25% of all submissions (71 total).
Terminations of Tenancy
The program data reflects only terminations for “no fault” and “no cause” as terminations “for cause” are not required to be filed. These “no fault” and “no cause” terminations require payment of permanent relocation assistance, which averaged $8,743 in FY 2018-19. Terminations for “no cause,” as the most commonly used ground, increased from the previous fiscal year to a total of 39 “no cause” cases compared to 31 “no cause” cases in the prior fiscal year. Termination submissions decreased in nearly all other categories, with a 35% drop in “owner move-in” cases (26 in FY 2018-19 compared to 40 in FY 2017-18) and a 71% drop in withdrawn termination submissions (17 in FY 2018-19 compared to 59 in FY 2017-18). Overall, there was a 40% decrease in submissions (84 in FY 2018-19 compared to 140 in FY 2017-18). In addition, staff was able to successfully monitor 165 cases following a termination of tenancy for no cause (when that was permitted) and no fault. Program monitoring includes activities such as verifying that the owner or qualified family member has moved in and occupies a unit as his or her primary residence following a termination for “owner move-in.”
Recommended Changes to Policies or Regulations
Staff does not have program recommendations based on the FY 2018-19 data because the Rent Program was significantly revised on September 3, 2019, with the adoption of Ordinance 3249. Staff will provide specific recommendations concerning the Capital Improvement Plan Policy in a subsequent staff report that will be submitted before the end of the calendar year.
In addition, Ordinance 3249 retained the requirement for the Program Administrator to prepare an annual report. Therefore, staff will be updating the City Council on the initial year of the revised Rent Program in September 2020.
Relocation Payment Schedule
Ordinance 3249 provides that permanent and temporary relocation benefits will be established by resolution. Such a resolution was adopted on September 3, 2019. As described above, the adopted permanent relocation payment formula provides standard relocation assistance to support displaced tenants in finding alternative rental housing. Payments are tied to the amount of the first and last months’ Fair Market Rent as established by HUD for the Oakland-Fremont HUD Metro Area based on the number of bedrooms, and are no longer based on the length of tenancy. Payments also include market rate moving and storage expenses and the estimated amount of taxes that the tenant will be required to pay, because such payments are taxable. In addition, the new formula provides for enhanced permanent relocation payments for qualified tenant households.
|
Table 1: City of Alameda Permanent Relocation Payments |
|
Rental Unit |
Base Relocation Amount |
Qualified Tenant Household Amount |
|
Studio |
$ 5,782 |
$ 7,472 |
|
1 Bedroom |
$ 6,494 |
$ 8,542 |
|
2 Bedroom |
$ 7,502 |
$ 10,024 |
|
3 Bedroom |
$ 9,420 |
$ 12,930 |
|
4 Bedroom |
$ 11,008 |
$ 15,313 |
Resolution 15583 also provides for temporary relocation payments to displaced tenants when a governmental agency orders the tenant to vacate a rental unit or when there are health and safety conditions (as that term is defined in Ordinance 3249) that result in a temporary displacement. The temporary relocation payments are tied to the cost of a hotel, meals, laundry and boarding pets (if the landlord had allowed the pet but the temporary housing will not accommodate pets).
|
Table 2: City of Alameda Temporary Relocation Payments |
|
Covered Items |
Temporary Relocation Amount |
|
Temporary Housing |
$335/day |
|
Meal allowance |
$64 per day per person |
|
Laundry allowance |
$1 per day per household if rental included laundry facilities |
|
Pet accommodations |
$50 per day per cat; $85 per day per dog; and actual daily boarding cost for all other pets. The pet accommodation per diem is required for lawful animals if the temporary relocation accommodation does not accept them. |
Permanent Relocation Payments
As part of adopting the resolution establishing permanent and temporary relocation payments, the City Council directed staff to return with an analysis of the enhanced relocation payments for qualified tenant households based on concerns that such payments could result in some landlords being reluctant to rent to such households, thereby creating an unintended negative consequence of reducing the available rental stock for these households. The direction included a request to survey other rent-regulated jurisdictions to determine if they provide enhanced permanent relocation payments for qualified tenant household and, if so, whether that has resulted in identified impediments for those households to find housing in the jurisdiction. Staff was directed to also include in the analysis an alternative approach of using the services of a relocation assistance consultant who would assist these households in finding new housing in lieu of requiring a landlord to pay enhanced relocation assistance.
A system that provides tiered relocation payments based on characteristics of a tenant household is common in Bay Area cities with rent regulations. Out of the 12 Bay Area cities that were surveyed, only one city does not provide differential payments for qualified tenant households. For the remaining 11 cities, qualified tenant households receive, on average, a 29% enhancement in relocation payments.
Although establishing tiered relocation payments appears to be a common practice, the tenant household characteristics used to establish the tiers vary between jurisdictions. For example, some jurisdictions include low income households, as well as seniors, disabled persons and households with minor children, as eligible for enhanced relocation payments. Moreover, four cities only provide permanent relocation payments to “low-income” households, while others do not include “low-income” as a category for enhanced payments. Some jurisdictions consider the length of the tenancy or type of landlord to define the amount of payments owed. See Exhibit 2 for more details.
The common practice of using tenant household characteristics to establish the amount of relocation assistance seems to indicate general acceptance and a best practice for establishing a relocation payment schedule to meet the needs of a range of rental households. The permanent relocation payment schedule adopted by the City Council on September 3 is consistent with that practice. Moreover, staff did not find readily available data demonstrating that the presence of enhanced payments reduces the available housing stock for qualified tenant households.
Staff contacted two jurisdictions that provide relocation assistance consultant services to qualified households to learn more about those services. San Mateo County contracts with Abode on an annual basis for $750,000. This program is limited in the sense that it serves only subsidized voucher holders who are displaced. The City of Los Angeles provides contracted relocation services to all households, with enhanced services for qualified tenant households. The Los Angeles contract limits assistance to five hours per household, and up to three additional hours for qualified tenant households, if approved by the program monitor. The contract services in Los Angeles are paid for by landlords, based on a $550 per unit or $834 per unit (for qualified households) fee, on top of the relocation payment, when a no fault eviction is filed with the city. In addition, several Bay Area cities require the landlord to pay for a sixty-day subscription to a rental agency service, as part of the total relocation payment amount, to assist displaced households in finding housing. These rental service subscriptions are in addition to the enhanced relocation benefits.
Temporary Relocation Payments
The City Council also directed staff to further review the temporary relocation payments due to concerns that the per diem expenses were higher than actual costs, namely the cost of a hotel ($335/night) and boarding pets ($85/night for dogs, $50/night for cats). In particular, City Council members noted that if the displacement were any longer than a few days, the financial burden on landlords would be significant. For example, while a tenant temporarily displaced for 30 days would continue to pay rent, the tenant would be owed $11,970, not accounting for any laundry allowance or pet accommodations. City Council directed staff to revisit the cost for a hotel and boarding pets, looking at such costs over an extended period of time, rather than a nightly, weekday rate.
Staff further researched weekly and monthly rates at City hotels and pet accommodations and reviewed online booking sites such as Hotel.com and Travelocity. As a result of the additional analysis, staff recommends that the temporary relocation payment schedule be revised to reduce the hotel/motel nightly cost to $220 ($200/night plus 10% TOT) and to reduce the daily costs to board dogs from $85 to $65 and cats from $50 to $35. All other pets will be compensated at the actual daily boarding cost (staff points out that the pet portion of the relocation cost is triggered only if the landlord had permitted the pet and the temporary housing does not). The proposed adjustments to the temporary relocation payment schedule resulted in a 34% reduction in the housing portion of the per diem rate and a 24% - 30% reduction in the allowance for boarding a dog or cat. The meal and laundry allowance remain unchanged.
ALTERNATIVES
FY 2018-19 Annual Report:
• Accept the FY 2018-19 Annual Report.
• The City Council could decide not to accept the Annual Report.
Permanent Relocation Payments:
• Retain the City Council-approved permanent relocation payment schedule, including enhanced payments to qualified tenant households. Providing such benefits are consistent with other rent-regulated jurisdictions and staff could not find evidence that providing such benefits is an impediment to those households securing rental housing.
• Revise the permanent relocation payment schedule to eliminate enhanced relocation payments to qualified tenant households and keep the relocation payments the same for all households.
• Direct Rent Program staff to retain a relocation assistance consultant, or require that a landlord provide a sixty-day subscription to a rental agency service, to help qualified tenant households find housing when they are displaced, in lieu of enhanced relocation payments. The cost to the Rent Program for retaining a relocation assistance consultant would be paid from program fees. Landlords would cover the cost of a subscription to a rental agency service for qualified tenants.
Temporary Relocation Payments:
• Adopt a resolution revising the temporary relocation payment schedule to reduce the hotel/motel nightly cost to $220 ($200/night plus 10% TOT) and to reduce the daily costs to board dogs to $65 and cats to $35. Costs for all other pets will be compensated at the actual daily boarding cost.
• The City Council may conclude that the proposed payments still impose too high a financial impact on the landlord if the tenant is displaced for more than a few days. Therefore, the Council may reduce the costs to an amount the City Council believes will provide adequate funds to displaced tenants to find temporary housing (for themselves and their pets) but will not be financially punitive to landlords. For example, the City Council may choose to set the payments at 70%-80% of the estimated costs with the option for a tenant to submit receipts if actual costs exceed the amount provided. A reduced amount may be appropriate as actual nightly hotel costs are often lower than listed prices.
FINANCIAL IMPACT
There is no impact to the General Fund by accepting the Annual Report or adopting a resolution revising the temporary relocation payment schedule as the annual Rent Program fee is set to cover all program expenses.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
The Alameda Municipal Code provides for the preparation and presentation of an Annual Report concerning the Rent Program. The Code also provides that the City Council may adopt a resolution establishing relocation payments for tenants displaced through no fault of their own.
ENVIRONMENTAL REVIEW
Acceptance of the Annual Report and adoption of a resolution establishing a revised temporary relocation payment schedule are not “projects” under the California Environmental Quality Act (CEQA) and therefore no environmental review is required either to accept the Report or adopt the resolution. CEQA Guidelines, Section 15378 (b) (2) and (5).
CLIMATE IMPACTS
Accepting the 2018-19 Annual Report for the Rent Program and adopting a resolution establishing a revised temporary relocation payment schedule have no impact on the climate.
RECOMMENDATION
It is recommended that the City Council:
1. Accept the 2018-2019 Annual Report for the City’s Rent Program; and
2. Adopt a resolution establishing a revised temporary relocation payment schedule.
CITY MANAGER RECOMMENDATION
The City Manager recommends accepting the 2018-2019 Annual Report for the City’s Rent Program.
I additionally recommend that if you adopt the resolution establishing a revised temporary relocation payment schedule that you review the schedule in the Spring of 2021.
Respectfully submitted,
Debbie Potter, Community Development Director
Gregory Kats, Rent Program Director
Vanessa Cooper, Alameda Housing Authority Executive Director
Financial Impact section reviewed,
Elena Adair, Finance Director
Exhibits:
1. Fiscal Year 2018-2019 Annual Report
2. Bay Area Cities Comparison of Relocation Payments
Cc: Eric Levitt, City Manager