Title
Adoption of Urgency Uncodified Ordinance Imposing within the City of Alameda a Temporary Moratorium on (A) Residential and Commercial Evictions due to the COVID-19 Pandemic and (B) Landlords Shutting off Utilities in Residential and Commercial Rental Units Except for Emergency Situations, and Repealing Ordinance No. 3268. (Community Development)
Body
To: Honorable Mayor and Members of the City Council
EXECUTIVE SUMMARY
On March 17, 2020, the City Council adopted an urgency ordinance establishing a 60-day moratorium on: 1) evictions from residential rental units due to the COVID-19 pandemic and 2) landlords shutting off utilities in rental units except in emergency situations. As part of adopting that ordinance, City Council directed staff to expand the moratorium to include commercial evictions and foreclosures. As a result of that direction, staff has prepared a new urgency ordinance that repeals the original urgency ordinance (Ordinance No. 3268) and replaces it with a more comprehensive ordinance that establishes a moratorium on residential and commercial evictions, including foreclosures, and prohibits landlords’ shutting off utilities in both commercial and rental units except for emergency situations.
The proposed new urgency ordinance is consistent with the previous ordinance in that the temporary moratorium (which would be in place for as long as the City of Alameda’s (City) emergency declaration is in place) would address evictions due to a substantial loss of income resulting from COVID-19 and non-emergency utility shut-offs by landlords. It would provide residential and commercial tenants, and residential and commercial mortgagors, with a substantive eviction defense if an eviction proceeding (an unlawful detainer) were filed against the tenant for non-payment of rent or against a homeowner/mortgagor following a foreclosure, and the tenant or mortgagor could demonstrate that the non-payment of rent or non-payment of the mortgage that led to foreclosure was due to the tenant’s/mortgagor’s substantial loss of income or other financial impacts arising out of the COVID-19 pandemic.
BACKGROUND
As a result of the public health emergency related to COVID-19 and the precautions recommended by health authorities, many residential tenants and homeowners in Alameda have experienced, or expect soon to experience, sudden and unexpected income loss due to temporarily being unable to report to work due to illness caused by COVID-19 or quarantines related to COVID-19, the closure of schools and daycare and the need to take care of children at home, and/or lay-offs due to business slow-down and closures. Further economic impacts are anticipated, leaving tenants vulnerable to eviction for non-payment of rent, and homeowners vulnerable to foreclosure-related eviction, during this local emergency. It is essential to avoid unnecessary housing displacement, to protect the City’s affordable housing stock, and to prevent housed individuals from falling into homelessness.
Small business owners are experiencing many of the same adverse impacts of the COVID-19 pandemic that their employees and other residents of the city are experiencing. Most commercial tenants have been ordered to shutter their businesses and even commercial tenants of businesses providing “essential services” may suffer economic losses, thereby depriving all commercial tenants of an income stream to pay rent and utilities.
Given the adverse economic impacts on the city’s residents and businesses from the COVID-19 pandemic, when the City Council adopted an urgency ordinance placing a moratorium on residential rental evictions on March 17, 2020, it directed staff to return with a more comprehensive urgency ordinance that provided eviction protections to commercial tenants as well as homeowners (mortgagors) who could be evicted following a foreclosure. A temporary moratorium on evictions from residential and commercial units due to a substantial loss of income from the COVID-19 pandemic, and a prohibition on landlords shutting off utilities for non-emergencies, will protect small business owners, homeowners, and tenants from losing their businesses and housing and protect the public health and prevent transmission of COVID-19.
DISCUSSION
The proposed urgency ordinance would repeal the previous urgency ordinance adopted by the City Council on March 17, 2020, and take effect immediately. The ordinance would apply to notices to quit or pay rent for commercial and residential tenants, and to notices to quit following a foreclosure, served on or after March 1, 2020. By providing an affirmative defense for tenants in an eviction (unlawful detainer) action, the ordinance would place a moratorium on evictions instituted for non-payment of rent, or following a foreclosure, where a residential or commercial tenant or mortgagor can demonstrate that s/he has suffered a substantial loss of income (defined as a reduction of 20% or more of monthly gross pay) due to the COVID-19 pandemic. Impacts on loss of income include:
• the need to remain off work due to COVID-19 symptoms;
• the need to self-quarantine because of exposure to COVID-19;
• a reduction in the number of work hours;
• job loss due to closure of the business that employed the tenant; and/or
• the need to care for a child(ren) whose school is closed.
Extraordinary business expenses for commercial tenants include:
• the need to pay employees to remain off work due to COVID-19 impacts on the employees or a member of the employees’ household; or
• reductions in business operations in compliance with governmental order to close, provide social distancing or shelter in place.
The ordinance provides a substantive defense in a court proceeding regarding an unlawful detainer. Such defense shall be available to residential and commercial tenants, and to residential and commercial mortgagors whose property has been foreclosed, between March 1, 2020, and 180 days after the conclusion of the COVID-19 pandemic as evidenced by the City rescinding its declaration of local emergency. By providing a substantive defense for an eviction action for six months beyond the conclusion of the COVID-19 pandemic emergency, residential and commercial tenants/mortgagors are given time to pay unpaid rent/mortgage. At the same time, the ordinance provides that the moratorium is only in place until the local emergency is rescinded. Therefore, while a tenant/homeowner/mortgagor cannot be evicted for six months following the conclusion of the local emergency for non-payment of rent/mortgage during the local emergency period, s/he can be evicted for non-payment of rent following the local emergency period.
For example, if a residential tenant was unable to pay rent due to substantial loss of income from the COVID-19 pandemic for the month of April 2020 (assuming the local emergency was in place for the entire month of April but lifted on May 1, 2020), the tenant would have 180 days (until November 1, 2020) to pay April’s rent and could rely on the ordinance as a substantive defense in an unlawful detainer proceeding during that 180-day period for non-payment of April’s rent. However, if the tenant also did not pay May’s rent (following the lifting of the local emergency), the ordinance would not protect the tenant if served with a notice to pay rent or quit for non-payment of May’s rent.
In addition, based on feedback received from the City Council during its discussion of the original urgency ordinance, the new ordinance provides for the following:
• No residential or commercial tenant shall be relieved of her/his liability for unpaid rent, whether the rent accrued before March 1, 2020, during the City’s declaration of a local emergency, or following the City’s rescission of the declaration of the local emergency.
• Any commercial or residential tenant unable to pay rent shall take all reasonable steps to timely inform the landlord of such and, to the extent feasible, make reasonable reduced rent payments commensurate with the tenant’s reduced income and financial ability to do so.
• Explicit penalties provisions are added to the Ordinance to make administrative, civil and criminal penalties available to violations of the Ordinance (e.g. an unauthorized utility shut-off). However, to be clear, because the eviction protections authorized by the Ordinance are substantive defenses, law enforcement remedies are not available to effectuate such protections.
• A landlord shall not charge or collect a late fee for rent that is delayed due to a substantial loss of income.
• Regulations shall be promulgated regarding repayment of rent.
ALTERNATIVES
Staff recommends that the City Council adopt the urgency ordinance as described above.
The City Council could:
• Decline to adopt the ordinance and instead rely on the existing urgency ordinance that protects residential tenants and look to state and federal action to preclude residential foreclosures and/or evictions following foreclosures.
• Modify the ordinance to remove the prohibition on utility shut-offs by landlords except in the case of emergencies.
• Direct staff to prepare a revised ordinance based on City Council direction. Such direction could include expanding the moratorium to cover evictions due to no fault of the tenant (owner move-in or removal from the rental market) unless necessary for the health and safety of tenants, neighbors, or the landlord, establishing the moratorium for a specific number of days, etc.
• Direct staff to prepare an urgency ordinance that establishes a moratorium on residential and commercial evictions regardless of the reason for non-payment of rent/mortgage (i.e., the tenant/mortgagor would not have to establish that the inability to pay rent/mortgage was directly linked to COVID-19). While there may be an argument for such a broad moratorium (it could be hard to find housing in this rental market if evicted thus increasing the likelihood of homelessness, etc.), staff has not been able to identify an urgency ordinance with such a broad scope.
FINANCIAL IMPACT
There is no impact to the General Fund from adopting an urgency ordinance establishing a moratorium on residential and commercial evictions due to loss of income resulting from the COVID-19 pandemic. The ordinance will be relied upon as an affirmative defense in a court proceeding for an unlawful detainer. Therefore, there is minimal staff work associated with implementing the ordinance.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
This ordinance is proposed and drafted pursuant to the City’s general police powers, Section 3-12 of the Charter of the City of Alameda, Article XI of the California Constitution, and Government Code Section 36937.
ENVIRONMENTAL REVIEW
Adoption of this ordinance is exempt from review under the California Environmental Quality Act: Section 15378 (not a project); and Section 15061(b)(3) (no significant environmental impact.
CLIMATE IMPACTS
There are no climate impacts to adopting an ordinance establishing a moratorium on residential and commercial evictions due to loss of income resulting from the COVID-19 pandemic.
RECOMMENDATION
Adopt an urgency uncodified Ordinance Imposing Within the City of Alameda a Temporary Moratorium on (A) Residential and Commercial Evictions due to the COVID-19 Pandemic and (B) Landlords Shutting off Utilities in Residential and Commercial Rental Units Except for Emergency Situations, and Repealing Ordinance No. 3268.
CITY MANAGER RECOMMENDATION
We are facing uncertain times for many residents and businesses in the community. This Ordinance is put forward to provide some relief during the COVID-19 Pandemic. The City Council has the options to approve as presented or may consider amendments.
Respectfully submitted,
Debbie Potter, Community Development Director
Cc: Eric Levitt, City Manager