Title
Adoption of Urgency Uncodified Ordinance Amending in Part Uncodified Ordinance No. 3275 and Imposing and Extending within the City of Alameda a Temporary Moratorium on Rent Increases for Fully Regulated Residential Rental Units until June 30, 2021 [Requires Four Affirmative Votes]; and
Recommendation to Provide Direction to Staff to Explore Additional Opportunities to Further Provide Assistant to Landlords, Especially Small Operators, Impacted by COVID-19. (Community Development 265)
Body
To: Honorable Mayor and Members of the City Council
EXECUTIVE SUMMARY
As a result of the economic impacts of the COVID-19 health pandemic, City Council adopted an urgency ordinance (Ordinance No. 3275) that, in part, placed a temporary moratorium on rent increases for fully regulated rental units until January 1, 2021. (Fully regulated rental units are rental units in multi-unit buildings, including duplexes and triplexes, built before February 1995.) Due to the continued health and economic impact of the COVID-19 pandemic, Staff comes to Council to request consideration on whether the rent freeze should be extended. Staff has prepared an urgency ordinance to amend in part uncodified Ordinance No. 3275 to extend the temporary moratorium on rent increases for fully regulated residential rental units until June 30, 2021.
BACKGROUND
In response to community concern that rents in Alameda were rising at a rate greater than household income, the City Council has adopted a number of rent control ordinances, the most recent of which was adopted on September 17, 2019 (Ordinance No. 3250).
On April 21, 2020, City Council adopted an urgency ordinance (Ordinance No. 3275) that, in part, placed a temporary moratorium on rent increases for fully regulated rental units until January 1, 2021. As part of its consideration of the urgency ordinance, City Council heard public comments regarding the economic challenges residential tenants are faced with as a result of the COVID-19 pandemic.
Public comments made at the March 17, 2020, April 7, 2020 and April 21, 2020 City Council meetings noted that many tenants had lost their jobs, have seen work hours reduced, were working less hours due to child care demands, or were sick or caring for family members. At the December 1, 2020 City Council meeting, public comments recognized the continued suffering and hardship created by the COVID-19 health pandemic and asked the City Council to consider extending the moratorium on rent increases to help mitigate these economic impacts.
As a result of public comments received and City Council’s concern about the ability of tenants to afford a rent increase before the end of the COVID-19 pandemic, City Council directed staff to prepare an urgency ordinance that extends the term of the rent freeze beyond December 31, 2020.
DISCUSSION
In response to Community input, staff has prepared an urgency ordinance that extends the rent freeze for fully regulated residential units through June 30, 2021.
Alameda renters continue to suffer significant financial impacts from the COVID-19 pandemic, whether directly or indirectly. The impact is likely to last for months beyond when the State and Local Emergency is declared over. Therefore, rent increases during the COVID-19 health pandemic may threaten the public health, safety and welfare of Alameda tenants, including seniors, those on fixed incomes, those households with very low, low and moderate incomes, and those with special needs.
Without a freeze on rent increases through June 30, 2021, tenants may be forced to choose between paying rent and providing food, clothing, medical care and child care for themselves and their families. They are being directed to shelter in place, thereby making it difficult and potentially a threat to a household’s well-being to find alternative housing due to a rent increase. Moreover, even when the shelter in place directive is lifted, rent increases could still threaten to displace households because many households may not have employment for some time and even those who are able to return to work will need some time to recover financially.
The rent freeze would affect landlords and tenants differently based on when a tenant’s rent is scheduled to be increased. Under the proposed urgency ordinance, for fully regulated rental units, landlords who have not imposed a rent increase since April 2020 will be prohibited from imposing a rent increase before July 1, 2021. At that time, assuming the rent freeze is not extended further, landlords may be able to increase rents by as much as 3.8%, depending on when the tenant’s rent increase “anniversary date” occurs. For example, because, generally, a landlord may increase rent only once every twelve months, if a landlord could have increased a tenant’s rent in June 2020 by 2.8% (the September 1, 2019 to August 31, 2020 AGA), the landlord could increase the tenant’s rent come July 1, 2021 by 3.8% (the 2.8% AGA + 1%, the September 1, 2020 to August 31, 2021 AGA). If, however, a landlord imposed a 2.8% rent increase in February 2020, prior to the rent increase freeze, the landlord would be able to increase rent by only 1% come July 2021.
Assuming, however, that a landlord could increase rent by 3.8% as of July 1, 2021, based on the median monthly rents as reported in the Rent Program Annual Report for FY 2019-2020, the estimated impact to a landlord ranges from $691.30 to $1,641.60 per unit per year, depending on the size of unit (studio vs. 4 bedroom) and the amount of time that has elapsed since the last rent increase.
|
|
Median Monthly Rent |
3.8% Increase |
|
|
|
Month |
Year |
|
Studio |
$ 1,516.00 |
$ 57.61 |
$ 691.30 |
|
1 br |
$ 1,840.00 |
$ 69.92 |
$ 839.04 |
|
2 br |
$ 2,250.00 |
$ 85.50 |
$ 1,026.00 |
|
3 br |
$ 2,730.00 |
$ 103.74 |
$ 1,244.88 |
|
4 br |
$ 3,600.00 |
$ 136.80 |
$ 1,641.60 |
Landlords impacted by this freeze continue to retain the constitutional right to ensure a fair rate of return. Any landlord who believes that the ordinance infringes upon such a right, may seek review and present evidence of the same to a Hearing Officer by filing a petition with the Rent Program. Consistent with existing law, landlords seeking such review bears the burden of proof.
In August 2020, staff conducted the City of Alameda COVID-19 Impact Survey for Landlords. Responses were analyzed based on the number of units owned: small (1-4 units), medium (5-16), and large (17+). Landlords with 16 units or less were shown to be disproportionately impacted by the moratorium on evictions in Alameda. Freezing rents will have cumulative impacts on these landlords.
It should be noted that the City of Alameda COVID-19 Emergency Rent Relief Program is accepting applications through December 20, 2020. While tenants must apply to the Program and document need (loss of income, amount of past due rent, etc.), the payments are made directly to the landlord. Both the tenant and landlord benefit from this Program.
Staff certainly recognizes that COVID-19 has seriously impacted the landlord community, especially smaller operators with less reserves. Staff welcomes council direction in this area.
ALTERNATIVES
• Adopt an urgency ordinance that extends the moratorium on rent increases to June 30, 2021, as described above.
• Adopt an urgency ordinance that extends the moratorium on rent increases to June 30, 2021, as described above and develop a grant relief program for landlords with few rental units to help mitigate the impacts of the combination of rent increase and eviction moratoria on such landlords.
• Modify the ordinance based on City Council direction received at the meeting. For example, City Council could choose to modify the length of the rent freeze or tie it, for example, to the rescission of the declaration of the State or Local Emergency.
• Decline to adopt the ordinance and instead allow the existing rent increase freeze to expire on December 31, 2020 and thereby allow landlords to implement rent increases, effective January 1, 2021.
FINANCIAL IMPACT
The Rent Program staff will continue to administer the provisions of the ordinance regarding the rent freeze for fully regulated residential units through June 30, 2021. The City contracts with the Housing Authority for these services through an existing staffing services agreement. No additional appropriations are needed.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
This ordinance is proposed and drafted pursuant to the City of Alameda’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 IMPACT
There are no identifiable climate impacts or climate action opportunities associated with the subject of this report.
RECOMMENDATION
Consider adopting an urgency uncodified Ordinance amending uncodified Ordinance No. 3275 to impose and extend a temporary moratorium on rent increases for fully regulated residential rental units until June 30, 2021.
CITY MANAGER RECOMMENDATION
The City manager concurs with the staff recommendation. Staff could additionally evaluate any opportunities to assist the impacted landlord community.
Respectfully submitted,
Lois Butler, Interim Community Development Director
By,
Lisa Fitts, Community Development Program Manager
Financial Impact section reviewed,
Annie To, Finance Director
cc: Eric Levitt, City Manager