Item 8-A

Council Meeting: June 29, 1999

Santa Monica, California

TO: Mayor and City Council

FROM: City Staff

SUBJECT: Recommendation to adopt an emergency ordinance establishing additional requirements for rehabilitation of tenant-occupied apartment buildings.

This report recommends that the City Council (1) adopt an emergency ordinance establishing additional requirements for the rehabilitation of tenant-occupied apartment buildings, (2) recommend that the Rent Control Board adopt procedures to assist tenants who are negatively impacted by apartment rehabilitation, and (3) authorize staff to prepare additional ordinances and administrative guidelines to further protect tenants in apartment buildings that are being rehabilitated.

State-mandated vacancy decontrol provisions that went into effect on January 1, 1999 have created new incentives for landlords to substantially rehabilitate their properties to capture market-rate rents. As a result, many apartment properties in Santa Monica are undergoing substantial rehabilitation and many more rehabilitation projects are expected in the coming months. While these rehabilitation projects provide an opportunity for tenants to enjoy a newly refurbished living environment, the rehabilitation process has the potential to severely impact tenants. Some recent rehabilitation projects have subjected tenants to lengthy periods of construction disturbances and lack of normal amenities. In two recent cases, in-progress reconstruction has reached the point of posing a serious threat to life safety, compelling tenants to relocate to other housing units on short notice. The City Council has recognized the need to protect sitting tenants in apartment buildings which are undergoing substantial rehabilitation. This need includes ensuring the safety and welfare of the sitting tenants, maintaining the livability of the units in which the tenants reside, providing appropriate alternatives in cases where the livability of the units cannot be maintained, and protecting tenants from losing their rent-controlled apartments due to renovations.

The Municipal Code currently provides that if a landlord is required to recover possession of a rental housing unit in order to comply with housing, health or safety laws of the State or City, the landlord is responsible for the temporary relocation costs of the displaced tenant. As happened in two recent cases, this provision of the Code applies in situations where in-progress construction constitutes a threat to the life safety of the tenants. In these situations, the Building Official and Fire Marshal are authorized to determine that a serious life safety condition exists and that all work on the project must stop until the tenants have been temporarily relocated to safety.

Currently, building permit applicants provide detailed information regarding proposed construction projects in their completed state. However, applicants are not required to report on the occupancy status of the building or submit detailed information regarding the proposed construction means and methods. In apartment rehabilitation projects, it is the construction means and methods that determine how tenants will be impacted by the construction.

Under the proposed ordinance, a building permit applicant for a residential rehabilitation project will be required to certify whether there are tenants in the building and whether the proposed building project will compromise the habitability of occupied units for a period of more than one working day. Habitability is defined in the ordinance as the availability of utilities, sanitation facilities, weather protection, fire protection, unencumbered exiting routes, and safe wiring, plumbing and electrical equipment, and freedom from structural and fire hazards. For projects where the habitability of the units will be compromised, the project applicant will prepare and submit a construction means and methods plan and will be subject to tenant notification requirements.

The construction means and methods plan will include detailed information regarding the proposed construction methodology, the impact of that methodology on tenants, and whether tenants will need to be temporarily relocated under that methodology. In addition, applicants will be required to provide detailed information regarding construction mitigation measures which will be implemented to minimize the impacts of noise, dust, and other construction nuisances on tenants.

During construction, building inspectors will review compliance with construction means and methods plans and construction mitigation plans, as well as reviewing typical building inspection items. Any project that submits a means and methods plan will be placed on a regular inspection cycle which is appropriate to the stages of construction and the potential for impact on tenant welfare. Through regular inspection, the City will be able to determine early in the construction process if the means and methods plan has been violated and could potentially impact tenant safety and welfare. Plan check and building permit fees for these rehabilitation projects will be adjusted to reflect the additional plan review and inspection requirements.

The proposed ordinance will require individual noticing of all tenants for any multifamily rehabilitation project which requires a construction means and methods plan. Before a building permit can be issued for construction in a tenant-occupied building, the applicant will be required to certify that all tenants will receive notices within ten days following release of the building permit. Before commencing work on the project, the applicant will provide the City with the names and addresses of all tenants residing in the building and evidence that the notices were delivered. Notices will be required to include:

A statement that tenant contracts cannot be terminated due to the building rehabilitation project;

General information regarding scheduling of construction and unavailability of services such as laundry, parking, elevators, water, power, etc.;

A statement informing tenants of their rights to seek mitigation from the landlord for construction disturbances and to seek assistance from the Rent Control Board if the landlord is unable to provide mitigation which is satisfactory to the tenant;

Contact information for the project applicant, including the designation of a project manager who is responsible for responding to tenant questions, complaints, and requests for mitigation of construction disturbances;

A statement that tenants have a right to review and receive copies of the construction means and methods plan for the project from the applicant at no charge; and

Contact information for the Building and Safety Division and a statement informing tenants of their rights to contact the Building and Safety Division regarding conditions which appear to be unsafe for tenants or could be violations of the Building Code.

For projects of greater than 30 days, the applicant will be required to provide bimonthly notices to tenants on the progress of construction and to schedule monthly progress and feedback meetings for tenants. The Building and Safety Division will provide sample notices containing all of the information that project applicants will be required to include in their notices.

In addition to the measures that are included in the proposed ordinance, staff recommends that the Rent Control Board adopt procedures to address situations where the rehabilitation project does not threaten the safety or welfare of the tenants, yet constitutes a disturbance or inconvenience for the residents. As part of the noticing requirements of the ordinance, a project applicant must notify their tenants of their rights to seek appropriate construction mitigation measures from the applicant. These mitigation measures could include temporary rent reductions, quiet office space for tenants who work at home during the day, temporary accommodations in a hotel, temporary relocation to units in the building that are not impacted by the construction, and other appropriate construction mitigation measures such as providing regular provision of carwash vouchers for impacted tenant vehicles. Collaboration between tenants and landlords is expected to encourage development of mitigation measures which deal with the particular needs of the tenants.

Rent Control Board staff is preparing procedures to provide a process for review of disturbances, inconveniences, and loss of amenities related to residential rehabilitation. Under the proposed procedures, if a tenant is not satisfied with the mitigation measures offered by the landlord, the tenant can request the assistance of Rent Control Board staff. Rent Control staff will provide mediation assistance to the tenant and landlord in finding appropriate mitigation measures for the disturbance conditions. If Rent Control staff involvement does not resolve the issue, the tenant can request a hearing before a Rent Control Board Hearing Officer for implementation of a temporary rent decrease for the period of the construction disturbance. The Rent Control Board is currently authorized to grant rent decreases under the City Charter. However, these rent decreases have only been applied on a prospective basis.

As part of this package of tenant protections during rehabilitation, the Rent Control Board will be considering the implementation of a special process for review of temporary rent reductions for the time period of the construction disturbance. Under these procedures, if the mediation process is ineffective, the tenant will have an opportunity for a hearing to present information regarding the nature of the construction disturbance, inconvenience or loss of amenities. The landlord will then have an opportunity to describe mitigation measures which are proposed or have been implemented to deal with the problem. The Rent Control Board will evaluate whether the mitigation measures are appropriate and will have the ability to require rent reductions if the mitigation measures are deemed to be insufficient. Providing tenants with an opportunity for review of the mitigation measures by the Rent Control Board, and the potential for mandatory rent reductions, is expected to motivate landlords to develop mitigation measures which better meet the needs of their tenants. These revised procedures will come before the Rent Control Board for adoption within the next 30 days.

FURTHER CLARIFICATION OF TENANT RELOCATION REQUIREMENTS

The April 13 ordinance requires landlords to find comparable units for tenants during the term of the temporary relocation. However, in very brief situations such as a two or three-day termite-abatement tenting of an apartment building, these comparability requirements may be too stringent. Given that it would be difficult for a landlord to secure apartment accommodations for a period of less than 30 days, the proposed emergency ordinance allows landlords to pay for hotel accommodations for relocation periods of less than 30 days, provided that (1) the hotel accommodations are located in Santa Monica, (2) the landlord provides tenants with vouchers for food, laundry, and pet accommodations, and (3) the landlord bears other costs that the tenant may incur such as moving and storage.

In addition to the measures above, other measures could provide further protections for apartment tenants. These include (1) requiring the posting of security by rehabilitation project applicants, (2) imposing penalties for delays and violations of construction means and methods plans, (3) requiring applicants to prepare and submit a relocation plan in the event that temporary relocation of tenants is proposed, (4) requiring relocation payments following a fire, (5) providing temporary City relocation assistance in certain cases, and (6) revising the permanent relocation fees. Staff is currently reviewing options for implementation of these measures and seeks authority from the City Council to prepare implementing ordinances and funding alternatives on the following measures. The measures could return to the City Council for adoption within the next 60 days.

For apartment rehabilitation projects that must submit a construction means and methods plan, applicants could be required to post a performance bond, letter of credit, or some other form of security. This security requirement would help ensure that a project would follow the means and methods plan and would be completed in a timely manner, and that tenants would not be subject to an inordinately lengthy construction period. The security requirement is particularly critical for situations where the rehabilitation project may be underfinanced and the project may be subject to delays or work stoppages.

Penalties could be required in two situations. In the first situation, project applicants would pay a per-day and per-unit penalty for unreasonable delays beyond the time period included in the construction means and methods plan. Implementing guidelines would govern the imposition and enforcement of this penalty. The penalty would act as a disincentive against lengthy periods of tenant disturbance.

The second penalty would be imposed on a per-day and per-unit basis for any applicant who had submitted a construction means and methods plan that did not require tenant relocation, yet had violated the plan during construction and brought their project to the point of no longer being safe for tenants to occupy. In this situation, the landlord would be responsible for temporary relocation costs and penalty damages. These damages would act as a penalty for violating tenant safety and forcing the City to play the role of requiring the relocation of the tenants on short notice.

In the event that the construction means and methods plan indicated that tenant safety could not be protected during part of the construction period, the project applicant would prepare a relocation plan. The plan would provide details regarding the timing and method of temporary relocation of tenants. Staff is exploring procedures for administrative review of submitted relocation plans.

The tenant relocation ordinance could be amended so that fires no longer release owners of their responsibility to provide for temporary relocation. The tenant relocation ordinance currently exempts owners from providing temporary relocation assistance in situations of an earthquake, other natural disaster, or fire not caused by the landlord. The process to determine who is at fault following a fire may be lengthy and difficult, taking several months after the tenants have had to find other accommodations.

City Relocation Assistance

There may be situations of code-required tenant relocation where landlords evade their responsibilities to provide temporary relocation assistance. This would be particularly problematic in situations where immediate tenant relocation is required. While the City is able to bring an enforcement action against the landlord to force compliance with the relocation ordinance, this prosecution is not immediate. During the interim period, low-income tenants could be left homeless. Staff is developing a program and funding options to enable to City to front the costs of tenant relocation when a landlord has evaded that responsibility. These funds would be repaid by the landlord following enforcement proceedings.

The permanent relocation fees were established in March of 1990 and have not changed since that time. The consumer price index for urban consumers in Southern California increased by more than 28 percent from March of 1990 to March of 1999. In addition, when the original fees were adopted, a tenant may have had an opportunity to relocate to another rent controlled unit within Santa Monica and avoid paying a dramatic increase in monthly rent. As a result of vacancy decontrol, a tenant relocating to a vacant unit today may be faced with significantly increased rental costs.

Staff recommends that an analysis be performed to determine the current costs of relocation from a rent-controlled unit. Following adoption of the new relocation amounts, relocation fees would be adjusted annually with the adoption of the City budget based on the most recent consumer price index increases.

It is expected that adoption of the ordinance will create additional requirements on the Building and Safety Division for plan check review and field compliance review of construction means and methods plans. To recover the additional costs, plan check and inspection fees will be adjusted as part of the fee study that is currently underway.

If the City Council provides direction to move forward on the additional tenant protection measures, the budget impacts and funding options related thereto will be presented to the City Council with the adoption of these measures.

It is recommended that the City Council:

7. Adopt the proposed emergency ordinance (a) establishing additional requirements in the building permit process for rehabilitation of tenant-occupied apartment buildings and (b) clarifying tenant relocation requirements;

8. Recommend that the Rent Control Board adopt new procedures to allow for expedited review of rent decreases for disturbances and inconveniences during apartment rehabilitation; and

9. Authorize staff to prepare ordinances related to (a) requiring the posting of security by rehabilitation project applicants, (b) imposing penalties for delays and violations of construction means and methods plans, (c) requiring applicants to prepare and submit a relocation plan, (d) requiring relocation payments following a fire, (e) providing temporary City relocation assistance in certain cases, and (f) revising the permanent relocation fees.

Prepared by:

Suzanne Frick, Director of Planning and Community Development

Andy Agle, Deputy Director of Planning and Community Development

Tim McCormick, Building Official

Marsha Jones Moutrie, City Attorney

Alicia Cortrite, Senior Deputy City Attorney

Adam Radinsky, Senior Deputy City Attorney

Barry Rosenbaum, Senior Deputy City Attorney

Mary Ann Yurkonis, Rent Control Administrator

Tracy Condon, Public Information Manager

Jenethen Pearl-Angulo, Senior Administrative Analyst

Jim Hone, Assistant Fire Chief/Fire Marshal

Bob Moncrief, Housing and Redevelopment Manager

Tad Read, Housing Coordinator - Preservation and Production

Attachment A. Ordinance

City Council Meeting 6-29-99 Santa Monica, California

ORDINANCE NUMBER ___ (CCS)

(City Council Series)

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA ADDING CHAPTER 8.100 TO THE SANTA MONICA MUNICIPAL CODE

TO REQUIRE AN OWNER PERFORMING REPAIRS/REHABILITATION OF

TENANT-OCCUPIED PROPERTIES IMPACTING TENANT HABITABILITY TO

SUBMIT A CONSTRUCTION MEANS AND METHODS PLAN, TO PROVIDE

DETAILED TENANT NOTIFICATION AND TO PROVIDE RELOCATION

ASSISTANCE AS NECESSARY; AMENDING SECTIONS 4.36.020 AND

4.36.100 OF THE SANTA MONICA MUNICIPAL CODE TO CLARIFY AN

TO REMOVE AN ILLEGALLY CREATED RENTAL UNIT FROM THE

MARKET AND WHEN THE OWNER MUST TEMPORARILY OBTAIN

POSSESSION OF A RENTAL HOUSING UNIT TO COMPLY WITH

HOUSING, HEALTH, BUILDING, OR SAFETY LAWS; DECLARING

THE PRESENCE OF AN EMERGENCY

WHEREAS, as a result of State-mandated vacancy decontrol and the robust local economy, there has been a significant increase in the number of apartment buildings in the City that are undergoing substantial repairs, rehabilitation, and upgrades; and

WHEREAS, such construction work can pose a serious threat to the health and safety of tenants occupying these properties during construction; and

WHEREAS, there have been two recent instances in which construction has posed a threat to the safety of tenants of such immediacy that all work on the projects had to cease until tenants were relocated to other accommodations; and

WHEREAS, given the financial incentive to upgrade apartment buildings, other tenants will likely be forced by construction to temporarily vacate their units until construction is completed; and

WHEREAS, the forced relocation of tenants can be highly disruptive to their lives and costly;

NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES ORDAIN AS FOLLOWS:

SECTION 1. Chapter 8.100 is hereby added to the Santa Monica Municipal Code to read as follows:

CHAPTER 8.100

TENANT PROTECTION DURING CONSTRUCTION

8.100.020 Contents of Construction Means and Method Plan.

A statement that the construction activity may require displacement, but that to the greatest extent practicable, no tenant lawfully occupying the property will be required to move without at least thirty (30) days written notice from the owner.

The Building Officer shall have the authority to promulgate and or adopt administrative regulations to implement the provisions of this Chapter.

SECTION 2. Section 4.36.020 of the Santa Monica Municipal Code is amended to read as follows:

4.36.020 When Relocation Fee Required.

(a) A relocation fee shall be paid in accordance with the provisions of this Chapter by any landlord who terminates or causes the termination of a tenancy for any of the following reasons:

(1) The landlord seeks to withdraw all rental housing units from the rental housing market as provided in Government Code Sections 7060 et seq.

(2) The landlord seeks to recover possession of a rental housing unit pursuant to Section 1806(h) or Section 1806(i) of the City Charter.

(3) The landlord seeks to recover possession to demolish or otherwise remove a rental housing unit from residential rental housing use, including units that were illegally converted to residential use, after having obtained all proper permits from the City, if any such permits are required.

(b) A relocation fee shall be paid in accordance with the provisions of this Chapter to a displaced tenant who serves a landlord with a notice to terminate tenancy after having received written notice from either the landlord or the Santa Monica Rent Control Board that the landlord has filed a Notice of Intent to Withdraw Residential Rental Units pursuant to Government Code Section 7060.4 and Santa Monica Rent Control Board Regulation 16002(a) or an Application for Removal Permit pursuant to Santa Monica Charter Section 1803(t).

(c) The fee required by this Chapter shall be due and payable to a displaced tenant whether or not the landlord actually utilizes the rental housing unit for the purposes stated in the notice of eviction.

SECTION 3. Section 4.36.100 of the Santa Monica Municipal Code is amended to read as follows:

4.36.100 Temporary relocation mandated by code compliance or by government order

SECTION 4. This ordinance is declared to be an urgency measure adopted pursuant to the provision of Section 615 of the Santa Monica City Charter. As set forth in the findings above, this ordinance is necessary for preserving the public peace, health, safety, and welfare. As an urgency measure, this ordinance is effective immediately upon adoption and tenants currently displaced for the reasons specified in 4.36.100(a) are entitled to its protections from the date of its adoption.

SECTION 5. Any provision of the Santa Monica Municipal Code or appendices thereto inconsistent with the provisions of this Ordinance, to the extent of such inconsistencies and no further, is hereby repealed or modified to that extent necessary to effect the provisions of this Ordinance.

SECTION 6. If any section, subsection, sentence, clause, or phrase of this Ordinance is for any reason held to be invalid or unconstitutional by a decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council hereby declares that it would have passed this Ordinance and each and every section, subsection, sentence, clause, or phrase not declared invalid or unconstitutional without regard to whether any portion of the ordinance would be subsequently declared invalid or unconstitutional.

SECTION 7. The Mayor shall sign and the City Clerk shall attest to the passage of this Ordinance. The City Clerk shall cause the same to be published once in the official newspaper within 15 days after its adoption. This Ordinance shall become effective upon its adoption.

APPROVED AS TO FORM:

_________________________

MARSHA JONES MOUTRIE

City Attorney