This report recommends that the City Council (1) adopt an emergency ordinance establishing additional requirements for rehabilitation of tenant-occupied apartment buildings and for tenant relocation, (2) adopt a resolution setting permanent relocation fees, (3) adopt guidelines providing for City assistance in certain tenant relocation cases, (4) direct the City Attorney=s Office to prepare an ordinance implementing penalties for code enforcement and to study the use of cost recovery for City costs associated with code enforcement, and (5) authorize the associated revenue and expenditure adjustments.

An interdisciplinary team including staff of the City Attorney=s Office, Fire Department, Housing Division, Building and Safety Division, Rent Control Board, and Planning and Community Development Department has been working over the past several months to review the recent cases of rehabilitation and tenant displacement in tenant-occupied buildings and develop recommendations for protecting tenants during apartment rehabilitation. The needs of tenants who must vacate their residences due to code violations have also been addressed.

On April 13, 1999, the City Council adopted an ordinance which clarified an owner=s responsibilities when temporary tenant relocation is required. On June 29, 1999, the City Council adopted an additional ordinance which: (1) requires building permit applicants for substantial apartment rehabilitation projects to prepare a construction means and methods plan detailing construction impacts on tenants; (2) does not allow the applicant to proceed with construction when the habitability of the units cannot be maintained during construction unless provisions have been made for relocation of the tenants; (3) puts these projects on a special inspection cycle to ensure compliance with the means and methods plan; (4) creates noticing requirements to ensure that tenants are aware of their rights during construction and receive complete information regarding the scope and schedule of the proposed project, and (5) further clarifies an owner=s responsibility in tenant relocation.

The following outlines how the proposed recommendations outline the Council=s previous direction:

In the event a building permit applicant=s construction means and methods plan indicates that tenant safety cannot be protected during part of the construction period and the tenants must relocate, the proposed ordinance requires the project applicant to prepare a relocation plan. The plan will provide details regarding each tenant=s existing housing and special needs, the timeline for notification of tenants, and a timeline and method for the actual temporary relocation. Under the guidance of Housing Division staff, a relocation expert will review and approve the relocation plan for the City. No building permit will be issued until the relocation plan is approved. The relocation expert will provide follow-up field inspections to assess relocation unit comparability in the event of disputes between tenants and landlords. Costs for review of relocation plans and follow-up inspection will be recovered by a new plan check fee.

For apartment rehabilitation projects that must submit a construction means and methods plan, the proposed ordinance requires applicants to post a performance bond or letter of credit which is acceptable to the City and sufficient to complete the project in a timely manner and fulfill the applicants= relocation obligations. This security requirement will help ensure that a project follows its approved means and methods plan, fulfills its temporary relocation requirements, and does not subject tenants to inordinately lengthy construction periods. The security requirement is particularly critical in situations where the rehabilitation project may be underfinanced and the project may be subject to delays or work stoppages. Security must be posted for the cost of the construction, as determined by review of the construction means and methods plan, and the cost of relocation (if required) as determined by review of the relocation plan. Such security must be provided to the Building Officer before construction work may begin. Rehabilitation projects that are not required to submit construction means and methods plans, or are otherwise exempted by the Building Officer due to lack of potential for significant negative impacts on tenants, will not be required to post security.

The proposed ordinance enables the Building Officer to impose penalties for violations of approved construction means and methods plans based on factors such as the violation=s duration, frequency, seriousness, and impact on the tenants. Each day of violation of the construction means and methods plan constitutes separate violation. The ordinance establishes the maximum rate for each violation of $500, with a maximum cumulative amount for any construction project of $100,000. The penalties are designed to act as a disincentive to violating means and methods plans as violations may necessitate the relocation of tenants on short notice. It is also recommended that the City Council direct the City Attorney=s Office to prepare an ordinance implementing penalties for other code violations.

In considering various approaches to modifying the relocation fees, staff conducted a survey of comparable cities, including Berkeley, San Francisco, Oakland, San Jose and Los Angeles. According to this survey, other cities= permanent relocation fees range from significantly below the City of Santa Monica=s current fees to generally comparable with the current fees. Staff also considered other approaches such as adjusting the fees based upon the consumer price index, adjusting the fee based upon a federal residential rent index known as the Rent of Primary Residence Index, and using the fee calculation methodology employed by the State of California for relocations that are subject to State relocation law.

Staff is recommending that the 1990 fee be adjusted by approximately 13 percent to reflect the changes in rental housing prices in accordance with the Rent of Primary Residence Index for Los Angeles, Orange, and Riverside Counties as published by the Federal Bureau of Labor Statistics. The proposed ordinance establishes that the fees will be set by resolution so that they may be adjusted annually with the adoption of the City budget based on the most recent index of residential rents. The proposed permanent relocation fees are as follows:

The Municipal Code currently requires that senior citizens, people with disabilities, and tenants with minor children receive an additional one thousand dollars of relocation fees if the tenant resided in the units when the authorizing ordinance was adopted in 1986. The City Council=s intent in limiting this additional payment to sitting tenants in 1986 was to avoid creating a disincentive against renting to seniors citizens, people with disabilities, and families with children. The City Council may wish to consider updating this provision so that sitting tenants as of the adoption of this ordinance are eligible for the additional fee.

The apartment rehabilitation requirements that were adopted in June, as well as the measures included in the proposed ordinance, limit the likelihood that the City will have to require immediate tenant relocation in apartment rehabilitation projects or that the owner will be unable to provide for such relocation. However, there have been and may continue to be situations where code enforcement of unauthorized units or unsafe construction requires immediate tenant relocation. Tenants and landlords may be in need of informational assistance from the City when tenants are required to vacate their units on short notice. This assistance can include helping tenants and landlords to understand the landlord=s relocation obligations, coordinating schedules for residents to retrieve their belongings from unsafe dwelling units, facilitating communication between landlords and tenants on unresolved issues, and providing limited financial assistance in certain relocation cases.

Staff has prepared administrative procedures for assisting tenants when code enforcement requires vacation of their units. The proposed procedures include designating one contact office for facilitating communication and educating tenants and landlords in these situations. Under the procedures, Rent Control staff will provide a single point of contact for tenants and education and coordination for tenants and landlords. Rent Control is best equipped to provide these services due to their experience with counseling tenants and facilitating communication between landlords and tenants and due to most tenants familiarity and comfort with working with Rent Control staff. The procedures also provide a standard outline of tenant-friendly information that will be provided when an order to vacate is issued, including the point of contact for tenant inquiries, and details regarding tenants= rights and landlords= obligations.

Over the next several months, Rent Control staff will monitor the resources required to provide education and coordination services to tenants and landlords following notices to vacate. If the burden of providing these services requires additional Rent Control resources, the City may need to appropriate funds and contract with the Rent Control Administration to provide these services. City staff will assess the possibility of recovering these costs from landlords through legal and administrative action, such as a cost recovery program. Under such a program, the property owner who created the unsafe non-code-compliant situation would be responsible for repaying the governmental costs associated with resolving the situation. Forcing landlords to take responsibility for administrative costs associated with code enforcement would create an additional disincentive to violate City codes and endanger tenants. Administrative cost recovery and implementation of fines could also be considered for other code enforcement activities. It is recommended that the City Council direct the City Attorney=s Office to research the City=s ability to implement cost recovery and penalties for code enforcement, and, if appropriate, prepare an implementing ordinance .

4. Direct the City Attorney=s Office to research the City=s ability to implement cost recovery and penalties for code enforcement, and, if appropriate, prepare an implementing ordinance; and