City Council Meeting 6-11-02 Santa
Monica, California
TO: Mayor
and City Council
FROM: City
Staff
SUBJECT: Proposed Charter
Amendments to Article XVIII, the Santa Monica Rent Control Law
Introduction
At its meeting of October 9,
2001, the City Council discussed the Rent Control Board=s determination that Article XVIII of the City Charter, Santa Monica=s Rent Control
Law, should be amended to afford the best possible legal protections to Santa
Monica tenants given current legal and economic circumstances. In response to the Rent Control Board=s determination, the Council directed legal staff to prepare a draft of
a proposed Charter Amendment based upon the Rent Control Board=s specific suggestions. The
attached proposed amendment responds to that directive.
Background
In 1979, the Santa Monica voters
added Article XVIII to the City Charter and thereby established Santa Monica=s Rent Control Law. Because that
law is part of the City=s Charter, it can be amended only by a vote of the
people.
As adopted, and later amended by
the voters, the Rent Control Law affords substantial protections to both the
affordable housing stock and to tenants living in controlled rental units
within the City. In the years
immediately following its adoption, the law
was challenged many times in court, but its basic provisions were
uniformly upheld. Ultimately, the state
legislature acted to significantly restrict cities= power to adopt and effectuate strong rent controls. In 1985, the legislature adopted the Ellis
Act, which gives landlords the right to withdraw rental properties from the
market for the purpose of going out of the rental business. In 1995, the legislature adopted the Costa
Hawkins Act which phased out local vacancy controls.
Both of these state enactments were directed at and significantly
impacted Santa Monica=s system of rent controls. Following the passage of the Ellis Act, a number of landlords
opted to take their units off the market and go out of the rental
business. Most followed through and
actually did stop renting units. Some
did not. They used the provisions of
the Ellis Act to cause tenants to vacate.
They then re-rented the units, either on the open market or to relatives
or friends. The Rent Board and City
Council took various actions in response to the passage of the Ellis Act. More recently, the Costa Hawkins Act
created a substantial financial incentive for landlords to cause tenants
to vacate controlled units. Many
landlords encouraged tenants to leave with buyouts; some forced tenants out
through harassment. In response, the
Council adopted, and has several times amended, the Tenant Harassment Law. It prohibits landlords from maliciously
undertaking certain actions detrimental to tenants.
Though the Council and Board have
acted to protect the rights of both tenants and landlords in the wakes of Ellis and Costa Hawkins, the Rent Control Law
itself does not address them.
Discussion
The attached proposed charter
amendment would address impacts of these state measures. It was prepared using a draft submitted by
Rent Control Board staff as a starting point. Specifically, the proposed amendments would add language
regarding landlords= and tenants= rights and responsibilities under the Ellis Act and
Costa Hawkins, incorporate into the Charter certain requirements presently
contained in the Board=s regulations, clarify eviction protections in
situations involving subtenancies and family members left behind when a tenant
dies or becomes incapacitated, clarify other aspects of existing law, and
increase compensation and benefits for Rent Control Board members. The proposed changes are listed below by
section in chronological order.
Section 1800 states the purpose
of the Rent Control Law. The proposed
changes would reference the currently proposed amendment and clarify the law=s purpose.
Section 1801 contains
definitions. The proposed change to
subsection (d) would add to the
definition of AHousing Service@ the right to have the same number of occupants as
were entitled to occupy the unit on the base date. Rent Board staff has suggested this amendment to address the
situation in which an original tenant moves out and the remaining tenant can
neither afford the rent alone nor obtain the landlord=s assent to a new tenant. The proposed language clarifies that the
remaining tenant may petition for a rent decrease. Similar language already appears in the Board regulations, and
the proposed language would likely also require implementation through
regulations.
Section 1803 establishes the Rent
Control Board. The proposed amendment
to subsection (k) would increase Board members compensation from $75 to $150
per meeting, add an escalator tied to the consumer price index, and increase the maximum compensation for twelve
months= service from $4750 to $6,000. Additionally, the proposed language would
give Board members medical, dental and health benefits paid for by the City,
provided that these benefits are available to miscellaneous City employees.
Section 1804 governs maximum
rents. The proposed language would
modify Section 1804(b) to reflect the requirements of Costa Hawkins. It would also address situations in which a
landlord rents at a specified amount but offers a discount in the first year. Rent Board staff explains that such
discounts take various forms. For
instance, the initial monthly rent actually paid by the tenant might be $1,500,
but the rental agreement specifies the rent as $2,000 per month with a $500
discount for the first twelve months.
However, in the second year, the landlord increases the rent by $500
claiming that the base rent is $2,000 (rather than $1,500). Likewise, a rental agreement might provide
for monthly rent of $2,000 for the first ten months and no rent in months
eleven and twelve. These terms would
artificially increase the Ainitial rental rate@ or base rent
ceiling to $2,000 (instead of the $1,667 per month the tenant actually paid for
the first year). Rent Board staff
believes that this practice adversely impacts tenants who suffer a substantial
increase in the second year of their tenancy and so may be forced to vacate.
Section 1806 governs
evictions. Several changes are proposed
to this section. Modifications to
subsection (a) would protect against an action to terminate tenancy in the situation
where a tenant replaces one subtenant with another and the landlord
unreasonably withholds approval following a written request by the tenant. The amendment would also provide that if the
landlord fails to respond to the tenant=s written request within fourteen days of receipt,
the request shall be deemed approved.
The proposed amendment is patterned after a similar provision in San
Francisco=s Rent Control Law.
San Francisco=s law was upheld in Danekas v. San Francisco
Residential Rent Stabilization Board, 95 Cal.App. 4th 638
(2001).
Other modifications to 1806(a)
specify that the landlord may not seek to obtain possession of a unit from the
tenant=s spouse, children, and/or registered domestic
partner after the tenant vacates due to death or incapacitation if the spouse,
children, and/or partner have lived in the unit for a year at the time the
tenant vacates. The Rent Control Board
proposes this amendment based upon a similar provision of the West Hollywood
rent control law which was upheld against a facial challenge in Pick v.
Cohen, 83 Cal.App. 4th Supp. 6 (2000), a decision by the
appellate department of the Superior Court.
The Rent Control Board=s proposal and the West Hollywood law are slightly
different and the Pick decision does not bind the Court of Appeal. Nonetheless, the Pick decision is
authority which supports the proposed amendment.
Other proposed modifications to
1806 would incorporate landlords= rights under the Ellis Act and create a cause of
action for actual or attempted wrongful eviction. Another would require
landlords to file copies of notices terminating tenancies with the Board within
three days, except for three day notices to pay or quit which would not need to
be filed with the Board. This amendment
would track similar provisions already in place in Berkeley and West Hollywood
and would allow the Board to monitor evictions for owner occupancy. The proposed modifications to Section 1806
would also clarify that violations of the section may be asserted as an
affirmative defenses in unlawful detainer actions. The Rent Board staff explains that this change is declarative of
existing law. Also, letter designations
would be added to subparts of Section 1806 to facilitate citation.
Finally, a new Section 1821 would
be added, establishing a basic and general prohibition against tenant
harassment which would continue to be implemented by ordinance.
Budgetary and Financial
Consequences
No direct financial consequences
are foreseen. If amendment to Article
XVIII caused an increase in enforcement activities by Rent Control Board staff
or City staff, enforcement costs could increase. Additional Rent Control Board expenditures could be covered
through the adjustment of fees.
Additional City staff expenditures would likely have to be covered from
existing General Fund revenues.
Recommendation
Staff recommends that the City
Council consider the proposed draft, conduct a public hearing, and either
revise or approve the proposed Charter Amendment.
PREPARED BY: Marsha
Jones Moutrie, City Attorney
Barry
Rosenbaum, Senior Land Use Attorney