RESOLUTION IN SUPPORT OF THE "AFFORDABLE HOUSING ACT"-A PROPOSED BALLOT INITIATIVE INTENDED TO REPEAL THE COSTA-HAWKINS RENTAL HOUSING ACT OF 1995

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1 CITY COUNCIL CONSENT CALENDAR MARCH 5, 2018 SUBJECT: INITIATED BY: RESOLUTION IN SUPPORT OF THE "AFFORDABLE HOUSING ACT"-A PROPOSED BALLOT INITIATIVE INTENDED TO REPEAL THE COSTA-HAWKINS RENTAL HOUSING ACT OF 1995 COMMUNITY & LEGISLATIVE AFFAIRS DIVISION (John Leonard, Manager)~ (Hernan Molina, Governmental Affairs Liaison)('Pfn (Andi Lovano, Senior Management Analyst STATEMENT ON THE SUBJECT: The City Council will consider adopting a resolution in support of the "Affordable Housing Act" (AHA), a proposed ballot initiative currently gathering signatures, which aims at repealing the Costa Hawkins Rental Housing Act of RECOMMENDATIONS: 1. Adopt Resolution No "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF WEST HOLLYWOOD IN SUPPORT OF THE AFFORDABLE HOUSING ACT". 2. Direct staff to send copies of the adopted resolution to Governor Jerry Brown, State Senator Benjamin Allen, Assemblymember Richard Bloom, the initiative's proponents, and other parties as deemed appropriate. BACKGROUND / ANALYSIS: AB 1164 (Hawkins) known as the "Costa Hawkins Rental Housing Act of 1995" or "Costa Hawkins" was first introduced in the state legislature on February 23, 1995 by Assemblymember Phil Hawkins, (R-Bellflower) and co-authored by Senator Jim Costa, (D-Fresno). Then-Governor Pete Wilson (R), signed AB 1164 (Chapter 331, Statutes of 1995)i into law on July 24, The law became effective on January 1, 1996, allowing landlords to set new rental rates upon vacancy by a tenant. Until its passage, California cities like the City of Berkeley, the City and County of San Francisco, the City of Los Angeles, and the City of West Hollywood had adopted local ordinances regulating the rental price of residential units in multifamily apartment buildings. In addition, "strict" rent stabilization ordinances like the one adopted by the City of West Hollywood regulated the rental rate of a unit after a vacancy. Enactment of Costa Hawkins prohibited this practice, establishing what today is referred to as "vacancy decontrol"; when a unit is vacated, a landlord can charge whatever rent he/she desires. In addition, Costa Hawkins also prohibited local governments from controlling rents on multifamily housing buildings which had received a certificate of occupancy on or after February 1, Said buildings are considered new construction and therefore Page 1 of4 AGENDA ITEM 2. V.

2 exempt of any type of rent control. The City of West Hollywood adopted a temporary moratorium ordinance as an urgency measure on November 29, 1984 rolling back rents to those in effect on August 6, 1984 and limiting evictions to certain specified grounds. Then, in 1985, the City of West Hollywood adopted its rent stabilization ordinance (RSO) (Title XVII of the West Hollywood Municipal Code) before Costa Hawkins became law; such ordinance covers buildings for which a certificate of occupancy was first issued before July 1, 1979, and exempts certain multifamily housing units for which a certificate of occupancy was issued after July 1, These multi-family residential units are considered "new construction". Condominiums and single family homes were also exempted from the ordinance. In the case of the City of Los Angeles, the rent stabilization ordinance covers properties built before October 1, The following jurisdictions have enacted some form of rent stabilization ordinance: Alameda, Berkeley, Beverly Hills, Campbell, East Palo Alto, Fremont, Hayward, Los Gatos, Mountain View, Oakland, Palm Springs, Richmond, San Francisco, San Jose, San Leandro, Santa Monica, Santa Rosa, and West Hollywood. The cities of Cotati and Thousand Oaks only have rent stabilization for mobile parks. IMPACT OF COSTA HAWKINS IN THE CITY OF WEST HOLLYWOOD: The following chart, which was prepared by the City's Rent Stabilization & Housing Division (RS&HD) for the City's "2016 Housing Reportii", clearly depicts the impact Costa Hawkins has had on housing affordability in the City of West Hollywood: The chart below shows the household income needed in 2016 to pay the rent in rent-stabilized units broken down by number of bedrooms. Affordability was defined by using the housing industry standard of 30 percent of gross household income. Pre Tenants 2016 New Renters $150,120 $63,600 $33,920 $36,040 $79,080 $48,080 $103,040 $ bedroom 1 bedroom 2 bedroom 3 bedroom The RS&H Division also found that average rent for tenancies beginning prior to 1996 (pre-costa Hawkins) ranged from $848 for a studio to $1,642 for a three bedroom unit. Average new rents (post-costa Hawkins) for the same rent stabilized units following a vacancy ranged from $1,590 for a studio to $3,753 for a 3-bedroom unit. According to a report by the National Low Income Housing Coalition iii, an individual residing in Los Angeles County must earn $19 per hour in order to be able to afford a single apartment and $22.98 for a 1 bedroom apartment. According to the same report, a person looking to rent a 1 bedroom in the City of West Hollywood will need to earn $28.65 and $ for 2 bedroom apartment. The same report shows that California is the 3rd least affordable in terms of housing in the United States. Hawaii and DC are Page 2 of 4

3 even less affordable, ranking #1 and #2, respectively. PROPOSED BALLOT INITIATIVE: "AFFORDABLE HOUSING ACT" (AHA): On October 20, 2017, the proponents of the "Affordable Housing Act" (AHA) ballot initiative submitted the draft to the State's Attorney General's office to prepare the official title and summary of the main goals of the initiative. The AHA proposes repealing sections of the California Civil Code, which were enacted with the passage of Costa Hawkins and returns to local governments the authority to adopt local ordinances governing the setting of initial rental rates and subsequent adjustments. On December 17, 2017, the Secretary of State cleared the initiative for signature gathering. Proponents must collect 365,880 valid signatures by June 25, 2018 in order to qualify the initiative for the November 2018 ballot. As of February 28, 2018, the proponents are actively gathering signatures. AHA IS CONSISTENT WITH THE CITY OF WEST HOLLYWOOD'S LEGISLATIVE PRIORITIES, ADOPTED POLICIES AND CORE VALUES: In January 2017, the City Council adopted the City's Legislative Priorities, and chief among them was the repeal of Costa Hawkins. On February 21, 2017, Assemblymember Richard Bloom, (D-Santa Monica) introduced AB "Residential rent control: Costa-Hawkins Rental Housing Act", which proposed the repeal of Costa Hawkins. In March 2017, the City Council adopted resolution No in support of AB Councilmember Lindsey Horvath testified in support of the bill on the City's behalf. Unfortunately, the bill failed passage and died after a lengthy hearing by the Assembly Committee on Housing & Community Development on January 11, For all the above enumerated reasons, the City Council is recommended to adopt a resolution in support of the AHA. CONFORMANCE WITH VISION 2020 AND THE GOALS OF THE WEST HOLLYWOOD GENERAL PLAN: This item is consistent with the Primary Strategic Goal(s) (PSG) and/or Ongoing Strategic Program(s) (OSP) of: PSG-2: Affordable Housing. In addition, this item is compliant with the following goal(s) of the West Hollywood General Plan: H-3: Encourage a diverse housing stock to address the needs of all socioeconomic segments of the community. EVALUATION PROCESSES: City staff will monitor the progress of this proposition as proponents gather the necessary signatures to qualify this initiative, all the way through the Secretary of Page 3 of 4

4 State's review. ENVIRONMENTAL SUSTAINABILITY AND HEAL TH: N/A COMMUNITY ENGAGEMENT: City staff will provide updates to the community on the progress made by the initiative's proponents to qualify the ballot initiative. OFFICE OF PRIMARY RESPONSIBILITY: CITY MANAGER'S DEPARTMENT/ COMMUNITY & LEGISLATIVE AFFAIRS DIVISION FISCAL IMPACT: None. ATTACHMENT: Yes. Attachment A: "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF WEST HOLLYWOOD IN SUPPORT OF THE AFFORDABLE HOUSING ACT". ; AB 1164 (Hawkins) Chapter 331, Statutes of /ab 1164 bill chaptered.html,; 2016 Housing Report: City of West Hollywood: Rent Stabilization & Housing Division. (2017) "; "Out of Reach 2017: The High Cost of Housing": National Low Income Housing Coalition pdf Page 4 of 4

5 RESOLUTION NO A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF WEST HOLLYWOOD IN SUPPORT OF THE AFFORDABLE HOUSING ACT THE CITY COUNCIL OF THE CITY OF WEST HOLLYWOOD DOES HEREBY RESOLVE AS FOLLOWS: WHEREAS, AB 1164 (Hawkins) known as the "Costa Hawkins Rental Housing Act of 1995" or "Costa Hawkins" was first introduced in the state legislature on February 23, 1995 by Assemblymember Phil Hawkins, (R Bellflower) and co-authored by Senator Jim Costa, (D-Fresno). Then-Governor Pete Wilson (R), signed AB 1164 (Chapter 331, Statutes of 1995) into law on July 24, The law became effective on January 1, 1996, allowing landlords to set new rental rates upon vacancy by a tenant; and WHEREAS, until its passage, California cities like the City of Berkeley, the City and County of San Francisco, the City of Los Angeles, and the City of West Hollywood had adopted local ordinances regulating the rental price of residential units in multifamily apartment buildings; and WHEREAS, "strict" rent stabilization ordinances like the one adopted by the City of West Hollywood regulated the rental rate of a unit after a vacancy; Costa Hawkins prohibited this practice, establishing what today is referred to as "vacancy decontrol"; and WHEREAS, on October 20, 2017, the proponents of the "Affordable Housing Act" (AFA) ballot initiative submitted to the State's Attorney General's office a request for preparation of a circulating title and summary of the main goals of the AHA, which would repeal the sections of the California law added by Costa Hawkins; and WHEREAS, on December 17, 2017, the Secretary of State cleared the AFA for circulation to gather the required signatures to qualify for a future ballot; based on existing rules, the proposed initiative is required to gather 365,880 signatures by June 25, 2018; and WHEREAS, according to the 2016 Housing Report authored by the City of West Hollywood's Rent Stabilization & Housing Division (RS&HD), tenants looking to rent in West Hollywood in a post-costa Hawkins environment needed to earn in 2016 about $63,600 per year to rent a single, while tenants paying for rents established prior to 1996 needed to earn $33,920 per year; and ATTACHMENT A

6 Resolution No WHEREAS, the same report found that a tenant looking to rent a 1 bedroom apartment in 2016 needed to earn $79,080 per year, while a tenant who established tenancy pre-costa Hawkins needed to earn $36,040; and WHEREAS, according to a report by the National Low Income Housing Coalition, an individual residing in Los Angeles County must earn $19 per hour in order to be able to afford a single apartment and $22.98 for a 1 bedroom apartment; according to the same report, a person looking to rent a 1 bedroom in the City of West Hollywood will need to earn $28.65 and $ for a 2 bedroom apartment; and WHEREAS, the AHA proposes repealing certain sections of the California Civil Code, which were enacted with the passage of Costa Hawkins and returning control to the authority to local governments to adopt local ordinances governing the setting of initial rental rates and subsequent adjustments; and WHEREAS, in January 2017, the City Council adopted the City's Legislative Priorities, and chief among them was the repeal of Costa Hawkins; and WHEREAS, on February 21, 2017, Assemblymember Richard Bloom, (D Santa Monica) introduced AB 1506 "Residential rent control: Costa-Hawkins Rental Housing Act", which proposed the repeal of Costa Hawkins; and WHEREAS, in March 2017, the City Council adopted resolution No in support of AB 1506; unfortunately, the bill failed passage and died; and NOW THEREFORE BE IT RESOLVED that the City Council of the City of West Hollywood supports the Affordable Housing Act of PASSED, APPROVED AND ADOPTED THIS day of, 20_. ATIEST: MAYOR City Clerk 2