Rent Stabilization Program. October 11, 2018

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Russell Gregory
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1 Rent Stabilization Program FINAL HR&A ADVISORS, INC REPORT; FEEDBACK RECEIVED AT FACILITATED DIALOGUE SESSIONS; AND DISCUSSION OF POSSIBLE AMENDMENTS TO THE RENT STABILIZATION ORDINANCE October 11, 2018

2 Rent Stabilization Ordinance (RSO) Updates 1. Summary of Facilitated Sessions 2. HR&A s Summary and Cross-Cutting Policy Options 3. Seek City Council Direction on: Possible Amendment Changes to the RSO Consideration of Other RSO Issues

3 Summary of Facilitated Sessions Facilitated Session 1 August 15, Participants Relocation Fees Necessary to pay moving costs No qualifying factors such as income or unit size Should be increased to cover true costs and for specific vulnerable groups No relocation during school year Undue burden on Housing Providers No evidence to support a need Discourage owners from evicting bad tenants Reduces property values Exempt properties with 2-4 units Leads to Tenants gaming the system No-Cause Eviction Needed for "bad tenants Makes it easier to make repairs Create greater tensions Owners are not in the eviction business Expand to Chapter 6 Largest threat to Tenants Eviction data is inaccurate BHUSD affected by displaced families Tenants live in continual fear of eviction Create mediation board to deal with bad tenants

4 Summary of Facilitated Sessions Facilitated Session 1 August 15, Participants Ellis Act Provides Tenant Protections Call to expand protections to Chapter 6 Tenants Prohibit until all permits have been approved Restricts Housing Providers Is unfair and does not occur in any other market Habitability Standards Inspections and mediation board needed Expand habitability standards, including mold Rent reduction for violations Proactive inspections are costly and not needed No need for increased standards Agreed for a need to establish a mediation board

5 Banking Annual Adjustments Summary of Facilitated Sessions Allows Housing Providers to recoup loss that could be used for future repairs Allows for flexibility to take into consideration a good Tenants circumstances Creates better relationships with Tenants Facilitated Session 2 August 26, Participants Banking should not be allowed for either Chapter Creates uncertainty for Tenants Shifts the market risks to the Tenants Exemptions for properties with 2-4 units Owner occupancy should be exempted because they are mom pops and difficult to navigate RSO regulations Costs are higher for small properties Relationships are stronger and therefore no need for RSO Majority of RSO properties have 4 units or less Exemptions would effect 550 families and 518 BHUSD students All Tenants need protections

6 Rent Increase Application Process Summary of Facilitated Sessions Facilitated Session 2 August 26, Participants No harm because few Rent Increase Applications have been submitted Housing Providers are unwilling to provide data NOI is very complicated and does not include mortgage costs making it difficult for new owners Fair return should not be measured solely on NOI Housing Providers with substandard conditions should not be allowed to increase rents Suggested options of using a time period for benchmarking operating income

7 Summary of Facilitated Sessions Facilitated Session 3 September 16, Participants Maximum Allowable Annual Rent Increase Necessary to establish stability Allows long term Tenants to remain in the community Avoids a homogeneous community Should continue to be tied to a percentage of the CPI with a 5% cap Should also be tied to habitability standards Rent increases and pass-throughs need to remain sustainable for the Tenant Pass-throughs should have a cap Should be increased or removed because the CPI index does not cover the Housing Providers costs and the market can dictate the rent amount Housing Providers should not be taking the full financial burden of affordable housing Properties with fewer than 4 units should be exempt Rent control should only be for those people in need There was no data to suggest the need for the urgency Creates rental shortages and decreases property values

8 HR&A Summary

9 Other RSO Considerations Should there be an Annual Rent Registration? Should the RSO allow for Seismic pass-through? Should there be a Mediation Board/Commission? How could the RSO utilize the Mills Act? Should there be a Qualified Status? Should there be an Annual Rent Registration Fee?

10 Rent Stabilization Program Discussion

11 Possible RSO Amendments Exempting 2-4 Units Banking Relocation Requirements and Fees Rent Increase Application Process No-Cause Evictions Maximum Allowable Annual Rent Increase Ellis Act Habitability

AGENDA REPORT. c i. Page 1 of 11. Meeting Date: October 11,2018. Item Number: To:

AGENDA REPORT. c i. Page 1 of 11. Meeting Date: October 11,2018. Item Number: To: AGENDA REPORT Meeting Date: Item Number: To: From: Subject: Attachments: October 11,2018 c i Honorable Mayor & City Council Susan Healy Keene, AICP, Director of Community Development Helen Morales, Deputy