MINIMUM LEASE TERMS RELOCATION ASSISTANCE March 26, 2018
BACKGROUND Council Managing Growth Study Session: 2/8/16 HHCC hosted community meetings and regular meetings: May - October 2016 Council / HHCC Study Session: 10/24/2016 HHCC Meetings: November 2016 - March 2017 HHCC Policy Recommendations: 6/26/17
PROPOSED HOUSING ORDINANCES Minimum Lease Terms Relocation Assistance
Minimum Lease Terms- Purpose Require Landlord to offer a 1-year lease term to provide stability for tenants. Provide flexibility for tenants and landlords to negotiate shorter lease terms Allows for rent increases when leases are renewed Allows landlords to end tenancy when lease is over
Applicability The ordinance is applicable to residential projects that include three (3) or more units Less than three units are considered smaller properties ( Mom and Pop landlords) typically have have lower rents, less ability to absorb cost increases Avoids creating disincentives for development of accessory dwelling units, considered to be a form of affordable housing.
Exemptions Single-family dwellings. duplexes Transient housing (30-days or fewer) Housing in hospitals, skilled nursing, health or care facility, extended-care facility Secondary dwelling units and condominiums
Policy Administration Similar to ordinances in other local cities (Menlo Park), this ordinance is intended to be administered without Coty oversight. City would intervene through code enforcement on a complaint basis. Once a violation has been found, City can rely upon the Municipal Code for penalties
Public Outreach and Notification Series of public meetings held over the past two years Detailed conversations with California Apartment Association (CAA) The City will implement an extensive outreach and education process in advance of the effective date of the ordinance This ordinance would become effective January 1, 2019.
Clarifications Based on recent feedback received, staff proposes: To strengthen ordinance language to make it clear that landlords may end tenancy after lease term is over. Council may also consider: Allowing landlords to offer reduced rent for shorter term lease periods Only requiring 1-year lease terms on the initial term
Relocation Assistance- Purpose Reduce disruption to tenants and their families caused by an unforeseen need for relocation by addressing some of the financial impacts. Currently- no State mandate for landlords to assist displaced tenants by compensating for relocation costs.
Requirements The ordinance includes a number of components requiring landlords to provide relocation assistance to lower income tenants. Lower Income Tenants are defined as households earning 80% or less of the Area Median Income ( AMI ). 1 2 3 4 5 80% 73,750 84,300 94,850 105,35 113,800 0 Median (100%) 80,700 92,250 103,750 115,300 124,50 0
Displacement One (1) or more rental units on properties with five or more units within a one-year period as a result of any of the following Landlord seeks to withdraw units from the rental housing market Landlord seeks to demolish or otherwise remove residential rental housing
Displacement - continued Remodeling, renovation, or rehabilitation of a unit resulting in permanent displacement of tenants The landlord seeks the conversion of a building into a condominium A change of use from a residential use to a nonresidential use that requires a permit from the city
Exclusions Providing relocation assistance is not applicable as the result of the following: A conversion of any portion of a mobile home park Compliance with a Chief Building Official ordered to pay relocation expenses pursuant to the Health and Safety Code or any other state or federal law The residential household is required to vacate the rental unit due solely to natural disaster, event, or accident outside the landlord s control Temporary displacement (less than one year) where tenants have been provided with alternative housing on site or nearby
Eligible Households A displaced residential household whose annual household income does not exceed 80% AMI
Ineligible Households The household s occupancy ended due to the expiration of a term lease and the tenancy was not extended The household is in the process of being evicted due to a failure to pay rent or violations of the rental agreement The household received written notice, prior to entering into an agreement to become a tenant, that an application to convert their rental unit to another use was on file with the city or had already been approved and would result in their displacement
Special Circumstance Households The ordinance includes additional relocation assistance for households defined as special-circumstances households with any of the following characteristics: At least one member is sixty-two years of age or older At least one member qualifies as disabled or handicapped A household with one or more minor children who are legally dependent A household that has occupied their unit as their primary residence for five or more consecutive years
Relocation Assistance The landlord shall provide relocation assistance to eligible residential households in accordance with the following requirements: Refund of a tenant s security deposit 60-day subscription to a rental agency service Cash equivalent of three months rent. Specialcircumstances households will be paid one additional month of rent for a maximum of four months rent. An administrative fee as set forth in the ordinance (through resolution of the City Council).
Tenant Displacement Notices Landlords shall provide tenants displacement notices no later than thirty days after filing a discretionary or ministerial application with the City. Landlords shall also provide a written notice of termination to all tenants subject to displacement in accordance with State law.
Policy Administration The ordinance is to be administered by the City through a third party relocation vendor or consultant. Property owners required to submit a deposit to pay for relocation assistance based on the total estimated cost of relocation, the direct costs of the relocation consultant and the cost of City staff time to coordinate.
Public Outreach and Notification Series of public meetings held over the past two years Detailed conversations with California Apartment Association (CAA) The City will implement an extensive outreach and education process in advance of the effective date of the ordinance This ordinance would become effective January 1, 2019.
Relocation Clarifications Based on recent feedback received, staff proposes: To strengthen language and make it clear that relocation payments would not be required when household s occupancy ended due to the expiration of a lease Additional language that relocation proposals that are deemed complete prior to January 1, 2019 are not subject to this ordinance. Council may also consider: Allowing landlords to offer reduced rent for shorter term lease periods
ALTERNATIVES Staff recommends the ordinances be revised: To clarify that landlords may end tenancy at end of lease term To clarify that ending tenancy at end of lease term would not trigger relocation benefits Several other minor revisions to ordinance language Staff would also recommend a 1-year check-in to make ordinance changes if necessary Council may also consider: Allowing landlords to offer reduced rent for shorter term lease periods Not requiring 1-year lease period at the end of initial term
Staff Recommendation 1. Hold a public hearing 2. Waive First Reading and Introduce an Ordinance Requiring Minimum Lease Terms with recommended staff changes; 3. Waive First Reading and Introduce an Ordinance Requiring Relocation Assistance with recommended staff changes; 4. Find that the proposed ordinances are exempt from the California Environmental Quality Act (CEQA)
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