Editorial News Alert: L.A. City Implements New Enforcement Program for Non-RSO Rentals

L.A. City Implements New Enforcement Program for Non-RSO Rentals

By Janet M. Gagnon

Senior Vice President, Government Affairs & External Relations

On January 7^th, the Los Angeles City Council voted unanimously to officially establish a new fee of $31.05 per unit, per year for the newly created enforcement program applicable to ALL rental housing not currently covered by the City’s existing rent stabilization ordinance (RSO).

Now going forward, all property owners who have multifamily properties built after October 1, 1978, single-family houses, condominiums, townhouses, accessory dwelling units (ADUs) and Junior ADUs (collectively, “Non-RSO” properties) are covered under this new enforcement program. The purpose of the new enforcement program is to regulate Non-RSO properties and hold rental property owners accountable to comply with several, recently passed ordinances targeting owners of Non-RSO properties. Hard copy bills are being mailed out by the Los Angeles Housing Department (LAHD) to owners. The new fee of $31.05 per unit, per year is effective immediately and has an initial payment deadline of February 28, 2025.

If owners of Non-RSO properties fail to pay the new enforcement fee on time, the City Council has granted LAHD sole authority to set the amount for late payment penalties. LAHD had previously stated that such penalties will be set at a whopping 150%. This is despite the fact that LAHD has conducted NO advanced outreach to single family owners and only minimal outreach to other owners of Non-RSO properties.  However, LAHD has informed AAGLA that invoices for single-family, condominium, ADU and Junior ADU rental units will not be mailed until sometime in March and that no late fees will be assessed if LAHD does not send an invoice.

The ordinance creating this new enforcement program includes a powerful compliance mechanism by preventing owners from demanding or accepting rent until (i) the enforcement fee has been paid along with any late payment penalties and (ii) the owner has obtained an annual registration statement from LAHD and posted a copy of it at the property.  How this will work in practice for existing renters is unclear.

LAHD will be hiring at total of 63 new staff for this program, including housing investigators and other support staff. It is outrageous that such a huge program would be implemented without proper advanced outreach by LAHD, especially one impacting 381,173 rental units within Non-RSO properties.  The new ordinances that will be enforced by this new program include:

1. Requiring property owners to pay mandatory relocation fees to renters of up to $12,505 if the owner raises the annual rent by more than 10% or Consumer Price Index (CPI) plus 5%, whichever is lower (currently 8.9%) based on the Economic Displacement Ordinance.
2. Restricting evictions to specific Just Cause reasons only, including mandatory relocation fees for No-Fault evictions to be paid by property owners to existing renters in amounts up to $27,500 based on the Just Cause Ordinance (JCO) that was extended to owners of Non-RSO properties effective January 27, 2023.
3. Restricting evictions to renters who have fallen behind in paying rent by at least one month’s worth of fair market rent (“threshold”) based on the Eviction Threshold Ordinance.
4. Restricting owners from asking certain questions or taking certain actions towards renters, including actions that disturb the comfort, repose, peace or quiet of a renter or interfering with their use and enjoyment of the rental unit, as forms of harassment with severe mandatory judgment awards based on the Tenant Anti-Harassment Ordinance (TAHO).
5. Mandating the continued allowance of pets obtained by renters during COVID-19 without the property owner’s permission based on the COVID Pet “Amnesty” Ordinance.

AAGLA’s Advocacy Efforts

AAGLA zealously advocated both behind the scenes and in-person at full city council as well as committee meetings to delay the implementation of this program for six months to allow the Los Angeles Housing Department (LAHD) to conduct a robust, citywide outreach campaign to Non-RSO owners in order to make them aware of these new ordinances and the new enforcement program fee.  We argued that NO outreach has been conducted by the city to make Non-RSO property owners aware of these new regulations despite the city paying hundreds of thousands of dollars to educate renters on their rights via the Stay Housed LA program. Also, we highlighted the fact that LAHD does not have email addresses for the 95,748 single family owners that will be subject to this new enforcement fee.

In addition, we urged the reduction of the 150% penalty for non-compliance as way too severe and creating a dynamic of hostility between the city and Non-RSO owners upon their first interaction with LAHD.  Since LAHD has done little to no outreach before the issuance of bills for the new fee, owners only have 60 days to receive the notices by mail (many going to P.O. boxes or through intermediaries), understand the program, calculate the total fee owed, and provide payment, it is creating a “gotcha” penalty for all Non-RSO owners most of whom have had no prior dealings with LAHD.

Unfortunately, these reasonable requests were completely ignored by the City Council as it made no changes and moved forward rapidly and unanimously through committees as well as a full City Council vote.  It is greatly disturbing that the City Council now seems to view rental housing providers as presumptively guilty of intentional misconduct without the need for any advanced education to private property owners by the city or a reasonable opportunity to remedy unintended deficiencies.

We would urge all rental housing providers, especially those new to the industry, to acquaint themselves with these many new ordinances.  AAGLA will be offering a webinar in the near future to help walk owners through these many new restrictions. We also encourage everyone to spread the word to anyone renting out their single-family properties, condominiums, townhouses, accessory dwelling units (ADUs), Junior ADUs and newer multifamily buildings (built after October 1, 1978) of all sizes to become AAGLA members and get educated on these ordinances and the LAHD’s new enforcement program.

This article is for informational purposes only. If you have any questions regarding your property or specific tenancies and the requirements of any local law changes described herein, please consult with an attorney.

ORDINANCE

LAHD FLYER

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