Local Advocacy Update
The year 2022, with only three months of the year remaining and the upcoming November 2022 General Election just around the corner, the end of the year holds several important and yet unknown answers to key questions. Who will be elected? What will the 2023 political landscape look like? Will the City of Los Angeles moratoriums on eviction and rent increases come to an end? Will the multifamily rental housing industry finally be permitted to resume normal operations?
While the answers to all these questions will undoubtedly unfold in the days and weeks ahead, one constant through it all is the Association’s unwavering advocacy for our industry and ensuring the voice of our members is heard. Our combined voices are impactful and essential as we navigate the remaining days of 2022.
Our Association is continually monitoring and advocating for our members’ interests in localities throughout Southern California on many critical issues affecting rental housing. Summarized below are some of the issues that are likely to be coming up, that were recently considered or that have been approved in Los Angeles County, and in the cities of Los Angeles, Bell Gardens, Cudahy, and Santa Monica.
City of Los Angeles Moratoriums Update, Is the End Near?
The question on all of our minds is a simple one: when will the City’s moratoriums end. After well over two and a half years and little discussion, the conversation has finally started and proposals for the phasing out of the moratoriums have been introduced. Nevertheless, as I write this article the final details and outcome remain unanswered.
At the end of August, the long-awaited Los Angeles Housing Department (LAHD) report was released and provided a number of recommendations including proposed end dates to the City of Los Angeles’ moratoriums on evictions and rent increases and brought other issues into the fold such as a proposal to expand the City’s Rent Stabilization Ordinance (RSO) “just cause” eviction requirements to non-RSO units.
LAHD’s proposed recommendations include ending the eviction moratorium on December 31, 2022 with some exceptions, requiring renters to pay current rent due beginning on November 1, 2022 unless the renter provides a self-attestation notice to the housing provider within seven (7) days after the rent is due of the renter’s inability to pay the rent due to financial impacts related to COVID-19, establishes two rent repayment deadlines of August 1, 2023 and December 31, 2023 based on when the rental debt was accrued, and would maintain the City’s moratorium on rent increases for RSO units for 12 months following December 31, 2022 (the recommended end of the eviction moratorium). LAHD’s proposed recommendations also include expanding the City’s “Just Cause” eviction requirement to non-RSO rental units and creating several reports on other housing regulatory policies.
On September 14th, the City Council’s Housing Committee conducted a meeting to review LAHD’s recommendations and provide their recommendations. In the hours prior to the Housing Committee meeting numerous proposed amendments were individually put forth by Committee Chair Cedillo, and Councilmembers Lee and Raman. In addition, LAHD also advanced some technical corrections and revisions to their initial report and recommendations. Among the proposals were amendments to extend some, if not all, the eviction moratorium provisions beyond the December 31, 2022 LAHD recommended end date to either February 1st or February 28th of 2023. Alternatively, Councilmember Lee’s proposed amendment sought to bring an immediate end to the City’s rent increase freeze which is currently to remain in place for one year following the declared end of the City’s local emergency.
However, while various proposed amendments were introduced, in the end Committee consensus was not reached and as a result no recommendations were advanced. The matter has now been referred to the Ad Hoc Committee on COVID-19 Recovery and Neighborhood Investment. We will continue to monitor this matter closely, continue to strongly advocate for the immediate end to the City’s moratoriums and provide updates.
Los Angeles County To Begin Comprehensive Communications Plan On December 31, 2022 End to Moratoriums
The September 13th Los Angeles County Board of Supervisors meeting marked an important moment as the Board of Supervisors approved a motion introduced by Supervisor Barger by a vote of 3-2, with Supervisors Solis and Kuehl opposing, to initiate a robust education and outreach campaign on the December 31, 2022 termination of the Countywide eviction moratorium (applicable to the County’s unincorporated areas and incorporated cities) and rent increase freeze on rent stabilized units within the County’s unincorporated areas only.
The Association has repeatedly and consistently called upon the Board of Supervisors to bring an end to the moratoriums and allow the rental housing industry to resume normal operations like all other businesses. While the Board’s recent action represents their commitment to ending the moratoriums this year, Supervisor Kuehl has indicated that she intends to bring forward a motion that may extend eviction prohibitions and/or limit rent increases. We will continue to closely monitor this matter.
Bell Gardens Adopts Local Rent Control and Just Cause Eviction Ordinance – Effective October 12, 2022
At the September 12th Bell Gardens City Council meeting, the Council adopted an ordinance establishing strict rent control and just cause eviction requirements. The ordinance goes into effect on October 12, 2022. It is important to note that since April 25th the City has had a rent increase freeze in effect pending the establishment of permanent local rent control. The City’s rent increase freeze is set to expire on October 9th and is likely to be extended by the City Council through October 12th, to coincide with the date that the rent control ordinance takes effect.
Some of the key ordinance provisions are summarized below. We encourage members with properties in the city of Bell Gardens to review the full details of the ordinance and to consult with an attorney regarding specific tenancy questions.
Limitations on Annual Rent Increases:
- Establishes limits on permissible rent increases to one rent increase within any 12-month period, with an annual rent increase “cap” of 50% of the change in the Consumer Price Index (CPI) or 4%, whichever is lower.
- The base rent is the rent that was in effect on April 11, 2022. This means that any allowable rent increases are to be calculated using the rent amount that was in place on April 11, 2022. The base rent does not apply to vacancies after the base rent date.
- Allows rental housing providers with existing renters who are paying below market rents that are less than 80% of Fair Market Rent (FMR) for a comparable unit to increase the rent by an additional up to 3% until the rent equals or exceeds 80% FMR for a comparable unit, upon submission of an application, compliance with the requirements set forth in the ordinance, and approval from the City’s Community Development Department.
Exemptions: Owner Must Submit an Application to the City’s Community Development Department to be Granted an Exemption for the Rent Control Provisions of the Ordinance
- The ordinance provides limited exemptions from the rent control provisions including:
- Dwelling units with a certificate of occupancy or equivalent permit for residential occupancy issued after February 1, 1995; any dwelling unit that is alienable separate from the title to another dwelling unit, including single family homes, condominiums, and townhouses; and owner-occupied residential real property with no more than three (3) rental units, where the owner occupies one of the units as their primary residence since the beginning of the tenancy. The exemption remains in place as long as the owner continues to reside in the unit as their primary residence.
Capital Improvements Pass-Throughs
- The ordinance provides a process in which rental housing providers may pass-through 50% of eligible capital improvement costs to existing renters.
Petition For Rent Adjustment
- The ordinance provides a petition process for owners to apply for a rent increase above the permissible annual allowable increase based on the necessity of the additional rent increase to earn a fair and reasonable return.
- Renters are also provided with a process to apply for a rent adjustment under certain circumstances.
- On or before September 30, 2023, and each year thereafter, rental property owners are required to register rental units, that are rented or available for rent for more than thirty (30) consecutive days, through the City’s rent registry and disclose information about the property and ownership details, rent paid, renter information, and housing services provided. After the initial registration of the unit, the owner will be required to notify the City’s Community Development Department and update the registration within thirty (30) days of the start of a new tenancy or change in tenancy or ownership. The requirement also provides for broad allowances for the City to require disclosure of additional confidential information, under a provision stating, “any additional information reasonably required by the Department to implement this Chapter.”
- In order to fund the administration of the ordinance, rent registration fees, in an amount yet to be determined, would be paid for by the housing provider with an allowable pass-through of 50% to renters subject to the ordinance requirements.
- Registration Fee Waiver: Owner-occupied residential real properties containing no more than four (4) dwelling units, will be granted a fee waiver, so long as the owner resides in one of the units as their principal residence.
Limitations on Evictions – “Just Cause” Regulations: Regulations Apply to Renters Who “Continuously and Lawfully Occupied the Rental Unit for Twelve (12) Months or More
- Establishes local “just cause” eviction regulations for at-fault and no-fault eviction – evictions allowed only if included in the list provided under the ordinance.
- Requires payment of relocations fees for no-fault evictions equal to three (3) times the renter’s monthly rent in effect when the notice was served. If any renter residing in the unit is a qualified renter, as defined in the ordinance: 62 years old or older, disabled, has one or more dependent children under the age of eighteen residing in the unit, meets the income limits of a lower-income household or has continuously lived in the unit for five years or more, the housing provider is required to pay an additional relocation fee of one (1) times the renter’s monthly rent in effect when the notice was served.
- The ordinance also includes temporary relocation fees when renters are temporarily displaced from the rental unit.
- Rental housing providers are required to provide each renter with a notice of their rights when entering into the rental agreement, renewal of the agreement, with any notice of a rent increase or decrease, and other circumstances set forth in the ordinance. In addition, the notice must be provided in English and the language that the rental agreement was written or negotiated in. The City will be posting a form notice prior to the effective date of the ordinance.
The ordinance also includes retaliatory eviction and anti-harassment provisions, imposes administrative citations, civil and criminal penalties for violations and/or civil action.
Cudahy City Council Adopts 90 Day Rent Increase Freeze as City Explores Potential Local Rent Control
At the September 20th Cudahy City Council meeting, the Council adopted a 90-day rent increase freeze prohibiting rent increases on residential rental units. The ordinance goes into effect on October 20, 2022 and will remain in effect through January 18th 2023, unless extended, as the City’s Ad Hoc Rent Control Subcommittee explores more permanent solutions, including potential local rent control.
The ordinance applies to existing residential renters whose tenancy started before or on October 20, 2022. The ordinance includes exemptions for dwelling units that are alienable separate from the title to any other dwelling unit, dwelling units with a certificate of occupancy issued after February 1, 1995, or any other dwelling units exempt under Costa-Hawkins or other applicable state or federal law. Additionally, the ordinance provides a process for owners to petition for a rent increase based on the contention that due to the prohibition they are not receiving a fair and reasonable return. We encourage members with properties in the City of Cudahy to review the full details of the ordinance.
The City’s Rent Control Ad Hoc Subcommittee was established in July 2022 as an advisory committee “to analyze and study the issue of rent control and to advise and make recommendations for the City Council’s consideration. The Subcommittee is currently comprised of two members of the City Council. During the meeting, the Subcommittee was reconfigured with Vice Mayor Gonzalez replacing Councilmember Lomeli. When the rent increase freeze ordinance was first discussed, Vice Mayor Gonzalez expressed concerns regarding the interim ordinance’s impact on the City’s small business rental housing providers and his interest in participating in the City’s Rent Control Ad Hoc Subcommittee. The City Council also discussed including representatives from the community on the Subcommittee and directed staff to return at the next City Council meeting with recommendations to add two renter representatives and one rental housing provider representative to the Subcommittee. The Association expressed strong opposition to the temporary rent increase freeze and consideration of local rent control. We will continue to closely monitor this matter, advocate for our members’ interests, and provide updates as this issue evolves.
Santa Monica Adopts Temporary Eviction Moratorium For Non-Payment of Rent - in Effect Through January 31, 2023
Santa Monica’s rent control provisions are established under the City’s Charter and includes the formula to be used in calculating the City’s annual general adjustment. The 2022 general adjustment permits rental housing providers to increase the rent as of September 1, 2022, following notice, up to 6% or $140, whichever is less.
In early August, the City Council approved a detrimental rent control charter amendment ballot measure for placement on the November 2022 General Election which, if approved by the voters, would drastically reduce the 2022 general adjustment for the period of February 1, 2023 through August 31, 2023 from 6% to 0.8%, or average not to exceed 3% and permanently reduce annual allowable rent increases to a maximum of 3% or $70 per month, whichever is less.
At the August 23rd Santa Monica City Council meeting, the City Council imposed further impediments on rental housing providers’ ability to collect the full, legally permissible rent increases under the 2022 General Adjustment by adopting a temporary eviction moratorium. This eviction moratorium applies to City renters residing in rent controlled units who receive a rent increase of more than 3% above the Maximum Allowable Rent (MAR) in place prior to September 1, 2022, self-certify (no documentation required from the renter) that they cannot pay rent due between September 1, 2022 and January 31, 2023 due to COVID-19 related financial distress, as defined in the ordinance, and the notifies the housing provider within 30 days after the rent is due.
It is important to note that once, the above circumstances occur, the renter can defer not only the rent increase amount but the full amount of rent due, meaning qualified renters can withhold payment of 100% rent for five months between September 1, 2022 and January 31, 2023. The renter has until September 1, 2023 to repay any deferred rent owed that was unpaid during the period between September 1, 2022 and January 31, 2023.
As the City Council’s action was taken days prior to September 1st and after rental housing providers may have already issued notices for legally permissible rent increases above 3%, the ordinance specifies that “the eviction moratorium shall not apply to tenants for which their landlord who had previously given notice of a rent increase that exceeds three percent from September 1, 2022, and thereafter, who shall have modified that notice so that it does not exceed three percent and/or accepts an increase not to exceed three percent during the protected period.” We encourage members with properties in the Santa Monica to review the full details of the ordinance and consult with an attorney regarding questions about specific tenancies and related rent increases.
The City’s temporary eviction moratorium is in addition to the Los Angeles County eviction moratorium currently in effect through the end of 2022, which also applies to Santa Monica renters, and prohibits evictions based on non-payment of rent for renters financially impacted due to COVID-19 with household incomes at 80 percent Area Median Income (AMI) or below. Moreover, the City’s own eviction moratorium prohibiting evictions based on no-fault reasons, nuisance with limited exceptions for health and safety reasons, unauthorized occupants or pets remain in effect through the end of year. Ellis Act evictions cannot be filed until 60 days after December 31, 2022. Prior to the meeting, the Association expressed strong opposition to the adoption of the urgency ordinance, both to the Council’s bypassing of the City Charter, and the implications of this eviction moratorium on Santa Monica’s responsible housing providers.
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.