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CM Renter Protections PPTRenter Protection Policies Andrew Hening Director of Homeless Planning & Outreach 1 Why We Are Here 2018-2019 Council Goals and Objectives: “Explore protections to increase rental and ownership housing affordability.” 8/20/18 “Housing Update”:Council directed staff to work on a number of policy options for future Council consideration. 12/18/18: The City Council passed a Source of Income Ordinance to prevent discrimination in the rental housing market. The County of Marin has explored, vetted, and adopted a variety of rental protections, providing a possible template for other jurisdictions. During public comment at recent Council meetings, community members have been asking the City Council to consider additional renter protection policies. Mandatory Mediation 3 Mediation: What Is It? Mediation is a process in which a neutral third party facilitates the negotiation of a mutually acceptable resolution to a dispute between parties. Mediation programs commonly apply voluntary, private and informal processes. If the parties involved come to an agreement, a settlement agreement can be prepared that will bind the parties. However, the parties may not come to an agreement and then there is no “resolution” to comply with. The mediator will not make a decision for the parties unless the parties have specifically agreed to such a process Mediation -1 of 9 Mandatory Mediation: What Is It? A variety of Bay Area communities, including Concord, Palo Alto, Union City, and the County of Marin, have adopted “Mandatory Mediation” programs to help renters. With “Mandatory” Mediation, if a triggering event occurs, then the tenant and/or landlord can request mediation services. Triggering events could include: a 10% rent increase (Concord), a 7% rent increase (Union City), a 5% rent increase (County of Marin), rent increases plus repairs and maintenance (Palo Alto) The “mandatory” aspect of the program is that parties agree to participate throughout the process in “good-faith,” but parties cannot be compelled to reach a resolution. The goal of these programs is to facilitate constructive conversations in a neutral and accountable environment. Mediation -2 of 9 The County’s Program As when the City Council adopted a “Source of Income” Ordinance, it is staff’s overall recommendation that the City consider the ordinance adopted by the County of Marin when crafting a policy for the City of San Rafael. 6 Mandatory Mediation: Eligibility The ordinance applies to all residential dwelling units. A residential dwelling unit may be defined generally as spaces containing a separate bathroom, kitchen, and living area. EXCEPTIONS -Residential dwelling units owned or operated by a government agency, units that are restricted for affordable housing Tenant’s receipt of one or more notices that individually or cumulatively increase rent more than 5% within any 12-month period. Any eligible Tenant or Landlord may request Mediation services Tenant must be provided notice of their rights: within 30 days of enactment of the ordinance; when entering a new lease agreement; when renewing a lease or rental agreement; when providing notice of a rent increase Mediation -3 of 9 Mandatory Mediation: Process Part 1 STEP 1 –Landlord notices Tenant about their right to request mediation services. STEP 2 -Mediation services may be requested within ten calendar days following the notice of a rent increase that is greater than 5% during a 12- month period of time. STEP 3 -Within 10 calendar days of receipt of a complete request, a Mediator shall be assigned to the case (the District Attorney’s Consumer Protection unit is providing mediation services) STEP 4 -Within 2 calendar days, Mediator to provide notice of Mediation to Landlord and Tenant. STEP 5 -Mediation must conclude within 30 days unless parties agree otherwise. Mediation -4 of 9 Mandatory Mediation: Process Part 2 Both parties must participate in “Good Faith.” Landlord must refrain from any harassment or other prohibited activity (the County ordinance duplicates or clarifies 12 existing rights under State law) The Tenant must abide by the terms of the lease or rental agreement and pay all lawful rent owed. The goal of the mediation is for both parties to meet face-to-face to discuss how the rent increase impacts them. The mediation could result in a deferred rent increase, a lower rent increase, a longer lease, additional housing services, or no change. Mediation -5 of 9 Impact To-Date Month # Cases Eligible Outcome Feb 2018 1 0 --- March 2018 3 1 Agreement Reached April 2018 1 1 NO Agreement Reached May 2018 1 1 NO Agreement Reached June 2018 1 1 Agreement Reached July 2018 1 0 Aug 2018 2 1 Agreement Reached Sept 2018 0 0 Oct 2018 1 0 Nov 2018 0 0 Dec 2018 1 1 Agreement Reached TOTAL 12 6 (or 50%)4 Agreements Reached (or 33% of total) 10 Mandatory Mediation: Admin & Enforcement for San Rafael The City does not offer in-house mediation services. Therefore, the City would need to contract with a local provider, such as the District Attorney’s Consumer Protection Unit. There would be a front-end effort by staff to develop marketing and educational materials. There would also be going monitoring on data and impact. Any inbound questions or requests would be directed to the Director of Homeless Planning & Outreach. If the ordinance is violated, any aggrieved person may seek civil remedy. This is similar to San Rafael’s Source of Income Ordinance. Mediation -6 of 9 Mandatory Mediation: Cost Part 1 For the County of Marin’s ordinance, the District Attorney’s Consumer Protection Unit provides mediations as an “in-house” service. Because these mediations are done as face-to- face conversations, there is more time involved (on average 5-10 hours). The DA’s Office has offered to provide San Rafael with up to 25 mediations per year for a base rate of $10,000 per year. Each additional mediation would cost the City $400. Mediation -7 of 9 Mandatory Mediation: Cost Part 2 Staff projects there will be significantly more than 25 mediations per year. #1 San Rafael has approximately 50% more rental units than the County of Marin, which would automatically increase our baseline (12 in the County to 18 in San Rafael) #2 The passage of Just Cause could help to ease concerns about requesting a mediation, thus encouraging more requests. #3 If every unit in a building receives a triggering rent increase, every household has a right to request an individual mediation. #4 In fiscal year 2018-19, there have been 68 rental units affected by 40%+ rent increases (that would have cost the City $27,200). There are presumably many more that experienced increases over 5%. Mediation -8 of 9 Mandatory Mediation: Downsides & Challenges Outcomes are not guaranteed or binding This would be a new, currently unfunded cost to the City. In 2018, average rent increases were below the 5% threshold. Communities that create numeric thresholds might unintentionally anchor price increases closer to that number. Some communities observe an uptick in rent increases and evictions prior to the implementation of these policies. Mediation -10 of 10 The Price to Rent 15 $1,800 $1,928 $2,268 $2,510 $2,586 $2,740 $2,874 $2,883 $- $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 2011 2012 2013 2014 2015 2016 2017 2018 Source: Rent Jungle % Change in Rent Prices 16 7% 18% 11% 3% 6% 5% 0% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 2012 2013 2014 2015 2016 2017 2018 Source: Rent Jungle FAQ: Does Mandatory Mediation limit a landlord’s ability to raise rent? No.The ordinance requires only that for certain rent increases a landlord or tenant could, upon request of either party, be required to engage in a sincere, facilitated conversation about that rent increase. Any agreements resulting from the mediation will be voluntarily undertaken. 17 FAQ: Does Mandatory Mediation occur anytime there is a 5% or greater rent increase? No.The ordinance requires that Landlords notify Tenants of their right to request mediation services. However, the Landlord or Tenant must take the initiative to request this service. 18 Just Cause Eviction 19 Evictions in California Under California law, landlords have the legal right to terminate a periodic tenancy without reason so long as they furnish the tenant proper written notice of termination. A residential tenant living in a home for less than one year must be provided with at least 30-days’ written notice. A residential tenant living in a home for one year or more must be provided with at least 60-days’ written notice. Landlords can also serve tenants with a three-day written eviction notice for any cause consistent with the California Code of Civil Procedure §1161, such as non-payment of rent or violation of a covenant in the lease If the Tenant does not vacate the unit at the end of the noticed lease term, the Landlord issues a “notice to vacate” or “note to quit.” If the Tenant does not vacate after issuance of notice to quit, the landlord files an unlawful detainer action in court. The Ellis Act allows Californians to withdraw their property from the residential rental market. Just Cause -1 of 8 Just Cause: What Is It? Just Cause policies are intended to provide stability for households who rent by regulating the grounds for eviction, typically by prohibiting termination of a residential tenancy without expressly stating the reason. Just Cause has been adopted by a variety of cities in California -Emeryville, San Diego, Union City, and the County of Marin. Just Cause is one of the ten recommendations in the CASA Compact. Acceptable reasons for eviction under Just Cause are often divided into two categories: “For Cause” and “No Fault.” Examples of eviction For Cause include failure to pay rent, illegal activity in the unit, nuisance activities, tenant fails to allow landlord access to the unit, or other material violations of a rental agreement. Examples of No Fault evictions include situations when an owner or relative moves into the unit or when the owner removes the unit from the rental market under the Ellis Act (Just Cause can stipulate longer noticing) Just Cause -2 of 8 The County’s Program As when the City Council adopted a “Source of Income” Ordinance, it is staff’s overall recommendation that the City consider the ordinance adopted by the County of Marin when crafting a policy for the City of San Rafael. 22 Just Cause: Eligibility Just Cause generally applies to all properties located in the unincorporated areas of Marin that have at least 3 dwelling units. EXCEPTION –Accessory Dwelling Units; Junior Accessory Dwelling Units EXCEPTION –Units located in affordable housing complexes EXCEPTION –Units owned, operated, or directly subsidized for affordability by the government. EXCEPTION –Units occupied by on-site property managers Just Cause -3 of 8 San Rafael Rents by Unit Type Adopting the County of Marin’s 3+ unit rule would cover up to 68% of San Rafael renters. 24 Unit Type Estimated Households Margin of Error % of Total Renters 1, detached 1,998 +/-298 18% 1, attached 655 +/-158 6% 2 711 +/-208 6% 3 or 4 891 +/-225 8% 5 to 9 1,645 +/-346 15% 10 to 19 1,782 +/-348 16% 20 to 49 1,670 +/-273 15% 50 or more 1,478 +/-278 13% Mobile home 71 +/-66 1% Boat, RV, van, etc.66 +/-78 1% Just Cause: Process STEP 1 –Obtain all necessary licenses and permits for the operation of a rental unit. STEP 2 –Complete Notice of Termination Form and deliver to the Tenant. STEP 3 –Submit an accurate copy of the Notice of Termination to the County within 10 calendar days of delivering the notice(s) to tenants. STEP 4 –If the Tenant does not vacate the unit on or before the intended final date of tenancy, consult an attorney regarding a potential unlawful detainer action in court. Just Cause -4 of 8 “For Cause”“No Fault” -Failure to pay rent -Breach of rental contract -Nuisance behaviors -Threat of a violent crime -Tenant use of the unit for illegal activities -Landlord will permanently remove the unit from the rental market -Landlord or family will move into the unit -Landlord will make substantial repairs that cannot be completed while the unit is occupied Just Cause: Registry & Data Collection To -date, there has not been robust data on the number of evictions that are occurring in Marin. Just Cause -5 of 8 Levels of Eviction Data 30 or 60-Day Eviction Notice Notice to Quit Unlawful Detainer Current Just Cause: Registry & Data Collection To -date, there has not been robust data on the number of evictions that are occurring in Marin. The County of Marin used Just Cause as a way to create a registry for properties with 3 or more units. The registry is hosted online to reduce the administrative burden on staff and landlords. The County is collecting ownership information, rent data, and eviction data on an annual basis. Do NOT collect identifying information about the tenants. Identifying information about landlords will NOT be made public. Just Cause -6 of 8 Just Cause: Admin & Enforcement for San Rafael Civil remedy available through the court. Landlords are required to have a valid business license. San Rafael already requires landlords with 3 or more units to have a business license (approximately 530 current licenses issued). Landlords would need to complete information in the registry. The County of Marin could potentially host this service for us. Landlords would need to provide a copy of any termination notice to the City. Any inbound questions or requests are currently being directed to the Director of Homeless Planning & Outreach. There would be a front-end effort by staff to develop marketing and educational materials, as well as an ongoing effort to monitor impact. Just Cause -7 of 8 Just Cause: Downsides & Challenges Just Cause regulations might discourage investment in rental property, thereby increasing operating costs and rental prices. Could make it more difficult to remove problematic tenants. Landlords have expressed concern that could foretell future rent stabilization policies. Existing State Law already provides some protections for renters from arbitrary or unreasonable evictions. For example, State law prohibits renters from being evicted in retaliation for filing health and safety claims. Just Cause -8 of 8 FAQ: Does Just Cause limit a landlord’s ability to increase rent? NO. 32 Summary & Next Steps 33 Staff’s Summation 1.Important to view these two policies together 2.Mandatory Mediation is not a panacea to stop increasing rents, but it does create a sense of “face-to-face accountability.” 3.Even though Mandatory Mediation is a helpful resource, and even though there are State laws protecting Tenants, renters still fear retaliation 4.Just Cause provides more stability that if you’re a good tenant, you can use the services available to you 5.Just Cause does potentially create more steps for challenging tenants 6.Overall, these policies are a way to provide more affordability and stability in the rental housing market without overly burdening property owners. 7.Further legal input from the City Attorney’s Office is needed 34 Questions for Council 1.Do you support Mandatory Mediation and Just Cause? 2.If yes, are there any significant ways in which you want to depart from what the County has done? 3.The only direct cost for implementing these policies is the cost of mediation services; however, there will be a indirect cost with regard to staff time. How does the Council want to allocate resources? 4.Would the Council want to create an ad-hoc City Council Subcommittee to finalize the policy recommendations? 35 Public Outreach 1.Informational presentation tonight ▪Advertised in Snapshot and the Homeless Initiatives newsletter ▪Courtesy notice (40 organizations, including the Marin Rental Property Association ) 2.Community meeting in the Canal, conducted in Spanish, attended by over 100 residents – unanimous support 3.The California Apartment Association has submitted a letter to the City in opposition. 36 Questions & Public Comment 37 Appendix 38 FAQ: Can a Landlord ask a Tenant to leave at the end of their lease term? Landlords can remove a tenant at any time for one of the reasons enumerated in the Just Cause Ordinance. Without cause, you may not ask your tenant to leave when their lease term ends. Unless you offer to renew the rental agreement, or propose new lease terms, your existing lease will default into continuing on a month-to-month basis. If you offer to renew the lease, or change the terms of it, your tenant retains the right to reject it. In this instance, you do not need to file a Notice of Termination with the County. Your tenant will be expected to vacate the unit at the end of their lease. 39 Prohited Activities under State Law •Interrupting, failing to provide, or threatening to interrupt or fail to provide any housing service under a lease or rental agreement, including but not limited to utility services and other amenities and services agreed to by contract; •Failing to perform repairs or maintenance required by contract or by State, or County housing, health, or safety laws; •Failing to exercise due diligence to complete repairs and maintenance once undertaken, including the failure to follow industry-appropriate safety standards and protocols; •Abusing or otherwise improperly using landlord’s right to access the property; •Removing personal property of the tenant(s) from the dwelling unit; •Influencing or attempting to influence the tenant(s) to vacate the unit by means of fraud, intimidation, or coercion (including but not limited to threats based on immigration status in violation of California Civil Code section 1940.3); •Offering payment or any other consideration, in return for the tenant(s) vacating the dwelling unit, more often than once every six months; •Threatening the tenant(s) by word or gesture with physical harm; •Interfering with the tenants(s) right to quiet use and enjoyment of the dwelling unit; •Refusing to accept or acknowledge receipt of lawful rent from the tenant(s); •Interfering with the tenant(s) right to privacy; •Requesting information that violates the tenant(s) right to privacy; •Repeating other acts or omissions of such significance as to substantially interfere with or disturb the tenant(s) comfort, repose, peace, or quiet enjoyment, and that cause, are likely to cause, or are intended to cause the tenant(s) to vacate the dwelling unit; or •Retaliating against the tenant(s) for the tenant(s) exercise of rights under the ordinance or State or federal law. 40 #1 Difficulty Becoming Property Owners If more of a household’s income is directed towards increasingly expensive rents, while at the same time the cost of becoming an owner also continues to rise, it becomes increasingly difficult for renters to become owners. 41 Prices for Renters / Owners 42 Source: County of Marin #2 Overpayment Housing overpayment, as defined by the state and federal government, refers to spending more than 30% of income on housing. 43 Overpayment in Marin 44 Source: Marin Economic Forum #3 Low Vacancy A low vacancy rate may indicate that households are having difficulty in finding housing that is affordable, leading to housing overpayment and/or overcrowding. 45 A healthy vacancy rate is 6 to 7%. Marin’s rate is 3% 46 Source: County of Marin #4 Jobs / Housing Imbalance A community’s jobs / housing balance refers to the percentage of workers who reside in the community. 47 87%of San Rafael’s workforce lives outside of the city. 48 Source: San Rafael Housing Element #5 Homelessness Of the variety of upstream causes of homelessness, the cost of housing is the most significant. 49 50 42% 26% 20%19% 13% 0% 10% 20% 30% 40% 50% Economic Substance Use Mental Health Personal Relationships Physical Health Primary Cause of Homelessness 67%65% 46% 34%33% 0% 20% 40% 60% 80% Rental Assistance More Affordable Housing Money for Moving Costs Transportation Help Finding an Apartment Assistance Needed to Obtain Permanent Housing