AGENDA REPORT
Meeting Date: March 15, 2022
Item Number:
To: Honorable Mayor & City Council
From: Helen Morales, DPA, Deputy Director of Rent Stabilization Subject: POSSIBLE AMENDMENTS TO THE URGENCY ORDINANCE NO. 20- O-2818 REGARDING THE EVICTION AND RENT INCREASE
MORATORIUMS, THE MAXIMUM ALLOWABLE RENT INCREASES
AT THE END OF THE RENT INCREASE MORATORIUM, AND THE
END OF THE REPAYMENT PERIOD FOR COVID-19 RELATED
BACK RENT; AND ESTABLISH A MEANS TESTED RENT INCREASE
ASSISTANCE PROGRAM
REQUEST CITY COUNCIL TO AUTHORIZE USE OF FUNDS
PREVIOUSLY APPROPRIATED TO THE RENT SUBSIDY PROGRAM
TO THE RENT INCREASE ASSISTANCE PROGRAM
Attachments: 1. Urgency Ordinance 20-O-2818
2. California COVID-19 Rent Relief Program for Beverly Hills
RECOMMENDATION
Staff recommends that the City Council consider amendments to the eviction and rent increase moratoriums and maximum allowable rent increases at the end of the rent increase moratorium provided for in Urgency Ordinance No. 20-O-2818 (Urgency Ordinance) (Attachment 1). More specifically, that 1) the residential eviction moratoriums end May 31, 2022; 2) the rent increase moratorium ends May 31, 2022; 3) the maximum allowable rent increases at the end of the rent increase moratorium be phased in as determined by City Council; 4) the end of the repayment period for COVID-19 related back rent is May 31, 2023; and 5) that the City establish a means tested rental assistance program with respect to rent increases.
INTRODUCTION
On March 15, 2020, the City Manager, in his role as Director of Emergency Services, proclaimed the existence of a local emergency, which was ratified by the City Council on March 16, 2020. As authorized by Governor Newsom under Executive Order N-28-20, the City Council adopted its first Urgency Ordinance, Ordinance No. 20-O-2805, on March 16, 2020. This ordinance, among other things, provided eviction protections for H-1
Meeting Date: March 15, 2022
Beverly Hills residential tenants. From time to time, the City Council has adopted superseding ordinances, and the current ordinance related to moratoriums on residential evictions and rent increases is Ordinance No. 20-O-2818, which the City Council adopted on September 1, 2020.
The Ordinance imposes a moratorium during the period of local emergency on:
1) evictions for non-payment of rent by residential tenants who are substantially financially impacted by COVID-19 and who comply with the requirements of the Ordinance (Section 1);
2) no-fault evictions for residential tenants, unless necessary for the health and safety of tenants, neighbors, or the landlord, other than based on illness of the tenant or any other occupant of the residential unit (Section 1); and 3) annual rent increases authorized by Sections 4-5-303 (c) and 4-6-3 of the Beverly Hills Municipal Code, provided, however, that the Ordinance does not alter the date of the annual rent increases in future years (Section 4).
Nothing in the Urgency Ordinance relieves the tenant of liability for the unpaid back rent, which the landlord may seek after the expiration of the local emergency. The Urgency Ordinance provides that the tenant must pay in full all back rent within one year of the expiration of the local emergency (please note in the following section that State law, AB 832, modifies this repayment period to May 31, 2023 for back rent that came due during the period March 1, 2020 through September 30, 2021).
At the October 26, 2021, City Council meeting, the City Council discussed ending the eviction moratoriums on March 31, 2022, which is when the State COVID-19 Rental Housing Recovery Act “COVID-19 recovery period rental debt” ends, pursuant to California Code of Civil Procedure Section 1179.09(b). The City Council also commenced discussion regarding ending the rent increase moratorium, as recommended by the Rent Stabilization Commission, and how to address rent increases that will commence after the end of the rent increase moratorium. At that time, the City Council requested that the City Attorney provide options for the City Council to consider regarding the amount of allowable rent increases following the end of the moratorium.
On January 18, 2022, staff presented a staff report regarding Update and Options Regarding the City’s COVID-19 Related Rent Protections. The City Council discussed a possible alignment of the end of the eviction moratoriums and the moratorium on rent increases with AB 832, with the moratoriums to end on May 31, 2022, and the repayment period for back rent to end on May 31, 2023. City Council requested additional information and, due to the Omicron surge that the matter be brought back to City Council at a meeting in February.
On February 15, 2022, staff presented a staff report regarding Update and Options Regarding the City’s COVID-19 Related Rent Protections and LA County Updated COVID-19 Tenant Protections Resolution. The Staff requested the City Council to provide staff with direction on establishment of a rental assistance program and amendments to the Urgency Ordinance regarding residential tenant protections including the following:
Meeting Date: March 15, 2022
1. whether to end the residential eviction moratoriums on March 31, 2022, May 31, 2022, or some other date (recognizing that if the City ends the residential eviction moratoriums, the County Resolution provides that the County’s eviction protections will extend to the City, with the eviction protections for nonpayment of rent due to COVID-19 financial hardship commencing April 1, 2022);
2. whether to end the rent increase moratorium on March 31, 2022, May 31, 2022, or some other date;
3. how to determine the maximum allowable rent increases that can be imposed by landlords at the end of the rent increase moratorium;
4. whether to provide that the one-year period to pay back rent ends one year after the end of the eviction moratorium for non-payment of rent instead of at the end of the local emergency; and
5. the establishment of a means tested rental assistance program to income eligible tenants to offset anticipated inflationary conditions that may result in exorbitant rent increases.
DISCUSSION
Eviction Moratoriums
In light of the current COVID-19 conditions, the City Council discussed that the City’s eviction moratorium for failure to pay rent due to COVID-19 financial impacts and nofault eviction end on May 31, 2022.
The County Resolution adopted by the Los Angeles County Board of Supervisors on January 25, 2022, amended and restated the County’s eviction moratoriums during the local emergency proclaimed by the County. The County Resolution provides that the County’s moratoriums extend to incorporated cities, and the Resolution established the County's eviction protections as the baseline for all incorporated cities within the County, including cities that have their own local eviction moratoriums, to the extent a city’s moratorium does not include the same or greater tenant protections as the County's moratorium. If the City ends the eviction moratorium protections on May 31, 2022, Beverly Hills tenants may be protected under the County Resolution for failure to pay rent commencing on or after April 1, 2022 due to COVID-19 financial impacts through December 31, 2022, if the tenants’ income is at or below 80% of the area median income (AMI). Beverly Hills tenants may also continue to be protected under the County Resolution for no-fault evictions (except for qualified owner move-in); nuisance and unauthorized occupants or pets whose presence is necessitated by or related to the COVID-19 emergency.
Meeting Date: March 15, 2022
Rent Increase Moratorium and the Allowable Rent Increases at the End of the Moratorium on Rent Increases
The Urgency Ordinance provides a moratorium on annual rent increases authorized by Sections 4-5-303 (c) and 4-6-3 of the Municipal Code and scheduled to take effect on or after March 15, 2020 (Section 4). The Urgency Ordinance further provides that nothing in the Ordinance shall alter the date of the annual rent increases in future years. The County Resolution also includes a moratorium on rent increases for residential tenants, but the Resolution provides that nothing in the Resolution shall be construed to apply this limitation on rent increases in incorporated cities within the County.
Chapter 6
The Municipal Code allows a landlord to increase the rent for a unit annually, and twelve months must have elapsed since the last rent increase (Section 4-6-3 A). The rent increase that may be imposed is the greater of: (a) 3% of the rental rate then in effect, or (b) the percentage equal to the percentage increase, if any, of the Consumer Price Index (CPI) published by the United States Department of Labor, Bureau of Labor Statistics for LA/Riverside/OC Area between May 1st of the then current year and May 1st of the immediately preceding year (Section 4-6-3 B).
At the end of the rent increase moratorium, a Chapter 6 tenant could receive a rent increase of as much as 6.9% (if two annual rent increases were missed) and as much as 10% (if three annual rent increases were missed).1 The below chart references the Chapter 6 annual rent increase schedule:
MAXIMUM ALLOWABLE RENT INCREASE
CHAPTER 6 TENANTS
DATE PERCENTAGE ALLOWED
7/1/19 - 6/30/20 3.10%
7/1/20 - 6/30/21 3.00%
7/1/21 - 6/30/22 3.90%
Chapter 5
There are 217 rental units in the City that are subject to Chapter 5 of the Rent Stabilization Ordinance. The Municipal Code allows a landlord to annually increase the rent for a unit that is subject to Chapter 5 as follows: the maximum allowable rent increase is 8% or the increase of the CPI as of the date of the notice of increase, whichever is lower, within any twelve (12) month period. The rent increases are adjusted on a monthly basis based on the change in the CPI for Los Angeles (or any successor equivalent) as published by the United States Department of Labor, Bureau of Labor 1 The State Tenant Protection Act, Civil Code Section 1947.12 (TPA), limits annual rent increases for certain rental units to 5% plus the cost of living increase or 10%, whichever is less. However, the TPA does not prohibit local annual increase caps that are more restrictive and, therefore, does not override the annual caps on rent increases that are set forth in Chapters 5 and 6.
Meeting Date: March 15, 2022
Statistics and computed as follows: “The latest published CPI figure shall be added along with such figures for the preceding eleven (11) individual months, and, from the sum reached, there shall be deducted the sum of such figures for the twelve (12) months further preceding the last such twelve (12) months. That remainder shall then be divided by the lower of the two (2) sums heretofore mentioned, and the resulting figure shall indicate the permissible maximum percentage by which the base rent may be increased by virtue of the rise in the CPI.” (Section 4-5-303 A, B and C).
For a Chapter 5 tenant, rent increases vary as provided in the below schedule based upon the annual rent increase anniversary month/date.
2020 JAN FEB MARCH APRIL MAY JUNE JULY AUGUST SEPT OCT NOV DEC
PERCENT
ALLOWED 3.1% 3.1% 3.1% 2.8% 2.6% 2.5% 2.4% 2.3% 2.1% 1.9% 1.7% 1.6% 2021 JAN FEB MARCH APRIL MAY JUNE JULY AUGUST SEPT OCT NOV DEC
PERCENT
ALLOWED 1.4% 1.2% 1.3% 1.5% 1.8% 2.0% 2.2% 2.3% 2.6% 3.0% 3.4% 3.4% At the end of the rent increase moratorium, a Chapter 5 tenant could receive a rent increase of as much as 5.1% (if two annual rent increases were missed) and as much as
8.5% (if three annual rent increases were missed) (estimating a future maximum increase of 3.4% for the third year).
The City Council discussed that the City’s rent increase moratorium end on May 31, 2022. The City Council discussed allowing the past rent increases in part and proposed a phase in allowance in addition to the current year increases. The following represents the phase in rent increases.
Meeting Date: March 15, 2022
MAXIMUM ALLOWABLE RENT INCREASE
MISSED RENT INCREASE
PERIOD
MAXIMUM
ALLOWABLE RENT
INCREASE
ALLOWED PHASE IN
PERCENTAGE
PHASE IN YEAR
7/1/2019 - 6/30/2020 3.10% 3.10% First Year 2022-2023
7/1/2020 - 6/30/2021 3.00% 1.20% (actual CPI) Second Year 2023- 2024
7/1/2021 - 6/30/2022 3.90% 3.00% Second Year 2023-
2024
7/1/2021-6/30/2022 3.90% .90% (carried over
balance) plus the
determined phase in
amount, if any,
allowed for 7/1/2022-
6/30/2023
Third Year 2024-2025
Staff requests further direction on the maximum annual allowable rent increase for the period from July 1, 2022 through June 30, 2023. For example, if the maximum allowable rent increase for July 1, 2022 through June 30, 2023 is 7% computed in accordance with the BHMC, the City Council may determine that the maximum allowable rent increase for the period from July 1, 2022 through June 30, 2023 should be 3%, with the balance (4%) added to the phase in for the third year (2024-2025). That would mean that the phase in period for the third year (2024-2025) would be .90% plus 4% for a total of 4.9% that would be added to the maximum allowable rent increase for the period of 2024-2025 as calculated by the BHMC.
It is important to note that the Urgency Ordinance provides that nothing in the Ordinance shall alter the date of the annual rent increases in future years. The effect of this statement is that, excluding the phase in rent increases for rent increases missed due to the rent increase moratorium, the annual rent increases will continue to be effective in the anniversary date month, which is the month in which the last increase became effective.
Staff recommends that the phase in rent increases for the first year be effective the date the amended Urgency Ordinance becomes effective, provided the housing provider has served the required thirty (30) day notice. Staff further recommends that the phase in for the subsequent years, year two and three, be implemented one year from the date of the prior phase in date.
Meeting Date: March 15, 2022
One Year Repayment Period
The City Council discussed amending the Urgency Ordinance to line up the one year repayment period for COVID-19 back rent with the end of the eviction moratorium instead of the end of the local emergency. This would mean that the tenants would have one year from the end of the eviction moratorium to pay COVID-19 back rent (May 31, 2023 if the moratorium ends on May 31, 2022). This would cause the Urgency Ordinance to also align with state law which requires that all back rent for the period March 1, 2020 through September 30, 2021 be paid by May 31, 2023. City Council members discussed encouraging tenants and landlords to enter into agreements to pay the back rent prior to the end of the repayment period.
Means Tested Rental Rent Increase Assistance Program
The City Council discussed the anticipated inflationary condition that may result in an exorbitant rent increase calculated for the period from July 1, 2022 through June 30, 2023. City Council discussed establishing a program to assist tenants who meet income eligibility requirements, with priority given to seniors, disabled and families with children in Beverly Hills Unified School District.
A means tested rent increase rental assistance program would assist qualified RSO tenants to offset the anticipated inflationary change in CPI index for the 2022 May to May CPI calculation, used to estimate the annual rent increase percentage, as well as additional inflationary costs.
Many Beverly Hills tenants have applied to the state rental assistance program Housingiskey. The California COVID-19 Rent Relief Program data for Beverly Hills applicants, provided by Housingiskey, referenced in Attachment 2, reflects that over 50% of the 697 applicants have incomes less than or equal to 30% of the Area Median Income (AMI) (extremely low income). The next largest percentage are those households with income levels between 30% and 50% AMI (very low income), at a rate of approximately 30%. The City Council may consider using either the lower income (under 80% AMI) or very low income (under 50% AMI) as a means test to determine eligibility.
The City has approximately $700,000 available from the Rent Subsidy Program to administer the rent increase rental assistance program. Staff requests direction on the total amount of subsidy that should be paid to housing providers on behalf of each household. The City Council may consider allowing a means tested household, with priority given to seniors, disabled, and households with minor children in Beverly Hills Unified School District, an annual maximum subsidy of $3,000 paid out monthly. This would provide a tenant with a monthly $250 subsidy to assist in paying the increased rent resulting from the increased CPI and the phased in rent increases. At the rate of a $3,000 maximum subsidy, the City could assist approximately 200 households. This assumes administration costs of $100,000. If it was determined that the need was greater, staff could return to City Council to request additional funding.
Staff requests direction on whether to contract with a third-party non-profit, like Jewish Family Services, to administer this rent increase subsidy program. Staff estimates the Meeting Date: March 15, 2022
costs associated with the administration of the rent increase subsidy would not exceed $100,000.
The City has an approximate amount of $700,000 remaining from the Rent Subsidy program previously appropriated by the City Council and seeks direction to transfer this appropriation to the Rent Increase Assistance Program.
Staff requests clarification on the following:
• Should the City use the lower income, under 80% AMI, or very low incomeincluding extremely low, under 50% AMI, or some other measure determined by City Council, as a means test to determine eligibility? • Should the maximum allowable annual rent subsidy be $3,000? • Should rent increase subsidy payments be a monthly or an annual payment? • Should the City contract with a third-party non-profit, like Jewish Family Services, to administer this rent increase assistance program?
• Should the phase in rent increases for the first year be effective the date the amended Urgency Ordinance becomes effective?
• Should the phase in for the subsequent years, year two and three, be implemented one year from the date of the prior phase in date? • Should the maximum allowable rent increase for the period from July 1, 2022 through June 30, 2023 be 3%, or some other percentage, with any balance to be phased in during the third year phase in period?
FISCAL IMPACT
The City has an approximate amount of $700,000 remaining from the Rent Subsidy program previously appropriated by the City Council and seeks direction to transfer this appropriation to the Rent Increase Assistance Program. The City Council may consider appropriating additional funds, if there is a greater need.
Jeff S. Muir
Director of Finance
Ryan Gohlich, AICP,
Director of Community Development
Approved By Approved By
Attachment 1
ORDINANCE NO. 20-0- 2818
AN URGENCY ORDINANCE OF THE CITY OF BEVERLY HILLS
ADOPTING EMERGENCY REGULATIONS RELATED TO RESIDENTIAL
AND COMMERCIAL TENANT EVICTIONS, AND OTHER MEASURES,
REPEALING ORDINANCE NO. 20-0-2817, AND DECLARING THE
URGENCY THEREOF
THE CITY COUNCIL OF THE CITY OF BEVERLY HILLS HEREBY ORDAINS AS FOLLOWS:
WHEREAS, international, national, state, and local health and governmental authorities are responding to an outbreak ofrespiratory disease caused by a novel coronavirus named "SARSCoV-2," and the disease it causes has been named "coronavirus disease 2019," abbreviated COVID-19, ("COVID-19"); and
WHEREAS, on March 4, 2020, the Los Angeles County Board of Supervisors and Department ofPublic Health declared a local emergency and local public health emergency to aid the regional healthcare and governmental community in responding to COVID-19; and WHEREAS, on March 4, 2020, the Governor ofthe State ofCalifornia declared a state of emergency to make additional resources available, formalize emergency actions already underway across multiple state agencies and departments, and help the state prepare for the broader spread ofCOVID-19; and
WHEREAS, on March 13, 2020, the President ofthe United States of America declared a national emergency and announced that the federal government would make emergency funding available to assist state and local governments in preventing the spread and addressing the effects ofCOVID-19; and
WHEREAS, on March 15, 2020, the City Manager, in his role as the Director of Emergency Services, proclaimed the existence of a local emergency pursuant to Section 2-4-107 ofthe Beverly Hills Municipal Code to ensure the availability ofmutual aid and an effective City response to the novel coronavirus ("COVID-19") and that state of emergency was ratified by the City Council on March 16, 2020; and
WHEREAS, the Califomia Department of Public Health and the Los Angeles County Department ofPublic Health have all issued orders including, but not limited to, social distancing, staying home ifsick, canceling or postponing large group events, working from home, and other precautions to protect public health and prevent transmission ofthis communicable virus; and -1-
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WHEREAS, as a result ofthe public health emergency and the precautions recommended by health authorities, many tenants in Beverly Hills have experienced or expect soon to experience sudden and unexpected income loss; and
WHEREAS, the Governor ofthe State ofCalifornia has stated that individuals exposed to COVID-19 may be temporarily unable to report to work due to illness caused by COVID-19 or quarantines related to COVID-19, and individuals directly affected by COVID-19 may experience loss of income, health care and medical coverage, and ability to pay for housing and basic needs, thereby placing increased demands on already strained regional and local health and safety resources, including shelters and food banks; and
WHEREAS, further economic impacts are anticipated, leaving tenants vulnerable to eviction; and
WHEREAS, the City of Beverly Hills is redoubling its efforts to maintain hand hygiene, respiratory etiquette, and social distancing. It is absolutely critical that the City does everything possible to slow the pace of community spread and avoid unnecessary strain on our medical system. To aid in these efforts, the City Council is ordering a series oftemporary restrictions be placed on certain establishments throughout the City in which large numbers of people tend to gather and remain in close proximity and is requiring the wearing offace coverings; and WHEREAS, during this local emergency, and in the interest ofprotecting the public health and preventing transmission of COVID-19, it is essential to avoid unnecessary housing displacement, to protect the City's affordable housing stock, and to prevent housed individuals from falling into homelessness; and
WHEREAS, commercial tenants who operate businesses within the City may have to close their businesses in response to emergency orders, which will substantially decrease or eliminate their income, and businesses that are permitted to remain open also are likely to experience a significant loss ofincome while the emergency orders are in effect; and WHEREAS, restaurants were prohibited from offering dine-in service, limiting restaurants to delivery and takeout offerings only, which has placed a sudden and severe financial strain on many restaurants, particularly those that are small businesses that already operate on thin margins, adding to financial pressures in the industry that predate the COVID-19 crisis; and WHEREAS, it is in the public interest to take action to maximize restaurant revenue from the takeout and delivery orders that to assist restaurants in surviving this crisis and remain as sources of employment and neighborhood vitality in the City; and WHEREAS, many consumers use third-party applications and websites to place orders with restaurants for delivery and takeout, and such third-party platforms charge restaurants fees ranging from 30% to 40% ofthe purchase price per order; and WHEREAS, restaurants, and particularly restaurants that are small businesses with few locations, have limited bargaining power to negotiate lower fees with third-party platforms, given -2-
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the high market saturation of third-party platforms, and the dire financial straits small business restaurants are facing in this COVID-19 emergency; and
WHEREAS, temporarily capping the per-order fees will accomplish the legitimate public purpose of easing the financial burden on struggling restaurants during this emergency while not unduly burdening third-party platforms that have seen an increase in demand; and WHEREAS, in the interest ofpublic peace, health and safety, as affected by the emergency caused by the spread ofCOVID-19, it is necessary for the City Council to exercise its authority to issue these regulations related to the protection ofthe public peace, health or safety.
Section 1. The City Council ofthe City ofBeverly Hills does adopt the recitals and the following emergency regulations which shall take effect immediately:
1. A temporary moratorium on eviction for non-pa3anent of rent by residential tenants substantially impacted by the COVID-19 crisis is imposed as follows:
a. During the period of local emergency declared in response to COVID19, no landlord shall endeavor to evict a tenant in either of the following situations: (1) for nonpayment ofrent ifthe tenant demonstrates that the tenant is unable to pay rent due to substantial financial impacts related to COVID-19, or (2) for a no-fault eviction, unless necessary for the health and safety oftenants, neighbors, or the landlord, other than based on illness ofthe tenant or any other occupant of the residential rental unit. A landlord who receives notice that a tenant cannot pay some or all of the rent temporarily for the reasons set forth above shall not serve a notice pursuant to Code ofCivil Procedure section 1161(2), file or prosecute an unlawful detainer action based on a 3-day pay or quit notice, or otherwise seek to evict for nonpayment of rent. A landlord receives notice of a tenant's inability to pay rent within the meaning ofthis Ordinance if the tenant, within seven (7) days after the date that rent is due, notifies the landlord in writing, of lost income or extraordinary expenses related to COVID-19 and inability to pay fiill rent due to substantial financial impacts related to COVID-19, and within thirty (30) days after the date the rent is due, provides written documentation to the landlord to support the claim, using the form provided by the City. A copy of both the seven-day notice and the documentation to support the claim shall also be provided by email (or if email is not feasible by mail along with notification by telephone) to the City's Rent Stabilization office. For purposes of this Ordinance, "in writing" includes email or text communications to a landlord or the landlord's representative ifthat is the method of written communication that has been used previously, or correspondence by regular mail, ifthat is the method ofwritten communication that has been used previously and the parties have not agreed to use email or text messaging. Any medical or financial information provided to the landlord shall be held in confidence, and shall be used only for evaluating the tenant's claim. b. Nothing in this Ordinance shall relieve the tenant of liability for the unpaid rent, which the landlord may seek after expiration ofthe local emergency, and which the tenant must pay in ftill within one year of the expiration of the local emergency. One year after the end ofthe emergency, unless ifthe rent is paid in ftill, a landlord may charge or collect a late fee for rent that is delayed for the reasons stated in this Ordinance; or a landlord may seek rent that -3-
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is delayed for the reasons stated in this Ordinance through the eviction or other appropriate legal process. No fee for the late payment of rent shall be charged by a landlord during the period of the emergency or one year after the end ofthe emergency. If a landlord makes an accommodation with respect to rent forbearance from a tenant pursuant to subsection l.a, and the tenant is in conformance with the tenant's obligations under that subsection, then the landlord shall not make a negative report to a credit bureau so long as the tenant remains in compliance with those obligations.
c. For purposes ofthis Section 1, "financial impacts related to COVID-19" include, but are not limited to, lost household income or extraordinary expenses as a result of any ofthe following: (1) being sick with COVID-19, or caring for a household or family member who is sick with COVID-19; (2) lay-off, loss of hours, or other substantial income reduction resulting from business closure or other economic or employer impacts ofCOVID-19 including for tenants who are salaried employees or self-employed; (3) compliance with a recorrmiendation from a government health authority to stay home, self-quarantine, or avoid congregating with others during the state of emergency; (4) extraordinary out-of-pocket medical expenses related to COVID-19; or (5) child care needs arising from school closures related to COVID-19. d. For purposes ofthis Ordinance, "no-fault eviction" refers to any eviction for which the notice to terminate tenancy is not based on alleged fault by the tenant, including but not limited to, eviction notices served pursuant to Code of Civil Procedure sections 1161(1), 1161(5), or 1161b, use by landlord or relatives as specified in Beverly Hills Municipal Code Chapters 5 and 6, demolition or condominium conversion, major remodeling, and the Ellis Act, which is called withdrawal of residential rental structure from the rental market in the Beverly Hills Municipal Code.
e. During this emergency, any notice served by a landlord on a tenant under Section 4-5-513 or Section 4-6-6 L ofthe Beverly Hills Municipal Code is hereby tolled. f. This Ordinance applies to nonpayment eviction notices, no-fault eviction notices, and unlawful detainer actions based on such notices, served or filed on or after the date on which a local emergency was proclaimed on March 15, 2020. g. For purposes ofthis Section 1, "substantial" shall be defined as a material decrease ofmonthly income, the incurring ofextraordinary expenses related to COVID-19, or any other circumstance which causes an unusual and significant financial impact on the tenant. h. Because some tenants may not be aware ofthis Ordinance's provisions, the Deputy Director ofthe Rent Stabilization may extend the seven (7) day deadline for notifying the landlord for up to thirty (30) days.
2. If a landlord disagrees with the residential tenant's assertion regarding: (1) whether a substantial financial impact exists; (2) whether the substantial financial impact is related to COVID-19; or (3) the amount ofrent that the tenant will pay, then the landlord shall notify the tenant ofthe disagreement in writing within ten (10) days ofreceipt ofthe written documentation -4-
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from the tenant. The residential tenant may file a written appeal to the City, on a form provided by the City, within ten (10) days ofreceipt ofthe landlord's writtendeterminationand shall provide a copy of the appeal to the landlord. Appealswill be heard by the StandingCommittee ofthe City Council appointed to hear disruptive tenant hearings or other Members of the City Council as designated by the Mayor, to make a final determinationofthe dispute, until fifteen (15) days after the Rent Stabilization Commission is appointed and sworn into office, in which case the Rent Stabilization Commission shall make a final determination ofthe dispute. Ifthe Rent Stabilization Commission cannot render a decision by a majority vote, then the Standing Committee or other Members ofthe City Council, as designated by the Mayor, will make a final determination ofthe dispute. Final Decisions ofthe Subcommittee, Council Members designated by the Mayor, or the Rent Stabilization Commission are subject to judicial review filed pursuant to Section 1094.6 of the California Code of Civil Procedure. The hearing procedures shall be established by the City Attorney.
Section 2. The following regulations shall apply to commercial tenancies:
1. The following definitions shall apply to this Section 2:
"Affiliate" shall mean the commercial tenant and any other entity that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the commercial tenant.
"Amnesty Date" shall mean August 1,2020 for Large Commercial Tenants, and September 1, 2020 for all other commercial tenants. "Large Commercial Tenants" shall mean a business that, together with its Affiliates, (1) employs more than 100 employees, or (2) has average annual gross receipts ofmore than $15 million over the previous three years, or (3) has business operations, other than sales conducted solely through online channels, in three or more countries, including the United States; or (4) a business whose payment of rent is guaranteed by a business falling within the scope of subsections (1) or (2) or (3) ofthis subsection.
"Rent Recommencement Date" shall mean August 1, 2020 for Large Commercial Tenants and October 1, 2020 for all other commercial tenants. "Repayment Date" shall mean the date by which all forborne rent shall be due.
2. Landlords and their commercial tenants shall work together during this time of emergencycaused by the spreadofCOVID-19 to make a good faith attempt to developa payment strategy for rent that accounts for the substantial financial impacts relatedto COVID-19 that may be faced by some tenants. Any payment strategynegotiatedbetween a landlord and a commercial tenant shalltake precedenceover the provisionsofthis Ordinance. Absent such a payment strategy, commercial tenants shallbe requiredto paytheir rent underthe following provisionsofthis Section
2. -5-
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The following paragraphs (a) through (d) ofthis Section 2, subsection 2 shall not apply to Large Commercial Tenants.
a. In order to assure that the landlords and commercial tenants will meet to attempt to develop a payment strategy for rent that accounts for the substantial financial impacts related to COVID-19, the landlord shall send a notice to any commercial tenant who has not agreed to a payment strategy with the landlord or who is not otherwise paying full rent, substantiallyin the form provided by the City, and by certifiedmail with return receipt, overnightcourier service, or by any other delivery method that provides written evidence of receipt, which informs the commercial tenant of the requirement to meet and requesting that the tenant contact the landlord within ten (10) days to arrange a meeting and meet with the landlord within forty five (45) days to discuss a payment strategy that accounts for the substantial financial impacts related to COVID19. A copy of this notice shall be provided to the City. This notice must be mailed by July 10, 2020.
b. Ifthe landlord fails to send the notice or otherwise fails to meet with the commercial tenant, then the Repayment Date shall be September 1,2021. c. If the commercial tenant fails to contact the landlord in response to the notice or otherwise fails to meet with the landlord, then the Repayment Date shall be December 1, 2020.
d. If either party has attempted to schedule a meeting, but the other party appears to be unwilling to meet, eitherpartymay callthe RentStabilization Office of the Cityof Beverly Hills and a City staff member will schedule such meeting or will determine that one or both parties are unwilling to meet. If the Rent Stabilization Office determines that eitheror both parties are unwilling to meet than the parties shall follow the provisions set forth below in this Section 2. The Rent Stabilization Office's determination that either or both parties are unable to meetshall create a rebuttable presumption in any unlawful detainer action or other actionwhich seeks to recover rent.
3. A temporary moratorium on eviction for non-payment of rent by commercial tenants andLarge Commercial Tenants substantially impacted bytheCOVID-19 crisis isimposed as follows:
a. During the period of local emergency declared in response to COVID19, and up until the date described in subsection d below, no landlord shall endeavor to evict a commercial tenant or Large Commercial Tenant in either of the following situations: (1) for nonpayment ofsome or allof therentifsuch commercial tenant demonstrates thatthecommercial tenant is unable to pay rent due to substantial financial impacts related to COVID-19; or (2) for a no-fault eviction unless necessary for the health and safety of tenants, neighbors, or the landlord, other than based on illness of the tenant, the tenant's family or any of tenant's employees. A landlord who receives notice that a commercial tenant cannot pay some or all of the rent temporarily for the reasons setforth above shall not serve a notice or otherwise seek to evict a tenant for nonpayment ofrent.
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b. A landlord receives notice of a commercial tenant's inability to pay rent within the meaning of this Ordinance ifthe commercialtenant, within seven (7) days after the date that rent is due, notifies the landlord in writing oflost income or extraordinary expenses related to COVID-19 and inability to pay full rent due to substantial financial impacts related to COVID-19, and within thirty (30) days after the date the rent is due, provides written documentation to the landlord to support the claim. Any medical or financial information provided to the landlord shall be held in confidence, and only used for evaluating the commercial tenant's claim. For purposes of this Ordinance, "in writing" includes email or text communications to a landlord or the landlord's representative if that is the method of written communication that has been used previously, or correspondenceby regular mail, ifthat is the method ofwritten communicationthat has been used previously and the parties have not agreed to use email or text messaging. c. Nothing in this Ordinance shall relieve any commercial tenant or Large Commercial Tenant ofliability for the unpaid rent,
d. Forbearance ofrent shall end on the Rent Recommencement Date. e. A Large Commercial Tenant must pay forborne rent on September 1, 2020 and all other commercial tenants must pay forborne rent on March 1,2021 ifsuch commercial tenant and the landlord have met pursuant to this Section 2 but have not come to an agreement regarding a payment strategy.
f. For Large Commercial Tenants, with regard to forborne rent a landlord may charge eitherthe late fee or the interest that is provided in the leasebetween the landlord and the tenant from the time that the first rental payment was missed until the forborne rent is paid. No other late fee, interest or other penalty shall be charged by the landlord during the emergency or before the Repayment Date. After the Repayment Date, and if the forborne rent has not been repaid, a landlord may charge the full amount of the late fee, interest and other penalty that is provided inthe leasebeginning on theRepayment Date. However, the fullamount of the latefees, interest and other penalty shall only run from the Repayment Date.
For all other commercial tenants, with regard to the forborne rent, a landlord may charge one half the amount of eitherthe late fee or the interest that is provided in the lease between the landlord and the tenant capped at five percent (5%) from the time that the first rental payment was missed until the forborne rent is paid. No other late fee, interest or other penalty shall be charged by the landlord during the emergency or before the Repayment Date. After the Repayment Date, and if the forborne rent has not been repaid, a landlord may charge the full amount of the late fee, interest and other penalty that is provided in the lease beginning on the Repayment Date. However, the full amount of the late fees, interest and otherpenalty shall only run fi'om the Repayment Date.
g. Foranycommercial tenant who is covered bythisOrdinance andwishes to avoidthe payment of late fees or interest on the tenant's forborne rent,the tenantmaypay some or all oftheir forborne rent, with no late fees, interest or other penalties, no later than the Amnesty -7-
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Date. Ifthe tenant pays all forborne rent by that Amnesty Date, the landlord shall not charge any late fees, interest, or other penalty.
h. For purposes ofthis Section 2, "financial impacts related to COVID-19" include, but are not limited to, a tenant who lost substantial business income or has extraordinary expenses as a resuh of any of the following: (1) being sick with COVID-19, or caring for a household or family member who is sick with COVID-19; (2) income reduction resulting from business closure or other economic or employer impacts of COVID-19; (3) compliance with a recommendation from a government health authority to stay home, self-quarantine, or avoid congregating with others during the state of emergency; (4) extraordinary out-of-pocket medical expenses related to COVID-19; or (5) child care needs arising from school closures related to COVID-19.
i. For purposes ofthis Section 2, "substantial" shall be defined as a material decrease ofmonthly income, the incurring ofextraordinary expenses related to COVID-19, or any other circumstance which causes an unusual and significant financial impact on the tenant. j. This Ordinance shall not apply to any commercial tenant that is a publicly traded entity, an entity that is listed on the Fortune 1000, or any entity that employs more than 500 employees or any commercial tenant that owned by another entity that is publicly traded, listed on the Fortune 1000 or combined with the commercial tenant and other subsidiaries employs more than 500 employees. As used in the preceding sentence, the term "owned" shall mean ownership of a majority ofthe ownership interest ofthe commercial tenant. This exemption shall not apply to a franchisee or similar small business owner who is the responsible tenant on the lease unless such small business owner meets the criteria ofthis exemption. (1) Any commercial tenant covered by the exemption set forth in this subsectionj, and who otherwise complied with this Ordinance, shall have until 10 days, after the tenant has received notice as provided below, to pay all forborne rent that became due since March 16,2020. The landlord shall not charge a late fee or interest in connection with such unpaid rent. If a commercial tenant fails to pay all forborne rent within 10 days after the tenant has received written notice delivered by certified mail with return receipt, overnight courier service, or by any other delivery method and provides written evidence ofreceipt, the landlord may charge a late fee or interest from that date.
(2) A landlord may give notice to any commercial tenant covered by the exemption set forth in this subsection j at any time. k. A dispute as to whether the commercial tenant has demonstrated facts sufficient to result in a temporary payment reduction or other legal remedy shall be determined according to civil law.
Section 3. In addition to the requirements ofthe Governor's Executive Order and the requirements of the Los Angeles County Department of Health order, the following regulations -8-
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related to businesses, located in the City of Beverly Hills are adopted in order to implement recommended practices as a result ofthe COVID-19 pandemic:
a. Business located in the City with self-service unwrapped food items such as buffets are prohibited.
b. Enforcement ofCity codes and regulations may be relaxed as City staff deems appropriate in connection with commercial signs and banners displayed on or adjacent to restaurants, bars or other businesses that are permitted to remain open pursuant to this Ordinance. c. The City shall provide for additional loading zones near businesses that are authorized to be open in order to facilitate curbside pickup. d. The City shall waive fees associated with a Special Event Permit for temporary outdoor dining and shall waive the minimum ten (10) day period for filing an application for a Special Event Permit for temporary outdoor dining. e. The City Manager is authorized to issue street closure permits and any other permits necessary to allow for temporary outdoor dining. f. To the extent that Beverly Hills Municipal Code Sections 5-10-2 through 5-10-7 prohibit retail establishments from providing without charge reusable bags or recycled paperbagsto customers at the pointofsale, Beverly HillsMunicipal Code Sections 5-10-2 through 5-10-7 are hereby suspended.
Section4. During the period of local emergency declared by the Director of Emergency Services on March 15,2020 and affirmed by the CityCouncil on March 16,2020, in response to the COVID-19 pandemic, a temporary moratorium is hereby imposed on the annual rent increases authorized by Sections 4-5-303(c) and 4-6-3 of the BeverlyHills Municipal Code.
This moratoriumon rent increases shall be applied to any rent increase scheduled to take effect on or after March 15, 2020. Nothingin this Ordinance shallalter the date of annualrent increases in future years.
Section 5. During the period of local emergency declared by the City Council on March 16, 2020, in response to the COVID-19 pandemic, there shall be no increase in Internet access fees or reduction in service.
Section 6. For those establishments offering food pickup options, and other essential businesses, proprietors are directed to establish social distancing practices for thosepatrons in the queue for pickup and otherreasons, as well those allowed in the premises or otherwise working.
Such restaurants and essential businesses shall establish health and safety measures for their employees and customers, including but not limitedto appropriate glovesand masks.
Section 7. Face Coverings. All persons shall wear face coverings that cover their mouth and nose openings such asscarves (dense fabric, without holes), bandannas, neck gaiters, or other fabric face coverings, when they leave their homes or places of residence for essential activities, such astaking a walk through their neighborhood, if that person has potential to come -9-
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within six feet of another person not a member of their household. All persons, including nonmedical essential workers are discouraged from using Personal Protective Equipment (PPE), such as N95 masks, for non-medical reasons.
Exceptions: These following exceptions will apply to this Section 6:
(1) Children under the age of 2 are not required to wear face coverings. (2) Persons who must remove the face covering in order to receive medical services. (3) Persons who are directed to remove the face covering by a law enforcement officer.
For the purposes ofthis Ordinance, the terms "essential business," "essential workers," and "essential activity" shall have the same meanings as they do under State law.
Section 8. Business Tax. No penalties or interest shall accrue on outstanding business tax during the period that the City ofBeverly Hills has declared an emergency related to the COVID-19 pandemic. The Director of Finance is authorized in his sole discretion to waive any penalties and/or interest on business tax imposed prior to the March 15, 2020 declaration of emergency, upon a request by a business owner and a demonstration by the business ovmer of economic hardship due to COVID-19.
Section 9. Hoarding. The City Council urges residents not to hoard essential goods such as hand sanitizer, cleaning supplies, toilet paper, canned food, frozen food and other needed supplies. The CityCouncil strongly condemns hoarding. Retail establishments located in the City shall be responsible for limiting the sales of such items, as they see fit to provide greater accessibility to a larger group of customers.
Section 10. Third Partv Food Delivery Service Commission.
1. Definitions. For purposes ofthis Section, the following definitions apply:
"Delivery Fee" meansa fee chargedby a Third-partyFood DeliveryService for providing a Retail Food Establishment with a service that delivers food and beverages from such establishment to customers. The term does not include any other fee or cost that may be charged by a Third-Party Food Delivery Service to a Retail Food Establishment, such asfees for listing or advertising the Retail Food Establishment on the Third-party Food Delivery Service platform or fees related to processing the online order including, but not limited to service fees, fees for facilitating Online Orders for pick-up, and credit card processing fees. "Online Order" means an order placed by a customer, including a phone order, for delivery or pick-up from a restaurant located within the City. "Purchase Price" means the menu price ofthe items contained in an Online Order, minus any applicable coupon or promotional discount provided to the customer by the restaurant through the Third-Party Food Delivery Service. Such term therefore excludes taxes. -10-
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gratuities and any other fees or costs that may make up the total amount charged to the customer of an Online Order.
"Retail Food Establishment" means a restaurant, delicatessen bakery, coffee shop, or other eat-in or carry-out service of processed or prepared raw and ready-to-eat food or beverages.
"Third-Party Food Delivery Service" means any website, mobile application or other internet service that offers or arranges for the sale of food and beverages prepared by, and the delivery or pick-up offood and beverages from, no fewer than 20 separately owned and operated food service establishments.
2. Prohibitions. So long as the local emergency is in effect, it shall be unlawful for a Third-party Food Delivery Service to do the following:
a. charge a Retail Food Establishment a Delivery Fee that totals more than fifteen percent (15%) ofthe Purchase Price of each Online Order. b. charge a Retail Food Establishment any amount designated as a Delivery Fee for an Online Order that does not involve the delivery offood or beverages. c. charge a Retail Food Establishment any combination of fees, commissions, or costs for the Retail Food Establishment's use ofthe Third-party Food Delivery Service that is greater than five percent (5%) of the Purchase Price of each Online Order or to charge any amount of fees, commissions, or costs for the Retail Food Establishment's use ofthe Third-Party Food Delivery Service unless the contract between the Retail Food Establishment and the Third-Party Food Delivery Service allows for fees, commissions, and costs other than a Delivery Fee. For the purpose of this subsection c, fees, commissions, or costs do not include the Delivery Fee, which is capped at fifteen percent (15%). d. charge a Retail Food Establishment any fee, commission, or cost other than as permitted in subsections a through c, above.
e. charge a customer any Purchase Price for a food or beverage item that is higher than the price imposed by the Retail Food Establishmenton the Third-PartyFood Delivery Service or, if no price is imposed by the Retail Food Establishment on the Third-Party Food Delivery Service, the price listed on the Retail Food Establishment's own menu.
f retain any portion of amounts designated as a tip or gratuity. Any tip or gratuity shall be paid by the Third-party Food Delivery Service, in its entirety, to the person delivering the food or beverages.
3. Disclosures. The Third-party Food Delivery Service shall disclose to the customer an accurate, clearly identified, and itemized cost breakdown of each transaction, including, but not limited to the following:
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a. the Purchase Price ofthe food and beverages at the cost Ustedon the Retail Food Establishment's menu;
b. the Delivery Fee charged to the Retail Food Establishment; c. each fee, commission, or cost, other than a Delivery Fee, charged to the Retail Food Establishment;
d. each fee, commission, or cost, other than the Delivery Fee or the Purchase Price ofthe food, charged to the customer by the Third-party Food Delivery Service; e. any tip or gratuity that will be paid to the person delivering the food or beverages.
4. A Third-Party Food Delivery Service shall not be found in violation of this Section if between June 17, 2020 and June 24, 2020, it imposes a Delivery Fee per Online Order that totals more than fifteen percent (15%), and other fees, commissions, and costs that total more than five percent (5%), ofthe Purchase Price ofsuch Online Order, provided that the Third-Party Food DeliveryServicerefundsthe portionof the fee that exceedsthose amountsto the Retail Food Establishment prior to July 3, 2020.
5. If a Third-Party Food Delivery Servicecharges a Retail Food Establishmentfees that violate this Section, the Retail Food Establishment shall provide written notice to the ThirdParty Food Delivery Service requesting a refund within seven days. If the Third-Party Food Delivery Service does not provide the refund requested after seven days or the Third-PartyFood Delivery Service continues to charge fees in violation of this Section after the initial notice and seven-day cure period, a Retail FoodEstablishment may enforce this Section by means of a civil action seeking damages and injunctive relief. The prevailing party in any such action shall be entitled to an award ofreasonable attorney fees.
Section 11. Violations. Violations ofthis Ordinance shall be punishable as set forth in Section2-4-111 and Chapter3 of Title 1 of the Beverly HillsMunicipal Codeexceptviolations of Section 7, which shall be solely subject to the administrative citation process set forth in Chapter 3 of Title 1 of the Beverly HillsMunicipal Code. Violations of anypublichealthorderduly issued by the Los Angeles County Public Health Officer may be cited andprosecuted as an infraction or may besubject to theadministrative citation process setforth inChapter 3 ofTitle 1oftheBeverly Hills Municipal Code. In addition, this Ordinance provides a defense to a tenant, in the eventthat an unlawful detainer action is commenced in violation ofthis Ordinance.
Section 12. Remain in Effect. This Ordinance shall remain in effect for the duration of the local emergency.
Section 13. Ordinance No. 20-0-2817 is hereby repealed and replaced by this Ordinance.
Section 14. Uncodified. This Ordinance shall not be codified. -12-
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Section 15, Severabilitv. If any provision ofthis Ordinance is held invalid by a court of competent jurisdiction, such provision shall be considered a separate, distinct and independent provision and such holding shall not affect the validity and enforceability ofthe other provisions ofthis Ordinance.
Section 16.. Publication. The City Clerk shall cause this Ordinance to be published at least once in a newspaper of general circulation published and circulated in the city within fifteen (15) days after its passage in accordance with Section 36933 ofthe Government Code, shall certify to the adoption ofthis Ordinance and shall cause this Ordinance and the City Clerk's certification, together with proof of publication, to be entered in the Book of Ordinances ofthe Council ofthis City.
Section 17. Effective Date. This Ordinance is adopted as an urgency ordinance for the immediate preservation ofthe public peace, health and safety within the meaning of Government Code Section 36937(b), and therefore shall be passed immediately upon its introduction and shall become effective at 12:01 a.m., September 2, 2020 upon its adoption by a minimum 4/5 vote of the City Council.
Section 18. Duration. This Ordinance shall remain in effect until it is superseded by another Ordinance adopted by the City Council.
Section 19. Certification. The City Clerk shall certify to the adoption ofthis Ordinance.
Adopted: September 1, 2020
Effective: September 2, 2020
ATTEST:
lUkXiA
HUMA AHMED
City Clerk
APPROVED AS TO FORM:
LAURENCE S. WIENER
City Attorney
B0785-1672\2451529v4.doc
(SEAL)
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LESTER J. FRIEDMAN
Mayor ofthe City ofBeverly Hills,
California
APPROVED AS TO CONTENT:
GEOROrcmVEZ
City Manager
Attachment 2