Item F-1 Agenda Report — Beverly Hills City Council, December 13, 2022

AGENDA REPORT
Meeting Date: December 13, 2022
Item Number:

To: Honorable Mayor & City Council
From: Helen Morales, DPA, Deputy Director of Rent Stabilization Subject: CONSIDERATION OF A RECOMMENDATION BY THE RENT

STABILIZATION COMMISSION TO PROHIBIT LANDLORDS FROM

BRINGING AN ACTION TO RECOVER POSSESSION OF AN

APARTMENT UNIT FOR THE PURPOSE OF MAJOR REMODELING
Attachments: 1. Rent Stabilization Commission Staff Report dated August 5, 2020

2. Resolution No. RSC 3, adopted on September 2, 2020

3. BHMC 4-5-512

4. BHMC 4-6-6 (K)

5. Rent Stabilization Division 2022 Fiscal Year Report

RECOMMENDATION
Staff recommends the City Council receive a resolution adopted by the Rent Stabilization Commission and advise staff on whether the Rent Stabilization Ordinance should be amended to remove Sections 4-5-512 and 4-6-6(K), eliminating the provisions that allow landlords to bring an action to recover possession of an apartment unit for the purpose of major remodeling.

INTRODUCTION

PROCEDURAL HISTORY
On October 18, 2018, the City Council adopted an Urgency Ordinance that removed the No-Cause eviction provisions in Title 4, Chapter 6 of the Beverly Hills Municipal Code.

As part of those revisions, permissible evictions for major remodeling, already present in Chapter 5, were adopted for Chapter 6. Due to the significantly greater number of units covered by Chapter 6 in comparison to Chapter 5 (tenant-occupied Chapter 6 units are 6,480 of roughly 7,784 total units, representing approximately 83% of all units), this F-1
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represented a significant expansion in units with tenants eligible for eviction on the basis of a major remodel.

On December 18, 2018, the Rent Stabilization Division recommended that the City Council update the figures used as the minimum expenditure-per-unit threshold, which is used to qualify work as a major remodel for eviction purposes, in order to reflect inflation, or, alternatively, remove major remodeling provisions from the Rent Stabilization Ordinance. The first recommendation was presented because the minimum amounts required to be expended on a major remodel in order to qualify for an eviction under the Code had not been updated since 2004. The latter recommendation was presented because the City of Beverly Hills is the only city with a Rent Stabilization Ordinance that allows an owner to evict a tenant for major remodeling.

On August 5, 2020, the Rent Stabilization Commission held a duly noticed meeting to consider potential modifications to Chapters 5 and 6 of Title 4 of the Code related to evictions for the purpose of major remodeling. A copy of the Staff Report is provided as Attachment 1.

Following discussion at the meeting on August 5, 2020, the Commission, by majority (4- 2) vote, recommended that the major remodeling provisions be eliminated from Chapters 5 and 6 of Title 4 of the Code in their entirety and directed the City Attorney’s Office to draft a resolution setting forth the Commission’s recommendation. Resolution No. RSC 3, adopted on September 2, 2020, and provided as Attachment 1 in this Agenda Report, presents the Commission’s recommendation to the City Council.

DISCUSSION
BHMC Sections 4-5-512 and 4-6-6 (K) allow a landlord to bring an action to recover possession of an apartment unit if the landlord seeks in good faith to recover possession for the purpose of major remodeling so long as the landlord meets certain requirements.

These requirements include, but are not limited to, proper noticing, payment of relocation fees, giving tenants the option to relocate to a similar unit in the building, caps on new rent (which may be increased over the previous base rent on account of the major remodeling as determined by a hearing officer), and spending a minimum amount per remodeled unit. Evictions for major remodeling are not common.

Given that the minimum spending requirements stipulated below in order to qualify for an eviction related to a major remodel have not been updated since 2004, they do not currently capture an accurate average cost for major remodeling projects. These minimum costs, which can additionally be found in Attachments 3 and 4, are as follows:

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Unit Size Minimum Major Remodeling Costs
Bachelor/Single $ 7,000
1 Bedroom $ 10,000
2 Bedroom $ 15,000
3 or More Bedrooms or 2 Bedrooms and a
Den
$20,000
The intent of the Major Remodeling provision is to strike a balance between incentivizing owners to maintain their rental properties while continuing to stabilize rents. Throughout outreach sessions and during City Council meeting public comments, owners have asserted that caps on allowable rent increases following a major remodeling have disincentivized them from making building improvements. Tenant advocates, on the other hand, have countered that owners were not making renovations even with no caps on rent.

The Commission, in making their recommendation to rescind the Major Remodeling provisions in BHMC Sections 4-5-512 and 4-6-6 (K), considered several factors prior to rendering their vote.

First, there are no evictions for major remodeling on record with the City since 2017, when the City began tracking this category of eviction (see the 2022 Fiscal Year Report, Attachment 5). The scarce number of evictions for major remodels may challenge the argument of proponents of the program that the provisions incentivize renovation and maintenance of buildings.

Additionally, the City of Beverly Hills is the only city with a Rent Stabilization Ordinance that allows a landlord to evict a tenant for the purpose of a major remodel. The City Council may wish to consider these factors when assessing whether to adopt the recommendations of the Commission to remove the provisions in the Rent Stabilization Ordinance which allow evictions for major remodeling.

FISCAL IMPACT
Staff does not anticipate any fiscal impact pursuant to the City Council’s decision on this matter.

Ryan Gohlich, AICP,
Director of Community Development
Approved By
Attachment 1

CITY OF BEVERLY HILLS

RENT STABILIZATION COMMISSION
August 5, 2020
TO: Rent Stabilization Commission
FROM: Helen Morales, Deputy Director, Rent Stabilization SUBJECT: Possible Amendments to the Rent Stabilization Ordinance (RSO) re:

1. Modifications to the Major Remodeling Amounts
ATTACHMENTS: A. Beverly Hills Municipal Code Section 4-5-512 B. Beverly Hills Municipal Code Section 4-6-6 K
Staff seeks recommendations from the Rent Stabilization Commission (Commission) to the City Council regarding amendments to Title 4, Chapters 5 and 6 of the Beverly Hills Municipal Code (BHMC) related to Major Remodeling Amounts.

Background
The City Council established the Commission pursuant to Ordinance 19-O-2776, which became effective on May 3, 2019 and is codified at BHMC Section 2-2-501. Pursuant to BHMC Section 2- 2-502, one of the duties of the Commission shall be to make recommendations to the City Council concerning amendments to Title 4, Chapter 5 and 6 of the BHMC that have not been resolved by the City Council. The matter before you today, regarding proposed modifications to major remodeling amounts, is one of the matters not resolved by the City Council.

Major Remodeling
BHMC Section 4-5-512, Major Remodeling, allows a landlord to bring an action to recover possession of an apartment unit if the landlord seeks in good faith to recover possession for the purpose of major remodeling as long as owners meet certain requirements (Attachment A).

These requirements include, but are not limited to, proper noticing, payment of relocation fees, giving tenants the option to relocate to a similar unit in the building, caps on new rent (which may be increased over the previous base rent on account of the major remodeling), and spending a minimum amount per remodeled unit as set forth in BHMC Section 4-5-512. Evictions for major remodeling are not common.

On October 18, 2018, the City Council adopted an Urgency Ordinance that removed the NoCause evictions provisions in Title 4, Chapter 6 of the Beverly Hills Municipal Code. As part of the revision, the permissible reasons to evict tenants from units that are set forth in Chapter 5 were added to Chapter 6, including the ability to evict tenants from units where major remodeling was to occur (Attachment B). This was a significant extension. According to the registry, only 241 of roughly 7,700 units currently fall under Chapter 5, while the remaining units are subject to Chapter

6. The major remodeling minimums have not been updated since 2004. In December 2018, staff recommended that the Council increase those amounts to reflect inflation for both Chapter 5 and Chapter 6 because these amounts no longer reflect the actual costs of the remodeling. Staff additionally recommended that the City Council consider making this adjustment annually based RSO: August 5, 2020
Possible Amendments to the RSO

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upon the percentage increase in the Consumer Price Index (CPI) to ensure that the major remodeling costs set forth in the RSO remain in line with regional cost increases for all goods and services.

Below are the remodeling minimums per remodeled unit established in 2004.

Unit Size Major Remodeling Costs
Bachelor/Single $ 7,000
I bedroom 10,000
2 bedroom 15,000
3 or more bedrooms or 2 bedrooms and a den 20,000
Below is the revision according to CPI that staff recommended in December 2018:

Unit Size Major Remodeling Costs
Bachelor/Single $ 10,000
I bedroom 14,000
2 bedroom 21,000
3 or more bedrooms or 2 bedrooms and a den 28,000
Below is the revision according to the CPI that staff recommends as of July 2020:

Unit Size Major Remodeling Costs
Bachelor/Single $ 10,000
I bedroom $ 15,000
2 bedroom $ 22,000
3 or more bedrooms or 2 bedrooms and a den $ 30,000
The City Council has not enacted the inflation-based increases. During a December 18, 2018 meeting, the City Council asked staff what the figures were based on and whether staff could use the City’s own data to determine what appropriate baselines might be. Staff responded that while the City had records of the permit fees, they did not have records of the actual project costs.

In its report to City Council, staff offered, as an additional option, to remove major remodeling provisions that allow the owner to evict a tenant from their unit for major remodeling from both Chapter 5 and Chapter 6 of the RSO. The City of Beverly Hills is the only City with a rent stabilization ordinance that allows an owner to evict a tenant for major remodeling. The City Council referred all the issues regarding major remodeling to the Commission.

Discussion
The intention of the Major Remodeling provision is to strike a balance between incentivizing owners to maintain rental properties while continuing to stabilize rents. Habitability and the condition of older Beverly Hills properties has been a fundamental concern for owners, tenants, and the City Council. Throughout outreach sessions and during City Council meeting public comments, owners have claimed that the caps on allowable rent increases following major remodeling disincentivize owners from making building improvements. Tenant advocates have countered that owners were not making renovations even when there were no caps on rent. The major remodeling provision provides an avenue for owners to make improvements to their property and recoup some of the cost. The dollar minimums for amounts required to be spent per RSO: August 5, 2020
Possible Amendments to the RSO

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remodeled unit function as eviction protections because they prevent owners from making minor renovations for the purpose of evicting tenants who pay below market rents.

The current major remodeling costs have not been updated since 2004 and do not represent current remodeling costs. Moreover, since the figures have not been updated, the current figures may work as an incentive for owners to evict tenants as the costs for eviction and remodeling could be quickly recovered by increased rents once a tenant is evicted.

Therefore, to establish a balance between incentivizing owners to maintain rental properties while continuing to stabilize rents, staff recommends that the Commission increase the major remodeling amounts by the CPI index through 2020. The CPI Index measure the average change over time in the prices paid by urban consumers for goods and services over a geographic region.

Staff increased the 2004 major remodeling amounts by CPI index for the Los Angeles Metropolitan Region through December 2018 and July 2020. The major remodeling amounts listed in the 2018 and 2020 schedules include those increases to the nearest thousand.

There are several points the Commission may consider in the context of this discussion:
• Whether the current remodeling minimums are appropriate; should they be increased to reflect current actual costs; and if so by how much; should they be increased annually by the CPI index?
• Should there be other forms or standards for determining the minimum major remodeling amounts?
• Should the Council consider eliminating the major remodeling provision from both Chapter 5 and Chapter 6 that allows an owner to evict a tenant from a unit to conduct major remodeling?
• Should the Council consider adding or removing any or all the major remodeling requirements?
Next Steps
Staff encourages the Commission to discuss what if any revisions should be recommended to the City Council to be made to the major remodeling no fault eviction provision for both Chapter 5 and Chapter 6 of the RSO.

ATTACHMENT A
Beverly Hills Municipal Code Section 4-5-512
4-5-512: MAJOR REMODELING:

A. A landlord may bring an action to recover possession of an apartment unit if the landlord seeks in good faith to recover possession so as to do alteration work on the building for the purposes of major remodeling provided that there is compliance with all of the following conditions:

1. The landlord has given the tenant not less than one year's written notice that such tenancy shall terminate. The notice shall state the specific reason for giving such notice and shall be deemed to include a representation and agreement by the landlord that the recovery of possession of the apartment unit is solely for a reason within the scope of this section and for no other reason. Such notice shall contain a statement of the rights of the tenants pursuant to this section and article 6 of this chapter and shall be approved by the city. Such notice shall not be required if:
a. Major remodeling of the building has been mandated by law to be performed at an earlier date; or b. Such notice has been given to a tenant who has vacated the apartment unit, the apartment unit has been rerented to a new tenant, and the new tenant has been advised by the landlord in writing that the notice of termination of tenancy had been given to the prior tenant. This exemption shall apply only if a copy of the written notice provided to such new tenant is filed with the city clerk within one week after such new tenant begins the occupancy of the apartment unit.

The hearing officer designated by the city manager ("hearing officer") shall establish the estimated new rent for the remodeled unit which shall not exceed one hundred fifty percent (150%) of the previous base rent. The notice required by subsection A1 of this section shall include such estimated new rent.

3. No notice of tenancy termination given pursuant to this section after February 11, 1986, shall be effective unless all the applicable provisions of this chapter have been complied with and a copy of such notice has been placed on file with the city clerk prior to such notice being served on the tenant. A minimum fee of one hundred dollars ($100.00) for each building for which notices of tenancy termination are to be filed with the city clerk shall be paid to the city for processing the notices prior to the filing of a notice with the city clerk. Where there are more than ten (10) apartment units in a building which are subject to this provision of this chapter, and for which notices of tenancy termination have been given, an additional minimum fee of ten dollars ($10.00) shall be paid to the city for each unit in excess of ten (10) units for which a notice of tenancy termination is given.

4. A relocation fee shall have been paid or deposited into escrow in accordance with the provisions of article 6 of this chapter. If an apartment unit vacated pursuant to this section has been rerented the new tenant shall not be entitled to any relocation fee or other relocation benefit if he or she received the notices required by subsections A1a, A1b and A2 of this section.

B. Any apartment unit vacated pursuant to this section if rerented after eviction but prior to remodeling, shall remain subject to the provisions of this chapter, and it shall be the responsibility of the landlord to notify any new tenant in writing of the controlled rents and the duration of the notice of termination. A copy of such notice shall be filed with the city clerk within one week after the new tenant begins occupancy of the apartment unit.

C. Any provision of this chapter notwithstanding, in lieu of receiving a relocation fee or being relocated to a comparable unit, a tenant, within sixty (60) days after the service of the one year notice of tenancy termination required by subsection A of this section, may elect to relocate to a comparable unit in the building to be remodeled. The comparability of the replacement unit shall be determined by the city. For the purposes of this subsection, "comparability" shall mean a unit with the same number of bedrooms as the unit vacated, and which is in a clean, functional, and secure state.

D. Should a tenant elect to be relocated to a comparable unit in the building to be remodeled, he or she shall serve written notice of such election on the landlord and file a copy thereof with the city clerk. Such notice shall be served and filed within sixty (60) days after service of the one year notice of tenancy termination required by subsection A of this section. Upon the service and filing of the required notice of election within the time set forth herein, the notice of tenancy termination shall become null and void as to that tenant for the purposes of eviction. Upon the receipt of multiple notices required hereby, the landlord shall make an application to the hearing officer for a determination of the order of relocation. The hearing officer shall determine the order of relocation, taking into consideration the relative hardships relocation will place on the tenants electing to relocate hereunder.

E. Upon the approval of the order of relocation as provided for in subsection D of this section, or if only one notice of election is received by the landlord, the landlord shall serve upon the tenant(s) and shall file a copy thereof with the city clerk notice of availability of the replacement unit. The tenant shall have thirty (30) days after the service and filing of the notice of availability to relocate to the replacement unit. The landlord shall pay the reasonable cost of such relocation. Any disagreement between the landlord and tenant regarding the reasonableness of the cost of relocation shall be submitted to the hearing officer for resolution. Should a tenant fail to relocate to the replacement unit within said thirty (30) days, the tenant shall vacate the unit within ninety (90) days after the date the notice of availability of the replacement unit was served and filed, and the landlord shall be relieved of the obligation of paying any further fees or costs provided for in this chapter.

F. Upon the completion of the remodeling, the landlord shall serve upon tenant(s) and shall file a copy thereof with the city clerk notice of availability of the remodeled unit. The tenant shall have thirty (30) days after the service and filing of the notice of availability of the remodeled unit to relocate. The landlord shall pay the reasonable cost of such relocation. Any disagreement between the landlord and tenant regarding the reasonableness of the cost of relocation shall be submitted to the hearing officer for resolution. Should a tenant fail to relocate to the remodeled unit within said thirty (30) days, the tenant shall vacate the replacement unit within ninety (90) days after the date the notice of availability of the remodeled unit was served and filed, and the landlord shall be relieved of the obligation of paying any further fees or costs provided for in this chapter; provided, however, the landlord shall not be relieved of the obligation of paying fees or costs provided for in this chapter if the new base rent is in excess of the estimated base rent.

G. If an apartment unit has been vacated for major remodeling, upon the completion of such remodeling the new allowable base rent for the apartment unit shall not exceed an amount equal to the previous base rent increased by the actual amount expended on such remodeling, including such items as interest or the value of capital up to eighteen percent (18%) per annum, and any fees or costs required to be paid to or on behalf of tenants pursuant to the provisions of this chapter, amortized in accordance with the straight line depreciation schedules allowed under the federal income tax law, but in no case less than five (5) years. The tenant evicted for the purpose of such remodeling shall have a right of first refusal to rent the remodeled apartment unit provided such right is exercised within thirty (30) days after the landlord notifies the tenant when the apartment unit will be ready to be rented. If such tenant rerents the remodeled apartment unit, the landlord may increase the actual rent chargeable to such tenant at the time he or she actually occupies the unit to the new base rent allowed by this subsection or twenty percent (20%) above the estimated rent, whichever is less; provided, however, if a tenant elects to relocate as provided for in subsection C of this section, the new base rent shall not be applicable until one year after the notice of eviction required by subsection A of this section. The new base rent shall be established by the hearing officer within ninety (90) days after the tenant has reoccupied the unit or, if the tenant decides not to reoccupy the unit, within ninety (90) days after the unit is ready for occupancy, and the tenant has requested to be notified of the new base rent. The hearing officer shall be provided copies of documents by the landlord to be used to establish the new allowable base rent. If a tenant who was evicted pursuant to this section rerents the remodeled apartment unit, such tenant shall return the relocation fee to the landlord, less actual direct moving expenses and the amount by which such tenant's rent during the period when the tenant was out of the apartment exceeded the tenant's rent prior to such move, but not more than one hundred fifty dollars ($150.00) per month.

H. No writ or judgment restoring possession to the landlord shall be issued or entered unless and until the complaint for such writ or judgment filed by the landlord contains the landlord's declaration under penalty of perjury of the giving of notice to the tenant as required by this section, the expiration of the one year notice period, the payment or deposit into escrow of the relocation fee specified in article 6 of this chapter, and that the major remodeling work will commence within sixty (60) days after the filing of such complaint.

J. The city manager or his designee shall issue guidelines for the implementation of the foregoing requirements, and all applicants for major remodeling pursuant to this section shall comply therewith.

K. The provisions of this section shall not apply to a building manager who is entitled to occupancy of an apartment unit solely because of his or her position as building manager.

L. For the purposes of this section, "major remodeling" shall mean the remodeling or reconstruction of more than one apartment unit subject to the provisions of this chapter in an existing building and a minimum amount per remodeled unit is expended on such work as follows:

Bachelor/single $ 7,000.00
1 bedroom 10,000.00
2 bedrooms 15,000.00
3 or more bedrooms or 2 bedrooms and den 20,000.00
M. The landlord shall obtain the building permit to perform the major remodeling within ninety (90) days after the date when the affected unit becomes vacant. The major remodeling shall be completed within one year of the date of issuance of the building permit. However, the building and safety department may extend the one year completion period upon a showing by the landlord of good cause for the failure to complete the repairs within the one year period and diligent efforts to complete the work timely. If the major remodeling work is not completed within the time period established by this subsection, including any extensions thereof approved by the city, the landlord shall be liable in a civil action, if commenced within two (2) years of the displacement, to any tenant who is evicted from an apartment unit as a result of a notice issued pursuant to subsection A1 of this section for the actual damages that were the proximate result of the displacement. (1962 Code § 11-5.12; amd. Ord. 98-O-2299, eff. 6-5-1998; Ord. 04-O2449, eff. 6-18-2004)

ATTACHMENT B
Beverly Hills Municipal Code Section 4-6-6 K
K. Major Remodeling:

1. A landlord may bring an action to recover possession of an apartment unit if the landlord seeks in good faith to recover possession so as to do alteration work on the building for the purposes of major remodeling provided that there is compliance with all of the following conditions:
a. The landlord has given the tenant not less than one year's written notice that such tenancy shall terminate. The notice shall state the specific reason for giving such notice and shall be deemed to include a representation and agreement by the landlord that the recovery of possession of the apartment unit is solely for a reason within the scope of this section and for no other reason. Such notice shall contain a statement of the rights of the tenants pursuant to this section and section 4-6- 9 of this chapter and shall be approved by the City's rent stabilization program. Such notice shall not be required if:
(1) Major remodeling of the building has been mandated by law to be performed at an earlier date; or (2) Such notice has been given to a tenant who has vacated the apartment unit, the apartment unit has been re-rented to a new tenant, and the new tenant has been advised by the landlord in writing that the notice of termination of tenancy had been given to the prior tenant. This exemption shall apply only if a copy of the written notice provided to such new tenant is filed with the City rent stabilization program within one week after such new tenant begins the occupancy of the apartment unit. b. The notice required by subsection K1a of this section shall not be given or served until such time as the landlord has received approval for the giving of such notice by the Hearing Officer. Such approval shall be given upon a showing by the landlord that written notice was received from the building official that the landlord has complied with all requirements, except for approval of final plans, for the issuance of a building permit for the purpose of major remodeling. The landlord shall file with the application for giving notice a copy of the final plans and specifications for the proposed remodeling. A Hearing Officer designated by the City Manager ("Hearing Officer") shall establish the estimated new rent for the remodeled unit which shall not exceed one hundred fifty percent (150%) of the previous base rent. The notice required by subsection K1a of this section shall include such estimated new rent.
c. No notice of tenancy termination given pursuant to this section after October 18, 2018, shall be effective unless all the applicable provisions of this chapter have been complied with and a copy of such notice has been placed on file with the rent stabilization program prior to such notice being served on the tenant. A minimum fee of one hundred dollars ($100.00) for each building for which notices of tenancy termination are to be filed with the rent stabilization program shall be paid to the City for processing the notices prior to the filing of a notice with the rent stabilization program. Where there are more than ten (10) apartment units in a building which are subject to this provision of this chapter, and for which notices of tenancy termination have been given, an additional minimum fee of ten dollars ($10.00) shall be paid to the City for each unit in excess of ten (10) units for which a notice of tenancy termination is given.
d. A relocation fee shall have been paid or deposited into escrow in accordance with the provisions of section 4-6-9 of this chapter. If an apartment unit vacated pursuant to this section has been rerented the new tenant shall not be entitled to any relocation fee or other relocation benefit if he or she received the notices required by subsections K1a, and K1a(2) of this section.

A copy of such notice shall be filed with the rent stabilization program within one week after the new tenant begins occupancy of the apartment unit.

3. Any provision of this chapter notwithstanding, in lieu of receiving a relocation fee or being relocated to a comparable unit, a tenant, within sixty (60) days after the service of the one year notice of tenancy termination required by subsection K1 of this section, may elect to relocate to a comparable unit in the building to be remodeled. The comparability of the replacement unit shall be determined by the rent stabilization program. For the purposes of this subsection, "comparability" shall mean a unit with the same number of bedrooms as the unit vacated, and which is in a clean, functional, and secure state.

4. Should a tenant elect to be relocated to a comparable unit in the building to be remodeled, he or she shall serve written notice of such election on the landlord and file a copy thereof with the rent stabilization program. Such notice shall be served and filed within sixty (60) days after service of the one year notice of tenancy termination required by subsection K1 of this section. Upon the service and filing of the required notice of election within the time set forth herein, the notice of tenancy termination shall become null and void as to that tenant for the purposes of eviction. Upon the receipt of multiple notices required hereby, the landlord shall make an application to the Hearing Officer for a determination of the order of relocation. The Hearing Officer shall determine the order of relocation, taking into consideration the relative hardships relocation will place on the tenants electing to relocate hereunder.

5. Upon the approval of the order of relocation as provided for in subsection K4 of this section, or if only one notice of election is received by the landlord, the landlord shall serve upon the tenant(s) and shall file a copy thereof with the rent stabilization program notice of availability of the replacement unit. The tenant shall have thirty (30) days after the service and filing of the notice of availability to relocate to the replacement unit. The landlord shall pay the reasonable cost of such relocation. Any disagreement between the landlord and tenant regarding the reasonableness of the cost of relocation shall be submitted to the Hearing Officer for resolution. Should a tenant fail to relocate to the replacement unit within said thirty (30) days, the tenant shall vacate the unit within ninety (90) days after the date the notice of availability of the replacement unit was served and filed, and the landlord shall be relieved of the obligation of paying any further fees or costs provided for in this chapter.

6. Upon the completion of the remodeling, the landlord shall serve upon tenant(s) and shall file a copy thereof with the rent stabilization program notice of availability of the remodeled unit. The tenant shall have thirty (30) days after the service and filing of the notice of availability of the remodeled unit to relocate. The landlord shall pay the reasonable cost of such relocation. Any disagreement between the landlord and tenant regarding the reasonableness of the cost of relocation shall be submitted to the Hearing Officer for resolution. Should a tenant fail to relocate to the remodeled unit within said thirty (30) days, the tenant shall vacate the replacement unit within ninety (90) days after the date the notice of availability of the remodeled unit was served and filed, and the landlord shall be relieved of the obligation of paying any further fees or costs provided for in this chapter; provided, however, the landlord shall not be relieved of the obligation of paying fees or costs provided for in this chapter if the new base rent is in excess of the estimated base rent.

7. If an apartment unit has been vacated for major remodeling, upon the completion of such remodeling the new allowable base rent for the apartment unit shall not exceed an amount equal to the previous base rent increased by the actual amount expended on such remodeling, including such items as interest or the value of capital up to eighteen percent (18%) per annum, and any fees or costs required to be paid to or on behalf of tenants pursuant to the provisions of this chapter, amortized in accordance with the straight line depreciation schedules allowed under the Federal Income Tax Law, but in no case less than five (5) years. The tenant evicted for the purpose of such remodeling shall have a right of first refusal to rent the remodeled apartment unit provided such right is exercised within thirty (30) days after the landlord notifies the tenant when the apartment unit will be ready to be rented. If such tenant re-rents the remodeled apartment unit, the landlord may increase the actual rent chargeable to such tenant at the time he or she actually occupies the unit to the new base rent allowed by this subsection or twenty percent (20%) above the estimated rent, whichever is less; provided, however, if a tenant elects to relocate as provided for in subsection K3 of this section, the new base rent shall not be applicable until one year after the notice of eviction required by subsection A of this section. The new base rent shall be established by the Hearing Officer within ninety (90) days after the tenant has reoccupied the unit or, if the tenant decides not to reoccupy the unit, within ninety (90) days after the unit is ready for occupancy, and the tenant has requested to be notified of the new base rent. The Hearing Officer shall be provided copies of documents by the landlord to be used to establish the new allowable base rent. If a tenant who was evicted pursuant to this section re-rents the remodeled apartment unit, such tenant shall return the relocation fee to the landlord, less actual direct moving expenses and the amount by which such tenant's rent during the period when the tenant was out of the apartment exceeded the tenant's rent prior to such move, but not more than one hundred fifty dollars ($150.00) per month.

8. No writ or judgment restoring possession to the landlord shall be issued or entered unless and until the complaint for such writ or judgment filed by the landlord contains the landlord's declaration under penalty of perjury of the giving of notice to the tenant as required by this section, the expiration of the one year notice period, the payment or deposit into escrow of the relocation fee specified in section 4-6-9 of this chapter, and that the major remodeling work will commence within sixty (60) days after the filing of such complaint.

9. The landlord shall file true copies of rental agreements for the re-rented apartment units after major remodeling has been completed with the rent stabilization program within one week after the new tenant begins occupancy of the apartment unit.

10. The City Manager or his designee shall issue guidelines for the implementation of the foregoing requirements, and all applicants for major remodeling pursuant to this section shall comply therewith.

11. The provisions of this section shall not apply to a building manager who is entitled to occupancy of an apartment unit solely because of his or her position as building manager.

12. For the purposes of this section, "major remodeling" shall mean the remodeling or reconstruction of more than one apartment unit subject to the provisions of this chapter in an existing building and a minimum amount per remodeled unit is expended on such work as follows:

Bachelor/single $ 7,000.00
1 bedroom 10,000.00
2 bedrooms 15,000.00
3 or more bedrooms or 2 bedrooms and den 20,000.00

13. The landlord shall obtain the building permit to perform the major remodeling within ninety (90) days after the date when the affected unit becomes vacant. The major remodeling shall be completed within one year of the date of issuance of the building permit. However, the Building and Safety Department may extend the one year completion period upon a showing by the landlord of good cause for the failure to complete the repairs within the one year period and diligent efforts to complete the work timely. If the major remodeling work is not completed within the time period established by this subsection, including any extensions thereof approved by the City, the landlord shall be liable in a civil action, if commenced within two (2) years of the displacement, to any tenant who is evicted from an apartment unit as a result of a notice issued pursuant to subsection K1a of this section for the actual damages that were the proximate result of the displacement.

Attachment 2
B0785-0023\2449029v1.doc
RESOLUTION NO. _56&___

RESOLUTION OF THE BEVERLY HILLS RENT STABILIZATION

COMMISSION RECOMMENDING TO THE CITY COUNCIL
AMENDMENTS TO CHAPTERS 5 AND 6 OF TITLE 4 OF THE CITY’S

MUNICIPAL CODE TO ELIMINATE THE RECOVERY OF

POSSESSION OF AN APARTMENT UNIT FOR THE PURPOSE OF

MAJOR REMODELING
WHEREAS, the Beverly Hills City Council (“City Council”) established the Beverly Hills Rent Stabilization Commission (“Commission”) pursuant to Ordinance No. 19-O-2776, effective on May 3, 2019; and
WHEREAS, one of the duties of the Commission is to make recommendations to the City Council regarding possible amendments to Chapters 5 and 6 of Title 4 of the Beverly Hills Municipal Code (“Code”) in connection with issues that have not been resolved by the City Council; and
WHEREAS, one such issue relates to Sections 4-5-512 and 4-6-6 (K) of the Code, which allow a landlord to bring an action to recover the possession of an apartment unit if the landlord seeks in good faith to recover possession so as to do alteration work on the building for the purpose of major remodeling, provided that the landlord complies with the conditions specified in Section 4-5-512 or 4-6-6 (K), as applicable; and
WHEREAS, for purposes of Sections 4-5-512 and 4-6-6 (K), “major remodeling” shall mean the remodeling or reconstruction of more than one apartment unit subject to the provisions of Chapter 5 or Chapter 6, as applicable, in an existing building and a minimum amount per remodeled unit is expended on such work as set forth in such sections; and WHEREAS, such minimum amounts have not been updated since 2004, have not been adjusted for inflation, and do not represent current remodeling costs; and WHEREAS, evictions for major remodeling are not common; and WHEREAS, the City of Beverly Hills is the only city with a rent stabilization ordinance that allows a landlord to evict a tenant for the purpose of major remodeling; and WHEREAS, in order to establish a balance between incentivizing owners to maintain rental properties while continuing to stabilize rents, staff of the Rent Stabilization Division (“RSD”) recommended that the major remodeling minimum amounts be increased to reflect the CPI index through 2020, with annual increases thereafter based on the CPI index; and WHEREAS, staff of the RSD also recommended that the Commission consider whether the major remodeling minimum amounts should be increased, and if so, on what basis, and whether the major remodeling provisions should be eliminated from Chapters 5 and 6 of Title 4 of the Code, in whole or in part; and

2 B0785-0023\2449029v1.doc
WHEREAS, on August 5, 2020, the Commission held a duly noticed meeting to consider proposed modifications to Chapters 5 and 6 of Title 4 of the Code related to evictions for the purpose of major remodeling, as described above; and
WHEREAS, by a majority (4-2) vote, the Commission voted to recommend to the Council that the major remodeling provisions be eliminated from Chapters 5 and 6 of Title 4 of the Code in their entirety, and directed the City Attorney’s Office to draft a resolution setting forth the Commission’s recommendation;

NOW, THEREFORE, THE CITY OF BEVERLY HILLS RENT STABILIZATION COMMISSION DOES HEREBY FIND, DETERMINE AND RESOLVE AS FOLLOWS:

Section 1. The Commission hereby finds that each of the recitals set forth above is true and correct and is incorporated herein by this reference as part of the Commission’s recommendation.

Section 2. The Commission hereby recommends to the Council that the Council amend the Municipal Code to delete Sections 4-5-512 and 4-6-6 (K), thereby eliminating the provisions that allow a landlord to bring an action to recover the possession of an apartment unit so as to do alteration work on the building for the purpose of major remodeling.

Adopted: ___6HSWHPEHU______, 2020
Lou Milkowski
Chair of the Rent Stabilization Commission
Attest:

Helen Morales, DPA
Secretary of the Rent Stabilization Commission
Approved as to form: Approved as to content:

Laurence S. Wiener Helen Morales, DPA
City Attorney Secretary of the Rent Stabilization Commission

Certificate Of Completion
Envelope Id: B6B399B5A7F842B28BE784F58599CFAB Status: Completed Subject: Please DocuSign: Tab 3 - Major Remodel Resolution.pdf Source Envelope:

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Certificate Pages: 2 Initials: 0 Evelin Welch
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455 N. Rexford Drive
Beverly Hills, CA 90210
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9/9/2020 5:14:54 PM
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Lou Milkowski
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Attachment 3
12/5/22, 1:20 PM https://export.amlegal.com/api/export-requests/a8195726-c2b3-4da2-860e-6c71e8560f98/download/ https://export.amlegal.com/api/export-requests/a8195726-c2b3-4da2-860e-6c71e8560f98/download/ 1/3 4-5-512: MAJOR REMODELING:

2. The notice required by subsection A1 of this section shall not be given or served until such time as the landlord has received approval for the giving of such notice by the hearing officer. Such approval shall be given upon a showing by the landlord that written notice was received from the building official that the landlord has complied with all requirements, except for approval of final plans, for the issuance of a building permit for the purpose of major remodeling. The landlord shall file with the application for giving notice a copy of the final plans and specifications for the proposed remodeling. The hearing officer designated by the city manager ("hearing officer") shall establish the estimated new rent for the remodeled unit which shall not exceed one hundred fifty percent (150%) of the previous base rent. The notice required by subsection A1 of this section shall include such estimated new rent.

D. Should a tenant elect to be relocated to a comparable unit in the building to be remodeled, he or she shall serve written notice of such election on the landlord and file a copy thereof with the city clerk. Such notice shall be served and filed within sixty (60) days after service of the one year 12/5/22, 1:20 PM https://export.amlegal.com/api/export-requests/a8195726-c2b3-4da2-860e-6c71e8560f98/download/ https://export.amlegal.com/api/export-requests/a8195726-c2b3-4da2-860e-6c71e8560f98/download/ 2/3 notice of tenancy termination required by subsection A of this section. Upon the service and filing of the required notice of election within the time set forth herein, the notice of tenancy termination shall become null and void as to that tenant for the purposes of eviction. Upon the receipt of multiple notices required hereby, the landlord shall make an application to the hearing officer for a determination of the order of relocation. The hearing officer shall determine the order of relocation, taking into consideration the relative hardships relocation will place on the tenants electing to relocate hereunder.

I. The landlord shall file true copies of rental agreements for the rerented apartment units after major remodeling has been completed with the city clerk within one week after the new tenant begins occupancy of the apartment unit. 12/5/22, 1:20 PM https://export.amlegal.com/api/export-requests/a8195726-c2b3-4da2-860e-6c71e8560f98/download/ https://export.amlegal.com/api/export-requests/a8195726-c2b3-4da2-860e-6c71e8560f98/download/ 3/3 J. The city manager or his designee shall issue guidelines for the implementation of the foregoing requirements, and all applicants for major remodeling pursuant to this section shall comply therewith.

K. The provisions of this section shall not apply to a building manager who is entitled to occupancy of an apartment unit solely because of his or her position as building manager.

Such notice shall not be required if:
(1) Major remodeling of the building has been mandated by law to be performed at an earlier date; or (2) Such notice has been given to a tenant who has vacated the apartment unit, the apartment unit has been re-rented to a new tenant, and the new tenant has been advised by the landlord in writing that the notice of termination of tenancy had been given to the prior tenant. This exemption shall apply only if a copy of the written notice provided to such new tenant is filed with the City rent stabilization program within one week after such new tenant begins the occupancy of the apartment unit. b. The notice required by subsection K1a of this section shall not be given or served until such time as the landlord has received approval for the giving of such notice by the Hearing Officer. Such approval shall be given upon a showing by the landlord that written notice was received from the building official that the landlord has complied with all requirements, except for approval of final plans, for the issuance of a building permit for the purpose of major remodeling. The landlord shall file with the application for giving notice a copy of the final plans and specifications for the proposed remodeling. A Hearing Officer designated by the City Manager ("Hearing Officer") shall establish the estimated new rent for the remodeled unit which shall not exceed one hundred fifty percent (150%) of the previous base rent. The notice required by subsection K1a of this section shall include such estimated new rent.
c. No notice of tenancy termination given pursuant to this section after October 18, 2018, shall be effective unless all the applicable provisions of this chapter have been complied with and a copy of such notice has been placed on file with the rent stabilization program prior to such notice being served on the tenant. A minimum fee of one hundred dollars ($100.00) for each building for which notices of tenancy termination are to be filed with the rent stabilization program shall be paid to the City for processing the notices prior to the filing of a notice with the rent stabilization program.

Where there are more than ten (10) apartment units in a building which are subject to this provision of this chapter, and for which notices of tenancy termination have been given, an additional minimum fee of ten dollars ($10.00) shall be paid to the City for each unit in excess of ten (10) units for which a notice of tenancy termination is given.
d. A relocation fee shall have been paid or deposited into escrow in accordance with the provisions of section 4-6-9 of this chapter. If an apartment unit vacated pursuant to this section has been re-rented the new tenant shall not be entitled to any relocation fee or other relocation benefit if he or she received the notices required by subsections K1a, and K1a(2) of this section.

2. Any apartment unit vacated pursuant to this section if re- rented after eviction but prior to remodeling, shall remain subject to the provisions of this chapter, and it shall be the responsibility of the landlord to notify any new tenant in writing of the controlled rents and the duration of the notice of termination. A copy of such notice shall be filed with the rent stabilization program within one week after the new tenant begins occupancy of the apartment unit.
12/5/22, 1:22 PM https://export.amlegal.com/api/export-requests/8b4db911-3800-4ad7-9eb3-5734e39e3671/download/ https://export.amlegal.com/api/export-requests/8b4db911-3800-4ad7-9eb3-5734e39e3671/download/ 5/11

Upon the receipt of multiple notices required hereby, the landlord shall make an application to the Hearing Officer for a determination of the order of relocation. The Hearing Officer shall determine the order of relocation, taking into consideration the relative hardships relocation will place on the tenants electing to relocate hereunder.

7. If an apartment unit has been vacated for major remodeling, upon the completion of such remodeling the new allowable base rent for the apartment unit shall not exceed an amount equal to the previous base rent increased by the actual amount expended on such remodeling, including such items as interest or the value of capital up to eighteen percent (18%) per annum, and any fees or costs required to be paid to or on behalf of tenants pursuant to the provisions of this chapter, amortized in accordance with the straight line depreciation schedules allowed under the Federal Income Tax Law, but in no case less than five (5) years. The tenant evicted for the purpose of such remodeling shall have a right of first refusal to rent the remodeled apartment unit provided such right is exercised within thirty (30) days after the landlord notifies the tenant when the apartment unit will be ready to be rented. If such tenant re-rents the remodeled apartment unit, the landlord may increase the actual rent chargeable to such tenant at the time he or she actually occupies the unit to the new base rent allowed by this subsection or twenty percent (20%) above the estimated rent, whichever is less; provided, however, if a tenant elects to relocate as provided for in subsection K3 of this section, the new base rent shall not be applicable until one year after the notice of eviction required by subsection A of this section. The new base rent shall be established by the Hearing Officer within ninety (90) days after the tenant has reoccupied the unit or, if the tenant decides not to reoccupy the unit, within ninety (90) days after the unit is ready for occupancy, and the tenant has requested to be notified of the new base rent. The Hearing Officer shall be provided copies of documents by the landlord to be used to establish the new allowable base rent. If a tenant who was evicted pursuant to this section rerents the remodeled apartment unit, such tenant shall return the relocation fee to the landlord, less actual direct moving expenses and the amount by which such tenant's rent during the period when the tenant was out of the apartment exceeded the tenant's rent prior to such move, but not more than one hundred fifty dollars ($150.00) per month.
12/5/22, 1:22 PM https://export.amlegal.com/api/export-requests/8b4db911-3800-4ad7-9eb3-5734e39e3671/download/ https://export.amlegal.com/api/export-requests/8b4db911-3800-4ad7-9eb3-5734e39e3671/download/ 6/11

11. The provisions of this section shall not apply to a building manager who is entitled to occupancy of an apartment unit solely because of his or her position as building manager.

Bachelor/single $ 7,000.00
1 bedroom 10,000.00
2 bedrooms 15,000.00
3 or more bedrooms or 2 bedrooms and den 20,000.00

Attachment 5
Report Month and Year: August, 2022
Data from July, 2022
Rent Stabilization

FISCAL YEAR-TO-DATE
July to July
Calls Received FY2017-18 FY2018-19 FY2019-20 FY2020-21 FY2021-22 FY2022-23 Evictions 21 29 46 16 8 21
General Complaints 7 - 13 27 18 4
General Inquiries 89 59 140 62 80 89
Habitability Standards 1 16 67 8 50 30
Leases 3 11 4 3 2 1
Mediation - - 5 - 1 -
Referral to Code Enforcement 5 5 11 7 6 -
Registration 381 9 26 9 31 29
Registration Amendments - 18 19 5 7 3
Rent Increases 29 63 102 12 17 56
COVID-19 - General n/a n/a - 62 14 12
COVID-19 - Eviction n/a n/a - 198 70 21
COVID-19 - No Entry n/a n/a - 2 - -
Means & Method n/a n/a - 86 28 16
COVID-19 - RS n/a n/a n/a n/a - -
Total 536 210 433 497 332 282
COMPLAINTS OPENED FY2017-18 FY2018-19 FY2019-20 FY2020-21 FY2021-22 FY2022-23 Rent Increase n/a 11 1 1 - 2
Habitability Standards n/a 10 4 3 1 9
Illegal Evictions n/a 5 - - - 2
Relocation Fees n/a 2 - - 1 1
Registration n/a 3 - - - -
Just Cause Evictions n/a 3 1 - - -
Leases n/a 2 - - - -
Reduction in Services n/a 5 5 1 - 3
Means and Method Plan n/a 2 32 16 14 17
Major Remodeling n/a - - - - -
Mediation n/a - 1 - - -
COVID Related Rent Increase n/a - - 1 - -
COVID Related Eviction n/a - - 13 1 1
COVID Related 3-Day Notice n/a - - 1 - -
COVID Related Appeal n/a - - 1 - -
COVID Commercial Lease Negotiation n/a - - 318 - -
COVID Rent Subsidy n/a - - - - -
Disruptive Tenant n/a n/a n/a n/a - -
Surcharge for Additional Tenant n/a n/a n/a n/a - -
Capital Expenditure Surcharge n/a n/a n/a n/a - -
Rent Adjustments n/a n/a n/a n/a - -
Refuse Fee Surcharge n/a n/a n/a n/a - -
Water Penalty Fee Surcharge n/a n/a n/a n/a - -
Utility Expenses Surcharge n/a n/a n/a n/a - -
Total n/a 43 44 355 17 35

Beverly Hills City CouncilDecember 13, 2022

Beverly Hills City Council
December 13, 2022