STAFF REPORT
Meeting Date: December 13, 2022
To: Honorable Mayor & City Council
From: Ryan Gohlich, AICP, Director of Community Development Timothea Tway, AICP, City Planner
Helen Morales, DPA, Deputy Director of Rent Stabilization Subject: Request by Councilmember Mirisch for Information Regarding Tenant Protections for Tenants Displaced by Redevelopment Attachments: None
INTRODUCTION
At the request of Councilmember Mirisch, this report provides information about the current City and state regulations pertaining to tenant protections when a tenant is being displaced from a rental unit due to redevelopment of the property.
BACKGROUND AND DISCUSSION
Eviction protections for tenants in the City are governed by both local and state regulations. The following protections are currently in place for tenants that will be displaced by redevelopment of a property:
Ellis Act
The Ellis Act (California Government Code Chapter 12.75) is a 1985 California state law that allows landlords to evict residential tenants to “go out of the rental business” and to permanently remove the units from the rental market in spite of desires by local governments to compel them to continue providing rental housing.
The City has codified the Ellis Act in the Beverly Hills Municipal Code (BHMC) §§4-5-513 and 4-6-6 L. The City has established required forms and procedures to implement these sections.
Meeting Date: December 13, 2022
In accordance with the BHMC §§4-5-513 and 4-6-6 L, an owner may evict a tenant to withdraw units from the rental market if the owner:
Withdraws all apartment units in a detached building or structure containing four or more units on a parcel of land, or when there are three or fewer units in a building on a parcel of land, then all units on the parcel must be withdrawn from the rental market. The right to evict a tenant to go out of the rental business, includes the right to allow the building(s) to be demolished or to allow the units to be converted to condominiums;
Provides no less than 120 days’ written Notice to the tenant from the date that the owner intends to withdraw the apartment units;
Provides the City with a written Notice of Intent to Withdraw units from the rental market;
Records a Memorandum Summarizing the Non-Confidential Provisions of a Notice of Intent to Withdraw Units from Rent Housing Use with the Los Angeles County Recorder’s Office;
Provides the City with a recorded copy of the Memorandum and Notices sent to all affected tenants;
Within 30 days of the notice by a tenant of a one year extension entitlement due to age or disability of a tenant who has resided in the unit for at least one year (see also below), the landlord must notify the City; and Within 90 days of the delivery of the Notice of Intent to Withdraw Units, the landlord must provide written notice to the City that the landlord is extending the withdrawal date by one year (or longer) for any other unit in the apartment building.
Under the Ellis Act and the Municipal Code tenants have the following protections:
A written Notice of Termination of Tenancy to all affected tenants at least 30 days prior to the service and recordation of the Notice of Intent to Withdraw which must contain the following:
o That the landlord is evicting the tenant for withdrawal of the unit from the rental market and provide notice to the City;
o A summary of the specific information to be provided to the City regarding the tenant’s Unit;
o That within 30 days of the Notice to Terminate, the tenant may provide a written Notice of Intent to Re-Rent the Unit if it is re-offered for rent in the future and to notify the owner and the RSO office of any changes; o That the landlord will provide the required relocation fee. At least a 120 Day Notice of Termination of Tenancy period. If a Tenant is age 62 years or older or disabled, and the tenant has lived in the unit for at least one (1) year prior to the delivery of the Notice to the City, the Notice to the Tenant is extended to one (1) year, provided that the tenant has provided the written notice of his or her entitlement to the extension within 60 days.
Meeting Date: December 13, 2022
o It is important to note that if the building has one tenant with a one (1) year extension, as mentioned above, Section 7060.4(b)(6) states that:
“The date of withdrawal for the accommodations as a whole, for purposes of calculating the time periods described in Section 7060.2, shall be the latest termination date among all tenants,” as set forth in the required notices. This means that the building is not considered “withdrawn” until all Notices, including any one-year notice(s) have expired. Therefore, if one tenant has obtained a one (1) year extension, the extended date of withdrawal applies to all tenants. That code section also states that an owner’s further voluntary extension of a tenancy beyond the date stated in the notices does not extend the date of withdrawal of the rental units. Relocation fees at the time the tenant vacates the unit in accordance with the BHMC;
The tenancy shall continue on the same terms and conditions; All duties to perform any and all obligations under the lease or rental agreement remain the same;
The landlord is required to extend the one (1) year period to all tenants.
If a withdrawn unit is re-rented after two (2), five (5) or ten (10) years, the Ellis Act and the Municipal Code require the following:
If the withdrawn units are reoffered for rent within two (2) years from the effective date of the withdrawal, the landlord is required to:
o Provide written notice to the City’s RSO office not less than 30 days prior to re-renting the units;
o Offer the units at the same rent levels as the date of withdrawal plus any annual rent increases;
o Provide any tenant who provided notice of his or her interest to re-rent a unit, the first right of refusal a 30 day notice to accept the offer (delivery of notice must be by personal service, certified or registered mail). Copies of notice and proof of mailing must be filed with the RSO office; o Be liable for a civil action if commenced within three (3) years of displacement; and
o Be liable to the City for exemplary (punitive) damages of tenants and lessees.
If the withdrawn units are reoffered for rent within five (5) years after the Notice of Intent to Withdraw the unit is filed with the City, or within five (5) years after the effective date of the withdrawal of the apartment unit, whichever is later, the landlords is required to:
o Provide not less than 30 days prior written notice to the RSO office; and o Shall offer the units to the displaced tenants at the same rent level as of the date of the withdrawal, plus allowed annual rent increases. If the withdrawn units are reoffered for rent within ten (10) years from the effective date of removal:
Meeting Date: December 13, 2022
o The landlord shall provide those tenants who provided notice of interest in re-renting the first right of refusal to re-rent the unit (rent amount is not restricted and can be market rate);
o The notice must be served by certified or registered mail, postage paid, the last address provided by the tenant;
o The tenant shall have 30 days to accept the offer by personal service, certified or registered mail;
o Copies of the notices and mail receipts must be filed with the RSO office within one week of mailing; and
o Failure of the landlord to provide the tenant with the right of first refusal shall render the landlord liable in a civil action to the tenant and punitive damages in an amount not to exceed six (6) month’s rent.
Senate Bill (SB) 330
SB 330, also called The Housing Crisis Act of 2019, as recently amended by SB 8, includes several provisions that pertain to the replacement of housing units that are proposed to be demolished, as well as protections for tenants in apartment buildings that will be demolished due to proposed redevelopment of the site. As required by State law, the City enforces these provisions. Protections for existing tenants are:
A developer must replace the total number of housing units being demolished with at least the same number of housing units (e.g., a project cannot be approved that includes fewer units than previously existing on the site – in other words, “no net loss”).
A developer must replace any “protected units” that will be demolished with units that will be available at affordable levels (deed restricted for 55 years). Protected units are defined as units that were subject to any form of rent or price control within the last five years; subject to regulations, laws, or ordinances that restricted rents to levels affordable to tenants with lower or very low incomes within the past five years; units that were rented by lower or very low income households within the last five years; or units that were withdrawn from rent or lease in accordance with the Ellis Act within the past 10 years. The vast majority of units demolished in the City for redevelopment are rent stabilized units, and therefore a developer in the City is currently required to replace approximately 40% of the demolished protected units at affordable levels (e.g., low income levels).
A developer must allow residents of protected units to remain in their units until six months before the start of properly noticed construction activities. If the proposed demolition of a protected rental unit does not occur, and the property is returned to the rental market, the occupants of the units who were required to vacate due to the proposed demolition must be allowed to return to the unit at the prior rental rate.
A project applicant must provide occupants of “protected units” with relocation benefits and a right of first refusal for comparable units (i.e., same bedroom type) available in the new housing development. However, this requirement is limited to occupants that are lower income households and with respect to the right of first refusal excludes: (1) a project that involves demolition of one protected unit Meeting Date: December 13, 2022
and construction of one residential unit; and (2) housing developments that are comprised of 100 percent lower income units (with exceptions).
At this time, no residential units that are subject to the SB 330 replacement unit requirements have been constructed in the City. However, the City is currently processing a number of multi-family residential projects that are subject to these provisions. When new units are developed and ready for occupancy, the City will follow all applicable State regulations regarding the rental of units to households at affordable levels.
Affordable Housing Unit Placement Priority List
The City Council has previously established a priority list that governs the placement of households into deed-restricted affordable units. The priority list was established in 2019 and is codified in the Beverly Hills Municipal Code (BHMC) in BHMC 10-3-1528. It generally provides the highest priority for placement in affordable units to households that have been displaced from the site of development, and households that have been displaced from any multi-family property in the City. There are a number of ways that deed-restricted affordable units in the City are created, including through the State Density Bonus program, the City’s local inclusionary housing program, or replacement of protected units per SB 330. See the table below for the status of existing and pending deed restricted affordable units in the city.
Status Number of Units
Existing/Occupied 4
Preparing for Rental 3
Under Construction 1
Entitled by Planning Commission (not yet constructed) 6 Pending Review by Planning Commission 16
Total 30
When deed restricted units are constructed (or vacated) and ready for placement of income qualified households the following priority ranking is used:
Tier 1 - Senior Tenants Displaced From The Project Site: First priority shall go to income-qualified households in which at least one member is a senior (62 years and older) and that have been or will be required to vacate existing dwelling units on the site of development so that an owner or developer may perform any construction, renovation or addition pursuant to a density bonus permit. If the number of qualified applicants in this tier exceeds the number of available units, then the order in which the units are offered to Tier 1 applicants shall be based on the period of time that the longest tenured member of the household resided at the project site, from longest to shortest, and a lottery shall be held within this tier to determine the order in which the units are offered to any Tier 1 applicants having the same period of residency at the project site.
Meeting Date: December 13, 2022
Tier 2 - Tenants With Beverly Hills Unified School District Students Displaced From The Project Site: Second priority shall go to income-qualified households that include as part of the household a legal guardian of one or more students currently enrolled in and attending the Beverly Hills Unified School District in grade 10 or lower, and that have been or will be required to vacate existing dwelling units on the site of development so that an owner or developer may perform any construction, renovation or addition pursuant to a density bonus permit. If the number of qualified applicants in this tier exceeds the number of available units, the order in which the units are offered to Tier 2 applicants shall be based on the period of time that the longest tenured member of the household resided at the project site, from longest to shortest, and a lottery shall be held within this tier to determine the order in which the units are offered to any Tier 2 applicants having the same period of residency at the project site. Tier 3 -Tenants Displaced From The Project Site: Third priority shall go to income-qualified households that have been or will be required to vacate existing dwelling units on the site of development so that an owner or developer may perform any construction, renovation or addition pursuant to a density bonus permit. If the number of qualified applicants in this tier exceeds the number of available units, the order in which the units are offered to Tier 3 applicants shall be based on the period of time that longest tenured member of the household resided at the project site, from longest to shortest, and a lottery shall be held within this tier to determine the order in which the units are offered to Tier 3 applicants having the same period of residency at the project site. Tier 4 - Displaced Senior Households: Fourth priority shall go to incomequalified households in which at least one member is a senior (62 years and older) and that have or will be displaced or evicted from a multi-family building in the City other than the project site for the purpose of redevelopment if either: (1) the multi-family building was demolished for redevelopment within the two years immediately preceding the date on which applications for the affordable housing units are due; or (2) the multi-family property to be redeveloped has received all entitlements, excluding building permits, and such redevelopment requires all residents to vacate the site, provided that such entitlements, or subsequent entitlements remain valid and have not expired on the date the applications for the affordable housing units are due. If the number of qualified applicants in this tier exceeds the number of available units, the order in which the units are offered to Tier 4 applicants shall be based on the period of time that the longest tenured members of the household resided at the multi-family building to be redeveloped, from longest to shortest, and a lottery shall be held within this tier to determine the order in which the units are offered to the Tier 4 applicants having the same period of residency at the project site.
Tier 5 - Displaced Tenants With Beverly Hills Unified School District Students: Fifth priority shall go to income-qualified households that include as part of the household a legal guardian of one or more students currently enrolled in and attending the Beverly Hills Unified School District in grade 10 or lower, and that have or will be displaced or evicted from a multi-family building in the City other than the project site for the purpose of redevelopment, if either: (1) the multi-family building was demolished for redevelopment within the two (2) years immediately preceding the date on which applications for the affordable housing units are due; or (2) the multi-family property to be redeveloped has received all Meeting Date: December 13, 2022
entitlements, excluding building permits, and such redevelopment requires all residents to vacate the site, provided that such entitlements, or subsequent entitlements, remain valid and have not expired on the date the applications for the affordable housing units are due. If the number of qualified applicants in this tier exceeds the number of available units, the order in which the units are offered to Tier 5 applicants shall be based on the period of time that the longest tenured member of the household resided at the multi-family building to be redeveloped, from longest to shortest, and a lottery shall be held within this tier to determine the order in which the units are offered to the Tier 5 applicants having the same period of residency at the project site.
Tier 6 - Displaced Households: Sixth priority shall go to income-qualified households displaced from a multi-family building in the City that have or will be displaced or evicted from a multi-family building in the City other than the project site for the purpose of redevelopment, if either: (1) the multi-family building was demolished for redevelopment within the two (2) years immediately preceding the date on which applications for the affordable housing units are due; or (2) the multi-family property to be redeveloped has received all entitlements, excluding building permits, and such redevelopment requires all residents to vacate the site, provided that such entitlements, or subsequent entitlements, remain valid and have not expired on the date the applications for the affordable housing units are due. If the number of qualified applicants in this tier exceeds the number of available units, the order in which the units are offered to Tier 6 applicants shall be based on the period of time that the longest tenured member of the household resided at the multi-family building to be redeveloped, from longest to shortest, and a lottery shall be held within this tier to determine the order in which the units are offered to the Tier 6 applicants having the same period of residency at the project site.
Tier 7 - Senior Households: Income-qualified households with at least one member who is a senior (62 years and older). If the number of qualified applicants in this tier exceeds the number of available units, then a lottery shall be held within this tier to determine the order in which the units are offered to the Tier 7 applicants.
Tier 8 - Other Income Qualified Households: Income-qualified households that do not meet the requirements of Tiers 1-7. If the number of qualified applicants in this tier exceeds the number of available units, then a lottery shall be held within this tier to determine the order in which the units are offered to the Tier 8 applicants.
It should be noted that in order to be placed into a ranking tier, a household must first be income-qualified, meaning that they meet the income limits for the housing unit for which they are being considered. These income limits are set by the state and change on an annual basis based on the median income for the County of Los Angeles.
Opportunities for Greater Tenant Protections
If there is interest from the City Council to provide greater tenant protections when existing RSO units are taken off the rental market for new construction, then the City Council could consider the following:
Reexamine relocation fees for all displaced tenants;i Meeting Date: December 13, 2022
Reexamine relocation fees for seniors, disabled and families with children in Beverly Hills schools;
Require the owner provide each displaced household/tenant with relocation services by a relocation services consultant at the owner’s expense; Require that some or all of the relocation fees be made available to the tenant within 15 days of service of the written Notice to Terminate Tenancy; Analysis of existing SB 330 regulations to determine if the City can require additional tenant protections under the State law.
FISCAL IMPACT
No fiscal impact is anticipated, since no legislation or policy changes are recommended at this time.
RECOMMENDATION
Staff recommends that the City Council conduct a study session to discuss the information provided in this report.
Ryan Gohlich, AICP
Approved By
i
The California Court of Appeal struck down a San Francisco ordinance that required landlords to pay their tenants the difference between the amount of the current rent and the amount of rent that the tenant would be required to pay to rent a similar unit following the eviction, in addition to traditional relocation fees (such as first and last month’s rent and moving costs). The court so held on the grounds that the payment for the increased rent was preempted by the Ellis Act because it placed an undue financial burden on landlords who are seeking to go out of the rental business. See, Coyne v. City and County of San Francisco (2017) 9 Cal.App.5th 1215,1225.