Meeting Date: February 19, 2025
Item Number:
To:
From:
Subject:
Attachments: 1. Ordinance
RECOMMENDATION
INTRODUCTION
AGENDA REPORT
Honorable Mayor & City CouncilLaurence S. Wiener, City Attorney AN ORDINANCE OF THE CITY OF BEVERLY HILLS AMENDING SECTIONS 2- 4-201; 2-4-202; AND 2-4-203 OF THE BEVERLY HILLS MUNICIPAL CODE
RELATING TO THE PREVENTION OF PRICE GOUGING
It is recommended that the City Council waive the full reading and adopt the ordinance entitled:
“AN ORDINANCE OF THE CITY OF BEVERLY HILLS AMENDING SECTIONS 2-4-201; 2-4-202; AND 2-4-203 OF THE BEVERLY HILLS MUNICIPAL CODE RELATING TO THE PREVENTION OF PRICE GOUGING”.
At its meeting on February 5, 2025, the City Council conducted a first reading of this ordinance and introduced it.DISCUSSIONBoth the State and the City have prohibitions on price gouging during an emergency. This ordinance amends the Beverly Hills Municipal Code to more closely mirror the state law and prevent price gouging, particularly on rental properties.
The revision of the price gouging prohibitions is not anticipated to materially impact the general fund. It is possible that there will be a small number of prosecutions pursuant to the prohibition, however, that cost should be minimal.
Laurence S. Wiener
City Attorney
Approved By
FISCAL IMPACT
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Attachment
I
ORDINANCE NO. 25-0-
AN ORDINANCE OF THE CITY OF BEVERLY HILLS
AMENDING SECTIONS 2-4-201; 2-4-202; AND 2-4-203 OF THEBEVERLY HILLS MUNICIPAL CODE RELATING TO THEPREVENTION OF PRICE GOUGING
THE CITY COUNCIL OF THE CITY OF BEVERLY HILLS HEREBY ORDAINS AS FOLLOWS:
WHEREAS, the Los Angeles County Fires and Windstorm Event of January 2025 has burned over 40,000 acres, destroyed more than 12,000 residential and commercial structures, and damaged critical infrastructure; and
WHEREAS, on January 7, 2025, the Governor of California declared a State of Emergency to exist in Los Angeles and Ventura Counties due to the Fires and Windstorm Event; and
WHEREAS, thousands of Los Angeles County residents have had their lives significantly impacted through partial or complete property loss, damage or evacuationorders, and WHEREAS, in the wake of widespread destruction, thousands of Los Angeles County residents must now purchase a myriad of goods and services to sustain their wellbeing and to begin the long process ofrebuilding their lives; and WHEREAS, California Penal Code Section 396 makes it illegal for a person, contractor, business, or other entity to increase the price of a product or service item more than ten (10) percent for the following thirty (30) days after a proclamation of a state of emergency declared by the President of the United States or the Governor, or upon thedeclaration of a local emergency by an official, board, or other governing body vested withauthority to make that declaration; and WHEREAS, pursuant to California Penal Code Section 396(k), municipalities are authorized to enact local legislation prohibiting excessive and unjustified increases in the prices of essential consumer goods and services when a declared state of emergency results in abnormal disruptions of the market; and
WHEREAS, Article XI, Section 7 of the California Constitution and California Government Code Section 37100 provide the City with authority to enact local ordinances to protect the health, safety, and welfare of its residents; and WHEREAS, it is the desire ofthis Council to amend the price gouging article of the Municipal Code to reflect consistency with state law and to include provisions that protect against price gouging for newly rented properties.B0785-000l\3071 771v1 .doc Section 1. The City Council hereby amends and restates Section 2-4-201 of the Beverly Hills Municipal Code to read as follows:
2-4-201: FINDINGS AND INTENT:
The city council hereby finds that during a state of emergency or local emergency, including, but not limited to, an earthquake, flood, fire, riot, storm, drought, plant or animal infestation or disease, pandemic or epidemic disease outbreak, or other naturalor manmade disaster, some merchants have taken unfair advantage of consumers by greatly increasing prices for essential consumer goods and services. While the pricing ofconsumer goods and services is generally best left to the marketplace under ordinaryconditions, when a Declared Emergency results in abnormal disruptions of the market, the public interest requires that excessive and unjustified increases in the prices of essential consumer goods and services be prohibited. It is the intent of the city councilin enacting this article to protect citizens from excessive and unjustified increases in the prices charged during or shortly after a Declared Emergency for goods and services that are vital and necessary for the health, safety, and welfare of consumers, whether thosegoods and services are offered or sold in person, in stores, or online. Further, it is theintent of the city council that this article be liberally construed so that its beneficial purposes may be served.
Section 2. The City Council hereby amends and restates Section 2-4-202 of the Beverly Hills Municipal Code to include or revise the following definitions:
DECLARED EMERGENCY: The proclamation or declaration of a “local emergency” or “state of emergency” or “state of war emergency” as defined in section 2-4-102 of this chapter.HOUSING: Any rental housing with an initial lease term of no longer than one year.REPAIR OR RECONSTRUCTION SERVICES: Services performed by any Person who is required to be licensed under the California contractors’ state license law (chapter 9(commencing with Section 7000) of Division 3 of the California Business and Professions Code), for repairs to residential or commercial property of any type that isdamaged as a result of an event that led to a Declared Emergency. -2-
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TRANSPORTATION, FREIGHT, AND STORAGE SERVICES: Any service that is performed by any company that contracts to move, store, or transport personal orbusiness property or rents equipment for those purposes.
RENTAL PRICE:
(A) For Housing rented within one year prior to a Declared Emergency, the actual Rental Price paid by the tenant.
For Housing not rented at the time of a Declared Emergency, but rented, or offered for rent, within one year prior to the Declared Emergency, the most recent Rental Price offered before the Declared Emergency.
For Housing rented at the time of a Declared Emergency but which becomes vacant while the emergency remains in effect and which is subject to any ordinance, rule,regulation, or initiative measure adopted by any local governmental entity that establishesa maximum amount that a landlord may charge a tenant for rent, the actual Rental Price paid by the previous tenant or the amount specified in subparagraph (B), whichever is greater. This amount may be increased by 5 percent (5%) if the Housing was previously rented or offered for rent unfurnished, and it is now being offered for rent fully furnished.
This amount shall not be adjusted for any other good or service, including, but not limited to, gardening or utilities currently or formerly provided in connection with the lease. (B) For Housing not rented and not offered for rent within one year prior to a Declared Emergency, 160 percent (160%) of the fair market rent established by the United States Department of Housing and Urban Development. This amount may be increased by 5 percent (5%) if the Housing is offered for rent fully furnished. This amount shall not be adjusted for any other good or service, including, but not limited to, gardening or utilities currently or formerly provided in connection with the lease. (C) Housing advertised, offered, or charged, at a daily rate at the time of a Declared Emergency, shall be subject to the Rental Price described in subparagraph (A),if the Housing continues to be advertised, offered, or charged, at a daily rate. 1-lousingadvertised, offered, or charged, on a daily basis at the time of a Declared Emergency,shall be subject to the Rental Price in subparagraph (B), if the Housing is advertised, offered, or charged, on a periodic lease agreement after the Declared Emergency. -3-
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Section 3. The City Council hereby amends and restates Section 2-4-203 of the Beverly Hills Municipal Code to read as follows:
2-4-203: PROHIBITION AGAINST EXCESSIVE AND UNJUSTIFIED INCREASESIN CONSUMER PRICES DURING A DECLARED EMERGENCY:
A. Consumer Goods And Services:
1. Upon a Declared Emergency, and for a period of thirty (30) days following a Declared Emergency, it is unlawful for a Person to sell or offer to sell any consumer fooditems or goods, goods or services used for emergency cleanup, emergency supplies, medical supplies, home heating oil, building materials, housing, Transportation, Freight, and Storage Services, or gasoline or other motor fuels for a price of more than ten percent(10%) above the price charged by that Person for those goods or services immediately prior to the Declared Emergency.
2. A Person may increase prices in excess of the amount permitted in subsection (A)(1) of this section if the seller or vendor can demonstrate that the increase in price is directly attributable to additional costs imposed on that Person by the supplier of thegoods, or directly attributable to additional costs for labor or materials used to provide theservices, provided that in those situations where the increase in price is attributable to additional costs imposed by the seller’s supplier or additional costs of providing the goods or service during the Declared Emergency, the price represents no more than ten percent (10%) above the total of the cost to the seller plus the markup customarily applied by theseller for that good or service in the usual course of business immediately prior to the Declared Emergency.
3. A Person offering an item for sale at a reduced price immediately prior to a Declared Emergency may use the price at which it usually sells the item to calculate the price increase permitted pursuant to this subsection.
B. Construction, Repair, And Cleanup Services:
1. Upon a Declared Emergency, and for a period of one hundred eighty (180) days following a Declared Emergency, it is unlawful for a Person to sell or offer to sell any Repair or Reconstruction Services or any services used in emergency cleanup for a priceof more than ten percent (10%) above the price charged by that Person for those services immediately prior to the Declared Emergency.
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2. A Person may increase prices in excess of the amount permitted in subsection (B)(l) of this section ifthe Person can demonstrate that the increase in price is directlyattributable to additional costs imposed on that Person by the supplier of the goods, or directly attributable to additional costs for labor or materials used to provide the services, provided that in those situations where the increase in price is attributable to the additional costs imposed by the Person’s supplier or additional costs of providing the service during the Declared Emergency, the price represents no more than ten percent (10%) above the total of the cost to the Person plus the markup customarily applied by the Person for that good or service in the usual course of business immediately prior to the Declared Emergency.
3. A Person offering a service at a reduced price immediately prior to a Declared Emergency may use the price at which he or she usually provides the service to calculate the price increase permitted pursuant to this subsection.
C. Hotel And Motel Rates:
1. Upon a Declared Emergency, and for a period of thirty (30) days following a Declared Emergency, it is unlawful for an owner or operator of a hotel or motel toincrease the hotel or motel’s regular rates, as advertised immediately prior to the DeclaredEmergency, by more than ten percent (10%).
2. A hotel owner or operator may increase prices in excess of the amount permitted by subsection (C)(1) of this section if the owner or operator can prove that the increase in price is directly attributable to additional costs imposed on it for goods or labor used in its business, to seasonal adjustments in rates that are regularly scheduled, or to previously contracted rates.
D. Rental Property Rates:
1. Upon a Declared Emergency, and for a period of thirty (30) days following a Declared Emergency, it is unlawful for any Person to increase the Rental Price, asdefined in Section 2-4-202, advertised, offered, or charged for Housing, to an existing or prospective tenant, by more than ten percent (10%) of the regular rate, as advertised immediately prior to the Declared Emergency.
2. A Person may increase prices in excess of the amount permitted by subsection (D)(l) of this section ifthe Person can prove that the increase in price is directly -5-
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attributable to additional costs for repairs or additions beyond normal maintenance that were amortized over the rental term that caused the rent to be increased greater than ten percent (10%) or that an increase was contractually agreed to by the tenant prior to the Declared Emergency.
3. It shall not be a defense to a prosecution under this subdivision that an increase in Rental Price was based on the length of the rental term, the inclusion of additional goods or services, except as provided in Section 2-4-202 with respect to furniture, or that the rent was offered by, or paid by, an insurance company, or other third party, on behalf of a tenant. This subdivision does not authorize a landlord to charge a price greater than the amount authorized by a local rent control ordinance.
Section 4. Severability. If any provision of this Ordinance is held invalid by a court of competent jurisdiction, such provision shall be considered a separate, distinct and independentprovision and such holding shall not affect the validity and enforceability of the other provisions of this Ordinance.
Section 5. 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 certifyto the adoption of this 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 of the Council of this City.
Section 6. Effective Date. This Ordinance shall go into effect and be in full force and effect at 12:01 a.m. on the thirty-first (3 1st) day after its passage.
Section 7. Certification. The City Clerk shall certify to the adoption ofthis Ordinance.
Adopted:
______________________________
Effective: LESTER J. FRIEDMAN
Mayor of the City of Beverly Hills,
California
ATTEST:
__________________________(SEAL)
HUMA ARMEDCity Clerk
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APPROVED AS TO FORM: APPROVED AS TO CONTENT:
LAURENCE S. WIENER NANCY HUNT-COFFEY
City Attorney City Manager
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