1 MEMORANDUM
DATE: May 16, 2023
TO: Justin Hess, City Manager
FROM: Joseph H. McDougall, City Attorney
SUBJECT: Budget Discussion Paper: Landlord-Tenant Dispute Resolution Program
INTRODUCTION
During the May 9, 2023 Budget Study Session, the City Council directed the City Attorney’s Office to explore offer ing mediation services geared towards resolving landlord-tenant disputes. Mediation services (a voluntary form of dispute resolution in which a neutral third- party mediator without authority to impose a certain outcome attempts to assist both parties in resolving their legal disputes ) could be provided by an attorney employed by the City, under contract with a private attorney, or under contract with some other private entity such as a nonprofit legal aid organization. 1 Intake and
referrals would likely be coordinated by the City’s housing staff.
DISCUSSION
Mediation can be a low-cost option to resolve landlord-tenant disputes and avoid litigation.
While the idea of City-provided mediation services may sound like a solution to landlord- tenant disputes, it is important to also understand the limitations. Mediators do not have authority to issue decisions or impose a specific outcome. A successful mediation requires both parties involved in a dispute to first voluntarily agree to mediation, participate meaningfully with a mediator, and finally to come to an agreement. If a party refuses to mediate or abide by the terms of the agreement reached in mediation, neither the mediator, the City Attorney’s Office, nor the courts will have the jurisdiction to carry out enforcement. As such, mediation is not a substitute for seeking the advice of an attorney or a guaranteed solution for either party and any delay a party experiences while going through the mediation process could potentially negatively impact their right to seek an enforceable legal solution . Nonetheless, in discussing dispute resolution programs
1 We do not recommend providing mediation through a non-lawyer given the specialized nature of landlord-tenant law and the necessity to understand the legal options and consequences available to landlords and tenants in mediating their disputes.
CITY ATTORNEY’S
OFFICE
2 with other cities, it has been noted that these programs are generally well-received by constituents and have the potential to be very successful.
The City Attorney’s Office reviewed surrounding cities’ landlord-tenant dispute resolution approaches to identify a program that might be used as a model. The review established that no existing programs offer mediation services for landlord- tenant disputes internally by city attorneys, and most refer out to non-profit organizations as described below:
City of Glendale : Sought t o create a mediation services program in 2019 and should have a recommendation ready within the next two months.
City of Hawthorne : Offered mediation and arbitration services by referring out to the South Bay Center for Dispute Resolution, however, the program ended in February 2022.
City of Los Angeles: Refers landlord-tenant disputes to volunteer mediators. Community members can become volunteer mediators by completing a 40- hour basic mediation training course and background check.
Town of Los Gatos: Contracts with non- profit organization, Project Sentinel, to provide rental dispute resolution services, as required by the Tow n’s Rental Dispute Mediation and Arbitration Ordinance. Project Sentinel is a region- specific non -profit organization serving the Bay Area and Central Valley.
City of Pasadena: Offers an in-house community mediation program, however, does not include landlord-tenant disputes as this area of law is very specialized. Instead, landlord- tenant disputes in need of mediation are referred to the Housing Rights Center, a local non-profit organization, in a manner similar to how Burbank conducts tenant referrals.
FISCAL IMPACT
The City’s cost to provide mediation services in-house would be the cost of a new attorney position, and likely an additional CDD housing staff member at the Administrative Analyst II level. The City Attorney’s Office recommends that attorney be a Senior Assistant City Attorney to enable the City to attract a candidate with sufficient knowledge and expertise in landlord-tenant law, who can effectively mediate between the landlord, tenant and their respective legal counsel, and persuade the parties as to the implications and legal consequences of failing to reach an agreement in mediation. The annual cost for a senior attorney is $233,614. The cost to add an additional Administrative Analyst II housing staff member is $114,864. Adding a new attorney position would enable the City to expand mediation services beyond l andlord-tenant disputes to include other community grievances such as business or neighbor disputes . As well, when not conducting mediations, this position would be available to assist with other housing matters, and work on other City work program matters and City Council initiatives. While it may be possible to provide some mediation services with the addition of a part-time attorney, recruiting and retaining an attorney that wants to work part-time is more difficult than recruiting full- time attorneys, which could delay or disrupt continuity of any mediation program. 3 Another option would be to contract a professional mediator to carry out this service. The cost of a professional mediator can range from $250-$500 an hour2, which is two to four times the hourly cost of the City’s in- house legal staff. Further, most private mediators require a minimum of two hours per mediation and/or schedule only half -day or full-day sessions. In the City’s experience professional mediation services for civil litigation range from $ 7,500 to $ 10,000 per full-day of mediation. However, the number of potential mediations is unknown. If the number of disputes that qualify for mediation is relatively low, paying private counsel to mediat e could result in costs savings over a new full -time in-house senior attorney position.
Under the Los Gatos model, the City would contract with a non- profit organization that would provide mediation services at an affordable cost to the City. Unfortunately, one of the major local non-profit organizations, Housing Rights Center (HRC), does not presently offer contract mediation services, nor do they have the capacity to do so. However, HRC is willing to consider creating a possible mediation program to serve the City depending upon the scope of work and adequate funding. The City Attorney’s Office is also exploring what options may be available with the County of Los Angeles.
Whichever option is selected, intake and referrals would be best handled by the Community Development Department’s housing staff who regularly coordinate housing programs, rental assistance, and case referrals to the Landlord Tenant Commission, and provide other resources to the City’s rent ers and future residents . However, any of the mediation options will increase CDD’s workload and require additional housing staff and resources to coordinate and implement.
CONCLUSION
The City Attorney’s Office request s direction as to whether Council wishes to offer a landlord-tenant mediation program and, if so, which option Council prefers to pursue.
Creating an in -house mediation program will cost the City $ 348,478 per year on a recurring basis. A pilot program utilizing outside mediators could be initiated with a one- time budget appropriation for legal services, but additional housing staff would still be required to coordinate and implement the program. Staff recommends that a pilot program be funded with at least $150,000 to cover the costs of implementation. The pilot program will be coordinated with the Community Development Department and geared toward providing mediation services for landlord- tenant disputes by partnering with a non- profit organization or hiring a private mediation firm.
2 During the COVID-19 Pandemic, the Chamber of Commerce purportedly partnered with a private law firm to offer discounted commercial landlord-tenant mediation services for approximately $550 for an initial 2-hour mediation session. This is far below market rates for private mediation services.