1 DATE: June 13, 2023
TO: Justin Hess, City Manager
FROM: Patrick Prescott, Community Development Director
VIA: Simone McFarland, Assistant Community Development Director BY: Maribel Leyland, Housing Authority Manager
SUBJECT: Budget Discussion Paper: Interim Program for Renter Relocation Assistance
INTRODUCTION
At the May 16, 2023, City Council meeting. Vice Mayor Schultz requested information on utilizing $500,000 in one -time General Fund dollars for a n Interim Program for Renter Relocation Assistance (Interim Program). This memorandum summarizes the framework of a proposed Interim Program for Council consideration, discussion, and direction.
BACKGROUND
The Tenant Protection Act of 2019 , otherwise known as A ssembly Bill 1 482, established statewide rent caps along with just cause eviction standards for specific multi -family and rental properties. Subject to certain exceptions, AB 1482 applies to all multi-family housing, as well as single homes or condos that are owned by a Real Estate Investment Trust (REIT) Corporation, and Limited Liability Company where one member is a corporation. Under the no -fault eviction provisions, a tenant being evicted may be entitled to a relocation fee equivalent to one month’s rent or to forego pay ment of the last month’s rent. (California Government Code Section 1946.2 (d)).
Furthermore, state law provides that when a tenancy ends, a landlord must return any security deposit unless the landlord uses it for a lawful purpose.1 The amount of a security deposit varies, and in many cases may include additional fees such as a parking fee or pet deposit; all of which are considered part of the security deposit. Per state law, c ities with local tenant protection ordinances can implement additional protections and relocation payment amounts. 1 Legal uses include unpaid rent, cleaning the rental unit, or repairs other than normal wear and tear, to name a few items. (California Civil Code § 1950.5.)
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2 Following Council direction during the January 31, 2023, presentation to Council related to rent control and tenant pr otections, staff is preparing a study session regarding AB 1482 that will include a discussion on local tenant protection options . The study session is tentatively scheduled for August 8, 2023 , followed by community meetings and a second step staff report to consider a possible local tenant protection ordinance with additional protections beyond existing state law and incorporating best practices from other cities. Developing an ordinance of this type and conducting adequate community outreach may take several months . The ordinance would likely increase the relocation payment amount to tenants by the landlords. The proposed Interim Program would assist qualified households with additional financial assistance in the interim until an ordinance is in place.
DISCUSSION
Should City Council want to create a n Interim Program, there are several considerations to implementation including, but not limited to:
✓ Program Parameters
✓ Household Income Eligibility;
✓ Amount of Financial Assistance per Household;
✓ Eligible Use of Funds;
✓ Timeframe for Fund Expenditure;
✓ Costs for Program Administration; and
✓ Cost for Third-Party Service Provider.
In addition to how the funds are expended , City Council can also consider adding housing navigation services to assist households with locating a unit, and other administrative requirements that are discussed later in the report.
Below are proposal considerations from staff, should City Council want to implement a n Interim Program.
Program Parameters
This Interim Program is only available to Burbank renters being subject to no-fault evictions. City Council should also consider the following:
• Should the participants be existing residents for a certain period of time to qualify? • That participants may need to move out of the City to find new housing they can afford.
Household Income
The next consideration for City Council is household income. Most programs that provide financial assistance to renters, such as the Federal Section 8 program or state affordable housing prog rams, limit eligibility to lower -income households based on household size as summarized in the chart below. Staff recommends income eligibility be a part of the proposed Interim Program that would include households from extremely low to moderate income.
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3 State Income Limits for Los Angeles County (2023) 2
Income Level 1 person
household
2 person
household
3 person
household
4 person
household
5 person
household
6 person
household
7 person
household
8 person
household
Extremely Low $26,500 $30,300 $34,100 $37,850 $40,900 $43,950 $46,950 $50,560 Very Low $44,150 $50,450 $56,750 $63,050 $68,100 $73,150 $78,200 $83,250 Lower $70,650 $80,750 $90,850 $100,900 $109,000 $117,050 $125,150 $133,200 Moderate -2022 $76,500 $87,450 $98,350 $109,300 $118,050 $126,800 $135,550 $144,300 Area Median Income: $98,200
Financial Assistance
The third consideration for City Council is the amount of financial assistance the City should provide an income eligible household . While there are numerous ways to determine/calculate financial assistance, staff has summarized three options for consideration. A Flat Rate option would be easiest for a service provider to implement, the least cumbersome for the community, and allow the funds to be distributed quicker. Another option is utilizing the City’s current median rent for a calculation. The City of Burbank Median Rent as of the writing of this report is $2,150, changes month to month , and does not reflect the specific housing needs of potential eligible recipients, which could cause confusion .3 Finally, some local cities with tenant protection ordinances utilize Federal Fair Market Rents (see No. 3 chart below).
The three proposed financial assistance options are summarized below:
No. 1 – Flat Rate (If Interim Program is pursued, this is staff’s recommended option) Total Assistance: 1. $2,500 for Moderate-Income Households
2. $5,000 for Low-Income Households
3. $7,500 for Extremely-low- and Very-Low-Income Households
No. 2 – City of Burbank Median Rent (Changes Monthly)
Total Assistance: 1. 2x $2,150 or ($4,300 current total) Burbank Median Rent for Moderate- Income Households
2. 3x $2,150 ($6,450 current total) Burbank Median Rent for Extremely- Low-, Very-Low and Lower-Income Households
No. 3 – Utilizing HUD Fair Market Rents (Changes Annually - Based on Unit Size) Total Assistance: 1. 2x HUD FMRs for Moderate-Income Households
2. 3x HUD FMRs for Extremely-Low-, Very-Low and Low-Income Households
2 New Income Limits for 2023 were published in May 2023 by the federal department of Housing and Urban Development (HUD) for low- income households only. The State Department of Housing and Community Development (HCD) publishes the Moderate-Income limits.
Those figures are expected in mid-June 2023. The chart will be updated when the figures are available. 3 Source: https://www.zumper.com/rent-research/burbank-ca .
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4 Number of
Bedrooms 1 2 3 4
2023 FMRs $1,747.00 $2,222.00 $2,888.00 $3,170.00
Note: Studio Units would fall under the one-bedroom amount.
Staff would recommend the Flat Rate option for clarity to the community and ease of implementation. Council may choose one of these options, a combination of options, or provide a different option/direction.
Eligible Uses and Expenditure of Funds
If the Interim Program is put into place, s taff recommends eligible uses for the funds , up to the maximum amount, be limited to security deposit, payment of fees , and pre-paid rental assistance. Staff recommends the funds be paid directly to the new landlord, rather than be issued directly to the tenant. Moving expenses paid to a moving company may also be an eligible use. Based on staff’s recommended Flat Rate option, the total financial assistance could fund one or a combination of these eligible costs up to the maximum amount.
Funding Period
All funds should be expended during the eviction notice period (60 days in most instances). The tenant could request an extension from the landlord citing pending Interim Program financial assistance and if granted, the eviction notice period could be extended. Should a tenant fail to relocate within the eviction notice or extension (if applicable) period, approved assistance may be rescinded.
To coincide with the March 31, 2023 , end of the Los Angeles County COVID-19 Emergency Tenant Protections for renters, staff recommends the Interim Program apply to no-fault eviction notices issued on or after April 1, 2023. Households that received a no-fault eviction notice on or after April 1, 2023 , and vacated their unit, may still be eligible for assistan ce, up to the maximum amount, for any outstanding, eligible costs owed within the described parameters.
Tenants whose notice pre-dates the Interim Program’s approval would have to apply within 60 days of moving for consideration. For example, households that moved June 1 , 2023, would have until July 31, 2023, to apply to the Interim Program.
Housing Navigation
In addition to needing financial assistance, tenants have expressed frustration about finding new housing that meets their needs. Having a service provider that already has relationships with landlords in the region along with the experience representing moderate, low - and very-low- income tenants in locating new housing will be an imperative part of a successful Interim Program. Staff would recommend including housing navigation within the program offerings.
Service Provider Recommendation and Implementation
Working with a qualified service provider to administer the program will be critical to the success of the proposed Interim Program. Staff would recommend contracting with Home Again Los Angeles (HALA) as they have experience with implementing similar programs such as the current rapid rehousing program that provides rental assistance to extremely-low-income, homeless households, and those at risk of homelessness . Furthermore, HALA successfully ATTACHMENT 2
5 implemented the Community Development Block Grant Coronavirus Aid, Relief, and Economic Security Act (C DBG-CV) emergency rental and security deposit assistance in Burbank during the Covid-19 Pandemic.
HALA’s cost to administer the program would be 20% of the Program’s total allocated amount up to $100,000. The City Council could either allocate $500,000 towards relocation assistance under the Interim Program or propose an additional appropriation of $100,000 for a total of $600,000 in General Fund money to fund a professional services agreement (PSA) with HALA to administer an Interim Program that includes housing navigation services. The contract scope would include the Council approved parameters of the proposed Interim Program, and navigation services to assist households with locating a unit . Navigation services has been a need of renters expressed in the last several weeks as they seek out an affordable unit in Burbank. HALA would assist eligible applicants, if needed, with the search for a replacement rental unit. Finally, staff will work closely with HALA to ensure all requirements are met for the use and distribution of the funds appropriated to the Interim Program. One such requirement is issuing 1099s to recipients that receive funds through the Interim Program that can be taxable.4 HALA has indicated they are equipped to provide required documents as necessary.
FISCAL IMPACT
Staff recommends either a one-time appropriation of $500,000 or $600,000 for the proposed Interim Program. $ 100,000 of the appropriation would be utilized for a PSA with HALA to administer the Interim Program funding along with housing navigation services. The remaining funds would be utilized for financial assistance on behalf of eligible applicants as outlined in this report. If the Interim Program is approved, staff recommends HALA be included in the Agreements and Contract List with the amount of $100,000 in the Fiscal Year 2023-2024 budget for administration of the program.
CONCLUSION AND NEXT STEPS
Under AB 1482, Burbank renters are currently eligible for a one-month relocation assistance payment (or last month credit) from landlords for a no-fault eviction. Tenants in good standing should also receive most or part of a security deposit as outlined in state law. The proposed Interim Program would provide additional financial assistance that a household facing a no-fault eviction could utilize to relocate.
Staff’s Interim Program recommendations and considerations should City Council wish to proceed are below.
Should City Council allocate $600,000 for the program the total number of participants in the program would vary based on the number of people in each income level and amount of financial assistance provided. This would be between 66 and 200 households. If $500,000 was allocated, between 53 and 240 households could be helped.
4 https://www.irs.gov/forms-pubs/about-form-1099-misc
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6 • Policy Questions
1. Should the participants be existing residents for a certain period of time to qualify?
2. Should the participants new residence be within the City of Burbank? • Interim Program Funding: $500,000 or $600,000
• Financial Assistance: Option 1 - Flat Rate Amount as noted or provided by Council
1. $2,500 for Moderate-Income Households
2. $5,000 for Low-Income Households
3. $7,500 for Extremely-Low-, Very-Low-Income Households • Funding U ses Include: Security deposit, payment of fees and rental assistance ; may include moving expenses.
• Funding Period: Applies to no-fault evictions noticed on or after April 1, 2023.
Must be e xpended during the eviction notice period (60 days) unless an extension is agreed upon in writing by tenant and landlord. Funding may be rescinded if a tenant fails to relocate during the eviction notice period/extension (if applicable). • Additional Assistance to Households: Housing navigation services to assist with locating suitable replacement housing.
• Service Provider: Home Again Los Angeles (HALA)
• Administration: up to $100,000
If directed by Council to pursue an Interim Program, staff would enter into a professional services agreement with HALA to administer the proposed Interim Program until funds are expended. If approved during the budget public hearing on June 13, 2023, staff would execute the PSA with HALA thereafter, and prepare for a tentative Interim Program roll out date of July 10, 2023.
Council could also defer any action and instead bring up the discussion of such a program during its Study Session on AB 1482.
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