DATE: October 7, 2024
TO: Mayor and Members of the City Council
VIA: Stefan Chatwin, City Manager
Marlene Subhashini, Assistant City Manager
FROM: Sofia Mangalam, Community Development Director
Nori Jabba, Housing Coordinator
DEPARTMENT: Community Development
SUBJECT: POLICY DIRECTION ON RENTAL REGISTRY PROGRAM
RECOMMENDATION
It is recommended that the City Council hold a study session on a Rental Registry Program and, by Minute Order, provide policy direction on the following: (1) Expanding the provisions of the existing BMR compliance software for BMR units to provide for additional data collection and analysis; or, (2) Extend the provisions of the existing BMR compliance software to Foster City BMR and market-rate multi-family rentals of three or more units; or (3) Extend the provisions of the existing BMR compliance software to all Foster City BMR and market rate rental units; and (4) Should the selected option by the City Council be encouraged on a voluntary basis or established as a mandate? Any such mandate would require the adoption of an Ordinance.
EXECUTIVE SUMMARY
Foster City’s Housing Element 2023-31 includes goals, policies, and programs to provide additional housing in a way that is balanced with the community’s desires to retain certain aspects of Foster City that make it a great place to live, work and play. The Housing Element Programs include the City’s commitment to timeframes for implementation. The Annual Progress Report to the California Department of Housing and Community Development (HCD), due by April 1 of each year, reports on progress made in implementing each of these Programs.
One of the Housing Element Programs to be addressed in 2024 is H-G-2-e:
H-G-2-e Rental Registry. Unless a requirement for a State Rental Registry is adopted, explore a Rental Registry that tracks information such as rents, utilities, accessibility for disabled persons, tenant occupancy dates, and landlord contact information in order to improve the information available to landlords, tenants, and decision makers.
Responsible Agency: Community Development Department
Timeframe: Report to City Council by December 2024
Funding Source: General Fund
BACKGROUND
The City’s adopted Housing Element 2023-31 includes a program to explore a Rental Registry as part of the Fair Housing Action Plan, which is intended to address barriers to housing choice primarily by adding affordable housing options and preserving existing housing opportunities. The priorities for the Fair Housing Action Plan are (see page HE- 38 Housing Element 2023-31):
Address disproportionate impacts by increasing the supply of affordable housing and providing more housing choices throughout the City. (Highest) Protect tenants from displacement through an anti-displacement strategy. (High) Address housing discrimination through fair housing information and training. (High)
Address housing discrimination by providing additional support and opportunities for housing to meet special needs. (High)
City’s Affordable Housing Programs
The Planning Division staff oversees the City’s Affordable Housing programs, which include deed-restricted owner-occupied units, inclusionary Below-Market Rate (BMR) rental units, 100% affordable senior rental properties, Workforce Housing rental units, and the Existing Unit Purchase Program (EUPP) rental units. All the rental and ownership affordable housing programs are collectively referred to as the BMR Housing Program.
In addition, the affordable housing programs include the HIP Home Sharing Program and the Housing Rehabilitation Loan Program.
The responsibilities pertaining to the oversight and administration of overseeing and monitoring existing BMR programs are specified in the requisite deed restriction applicable to the property and the City’s BMR Guidelines as included in Section
17.90.100 of the Foster City Municipal Code.
The BMR Housing Program portfolio includes 433 total units and 19 properties. Of the 433 units, 426 are rental units, and seven (7) are owner-occupied.
Table 2: Foster City BMR Housing Program
Name of
Development Total
Properties
BMR
Rentals
Workforce
Rentals
Senior
BMR
Rentals
BMR
Owner-
Occupied
Total
Units
The Plaza 1 60 60
The Triton 1 48 48
100 Grand 1 33 33
Miramar 1 48 48
Marlin Cove 1 84 84
The Pilgrim 1 14 8 22
Alma Point 1 65 65
Metro Center 1 60 60
EUPP Homes 4 6 6
Emerald Bay 7 7 7
Total Units 19 293 8 125 7 433
*The BMR program also previously included Foster’s Landing (74 units), for which the deed restrictions expired in phases between 2021 and 2023.
Management of the BMR program includes but is not limited to:
For rental properties not owned by the City - Annual audits, training BMR property managers, ensuring compliance with regulatory agreements for each property, approval of utility allowances and annual rent and income limits, updating and assisting BMR property managers with interpretation of the BMR Guidelines, updating BMR Guidelines as needed, and addressing inquiries from BMR tenants and members of the public.
For rental properties owned by the City (managed by HIP Housing) – In addition to all the above, managing the operating budgets and payment of expenses, managing property management contracts, and applying for and administering grants and notices of funding opportunities.
For owner-occupied BMR units - Monitor annual occupancy requirements and obtain annual occupancy affidavits from homeowners, notify homeowners of regulatory agreement expiration dates, calculate sales price and review sales of properties to other qualified buyers (if applicable), certify incomes of new buyers (if applicable), calculate share of proceeds to the City when and if a sale occurs after the expiration of the BMR agreement; revise the BMR Ownership Guidelines, and address inquiries from homeowners and members of the public.
Annual Audit of BMR Properties
Each year, BMR property managers of all BMR rental properties (including HIP Housing that manages City-owned BMR rentals) submit reports to the City with data for each tenant, including income, rent, size of the unit, household size, utility allowances, and the maximum rent and income for each size of the unit. Reports are due at varying times of the year, depending on the regulatory agreements. During an audit, staff reviews the requirements of the property’s regulatory agreements and reviews the annual report and tenant files to ensure compliance with BMR Guidelines and regulatory agreements for each property. During an audit, Staff completes the following for each property:
Verifies that the report was submitted by the deadline. Reviews the report against annual maximum income and rent limits. Verifies that the correct utility allowances were used. Reviews tenant files to ensure that incomes were calculated correctly, files contain required application, lease, and income certification documentation, and that files match the annual report. Staff generally selects a percentage of files from each affordability category and size of unit as well as recent move-in files. Reviews the properties income certification procedures, manuals, and forms.
Since 2009, the City has contracted with Housing Compliance Services for a license agreement to use software for monitoring BMR units called FOCUS. The software is used by public agencies and developers to monitor BMR units and ensure compliance of income limits and rental rates with local, state, and/or federal BMR programs. Initially, FOCUS included five (5) properties and 274 units:
Foster’s Landing
Metro Center Senior Housing
Community Development Agency (CDA)-owned rentals (now the EUPP units) 1 Miramar
Marlin Cove
Over the years, the number of BMR properties has increased. The City requires property managers of all BMR rental properties to use FOCUS to submit annual reports. BMR property managers enter information into the FOCUS software each year for each unit, including affordability level, rental rate, utility allowance, maximum rent, household size, number of bedrooms, unit number, initial move-in date, household income at move-in, voucher amount, if applicable, whether the unit is occupied or vacant, and income from the latest income certification. The data is entered once per year. The software does not provide reports comparing data from year to year, including turnovers, or rent increases, or comparisons among or between properties as they occur.
Difference between a Rental Registry and Rental Registry Program A Rental Registry is essentially a database containing information about rental properties and units, such as rental rates, apartment sizes, vacancies, utilities, and property contact information. The use of a Rental Registry varies by jurisdiction and can be tailored to a jurisdiction’s needs.
A Rental Registry program is established via an Ordinance and becomes a mandate.
Many California cities have Rental Registry programs in place to mandate the collection of data to monitor rental properties (see section below) and ensure compliance with local and state regulations.
Rental Registry data can be broken into four (4) categories:
Information on the units, including the unit number, occupancy status (vacant or occupied), number of bedrooms, square footage, and accessibility. Information about rent charges, including the start date and rent to be charged to the tenant, current monthly rent charges, and the date and amount of rent increases.
Information about the tenant, including name of the current tenants, number of occupants, etc.
Information about the property, such as address, owner and property manager contact information, amenities, utilities charged to the tenant, rehabilitation projects, parking spaces, and vacancy rates.
Research
According to Policy Link, “a Rental Registry is a database of rental properties that includes detailed information about the property owner and the rental property. This rental registration system in its most basic form regularly requires property owners to provide up-to-date contact information of key individuals involved with the management and maintenance of the property, and an emergency contact who can be contacted 24 hours a day. Property owners may also be required to provide information and documentation regarding their last property inspection, the number of units owned, the occupation status of those units, and how much has been and is currently being charged for rent. Additional information can also be collected by localities to gather the important data needed to address a community’s unique housing challenges and inequities, such as a property’s connections to water and electricity, or monthly utility costs.” – Source:
https://www.policylink.org/resources-tools/tools/all-in-cities/housing-anti- displacement/rental-registries.
Rental registries can serve many purposes for cities, such as providing data and analysis to inform housing policies, helping to regulate BMR rentals, identifying neighborhoods at risk of displacement due to rent increases or no-fault evictions, providing data for permitting, code enforcement, and building inspections, helping facilitate community outreach, supporting social support services in times of crisis, providing information on the rental ownership landscape, providing information on properties for those searching for housing, and providing landlord contact information.
Other Jurisdictions
The following Bay Area cities have Rental Registry programs in place or pending:
Alameda, Berkeley, Burlingame, Concord, Half Moon Bay, East Palo Alto, El Cerrito, Mountain View, Monterey, Oakland, Palo Alto, San Francisco, San Jose, San Pablo, and Burlingame. Examples of how some of these cities use the data include:
The City of Concord has had a Rental Registry Program for four (4) years as part of its Residential Tenant Protection Program. In addition to rent, the registry collects data on property address, size of unit, number of bedrooms and bathrooms, parking spaces, and lease terms. Registration is required for all rental units, including single- family homes. According to the City’s Rental Registry Webpage, “the 2023 report builds upon and includes year-over-year comparisons to the baseline data obtained in 2022 and 2021. The 2023 report analyzes tenancies and rents in Concord, provides a landlord registration and program compliance analysis, and includes neighborhood maps with the locations of the registered multifamily complexes.” The rental registry is used to monitor the Residential Tenant Protection program with rent stabilization and just cause for eviction, Ordinance 24-3.
The City of Half Moon Bay states the following on its Rental Registry Webpage:
“This annual registration process is crucial to efforts to better understand rental housing characteristics in Half Moon Bay, which will help inform future policy decisions regarding rental housing.” The program is required for all rental units, including ADUs, single-family homes, and those who rent out rooms. The following information is required for the registration of a residential rental unit:
oThe name, mailing address, phone number, and email of the owner, landlord, and property manager as applicable;
oThe street address (and unit number where applicable) of each residential rental unit or portion thereof for rent or lease;
oThe assessor’s parcel number (APN) that each residential rental unit for rent or lease is located;
oThe number of bedrooms and bathrooms in each residential rental unit, including square footage, for rent or lease;
oThe occupancy status of each residential rental unit (e.g., vacant or occupied); oReason for vacancy (e.g., lease expiration, voluntary move-out or eviction); oThe number of individuals currently residing in the unit, if occupied; oWhere applicable, the number of rooms individually rented; oThe current amount of the monthly rent charged for each residential rental unit, identifying whether the monthly rent includes specified utilities (e.g., water, sewer, solid waste disposal, natural gas, electricity, etc.); oWhether or not the unit’s monthly rent is subsidized (e.g., such as through a housing voucher or another subsidy).
The City of Palo Alto recently adopted the Residential Registry Program effective from July 1, 2024. According to the City’s website, “the Rental Registry will help the City better understand Palo Alto's rental landscape as experienced by renters and property owners. It will also help inform future Council decision-making.” Registration is required for all rental properties with three or more units. As per their website, The Rental Registry Program will collect the following information:
oResidential rental property contact information, such as property owner and property manager contact information;
oResidential rental property characteristics, such as property address, property type, year purchased, number of rental units at the property, and year built; oResidential rental unit characteristics, such as rental unit address, size (indoor/outdoor), number of bedrooms and bathrooms, year of any remodel, and owner or property manager occupancy;
oTenancy information, such as rental unit tenancy status as occupied or vacant, date of vacancy, reason for vacancy, date of tenancy, initial lease length, date of 1-year lease renewal, and date of last lease renewal; oRent information, such as initial security deposit amount, base rent amount, current rent amount, presence of rental assistance/subsidy/deed restriction/incentive, and rental unit amenities/services; oAffidavit information, such as attestation of accuracy, submittal date, name/contact information for registrant;
oOptional information, such as open-ended opportunity to provide feedback. oEvents, such as when there is any increase in rent, when a notice to quit is sent to a renter, when an unlawful detainer complaint is filed, and when there is an eviction.
See City of Palo Alto, Rental Registry FAQs. The City of Palo Alto adopted a phased implementation, which initially required registration for multi-family rental units (properties with 3 or more rental units). The staff has been directed to evaluate if/when to require registering and potentially charging the RRP participation fees for all remaining rental units (including rented single-family residences, J/ADUs, and duplexes).
The City of Alameda has a Rental Registry program that also allows tenants and landlords to file petitions. The City collects the following data:
oType of property – ADU, Condo, mixed-use built before 1995, mixed use built after 1995, multi-family built before 1995, multi-family built after 1995, single- family residence, single-family residence + ADU, townhouse oLandlord/property manager contact information – mailing address, phone, email
oAddress of unit
oYear built
oAssessor’s parcel number
oNumber of bedrooms
oOccupant type – tenant, rent-subsidized tenant, vacant, manager, owner, non-residential commercial, short-term rental, work/live oReason for vacancy
oMonthly rent
oUtilities charged to tenant
oIncrease in rent
oCase type – tenant petitions, landlord petitions, annual program fee payments, annual registration status, capital improvement plans, no fault terminations, temporary relocation, buyout agreements, invalid rent increases.
ANALYSIS
As discussed in the background section, the City has been using FOCUS to generate annual reports and conduct audits of BMR properties to ensure compliance with the BMR Guidelines. BMR Property Managers input information for each BMR unit under their purview, including affordability, rental rates, utility allowances, maximum rent, household size, apartment size, unit number, initial move-in date, household income at move-in, voucher amounts, if applicable, and current income. FOCUS collects some of the same data that would be used in an expansive Rental Registry.
In other words, the FOCUS software already serves as a basic Rental Registry for BMR units but is limited in its capabilities for monitoring rent increases and vacancies because data is currently entered only once a year for each property. The system only provides the annual report of data entered and limited other reports. There is no comparison from prior years to monitor rent increases, show vacancies throughout the year or the reason for vacancies, or compare properties.
This presents an opportunity to explore working with Housing Compliance Services to expand and customize the FOCUS software to provide additional features for reports and analytics or to explore other available software options that can further streamline the audit process and/or provide reports to help inform the City Council of vacancy and rental rate trends and make informed future policy decisions as it related to housing. It should also be noted that the City of Concord, for example, uses the FOCUS software to help manage both BMR compliance and a Rental Registry.
Fig. 1: Foster City Rental Housing Tenure by Units in Structure Source: US Census, American Communities Survey, 2022, Chart B25032
A Rental Registry provides accurate real-time data on rental housing tenure and rental units by structure size and serves as a tool to identify the locations of older buildings where displacement due to rehabilitation is at higher risk. This information would be useful for applying for grants for developer loan programs and other financial assistance programs, such as tenant relocation assistance programs.
City Council Study Session September 16, 2024
On September 16, 2024, the City Council held a Study Session to discuss Anti Displacement Strategies and provided the following directions to staff, including:
1. Include the following recommended strategies in the Anti-Displacement Strategy document:
a. Tenant and landlord education and outreach for all rental units b. Extend AB 1482’s “No Fault Just Cause” lease termination provisions to BMR units
c. Apply a minimum tenant relocation payment equal to three month’s rent according to published U.S Department of Housing and Urban Development (HUD) Fair Market Rent (FMR) rates to BMR tenants as required for “No Fault Just Cause” lease terminations.
2. Change the BMR Guidelines to apply to all BMR rental units (both existing and future) to a maximum rent increase of 5%; and
3. Establish the Anti-Displacement Strategy as a mandate for BMR landlords/property managers and codify the strategies in an Ordinance.
An expanded Rental Registry with participation mandated through an Ordinance could provide data on lease terminations and rent increases for BMR units to assist staff in monitoring these provisions of the Anti-Displacement Strategy.
Options for the City Council’s consideration:
(1) Expand the provisions of the existing Compliance software for BMR rental units to include real-time, accurate data, and data and analytics capabilities on vacancies, lease terminations, and rent increases (426 units). Data already collected in the FOCUS software program includes the following items:
Contact information for owner
Contact information for property manager
Property address
Unit number
Number of household members
Number of bedrooms
Monthly tenant rent
Monthly subsidy, if any
Occupancy status (vacant or occupied)
Move-in date or vacancy date
BMR-specific data, including utility allowance amount, tenant name, household income, household income at move-in, affordability restriction (% of AMI), and date of last income recertification
In addition to the data already collected and listed above, expanded provisions could include the following:
Year property was built
Number of bathrooms
Square footage of the unit
Lease Term
Reason for vacancy
Increase in rent
List of utilities charged to tenants
Date of Notice to Pay or Quit
Property amenities/elevators
Parking spaces included
Whether the unit is accessible or adaptable
Assessor’s Parcel Number (APN)
(2) Extend the provisions of the existing BMR Compliance software, with additional data collection at the Council’s discretion as listed above in Item (1), to Foster City multi-family rentals of three or more units (approximately 4,700 units) to provide a comprehensive database of rental properties, units, vacancies, and rental rates. (3) Extend the provisions of the existing BMR Compliance software, with additional data collection at the Council’s discretion as listed above in Item (1) to all Foster City rental units (approximately 6,000 units) to provide a comprehensive database of rental properties, units, vacancies, and rental rates. (4) Should the selected option by the City Council be encouraged on a voluntary basis or established as a mandate? Any such mandate would require the adoption of an Ordinance. It shall be noted that if the Council’s direction is to establish the program as a mandate, staff will need to conduct extensive outreach to stakeholders, including property managers, landlords etc.
As noted previously, Option 1 would support the direction provided by the City Council for an Anti-Displacement Strategy at the September 16, 2024, Study Session.
Options 2 and 3 would support the direction provided at the Study Session and provide additional insightful data regarding market-rate rents and vacancies for comparison.
However, analysis of market-rate rental data is not a requirement to implement the Anti- Displacement Strategy. Based on the Council’s direction, staff will return to the City Council at a future date to discuss other considerations pertaining to the Rental Registry Program, including:
Costs and Pricing Structures for expanding the existing software or acquisition of new software
The current software, FOCUS, costs $5,500 annually to all existing BMR rental properties and is borne by the City. Housing Compliance Services has indicated a willingness to explore expansion and customization of the FOCUS software to provide additional features at additional cost. However, FOCUS would remain for use for BMR units only.
On August 20, 2024, the City issued a Request for Proposals (RFP) for BMR Compliance software and professional services to administer a potential Rental Registry program ( see Agenda Item 5.5 in the link). The RFP was issued on August 20, 2024, with a due date of September 10, 2024. Staff received four (4) responses, including Tolemi, HdL Companies, Deckard Technologies, and 3D.
The cost of a Rental Registry would vary depending on the software's complexity and the degree to which the City of Foster City subsidizes the costs or passes them on to landlords. The costs range from no hard costs to the City if all registration fees are borne by property owners to about $100,000 to launch a system. Annual costs to the City for program administration range from $0, if all costs are borne by property owners, to between $10,000 and $70,000 per year.
California Environmental Quality Act
CEQA General Rule Exemption pursuant to Section 15061(b)(3)
FISCAL IMPACT
There is no fiscal impact in receiving this report. Depending on the Policy direction provided by Council, staff will bring a future item that would discuss fiscal impacts associated with each of the options.
CITY COUNCIL VISION, MISSION, AND VALUE/PRIORITY AREA
Smart Planning, Development, and the Local Economy
ATTACHMENTS:
None