Fremont City Council Meeting: 09/20/22 07:00 PM
3300 Capitol Avenue Div/Dept: Human Services Department Fremont, CA 94538 Category: Fees & Rates
SCHEDULED
Sponsors:
STAFF REPORT (ID # 4638) DOC ID: 4638 B
Updated: 9/16/2022 1:12 PM by Susan Gauthier B Page 1
RENT REVIEW ORDINANCE ANNUAL REPORT AND PROGRAM FEE – Public Hearing (Published Notice) to Review the Annual Report on the Rent Review Ordinance and Adopt the FY 2022/23 Annual Fee
Contact Persons:
Name: Robert Lopez Suzanne Shenfil
Title: CDBG Administrator Director
Div/Dept: Human Services Department Human Services Department Phone: 510-574-2043 510-574-2051
E-Mail: [email protected] [email protected]
Executive Summary: As required by the Rent Review Ordinance (RRO), City staff has prepared a RRO Annual Report for the City Council. The report provides an update on the status of the rent review program. Staff has also calculated the FY 2022/23 Rent Review Ordinance annual fee for City Council approval.
The RRO authorizes the City to recover all expenditures by collecting a per rental unit fee from residential landlords. The purpose of this staff report is to recommend that the City Council adopt a per-unit fee of $13.00 for FY 2022/23, for full cost-recovery of administering the RRO.
BACKGROUND: On October 3, 2017, City Council adopted the RRO creating a process for reviewing proposed residential rent increases exceeding 5% and establishing a Rent Review Board, although tenants and landlords are encouraged to attempt to resolve their differences through consultation and mediation before proceeding to a hearing. The ordinance also requires written noticing to tenants in multiple languages within 60 days, an increase in the penalty for landlord retaliation against tenants from $1000 to $2000 (the maximum allowable under state law), and rent may only be raised one time a year. There is also a requirement for an annual report to the City Council assessing the effectiveness of the program. The RRO covers all residential rental units in Fremont, including single family homes and condominiums, with a few exceptions.
The source of funding for the RRO is an annual per-unit cost-recovery fee that is approved annually by City Council and subsequently billed to residential landlords (Rent Review Ordinance Section 9.60.130). In determining the fee, staff divides the appropriated expenditures by the number of residential rental units, subject to the RRO, with adjustments to reflect the expected collection rate and remaining funds from the prior year .
In FY 2021/22, the fee was $12.00 per unit. This year the recommended fee amount is $13.00 per unit.
COVID-19 and Eviction Moratoriums. On March 25, 2020 the Fremont City Council ratified an Executive Order establishing a temporary moratorium on evictions of residential tenants in Fremont as one of its measures to address the COVID -19 pandemic emergency.
Thereafter, on April 22, 2020, the Alameda County Board of Supervisors adopted Ordinance No. O-2020-23 as an urgency ordinance to regulate residential evictions throughout the County during the COVID-19 public health emergency. On June 30, 2020, the County Staff Report (ID # 4638) Meeting of September 20, 2022 Updated: 9/16/2022 1:12 PM by Susan Gauthier B Page 2
adopted Ordinance No. O-2020-41 to extend its previous eviction moratorium. The County’s ordinance effectively superseded the City’s residential moratorium, prohibiting all residential evictions anywhere in the County with few exceptions. The County’s moratorium ordinance remains applicable in Fremont and throughout Alameda County, even though the City’s residential eviction moratorium has lapsed, and the state’s COVID -19 eviction protections (through Assembly Bill No. 2088 (August 31, 2020) as well as Senate Bill No. 91 (February 1, 2021)) ended on June 30, 2022.
During this last year, relatively few rent increase cases were brought to the City, however a number of tenants impacted by COVID saw lost wages and in some cases lost employment all together. City staff directed their attention from cases involving rent increases to the administration of the Emergency Rental Assistance Program (ERAP) which assisted tenants who were accumulating debt by owing rent arrears and landlords who were not receiving rental payments they were anticipating. Through ERAP, the City assisted with monetary relief offered through the Federal Treasury Department/State of California in the amount of $15.9 million provided to 1,365 households.
DISCUSSION/ANALYSIS: The following information serves as the annual report to the City Council to continue assessing the effectiveness of the RRO. The report covers the period from January 1, 2021 to December 31, 2021. According to the 2020 Census, the City has approximately 234,829 residents and 78,038 occupied housing units. 1 Of the total housing units in Fremont, about 21% are renter occupied. There are approximately 16,408 rental units in Fremont that are subject to the RRO. Rental units that are not subject to the RRO include units that are hotels, boarding houses, transient accommodations, dormitories, mobile home space rentals, shared housing units, and junior accessory dwelling units. The average cost of rent in 2021 for a 1-bedroom unit was $2,444.2
In 2021, a total of 26 requests for rent review were received between January 1 st and December 31. Of the 26 cases, 13 were resolved by consultation, two were partially resolved by mediation, and one was resolved by mediation. Six (6) cases were unresolved after consultation, two were unresolved after mediation, and two were cancelled by the tenants. Most cases brought to the City are resolved within the first two steps of the RRO process, which include 1.) consultation, 2.) mediation, and 3.) Rent Review Board hearing.
Resolved cases:
1. An increase of 5.1% was cancelled by the landlord after the Housing Authority refused to approve the increase for the Section 8 tenant at the BMR complex.
2. An increase of 5.3% was cancelled by the landlord because the increase violated the 12-month rule of the rent review ordinance.
3. An increase of 8.8% was reduced to 5%.
4. An increase of 5.9% was cancelled and the base rent was reduced by 4%.
5. Landlord declined to reduce the increase but agreed to renovate the unit.
6. An increase of 8.8% was reduced to 5%.
7. An increase of 10% was reduced to 5.2%.
1 Data from the United States Census Bureau;
https://data.census.gov/cedsci/table?q=population%20in%20fremont&tid=ACSDP5Y2020.DP05 2 The average rent is calculated using data from Apartments.com, Rent Café, and Zumper, and may be skewed depending on how each reporting agency collects their data.
Staff Report (ID # 4638) Meeting of September 20, 2022 Updated: 9/16/2022 1:12 PM by Susan Gauthier B Page 3
8. Landlord agreed to a month-to-month tenancy with the same 5% increase as a lease.
9. An increase of 8% was reduced to 5%.
10. Landlord agreed to replace the appliances as requested by the tenant.
11. Landlord agreed to a 6-month lease with same 3.5% increase as a 1-year lease
12. An increase of 8.7% was reduced to 7.8% (mediation).
13. An increase of 5.5% was reduced to 5%.
14. An increase of 7.4% was reduced to 5%.
15. Landlord agreed to a month-to-month tenancy with the same 5% increase as a lease.
16. An increase of 8.8% was reduced by a $101 concession for 3 months.
Staff has seen an uptick in rent increase cases since the prior year and anticip ate more in the upcoming fiscal year as the rental and job markets recover. The County is also anticipating an increase in rent increase cases and has allocated approximately $4 million dollars for eviction protection assistance that includes funding for mediations and legal services. These services are largely being contracted to Central Legal and will be available to all county tenants.
FY 2022/23 Rent Review Ordinance Annual Fee
Staff has prepared a recommended per-unit fee for Council to adopt for FY 2022/23. The fee only applies to landlords with five or more units.
Amount to be Recovered: The cost recovery model divides the FY 2022/23 budgeted expenditures for the rent review ordinance program by the total number of billable residential rental units in the City. The budgeted expenditures for FY 2022/23 are $260,825.
With $61,166 of fund balance available for the program on June 30, 2022, the net amount to recover is $199,659.
Item/ Amount
FY 2022/23 RRO Projected Expenditures $260,825
Fund Balance Available ($61,166)
FY 2022/23 Amount to be Recovered: $199,659
Total Number of Billable Units: Staff is estimating the total number of billable units to be roughly 16,408. This number is based on the number of landlords that participated in the FY 2021/22 fee process. Based on actual collections for FY 2021/22, staff is estimating a 96% collection rate for these units, which is 15,687 units.
Estimated residential rental unit fee: $13.00*
($199,659/15,687)
* Rounded up to the nearest whole dollar
Staff recommends that the City Council adopt a per-unit fee of $13.00 for FY 2022/23, for full cost-recovery of administering the RRO.
The Master Fee Schedule will be amended annually to reflect each year’s budgeted or projected program expenditures, the rental unit inventory, and the estimated collection Staff Report (ID # 4638) Meeting of September 20, 2022 Updated: 9/16/2022 1:12 PM by Susan Gauthier B Page 4
rate. In the event that the fees collected in one year exceed or fall below actual costs, adjustments will be made when the City determines the fee for the following year.
FISCAL IMPACT: There is no impact to the General Fund. All of the City’s ongoing costs incurred in the implementation and administration of the Rent Review Program will be recovered from rental unit owners through the annual Rent Review Program fee.
ENVIRONMENTAL REVIEW: The proposed action is exempt from the requirements of California Environmental Quality Act (CEQA) pursuant to, without limitation, CEQA Guidelines Section 15378(b)(2), (4) and/or (5) and/or 15061(b)(3), in that it is an administrative or fiscal activity of the City which does not have the potential for causing a significant effect on the environment, each of the foregoing providing a separate and independent basis for CEQA exemption.
ATTACHMENTS:
• Draft Resolution Rent Review Program Fee
RECOMMENDATION: Staff recommends that the City Council:
1. Receive the Rent Review Ordinance Annual Report;
2. Hold a public hearing;
3. Authorize a fee of $13.00 per residential rental unit in FY 2022/23 to recover the costs of the Rent Review Program; and
4. Adopt a resolution to amend the Master Fee Schedule to modify the Rent Review Program Fee.