City of PomonaRent Stabilization Ordinance Update and Next Steps Study Session #2
August 7, 2024
Prepared by RSG, Inc.
Attachment No. 2
Agenda
Purpose of today’s Study Session
Overview of Urgency Ordinance
Work done to date
Permanent rent stabilization options
City Council questions
Next steps
Public comment
Purpose of Today’s Study Session
Overview of Urgency Ordinance
Background
Effective January 1, 2020, AB 1482, also known as the Tenant Protection Act set a state-wide rent increase limit of 5% plus CPI, capped at 10%, and implemented just cause eviction protections after 12 months As a response to the increased housing instability as a result of the COVID-19 pandemic, the City of Pomona adopted Urgency Ordinance 4320 on August 1, 2022 The City subsequently adopted Amended Ordinance 4329 on April 17, 2023, implementing the City’s rent stabilization measures for residential rental properties The Urgency Ordinance directed staff to further study and analyze whether a permanent rent stabilization program is warranted in the City and alternatives that may achieve similar goals
Urgency Ordinance No. 4320 and 4329
Rent increase limit:
Lesser of 4% or change in CPI for non-exempt residential rental units Just cause protections
Property owners must cite a for cause or no fault reason to terminate tenancy No fault terminations receive relocation assistance ranging from $5,926 to $15,377 Established petition process
Petition for Relief - for property owners seeking fair return Petition for Noncompliance - for tenants who allege there is a violation
Trends to Date
The Urgency Ordinance requires that a copy of all notice of terminations be provided to the City within 5 calendar days after service to the tenant Data in Pomona shows that approx. 97% of eviction notices served in the City are for a tenant’s failure to pay rent *Updated 7/18/2024
Work Done to Date
Work Done to Date
Urgency Ordinance:
Created program materials, program website, launched dedicated phone and email hotline, reviewed submitted petitions, launched Rental Registry, gathered data on evictions Meetings to Date:
August 14, 2023 – Study Session #1
August 7, 2024 – Study Session #2
Rent Stabilization Program Analysis:
Researched and interviewed 11 California jurisdictions with rent stabilization and just cause eviction programs Completed a comprehensive study on program design options and alternative approaches to housing stabilization
Permanent Rent Stabilization Options
Overview of Long-Term Options
Implement Permanent Ordinance
Make Urgency Ordinance permanent and add or modify some provisions based on research of best practices Implement an Alternative Approach
Adopt alternative city-wide tenant protection measures
Option 1: Implement Permanent Ordinance
Implement Permanent Ordinance
Research Topics:
Rent Limits – Rent limits, rent banking, and vacancy decontrol Petitions – Petition types, fees, petition review and hearings, governing entity, and appeals process Registration and Compliance - Rental registry and fees, inspections, and administrative penalties and fines Other Factors - Mediation, relocation assistance, and exemptions Administrative Considerations – Administrative factors to consider, such as program staffing and budget
Implement Permanent Ordinance
Key Findings – Rent Limits
Rent Limits
Rent Banking
Vacancy Decontrol
Urgency Ordinance Provisions
4% or change in CPI, whichever is lower
No provisions on rent banking
No provisions on vacancy control in the case that state law changes Research-Based Options
Tie rent increases to 65% to 100% of the change in CPI; Establish the limit as a flat rate;
Establish the limit as the lesser/greater of a percentage of the change in CPI or a flat rate (Current Scenario under Urgency Ordinance 4320); and/or Establish separate limits for small and large landlords, as defined by number of units.
Include provisions to allow for rent banking and consider restrictions, such as how many years can be banked, how much can be banked, expiring banked amounts upon new ownership, and caps on applying banked rent increases; Include provisions to allow for rent banking until rent reaches a program-established rent ceiling; or Do not allow banking (current scenario under Urgency Ordinance 4320) Include a provision that allows vacancy control for unlawful evictions; Include a preemptive vacancy control provision stating rent regulations continue upon vacancy in the event state law changes; and/or Do not include preemptive vacancy control (current scenario under Urgency Ordinance 4320)
Implement Permanent Ordinance
Key Findings – Petitions
Petition Types
Petition Fees
Petition Review and Hearings
Urgency Ordinance Provisions
Two petition types offered: 1) Petition for Relief from the Ordinance (fair return petition) and 2) Petition for Noncompliance (tenant petition) Applicants (landlords) are charged separately for the cost of processing petitions based on staff and/or consultant hours spent Some timelines for each phase of the petition/hearing process are included in the ordinance Research-Based Options
Landlord petitions: fair return, capital improvements, exemptions; Tenant petitions: improper rent increase, decreased housing services, habitability issues, undue burden from applying banked rent increases, if applicable; and/or Joint petitions: additional occupants, added housing services, one-time payments, etc.
Include the cost of processing petitions in the rental registry fee and do not charge separately for petitions; or Charge applicants separately for the cost of processing petitions based on staff and/or consultant hours spent (current scenario under Urgency Ordinance 4320) Set timelines for each phase of the petition/hearing process in the ordinance; and/or Allow for flexibility of the petition/hearing process by establishing timelines in program Policies and Procedures
Implement Permanent Ordinance
Key Findings – Petitions
Petition Authority
Appeals
Urgency Ordinance Provisions
Petitions are decided by a hearing officer
Any person directly aggrieved by a decision of a hearing officer may seek judicial review in the Superior Court Research-Based Options
Petitions are decided by a hearing officer or similar role (current Scenario under Urgency Ordinance 4320); or Petitions are processed and addressed internally by program staff, with only appeals of decisions going to a board or hearing officer Establish an internal process for appeals of petition decisions and determine who will hear them; or Do not allow for appeals of petition decisions to the City and defer such matters to the court of local jurisdiction (current Scenario under Urgency Ordinance 4320)
Implement Permanent Ordinance
Key Findings – Registration and Compliance
Rental Registry and Fee
Inspections
Administrative Penalties and Fines
Urgency Ordinance Provisions
No provisions on the requirement to register or pay a rental registry fee No provisions on inspection of rental units
Administrative fines of up to $1,000; and City Attorney is authorized to bring a civil action, seeking civil penalties, injunctive relief, declaratory and other equitable relief, restitution, and reasonable attorneys' fees and costs Research-Based Options
Charge separate fees for small landlords or fully vs. partially covered units; Allow or disallow for 50% pass-through of the registration fee to tenants; Decide which properties will be exempt from program fees, if any; and/or Decide whether to include provisions that encourage compliance, such as fee waivers the first year Omit inspection provisions from the ordinance, redirecting inspection requests to Code Enforcement or establishing a separate periodic inspection program for rental properties; and/or Include inspections provisions in the ordinance and employ trained staff Implement a fixed fee for violations of the ordinance;
Implement a penalty structure that escalates with each incidence of violation; or Do not incorporate explicit penalties into the ordinance and defer to the existing administrative citation process set forth in the municipal code
Implement Permanent Ordinance
Key Findings – Other Factors
Mediation
Relocation Assistance
Urgency Ordinance Provisions
No provisions on mediation
Permanent relocation amounts range from $5,926 to $15,377 for no-fault terminations of tenancy depending on whether the tenant is an eligible or qualified tenant, the length of tenancy, and the tenant’s income Research-Based Options
Do not include mediation services in the ordinance (disputes are resolved through petitions/hearings or contracted mediator) (current scenario under Urgency Ordinance 4320); or Incorporate mediation services into the petition process or provide them upon request Consider alternative methods of calculating relocation assistance amounts, such as estimated moving costs, one to three months of current rent, and distinctions for vulnerable populations (eligible vs. qualified); Consider including temporary relocation assistance for tenants who must temporarily relocate; and/or Consider including provisions for tenant buyout agreements
Implement Permanent Ordinance
Key Findings – Other Factors
Exemptions
Urgency Ordinance Provisions
The Ordinance does not apply to:
Dwelling units with a certificate of occupancy or equivalent permit for residential occupancy issued after February 1, 1995; Single family residences, condominiums, and townhomes;
Dwelling units that are a subdivided interest in a subdivision; and Dwelling units for which the landlord receives federal, state, or local housing subsidies Research-Based Options
Include specific provisions clarifying the exempt status of ADUs and/or duplexes; Include other exemptions depending on the specific community need; and/or Differentiate between exemptions from rent stabilization provisions and just cause eviction provisions
Implement Permanent Ordinance
Estimated Cost
FTE Needed*
Residents Served
Timeframe to Implement
$1.5 – $2.5 M
6 – 7 FTE
Residents of Covered Rental Units
1 – 2 years to be fully operational
Key Findings – Administrative Considerations
* FTE = Full-Time Equivalent staff
Implement Permanent Ordinance
Make Urgency Ordinance permanent and add or modify some provisions based on research of best practices Benefits
Offers more protections than state law
Can be tailored to community needs
Provides stability/predictability in rental costs
Considerations
Requires extensive administrative procedures (petitions, hearings, etc.) and high level of regulatory oversight Legal challenges
Gaps for tenants with emergency needs (rental assistance/legal assistance) Permanent Ordinance
Rent Limits
Keep as in Urgency Ordinance or modify
Eviction Protections
Keep as in Urgency Ordinance or modify
Relocation Assistance
Keep as in Urgency Ordinance or modify
Additions
Enforcement
Mediation
Tenant/landlord petitions
Funding
Rental registry fee covers program costs
Option 2: Implement an Alternative Approach
Alternative Approach
Research Topics:
Rental Assistance Programs – Programs that offer financial support to tenants to help cover rent payments Rental Inspection Programs – Programs focused on ensuring rental properties meet health and safety standards through regular inspections Code Compliance Programs – Programs that take a more proactive approach to code compliance, targeting the worst violators to enhance habitability standards Legal Aid and Eviction Defense Programs – Initiatives that provide legal support to tenants facing eviction, helping them navigate the legal system and avoid unjust evictions Enforcement Considerations – Enforcement mechanisms that can be implemented to ensure compliance with housing laws and regulations, enhancing the overall effectiveness of housing stabilization efforts
Alternative Approach
Program
Housing Stabilization Benefits
Estimated Costs
Time to Implement
Enhanced Rental Assistance Program
Provides financial support to tenants to help cover rent payments and prevent evictions. Prevents evictions by addressing immediate financial needs, maintaining stable living conditions for vulnerable tenants Current cost for Pomona: $174,000 annually. Expansion requires 1 additional Housing Technician ($92,675 - $99,341 annually). Additional funds needed to provide assistance to more households Infrastructure exists, expansion can be swift. Initial setup for expansion: less than 6 months Key Findings – Rental Assistance Programs
Alternative Approach
Program
Housing Stabilization Benefits
Estimated Costs
Time to Implement
Rental Inspection Program
Ensures rental properties meet health and safety standards through regular inspections. Maintains habitable living conditions by addressing potential health and safety issues, ensuring stable and safe housing for all tenants 3-4 FTEs needed, with annual costs between $350,742 and $467,656 Dependent on hiring and training staff, development of inspection protocols, and integration with existing code enforcement efforts Key Findings – Rental Inspection Programs
Alternative Approach
Program
Housing Stabilization Benefits
Estimated Costs
Time to Implement
Code Compliance Program
Takes a proactive approach to code compliance, targeting worst violators to enhance habitability standards. Prevents urban blight and improves living conditions for tenants in substandard housing 1-2 full-time inspectors, annual costs range from $116,914 to $233,828 Dependent on referrals and case volume. Implementation may require coordination with other departments Key Findings – Code Compliance Programs
Alternative Approach
Program
Housing Stabilization Benefits
Estimated Costs
Time to Implement
Legal Aid/Eviction Defense Program
Provides critical legal assistance to tenants facing eviction, particularly those who cannot afford private legal representation. Ensures tenants receive due process and are protected from wrongful evictions, maintaining housing stability for vulnerable populations Costs and staffing to be based on desired program scope and capacity. Could involve partnerships with local universities, paraprofessionals, and increased funding to local nonprofits Implementation timeline may range from 4 to 12 months or more, depending on stakeholder engagement, funding allocation, program design, and capacity building Key Findings – Legal Aid and Eviction Defense Programs
Alternative Approach
Program
Housing Stabilization Benefits
Estimated Costs
Time to Implement
Enforcement Considerations
Implements enforcement mechanisms to ensure compliance with housing laws, promoting a stable and secure housing environment through consistent enforcement Costs to be determined based on scope and scale. Influencing factors include level of oversight, existing staffing, and non-compliance rates Administrative fines and penalties may be quick to set up. Overall effectiveness depends on the time required to hire dedicated staff and implement procedures Key Findings – Enforcement Considerations
Alternative Approach
Follow state law for base rent stabilization and adopt alternative city-wide tenant protection measures Benefits
Addresses urgent tenant needs (financial and legal support, improved living conditions) Innovative, community-tailored support programs
Considerations
Some programs require identification of a flexible and sustainable funding source Some programs require development of program scope and coordination with other City departments Alternative Approach
Rent Limits
Mirror state law – 5% + CPI, not to exceed 10%
Eviction Protections
Separate just cause eviction ordinance tailored to the community Relocation Assistance
Keep as in Urgency Ordinance or modify
Additions
Rental assistance program
Rental inspection program
Code compliance program
Legal aid/eviction defense program
Enforcement considerations
Funding
Business License
Cannabis CB + tax
Rental Inspection Fee
Transient Occupancy Tax (TOT)
Questions
City Council
Next Steps
Next Steps