1 SANTA MONICA RENT CONTROL BOARD MEMORANDUM
TO: Santa Monica Rent Control Board
FROM: Rebecca Sherman, Acting General Counsel
MEETING: April 28, 2022
RE: Public hearing on proposed Charter amendments
_____________________________________________________________________ Subject Matter
The Board will hold a public hearing and consider whether to recommend to the City Council that the City place on the November 2022 ballot certain amendments to the City Charter and the Rent Control Charter Amendment (RCCA).
The first public hearing on this item was held on April 14, 2022. The Board continued the item to April 28, 2022, to allow for additional opportunity for public input. Staff has conducted additional outreach through public notices in the local newspaper, additional email blasts and social media engagement.
Executive Summary
In November 2022, Santa Monica will hold a general municipal election. For such elections, the Rent Control Board may make recommendations that the City Council place proposed amendments to the Santa Monica City Charter, including the Rent Control Charter Amendment, on the general election ballot.
The Board will hold a public hearing on the feasibility of certain amendments to the Charter: 1) that the City of Santa Monica adopt an amendment to the City Charter requiring the registration of all non-rent-controlled rental units; 2) that Section 1806(a)(8)(iv) of the RCCA be amended to require that an owner intend to occupy the unit for at least three years instead of one year; 3) that Section 1803(e) of the RCCA be amended to allow Commissioners to be elected to a maximum of three full terms to align with City elected officials; and 4) that Section 1803(d) of the RCCA be amended to state that an election need not be held if the number of qualified candidates does not exceed the number of open board positions.
The Board will consider whether to recommend an amendment to City Charter Article XXIII, which governs the City’s housing policies. Currently, this section of the City Charter does not include a requirement for owners to register rental units not subject to the RCCA. Such a requirement, if recommended, should be Item 11
2 incorporated into the City Charter and city processes since the RCCA already governs rental units subject to the Rent Control Law and requires owners to register those units with the Rent Control Agency.
The Board will also consider whether to recommend an amendment to the RCCA to increase from one year to three years the amount of time that an owner must intend to reside in their unit before being allowed to evict an existing tenant.
Finally, the Board will consider whether to recommend amendments to the RCCA regarding elections to align with term limits of the City Charter and improve election efficiency.
Discussion
a. Registration of rental units not subject to the Rent Control Law.
State restrictions on a local government’s ability to regulate rents across tenancies or to update local ordinances to apply rent control to buildings built after the adoption of the local law (April 1979 in Santa Monica) have substantially hobbled local entities’ efforts to ameliorate the worsening affordable housing crisis. Most new housing units are market rate units that are exempt from local rent control laws and, therefore, do not improve local housing’s affordability. And despite the claims of developers, simply increasing the supply of housing has not resulted in lower market rents. In fact, just the opposite is true: rental rates continue to increase even as the market-rate housing supply grows. Moreover, as rent-controlled units continue to be withdrawn from the rental market through the Ellis process and demolished and replaced with exempt units, the balance continues to shift toward fewer controlled units.
These state laws have led to a two-tiered system in which some tenants enjoy protections from large, unpredictable rent increases while others’ rents are limited only by a one-size-fits-all state law with no local enforcement mechanism.
Requiring the registration of all rental units could assist the City in a greater understanding of the scope of the affordable housing crisis in Santa Monica and in determining more effective ways to mitigate its impact, an impact that is driving housing instability, displacement, and greater numbers of the unhoused population.
i. Existing law
All units subject to the RCCA must be registered with the agency. Owners must provide information related to unit size, base rent, amenities and other basic information. In addition, units must be re-registered following a vacancy and re-rental. In this way, the agency obtains basic information about each rental unit to allow it to administer and enforce the law more effectively. This information also helps inform the agency about rental rates and trends as well as 3 the loss/gain of controlled units and the effectiveness of measures to maintain and increase the controlled rental housing stock.
Currently, unlike the RCCA, the City Charter does not require registration of non-controlled units. Like the registration requirements for controlled units, registration of uncontrolled units would assist city officials in monitoring and mitigating the affordable housing crisis and ensure that the tenant protections in the City Charter are followed. Moreover, with the state limits on rent increases and eviction protections, tenants would be better informed as to their rights.
To accomplish this, Article XXIII of the Santa Monica City Charter could be amended to require owners to register with the City non-controlled rental units.
Article XXIII governs the City’s housing policies, including tenant protections, in non-controlled rental units.
ii. Other jurisdictions
Most jurisdictions with some form of rent control or tenant protections require the registration of rental units. The table below illustrates the requirements of some of these cities.
Jurisdiction Type of units Initial
registration? Re-registration?
West Hollywood Controlled units Yes Upon vacancy and re-rental Los Angeles Controlled units Yes Annual
LA County Controlled units Yes Annual
Culver City All rental units Yes
Annual, upon new tenancy
and changes in housing
services
Berkeley Controlled and partiallyexempt units Yes Upon vacancy and re-rental; annually for PE units
Beverly Hills Controlled units Yes Upon vacancy and re-rental 4 iii. Other considerations
The requirement to register rental units and provide basic information such as the rental rate, ownership details, occupancy dates and amenities is not a new concept. In fact, most jurisdictions that provide any tenant protections either in the form of rent limits or just-cause eviction protections require the registration of rental units to gauge the effectiveness of the laws and to aid in enforcement.
These requirements have been in place for decades in some jurisdictions, including Santa Monica. The RCCA has required the registration of rental units since its enactment.
And courts have consistently upheld these requirements as squarely within the bounds of a local entity’s police powers and as Constitutional regulations of the provision of housing. As recently as 2020, the 9th Circuit Court of Appeals in Hotop v. City of San Jose unanimously upheld San Jose’s ordinance requiring initial and annual registrations of rental units against a challenge on Constitutional grounds.1 Plaintiffs claimed that the rent registry violated the 4th, 5 th and 14th amendments to the Constitution as well as the Contracts Clause. In rejecting the 4th amendment claim, the Court noted that no information was being disclosed that wasn’t already provided in other contexts under regulations that hadn’t been challenged. The Court also found there was no per se taking and no facts that would plausibly assert a regulatory taking under the 5th amendment.
Finally, the Court rejected the contracts clause allegation for failure to state a claim and the 14th amendment claim for the failure to show that the ordinance’s distinctions could not survive rational basis review.
Here, the factual and legal landscape is similar to that in the Hotop case.
The information sought is the same or similar as that which is already required for controlled units. And as in San Jose, the proposal would require information pertinent to the regulation of rental housing and the enforcement of existing laws.
Similarly, in 2019, the federal district court granted the City of Beverly Hills’ motion to dismiss against AAGLA, who had brought suit under 42 USC section 1983 for that city’s registration requirements.
In the cases cited above, the Courts uniformly rejected challenges to registration requirements based on privacy concerns. San Francisco Apartment Association v City and County of San Francisco, 881 F.3d 1169, 1178-1179 (9th Cir. 2018) involved a challenge to a San Francisco ordinance requiring certain disclosures regarding buyout offers. The Court noted that information already publicly available is not protected by the right to privacy under the California Constitution and because information that is routinely submitted to the government, such as the landlord's name and contact information, the property 1 982 F.3d 710 (2020); see also San Francisco Apartment Association v. City and County of San Francisco, 881 F.3d 1169 (9th Cir. 2018).
5 address, information about proposed expenditures where applicable, the current rent for each unit, detailed rental history, and the like, is regularly made publicly accessible, there is no reasonable expectation of privacy in such information.
Hoptop v. City of San Jose, discussed above, reached the same result when considering a local rent registry ordinance. And AAGLA v. Beverly Hills, U.S.D.C.
Central District, Case No. CV 18-6840 PSG (Ex). addressed the same issue, with the same result.
iii. Potential requirements for a rent registry for noncontrolled units in the City Charter, Article XXIII Article XXIII of the Santa Monica City Charter provides, among other things, eviction protections for tenants living in uncontrolled rental units. Section 2302(a) defines Nonrentcontrolled rental units as: “All residential rental units in the City of Santa Monica except those units that are subject to rent control pursuant to Article XVIII of this Charter or are single-family homes.” Section 2305, titled “Implementation”, describes the broad authority of the City Council to “protect community health, safety and welfare by, among other things, adopting ordinances, resolutions or regulations to implement and effectuate the provisions of this Article, including, but not limited to, provisions relating to exemptions, just cause, notices, comparability of units, and good faith. Additionally, the City Council may create any administrative mechanisms it deems necessary for this Article’s implementation.”
Requiring the registration of uncontrolled rental units that are subject to this Article could arguably be accomplished through an ordinance or regulation since it could reasonably be construed as a mechanism to ensure that landlords are adhering to the just cause provisions. An annual registration requirement along with a requirement to explain the reasons for changes in tenancy could greatly enhance these tenant protections.
Alternatively, the City Council could propose an amendment to the City Charter to require registration of these uncontrolled rental units. A new section could be added to Article XXIII requiring that the units subject to this article must be registered as set forth in the section and accompanying regulations. The City could also require that rental units subject to Article XXIII be registered annually to ensure rental rates and vacancy/tenant information is kept current. The City could also require registrations to be updated upon a new tenancy or changes in housing services as Culver City has done.
As part of the annual registration, the City could require owners to provide some or all of the following information: 1) occupancy status and commencement date of the current tenancy; 2) the amount of rent the current tenant is paying; 3) the reason the prior tenant vacated the unit, if known; 4) the water/utility metering 6 status of the unit; 5) the amenities provided with the tenancy; 6) any changes in ownership information; and 7) any other information the City deems necessary.
To cover the reasonable expenses necessary to administer the rent registry and provide counseling services, the City could establish an annual per unit fee that would be charged to property owners.
A new section, 2304.5, could be added to read:
2304.5 Registration of nonrentcontrolled rental units
(a) Registration required. Upon issuance by the City of Santa Monica of a valid written Rent Registration certificate, as set forth in this Section 2304.5, no Landlord shall demand or accept Rent for a Nonrentcontrolled Rental Unit (NRU) without first serving on the Tenant, or displaying in a conspicuous place, such Rent Registration certificate.
(b) Registration Process.
(1) A Landlord shall provide Rent amount and Tenancy information for every Rental unit on a Rent Registration form provided by the City. The Rent Registration form shall be submitted on a date to be determined by the City and on that date each year thereafter. Registration is complete only when all of the following information is provided: ownership information; property information; year built and certificate of occupancy date; number of bedrooms and bathrooms for each NRU; the amount of Rent in effect at the time of registration; a description of housing services; water/utility metering status of the unit; and the property vacancy rate. If any NRU has been vacant for more than 30 days, the Landlord shall provide the date of vacancy and an explanation for the vacancy. (2) Every NRU Rent Registration certificate shall be updated annually, as required by Section 2304.5(b)(1), upon a new tenancy, or when there are changes in housing services.
(3) If an NRU is vacant for more than 30 days, the Landlord shall provide a certification to the City of the duration of the vacancy, and that the NRU shall be secured against unauthorized entry.
(4) For every property for which a Landlord is required to procure a Rent Registration certificate pursuant to this section, the Landlord shall post a notice in a form provided by the City, providing information about this Subchapter 2304.5 and City contact information. Notices must be posted in a conspicuous location in the common area, at the entry or entries to the building or units, or other similar location or locations as necessary to provide Tenants a reasonable opportunity to view the notice. If there is no common area or similar location, this requirement 7 may be satisfied by mailing the notice to each Tenant of the building, by certified mail, return receipt requested. The notice shall be written in English and Spanish, and in any other languages as required by the City.
(c) Notice of Rent information deficiencies and opportunity to cure; Appeals; and Final Administrative Decision.
(1) The City shall provide written notification to the Landlord of a failure to comply with this section and allow fifteen (15) calendar days to respond. The City shall not issue a Rent Registration certificate for the NRU until the Landlord has substantially complied by providing the rental information as required by this section.
(2) Any Landlord disputing the City’s notification of deficient registration may file a written appeal with the Director within ten (10) calendar days of the date of the notice of deficiency. The Director shall provide a written notice within thirty (30) calendar days of its appeal decision, which shall be a final administrative decision.
(d) Registration fee.
(1) A fee for the registration of NRU’s may be established by resolution of the City Council. Such fees are intended to recover the City’s reasonable costs associated with the administration and enforcement of this section. (2) A Landlord may pass through to the Tenant fifty percent (50%) of the initial fee for the registration of the Tenant’s NRU (the pass-through fee) if such Tenant continuously occupied the NRU during the period covered by the completed registration. The City may establish applicable conditions and procedures governing the pass-through. The pass-through fee is not considered Rent and should appear as a separate line item on the Rent statement. A Landlord may collect a maximum of one-twelfth (1/12) of the pass-through fee per month.
b. Good faith requirements for owner-occupancy evictions The RCCA prohibits evictions of tenants except as enumerated in the law.
Owners or qualified relatives who wish to move into their units and reside there permanently may evict current tenants to do so, but only if they meet the requirements set forth in the RCCA. One of those requirements is that the owner or relative “intend in good faith to move into the unit within thirty (30) days after the tenant vacates and to occupy the unit as a primary residence for at least one year.”2
2 RCL Section 1806(a)(8)(iv).
8 The Board will hear input from the public on the feasibility of requiring owners or their qualified relatives to intend to occupy the unit for at least three years, instead of one year, upon evicting an existing tenant. The purpose of placing both a requirement to occupy the unit within a certain time frame and a good faith intent to live there for a certain period is to ensure that the eviction is not used as a pretext for the owner to rent the unit to a new tenant paying market rates. i. Existing tools to prevent sham evictions and their
effectiveness.
Currently, if an owner or relative fails to move into the unit within 30 days, the landlord is required to re-offer the unit to the displaced tenant and pay the tenant any expenses incurred in the unlawful displacement.3 Moreover, owners cannot set a new initial rent for the first tenancy following an owner-occupancy eviction; the Maximum Allowable Rent (MAR) for this tenancy is the same MAR as the previous tenancy.
4 Other protections include a requirement that the owner offer to the displaced tenant any unit that becomes vacant within a year of the tenant’s displacement, including the unit from which the tenant was evicted.5 The Board also has the ability to determine whether the first tenancy is a legitimate tenancy or a sham, in which case the landlord cannot set the initial rent for a subsequent tenant.
6 The table below illustrates the rate of evictions for owner-occupancy in the 5 years preceding the current COVID-19-related eviction moratoria, the current status of the units, and whether they have been re-rented. This information is based upon copies of eviction notices filed with the agency, notices of ownership changes and vacancy unit registrations.
Notices by year
from 2015 to
2019
Avg property
size Current status Rent still restricted? New tenancy? 2019 - 5 4 units 1 sold to new
owner
Yes 1 – May 2020
2018 - 7 5 units 1 Ellis, 1 sold to
new owner
6 restricted; 1
market
1 – 2020; 2021
(market rate)
2017 - 11 5 units 3 sold to new
owners
8 restricted; 3
market
5 new tenancies: 1-
2018, 4-2019
3 RCL Section 1806(a)(8)(v).
4 Regulation 3301(b)(1).
5 Regulations 9002(d)(4) and 9002(g).
6 Regulation 3301(k).
9 2016 - 7 5 units 6 sold to new
owners
3 restricted; 4
market
6 new tenancies: 1-
2016; 3-2018; 1-
2019; 1-2021
2015 - 5 3 units 3 sold to new
owners
Yes None
There are two instances of the re-rental of a formerly owner-occupied unit at the year mark, but more typical is the re-rental around two years or later. There does not seem to be a pattern as to the frequency of re-rental following an owner-occupancy exemption. The units that were owner-occupied in 2016 have mostly been re-rented while the units owner-occupied in 2015 all remain owneroccupied.
It is important to note that the good faith requirement to intend to live in the unit for a certain period of time serves as evidence of bad faith in an enforcement proceeding if the owner or relative moves out before the requisite time period is up. Such evidence is typically supported by other evidence to show that the eviction was carried out in bad faith.
ii. Good faith requirements in other jurisdictions
The table below illustrates the requirements for other jurisdictions.
Jurisdiction Time to
occupy unit
Period of
residency
Evidence of
bad faith
Right to return if
vacated within
period?
West
Hollywood 90 days 12 consecutive months
Rebuttable
presumption
Yes, if re-offered
for rent
Los Angeles 3 months 2 consecutive
years
Yes Yes, if tenant
notified owner
LA County 60 days
3 years unless
extenuating
circumstances
Yes Yes
Culver City 3 months 36 months Yes No
Berkeley 3 months 36 consecutive
months Yes Yes
10 iii. Potential impact of extending length of residency requirement
The residency requirement is a statement of intent before owners can evict a tenant using this section. So, if this change is made, an owner would have to declare an intention to reside in the unit for at least three years. An owner who vacates the unit within that time period would be presumed not to have acted in good faith in evicting the tenant under this section.
Based on past practices, staff has found that the agency’s most effective tool in deterring sham evictions has been the bar to setting a new initial rent for the first tenancy following an owner-occupancy eviction as well as the tenant’s right to re-rent the unit if the owner vacates it within a year. The requirement to reregister the unit when it is re-rented allows the agency to enforce the limits on the MAR as well as to determine whether the tenancy itself is legitimate.
To implement this change, RCCA Section 1806(a)(8)(iv) would be amended to read:
(iv) The landlord or enumerated relative must intend in good faith to move into the unit within thirty (30) days after the tenant vacates and to occupy the unit as a primary residence for at least one year three years.
To strengthen this requirement, the Board could also require owners to reoffer the unit to the displaced tenant if the owner vacates the unit within three years. In addition, currently, owners must move into the unit within 30 days after a tenant vacates. If the owner fails to take possession within 30 days, the owner must re-offer the unit to the displaced tenant. Many owners who genuinely intend to occupy the unit as their primary residence find it difficult to make the transition that quickly. And most jurisdictions allow at least 60 days for owners to move into the unit after the tenant vacates.
To implement these changes, Section 1806(a)(8)(v) could be amended as follows:
(v) If the landlord or relative specified on the notice terminating tenancy fails to occupy the unit within thirty (30) sixty (60) days after the tenant vacates or fails to occupy the unit as a primary residence for at least three years, the landlord shall:
A. Offer the unit to the tenant who vacated it.
B. Pay to said tenant all reasonable expenses incurred in moving to and/or from the unit.
11 c. Election administration
Term limits
RCCA Section 1803(e), Term of Office, states “Commissioners shall serve a maximum of two full terms.” The Santa Monica City Charter also sets term limits for its councilmembers. Article VI, Section 600 allows councilmembers to serve up to three terms. For both agencies, terms are four years. The City Charter also states that term limits apply to appointed terms as well as elected terms. The RCCA does not specify whether appointed terms count toward the term limits.
In order to align with the City Charter and to have greater efficiency and cost reductions in the administration of elections, the Board proposes that the RCCA be amended as follows:
Section 1803(e) TERM OF OFFICE: Commissioners shall serve a maximum of two three full terms. These term limits shall not apply to appointed terms, only elected terms.
Election efficiency
Currently, the RCCA requires that an election be held even if there are only as many candidates as open Board positions. The Board could propose an amendment to the RCCA that an election is not necessary when the number of qualified candidates does not exceed the open positions. To accomplish this, Section 1803(d) could be amended as follows:
Section 1803(d) ELECTION OF COMMISSIONERS: If, upon the City Clerk’s determination of the qualified candidates, the number of candidates does not exceed the number of vacant positions, no election will be held and the qualified candidates shall be seated upon swearing in by the City Clerk. The elected Commissioners shall take office on the first Tuesday following the general municipal election.
Conclusion
Following the public hearing and after consideration of public input, the Board can determine whether to recommend these changes to the City Council. To ensure the City Council has adequate time to consider any recommended changes, they should be forwarded to the City Council no later than mid-May.