Proposed tenant relocation assistance ordinance

Background


On January 10, 2017, the City Council held a study session on addressing the concerns regarding residential displacement in Menlo Park. The study session included staff, Housing Commissioners and a panel of four housing experts. Staff presented 10 policies that have been commonly used or considered in other cities, including rent control, just cause eviction, relocation assistance and mandatory non-binding arbitration, among others. At that time, the City Council did not support dedicating any staff resources to exploring rent control or just cause eviction. The City Council referred the remaining eight recommended policies, along with seven others introduced by the expert panel, to the Housing Commission for prioritization. The Housing Commission reviewed the policy table over the course of three consecutive monthly Housing Commission meetings, received input from stakeholders and experts and developed a recommended prioritization list.

Staff presented this recommended prioritization list at the August 22, 2017, City Council meeting where the City Council approved the Commission’s recommendations without changes.

At its July 11, 2018, regular meeting, the Housing Commission reviewed a draft of the proposed tenant relocation assistance ordinance and recommended changes in regards to the urgency of the ordinance, the household eligibility criteria, the indexing of rent increases to the consumer price index plus 5 percent, the definition of applicable residential units, inclusion of special circumstance provisions and a rental subscription service.

At its August 8, 2018, regular meeting, the Housing Commission modified the eligible tenant definition to include any tenant residing in a rental unit for 12 months or more, subject to an annual household income limit equal to two-hundred percent (200%) of the area median household, and added an owner move-in exemption. The Commission also scheduled two public meetings for September 2018, to gather further public input.

The September 2018 meetings were noticed during the week of August 27, 2018, via mailed postcards to all Menlo Park properties and property owners (including out of town property owners). Additionally, interested organizations who had previously contacted the city about the draft ordinance were also invited to provide comments. These organizations included housing advocacy groups, landlord-tenant mediation services, the California Apartment Association and realtors.

During the September 12, 2018, Housing Commission meeting and the September 13, 2018, community meeting, the City received approximately five hours of public testimony.

The October 10, 2018, Housing Commission is the next opportunity for public comment and discussion.

Draft ordinance language



ORDINANCE NO. ____

URGENCY ORDINANCE OF THE CITY COUNCIL OF THE CITY OF MENLO PARK AMENDING TITLE 8 [PEACE, SAFETY AND MORALS] OF THE MENLO PARK MUNICIPAL CODE TO ADD A NEW CHAPTER 8.55 [TENANT RELOCATION ASSISTANCE]

The City Council of the City of Menlo Park does hereby ordain as follows:

SECTION 1. FINDINGS AND DETERMINATIONS.

A. Government Code § 36934 (b) authorizes ordinances to take immediate effect when they are “[f]or the immediate preservation of the public peace, health or safety, containing a declaration of the facts constituting the urgency, and [are] passed by a four-fifths vote of the city council.” 

B. The City of Menlo Park currently does not regulate rent increases or reasons for evictions from residential property and certain aspects of public peace, health, and safety are not adequately protected due to the lack of regulation.

C. The California Housing Partnership Corporation estimates there is a shortage of 25,882   affordable rental homes to accommodate low-income renters in San Mateo County, which has a population of 748,732 and 106,289 renting households, according to the U.S. Census.

D. The report Displacement in San Mateo County: Consequences for Housing, Neighborhoods, Quality of Life, and Health found that after being displaced, only 21 percent of households reported staying in the same neighborhood (within 1 mile of their previous home). Thirty-three percent of households left San Mateo County, generally moving to the Central Valley or eastern communities in the East Bay.

E. The rents in San Mateo County and Menlo Park in particular have been steadily increasing. Increasing rents combined with a housing shortage places substantial pressure on the existing city residents who rent housing. In particular, rising rents can lead to tenant displacement of longstanding residents.

F. On August 22, 2017, the City Council directed City Staff to prioritize housing policies, with tenant relocation assistance being part of the priority one recommended policies. 

G. On July 11, 2018, the Housing Commission held a regular public meeting to discuss and consider for recommendation to City Council for adoption of a draft tenant relocation assistance ordinance. 
 
H. On August 8, 2018, the Housing Commission held an additional regular public meeting to discuss and consider for recommendation to City Council for adoption of a draft tenant relocation assistance ordinance.
 
I. The Commission scheduled two additional community meetings, one at the Menlo Park Senior Center, September 12, 2018, and one at the City Council Chambers, September 13, 2018, in order to hear additional public comment on the matter.

J. Members of the community expressed concern that in light of this proposed relocation assistance ordinance, they would receive eviction or rent increase notices from their landlords. 

K. The process of adopting a relocation assistance ordinance regulating substantial rent increases and no cause evictions by requiring landlords to pay relocation fees in certain instances creates uncertainty and concerns among some landlords that if they do not evict tenants or raise rents before the effective date of the ordinance, they will be required to pay relocation fees later by the new regulations and such actions would defeat the intent and purpose of the new ordinance and substantially impair its effective implementation. 

L. According to Legal Aid, at least 20 “no fault” eviction notices were issued within the past 32 months in Menlo Park and this sample of eviction activity, self-reported by the Menlo Park residents who were motivated to consult a lawyer, is a fraction of the total. Legal Aid further reports that their records reflect that at least an additional 10 Menlo Park households reported rent increases of more than ten percent (10%) during the past 32 months. Again, this fractional sampling does not capture the full-scale of significant rent increases in the city. 

M. This data is also supported by reports received by City from tenants and community organizations that indicate at least 20 instances of “no fault” evictions and at least 10 instances of tenants having received rent increase notices greater than 10 percent (10%) since December 2015.

N. Legal Aid also reported that in other jurisdictions, which have adopted similar ordinances, landlords responded pre-emptively before the potential effective date of a tenant protection measure. Two examples from Legal Aid’s cases: 

In April 2017, in response to the Pacifica City Council agenda item to place a rent control and just cause eviction ordinance on the November 2017 ballot, the landlord of a 16-unit building increased rents on all units of the building by forty percent (40%). The landlord stated her intention in doing so was to avoid potential fiscal impact of the ordinance, and that the increase was more than she would have routinely sought but for the possibility of future increases being limited.

In August 2016, a landlord in Burlingame issued 60-day “no cause” notices of termination of tenancy to all four units in the building, in anticipation of a rent control ordinance on the November 2016 ballot, which if passed, would have rolled back recently implemented rent increases for existing tenants. The landlord publicly state that the only reason the termination notices had been issued was to ensure that the landlord would not be “stuck” with them if the ordinance passed, and that he had been advised to take this preemptive step by his attorney.

O. Tenants evicted in Menlo Park are forced to incur substantial costs related to new housing including, but not limited to, move-in costs, moving costs, new utility hook-ups, payments for temporary housing, and lost work time seeking housing. Move-in costs commonly include first and last month’s rent plus a security deposit equal to one month’s rent, leading to total relocation expenses in excess of three months’ rent.

P. The impacts of evictions are particularly significant on low-income, elderly, and disabled tenants and tenants with minor children, justifying an additional payment for households with these tenants.

Q. In light of the numerous concerns noted herein, including but not limited to, the current and immediate threat to the public peace, health and safety by the fact that tenants are not adequately protected due to the lack of regulation and the adverse impacts that would result from displacement of City residents, this emergency measure is necessary to preserve the public peace, health, and safety of the community.

R. In enacting this ordinance, the City is exercising its right to regulate and monitor the basis for eviction.

S. For the reasons set forth above, and to mitigate displacement issues, the City Council of the City of Menlo Park finds and declares the addition of Chapter 8.55 [Tenant Relocation Assistance] is necessary for immediate preservation of the public peace, health, and safety, and the findings and determinations above taken together constitute the City Council’s statement of reasons constituting the urgency. 

SECTION 2. ADDITION OF CODE. Chapter 8.55 [Tenant Relocation Assistance] of Title 8 [Peace, Safety and Morals] is hereby added to the Menlo Park Municipal Code to read as follows:
Chapter 8.55
TENANT RELOCATION ASSISTANCE

Sections:
8.55.010 Purpose.
8.55.020 Definitions.
8.55.030 Requirement to provide relocation assistance.
8.55.040 Relocation assistance.
8.55.050 Procedures for relocation assistance payment.
8.55.060 Notice of termination and notice of entitlement to relocation assistance.
8.55.070 Text of notice.
8.55.080 Retaliation prohibited.
8.55.090 Failure to comply.
8.55.100 Hardship Waiver.


8.55.010 Purpose.
In enacting these regulations, the City Council recognizes the need to protect tenants and tenant households from the adverse health, safety and economic impacts of displacement. It is the purpose and intent of the City Council to mitigate such impacts on these residents with this Chapter. 

8.55.020 Definitions.
For the purpose of this Chapter, unless otherwise apparent from the context, certain words and phrases used in this Chapter are defined as follows:

(a) BASE RENT means the rent for a rental unit required to be paid by the tenant to the landlord in the month immediately preceding the effective date of the rent increase. Base rent shall not include ancillary services including, but not limited, to pet deposits, storage, additional parking or utility pass-throughs.

(b) ELIGIBLE TENANT means any tenant(s) residing in a rental unit in the City for twelve (12) months or more under a valid rental agreement whose annual household income, as adjusted for household size, does not exceed two-hundred percent (200%) of the area median household income for San Mateo County according to the United States Department of Housing and Urban Development, as may be adjusted from time to time.

(c) LANDLORD means any person, partnership, corporation or other business entity offering for rent or lease any rental unit in the City. Landlord shall include the agent or representative of the landlord, provided that such agent or representative shall have full authority to answer for the landlord and enter into binding agreements on the landlord’s behalf. For the purposes of the owner move-in exception provided in Section 8.55.020 (d)(4) below, "landlord" shall be defined as an owner of record of at least fifty percent (50%) interest in the property.

(d) LANDLORD-CAUSED TERMINATION means the circumstances where a landlord provides an eligible tenant with a proposed significant rent increase and the tenant elects to not remain in the rental unit. It also includes a landlord taking action to terminate the tenancy of an eligible tenant occupying a rental unit for any reason except the following:
(1) Failure to Pay Rent. The tenant has failed, after three days’ written notice as provided by law, to pay the amount stated in the notice, so long as the amount stated does not exceed the rent to which the landlord is legally entitled under the rental agreement, this Chapter, state law, or any other local law. 
(2) Breach of Rental Agreement. After service of the required notice, the tenant has not cured a violation of a material term of the rental agreement. 
(3) Nuisance. The tenant has continued, after the landlord served the tenant with a written notice to cease, to commit or expressly permit a nuisance in the rental unit. 
(4) Owner Move-In. The landlord seeks to recover possession in good faith:
a. For the landlord's use or occupancy as his or her principal residence for a period of at least twelve (12) continuous months or
b. For the use or occupancy of the landlord's parents, children, brother or sister, as their principal place of residency for a period of at least twelve (12) continuous months.
(5) Expiration of lease term. Expiration of a one year rental agreement as provided in Chapter 8.53 of this Code.

(e) RENT means the amount of fixed periodic compensation paid by a tenant to a landlord, as defined by the rental agreement between the tenant and landlord, for the possession and use of a rental unit. Rent shall not include ancillary services including, but not limited to, pet deposits, storage, additional parking or utility pass-throughs.

(f) RENTAL AGREEMENT means the legal written or oral agreement, including all changes and addenda, governing occupancy of the rental unit between landlord and tenant.

(g) RENTAL UNIT means any housing unit offered for rent or lease in the City of Menlo Park, except that for purposes of this Chapter Rental Unit shall exclude:
(1) Any housing unit that is subject to a recorded affordable housing regulatory agreement that requires that the housing unit be rented at restricted rents to income-qualified tenants as defined by the regulatory agreement;
(2) Secondary Dwelling Units as defined by Chapter 16.79; and
(3) Owner occupied Single Family Residences where a room is rented to a third party.

(h) RENT INCREASE means any upward adjustment of the rent from the base rent amount.

(i) SIGNIFICANT RENT INCREASE means a proposed rent increase that raises the rent, or proposed multiple rent increases that cumulatively raise the rent during any twelve (12) month period, to an amount more than the previous year’s Consumer Price Index for all Urban Consumers for the San Francisco-Oakland-San Jose area, published by the U.S. Department of Labor, Bureaus of Labor Statistics (CPI) plus five percent (5%) above the base rent that was in place at the beginning of such twelve (12) month period. This excludes circumstances where the proposed rent increase is rescinded by the landlord and excludes residential properties where landlords may establish the initial and all subsequent rental rates for a residential property pursuant to California Civil Code Section 1954.52.

(j) SPECIAL-CIRCUMSTANCES HOUSEHOLD means an eligible tenant with any of the following characteristics at the time of notice of landlord-caused termination:
(1) At least one resident of the rental unit is sixty-two (62) years of age or older; 
(2) At least one resident of the rental unit qualifies as disabled as defined by Title 42, United States Code Section 423 or has a handicap as defined by California Health and Safety Code Section 50072; or
(3) One or more minor children (under eighteen (18) years of age) who are legally dependent (as determined for federal income tax purposes) reside in the rental unit. 

(k) TENANT shall have the same meaning as defined in Chapter 8.53.  

8.55.030 Requirement to provide relocation assistance.
If any eligible tenant receives notice(s) of a landlord-caused termination, that eligible tenant is entitled to relocation assistance in accordance with this Chapter.

8.55.040 Relocation assistance.
The landlord shall provide relocation assistance where required by Section 8.55.030 to an eligible tenant as set forth below:

(a) Three times the most current applicable Menlo Park market rate monthly rent, published by the director of community development and updated January 1 of each year, or three times the monthly rent that the tenant(s) is paying at the time the notice of landlord-caused termination is delivered, whichever amount is greater.

(b) A sixty-day (60-day) subscription to a rental agency service.

(c) Special circumstances households will also receive one times the most current applicable Menlo Park market rate monthly rent, published by the director of community development and updated January 1 of each year, or one times the monthly rent that the tenant(s) is paying at the time the notice of landlord-caused termination is delivered, whichever amount is greater.

8.55.050 Procedures for relocation assistance payment.
The landlord shall pay relocation assistance as follows:

(a) The landlord shall pay one-half of the relocation assistance to the eligible tenant(s) no later than five business days following receipt of written notice that the tenant intends to vacate the rental unit, or following service of the notice of landlord-caused termination; and the balance of the relocation assistance no later than five days after the tenant has vacated the rental unit. If the tenant ultimately fails to vacate the rental unit where a landlord provides a proposed rent increase that raises the rent, or proposed multiple rent increases that cumulatively creates a significant rent increase at any time during a twelve (12) month period, the tenant shall reimburse relocation assistance to the landlord.

(b) The landlord shall provide tenant with the sixty (60) day subscription to a rental agency service no later than five business days following receipt of written notice that the tenant intends to vacate the rental unit, or notice of a landlord-caused termination.

(c) Nothing provided herein prohibits a landlord and a tenant from agreeing to relocation assistance different from that provided in this section. A landlord shall not attempt to influence a tenant to agree to relocation assistance different from that provided in this Chapter in bad faith by means of fraud, intimidation or coercion (including, but not limited to, threats based on immigration status).

8.55.060 Notice of termination and notice of entitlement to relocation assistance.
Where a landlord provides a notice of a landlord-caused termination or a significant rent increase to an eligible tenant the landlord shall provide a written notice of tenant’s entitlement to relocation assistance at the same time. Such notice of entitlement to relocation assistance shall be posted on the door to the rental unit and sent certified mail or first class mail, or personally served upon tenant, and shall be provided in both English and Spanish.

8.55.070 Text of notice.
The notice of entitlement to relocation assistance for a landlord-caused termination shall state:

NOTICE: Under Civil Code Section 827(b), a landlord must provide a tenant with thirty (30) days’ notice before a rent increase of ten percent (10%) or less and sixty (60) days’ notice of a rent increase of greater than ten percent (10%). Under Title 8, Chapter 8.55 of the Menlo Park Municipal Code, a landlord must at the same time as a notice under Civil Code Section 827(b), for any landlord-caused termination, provide this notice of the tenant’s entitlement to relocation assistance. Eligible tenants are entitled to the following forms of relocation assistance: (a) A relocation fee which shall be the cash equivalent of  three times the most current applicable Menlo Park market rate monthly rent, published by the director of community development and updated January 1 of each year, or three times the monthly rent that the tenant(s) is paying at the time the notice of the landlord-caused termination is delivered, whichever amount is greater; (b)  a sixty (60) day subscription to a rental agency service; and (c) for special circumstances households one times the most current applicable Menlo Park market rate monthly rent, published by the director of community development and updated January 1 of each year, or one times the monthly rent that the tenant(s) is paying at the time the notice of landlord-caused termination is delivered, whichever amount is greater. Special-circumstances households include the following: (1) At least one resident of the rental unit is sixty-two (62) years of age or older; (2) At least one (1) resident of the rental unit qualifies as having a disability defined by Title 42, United States Code Section 423 or has a handicap as defined by California Health and Safety Code Section 50072; or (3) One or more minor children (under eighteen (18) years of age) who are legally dependent (as determined for federal income tax purposes) reside in the rental unit. Under Civil Code Section 1942.5, it is illegal for a landlord to retaliate against a tenant for lawfully and peaceably exercising his or her legal rights.

8.55.080 Retaliation prohibited.
Commencement of eviction proceedings against a tenant for exercising his or her rights under this Chapter shall be considered a retaliatory eviction. Under Civil Code Section 1942.5, it is illegal for a landlord to retaliate against a tenant for lawfully and peaceably exercising his or her legal rights.

8.55.090 Failure to comply.
A landlord’s failure to comply with any requirement of this Chapter may be asserted as an affirmative defense in an action brought by the landlord to recover possession of the rental unit. Additionally, any attempt to recover possession of a rental unit in violation of this Chapter shall render the landlord liable to the tenant for damages permitted by law in a civil action for wrongful eviction. The tenant may also seek injunctive relief and money damages for wrongful eviction and/or failure to pay relocation assistance. A landlord may seek money damages for a tenant’s failure to reimburse relocation assistance if the tenant ultimately fails to vacate the rental unit where a landlord provides a legal notice to terminate without cause or where the landlord provides a legal notice of a significant rent increase, or proposed multiple rent increases that cumulatively create a significant rent increase at any time during a twelve (12) month period. The prevailing party in an action for wrongful eviction and/or failure to pay relocation assistance or reimburse relocation assistance shall recover costs and reasonable attorneys’ fees.

8.55.100 Hardship Waiver.
A landlord may request a waiver or adjustment of the relocation assistance payment required by this section only upon a showing that strict application of its requirements would effectuate an unconstitutional taking of property or otherwise have an unconstitutional application to the property. Requests for waiver or adjustment must be submitted in writing to the director of community environment together with supporting documentation at least 90 days before the proposed termination of tenancy. Requests shall be acted on by the City Council.

SECTION 3. SEVERABILITY. If any section of this ordinance, or part hereof, is held by a court of competent jurisdiction in a final judicial action to be void, voidable or unenforceable, such section, or part hereof, shall be deemed severable from the remaining sections of this ordinance and shall in no way affect the validity of the remaining sections hereof.

SECTION 4. CALIFORNIA ENVIRONMENTAL QUALITY ACT DETERMINATION. The City Council hereby finds that this ordinance is not subject to the provisions of the California Environmental Quality Act (“CEQA”) under Sections 15378 and 15061(b)(3) of the of the CEQA Guidelines.

SECTION 5. EFFECTIVE DATE AND PUBLISHING. This Ordinance shall take effect 30 days following its adoption. The City Clerk shall cause publication of the ordinance within 15 days after passage in a newspaper of general circulation published and circulated in the city or, if none, the posted in at least three public places in the city. Within 15 days after the adoption of the ordinance amendment, a summary of the amendment shall be published with the names of the council members voting for and against the amendment.

INTRODUCED on the __ day of __ , 2018.

PASSED AND ADOPTED as an ordinance of the City of Menlo Park at a regular meeting of said City Council on the __ day of __, 2018, by the following vote:

AYES: Councilmembers:
NOES: Councilmembers:
ABSENT: Councilmembers:
ABSTAIN: Councilmembers:

APPROVED:

Mayor

ATTEST:

Judi A. Herren, City Clerk