As most readers of this magazine know, several Bay Area cities have existing rent and eviction control laws, commonly referred to as “rent control.” Beginning with Berkeley, then San Francisco, then Oakland, these ordinances all share the same basic features of a rent control provision and an eviction control provision.
The rent control provisions typically limit rent increases to an amount related to the consumer price index, with increases limited to one increase per year. The eviction control provisions typically prohibit evictions or termination of tenancies unless the landlord/owner has one of a dozen or so ‘just cause’ grounds. ‘Just cause’ grounds include violations of the rental agreement by the tenant, such as non-payment or rent, breach of subletting/assignment prohibitions, or nuisance behavior, and a failure to cure the breach after proper notice will allow an eviction action to be filed.
“Just cause’ grounds also typically include ’no-fault’ provisions, allowing the owner to terminate a tenancy for reasons such as the owner’s intention to move into the unit, or remove the unit from the rental market. Some ordinances require relocation payments to tenants when the tenancy is terminated through no fault of the tenant.
However, while each of the Bay Area ordinances are similar, they are not identical. Therefore, it is important that you closely review each applicable ordinance for the details that will apply in your particular situation. Some ordinances require, for example, that notices of termination, whether three or 30 or 60 day, be filed with the rent board, and the failure to do so is a defense to an action for unlawful detainer based on the notice. Again, it is important that each landlord insure he or she is familiar with the specific rules of each ordinance affecting a particular rental unit.
Given the heightened economic activity in the bay area in the last few years, and the impact of such activity on rental prices, other cities have begun discussing, and in some cases enacting, rent ordinances similar to those long established in San Francisco, Berkeley and Oakland. This article reviews both recent amendments to the existing ordinances, and also provides a short survey of pending and recently enacted rent control laws in other Bay Area cities.
- Recent Changes or Additions to Existing Rent Control Ordinances
Tenant Buyout Ordinance
At the March 29, 2016 city council meeting, the Berkeley City Council voted unanimously to adopt Ordinance No. 7.469–NS amending Chapter 13.79 of the Berkeley Municipal Code adding a new section to the Chapter – Section 13.79.050. Section 13.79.050 applies to every rent controlled rental and all rental units subject to the “good cause” eviction protections codified in Berkeley Municipal Code section 13.76.130.
This new section, which is effective April 30, 2016, mandates that before making a buyout offer for a controlled rental unit, the landlord must provide each tenant with a written disclosure, on a form developed and authorized by the City or Rent Stabilization Board. Section 13.79.050 defines a “buyout offer” as any offer, written or oral, by a landlord to pay a tenant money or other consideration to vacate the rental unit. An offer to settle a pending unlawful detainer action will not be considered a “buyout offer” under the new ordinance. “Buyout agreement” refers to an agreement wherein the landlord pays the tenant money in consideration of the tenant vacating the unit. An agreement to settle a pending unlawful detainer action will not be considered a “buyout agreement.”
Some of the most important points of Section 13.79.050 include:
- The tenant can cancel the buyout agreement in writing at any time before the thirtieth day after all parties have signed the agreement.
- If the buyout agreement is defective, the agreement will not be effective and the affected tenant will have the option to void the agreement. However, any remedy based on the ineffective or void buyout agreement shall not include displacement of a subsequent tenant or tenants of the affected unit. According to staff at the Rent Board, this means that a tenant who is claiming that the agreement is void cannot assert as a remedy that his or her tenancy be reinstated if reinstatement would mean displacing a subsequent tenant.
- The landlord has to keep a copy of the agreement for five years and must provide a copy to the tenant at the time the tenant executes it and a copy to the Rent Board no earlier than the thirty-first day after the buyout agreement is executed by all parties but no later than sixty days after the agreement is executed by all parties.
Annual Rent Registration Fee
At the May 2, 2016 meeting, the Berkeley Rent Board held a public hearing to consider whether to increase the annual rent registration fee by an amount not to exceed $27.00. Registration fees are due July 1, 2016.
On April 5, 2016, the Oakland City Council adopted an Interim Emergency Ordinance to temporarily place a 90-day moratorium on rent increases above the annual CPI adjustment and other measures. The new moratorium allows just a 1.7 percent cost of year rent increase — the city’s consumer price index — in the interim. The moratorium, meant to give city leaders time to re-examine current housing policies, is set to expire July 4, 2016.
In addition to the “Kim 2.0” rules affecting various aspects of the tenancy passed in November, 2015, and discussed previously in this column, the annual adjustment (increase) to the ‘no-fault’ eviction relocation payment amounts became effective for notices served March 1, 2016 through February 28, 2017. The increased amounts are $5,890 due per tenant with maximum relocation amount of $17,670.00 due per unit, PLUS an additional amount of $3,927.00 due for each elderly (60+) or disabled tenant or household with minor children.
Also note that Form 1007, which must be attached to every eviction notice, was amended March 19, 2016. See http://sfrb.org/article/new-eviction-notice-requirements-march-19-2016 for current form.
The San Jose City Council voted at the April 19, 2016 city council meeting to adopt the staff report and general recommendations to amend the City’s Apartment Rent Ordinance (ARO) to include the following changes:
- Replace the annual 8% allowable rent increase with an annual allowable rent increase of 100% of the San Francisco-Oakland-San Jose Consumer Price Index for All Urban Consumers (CPI-U), with 2% floor and 8% ceiling for annual increases, and allowing banking. Staff directed to incorporate: 5% Fixed Rate annual allowable rent increase with banking capped at 10%, an annual maximum of 8% rent increase cap (including any banking and allowed capital improvement pass through), provide tenant notification of banking and eliminate the adjustment for historically low rents.
- Eliminate the existing debt-service pass-through provision.
- Replace the existing capital improvement pass-through provisions with a fair return petition process based on maintenance of net operating income fair return standard.
- Add a limited capital improvement incentive program.
- Include a provision to address historically low rents.
- Add a registry to facilitate the monitoring and enforcement of the ARO.
The City of Fremont has an Ordinance – the Residential Rent Increase Dispute Resolution Ordinance – which provides rental residents and owners with a three step process to resolve rent increase disputes. The purpose of the Ordinance is to:
- Discourage unreasonable rent increases on occupied units by providing remedies to resolve rent increase disputes.
- Limit rent increases to once per year, unless otherwise agreed to by the parties in writing with the effective date(s) and the exact amount(s) of a rent increase(s).
- Limit rent increases to fair and reasonable amounts.
- Encourage a 90-day minimum advance notice of rent increases.
- Provide well-maintained living units.
- Discourage retaliatory evictions and other retaliatory behavior.
The Ordinance, which became effective in 1997, applies to all housing units offered for rent in the City (apartments, condominiums and single family homes). It requires rental owners, when notifying tenants of a rent increase, to encourage tenants to contact them to discuss the rent increase, and also to inform tenants of their right to use the City’s dispute resolution process. A rent increase imposed without first giving the required notice is void. The three steps of the dispute resolution process and other important information about the ordinance are explained on the reverse of this letter. For more information about the Ordinance, please visit the City’s website at www.fremont.gov/rridro
The City of Hayward Residential Rent Stabilization Ordinance (“Ordinance”) provides limits on rent increases and causes for eviction for residential rental units within the city limits of Hayward. Currently, the Ordinance applies to approximately 11,200 rental units in Hayward.
A “rental unit” is defined as any residential dwelling unit used or occupied by the payment of rent, provided the unit is one of at least five (5) residential units in Hayward under common ownership.
A landlord may not raise the rent more than five percent (5%) per year and may not increase the rent more than once in any twelve (12) month period. Where a landlord increases the rent payable during any twelve (12) month period commencing April 1, 1987 by less than five percent (5%) per year, the landlord may “bank” the untaken rent increase and apply it in the current year.
Evictions are governed mainly by state law, but the Ordinance imposes additional requirements known as “Eviction for Cause.” The Ordinance’s “Eviction for Cause” section provides that a landlord may recover possession of a rental unit covered by the terms of the ordinance only if the landlord demonstrates one of fifteen enumerated causes.
- Recently Passed Ordinances
After having passed several temporary rent control ‘moratoriums’ on rent increases and evictions, The Alameda City Council recently adopted a new ordinance, Ordinance 3148, concerning restrictions on rent increases and limiting the grounds for evictions. The new Ordinance became effective March 31, 2016 and is effective until December 2019, unless the Council takes action otherwise.
The ordinance relating to rent increases only applies to rental units under the authority of the Rent Program. The ordinance relating to termination of tenancy, however, applies to all rentals, including single-family homes and condominiums.
The new Ordinance restricts rent increases to only one rent increase every 12 months, but does not put a cap on the amount of rent increase. However, any rent increase above 5% requires that the landlord file a notice with the Rent Program and the rent increase will be subject to review by the Rent Review Advisory Committee.
Under the new Ordinance, “for cause” evictions, “no fault” evictions and “no cause” evictions are permitted. Relocation fees are required for “for cause” evictions and there is no limitation on the rent for a new tenant. Relocation fees are required for “no fault” and “no cause” evictions. Relocation assistance is $1,500 (adjusted yearly based on the CPI) for moving expenses plus the payment of one month’s rent for every year, or portion thereof, that the tenant has rented the unit (not to exceed four months). The amount of assistance is per household, not per tenant. Additionally, for “no cause evictions,” the rent offered to the new tenant cannot be more than 5% greater than the prior tenant’s rent and only a limited number of “no cause” evictions are permitted each year.
New Landlord Noticing Requirements
Section 6-58.20 of Ordinance 3148 requires a landlord to notice a tenant of four items defined in the Ordinance. The notice needs to be provided to current and prospective tenants. Current tenants should have received the new notice by April 30, 2016. For more information on the new notice requirements, see http://www.alamedarentprogram.org/home
- Recently Considered Ordinances
A group in Burlingame, Burlingame Advocates for Renter Protections (http://www.rentersrightsnow.com), is gathering signatures to qualify an initiative for the November 2016 election to implement rent control in the city. The initiative, if passed, would establish just cause eviction protections for tenants, implement rent stabilization and require landlords to provide relocation assistance to displaced residents.
The Pacifica City Council voted 3-2 on January 25, 2016 to reject a Rent Control ordinance for Pacifica.
The Santa Rosa City Council is considering enacting rent control and just cause for eviction, and a possible moratorium on rent increases. A council meeting scheduled for Tuesday, May 3 at City Hall, the results of which were unavailable as this article was prepared for publication, was scheduled after the Santa Rosa Rent Stabilization Subcommittee voted 2-1 to recommend the measures. If the council follows the subcommittee’s recommendations, the most immediate impact would likely be a moratorium provision preventing any rent increases for 45 days, followed by more hearings on a more permanent ordinance.
Richard Beckman, of Beckman Blair, LLP has been practicing landlord-tenant law for over 24 years, primarily in rent-controlled jurisdictions such as San Francisco, Oakland and Berkeley. He represents clients in a broad range of real estate-related disputes, including partition of co-ownership interests, purchase contract disputes, insurance coverage analysis and land use. Mr. Beckman also specializes in all aspects of landlord-tenant issues, representing landlords and tenants in residential and commercial matters. He can be reached at 415-871-0070; email [email protected] or by visiting the website www.beckmanblairllp.com