Santa Cruz’s renter protection ballot initiative, explained

By Jondi Gumz, Santa Cruz Sentinel
http://www.santacruzsentinel.com/article/NE/20180310/NEWS/180319977

MARCH 10, 2018, SANTA CRUZ >> City residents and property owners are trying to understand emergency rent control rules adopted by the City Council last month in the wake of tenant advocates seeking to put their own rent control measure on the November ballot. This is the second of a two reports by the Sentinel to help residents understand what they could be voting on if tenant advocates gather 3,774 valid signatures by Aug. 4 for their ballot initiative.

House For Rent

The biggest difference between the 33-page document tenant advocates submitted to the city Feb. 9 and the seven-page set of rules the City Council adopted Feb. 13 is that the proposed ballot measure calls for an independent entity, the Santa Cruz Rent Board, to administer and enforce rent regulations. Single-family homes are exempt from rent control because of the state’s 1995 Costa-Hawkins Act, and so is housing first occupied after Feb. 1, 1995.

What is covered under the ballot initiative? An estimated 5,100 to 5,800 rental units in the city were built before that date. That’s about 22-24 percent of the city’s housing stock. Both the current and the proposed rules offer protections to tenants by limiting rent increases and evictions. Current rules set a limit of 2 percent and the proposed rules saying annual increases cannot exceed the consumer price index of the prior year, with rent in effect on Oct. 19, 2017 as the starting point.

The ballot measure specifically excludes rentals in hotels, motels, tourist homes, boarding houses, vacation rentals for less than 30 days, college-owned dormitories, nonprofit homes for the aged, hospitals, convents and extended medical care facilities. The new city rules on “just cause” evictions apply to all landlords in the city but those who own a single rental are exempt. So are landlords who live in the same home as the renter, in a duplex or in a single-family home with an accessory dwelling unit.

The ballot measure does not contain these exemptions. Current rules leave rental oversight in the hands of the city manager and his staff but the ballot measure would create a new agency with broad powers independent of the City Council, city manager and city attorney,

Here’s how it would work, as detailed in 33 pages of regulations submitted by tenant advocates:

Elected board: Initially, each City Council member would appoint one member for the seven-member rent board. At the next municipal general election, city residents would run for a five-seat rent board. The three top vote-getters would serve a four-year term, with the next two serving for two years. After the first election, all terms would be for four years. Terms would be limited to 12 years.

Pay: The rent would determine the compensation of board members based on their time and work performed.

Disclosure: Board candidates and nominees would have to submit a verified statement listing their interests and dealings in property during the past three years, including ownership, sale or management. Interests include partnerships, corporations, joint ventures and syndicates.

Staffing: The rent board would hire an executive director, and ensure sufficient staffing, which would include hearing officers, housing counselors and legal staff.

Rent adjustments: The rent board would determine the annual rent adjustment based on the consumer price index, publicize it, establish hearing procedures, appoint hearing officers to consider individual petitions from landlords or tenants, and then render a decision.

Penalties: The rent board would set penalties for noncompliance, pursue civil remedies, and refer violations to authorities for prosecution. Landlord violations would be considered misdemeanors. If these rules are approved, a tenant facing eviction could use landlord violations of the rules as a defense in a legal action to contest eviction.

Agency financing: Landlords are to pay a fee for each rental unit annually, a fee to be set by the board to fully fund its operating costs. Fees would be collected at the same time as business license fees, with landlords not allowed to pass on the rental fee to the tenants as a separate charge. The board has authority to reduce the rental housing fee on units where the rent is 10 percent below market rate for a comparable unit; a definition of market rate is not in the measure, leaving that up to the rent board.

The city is required to advance all funds until the rental housing fees collected are sufficient for operations. The rent board’s budget would be decided by the board, after scheduling a hearing prior to July 1. The amount considered reasonable and necessary would be up to the board. The ballot measure includes detailed procedures for landlords to request a rent adjustment to ensure a fair return, maintaining net operating income in 2016 adjusted by 80 percent of the consumer price index.

Tenants can request an adjustment downward, alleging failure to maintain a habitable premises based on state law, and specifying the conditions and showing the landlord was given “reasonable notice and opportunity to correct the conditions.” Tenants also can request a downward adjustment, alleging a deterioration beyond ordinary wear and tear and specifying the conditions not corrected by the landlord. Thirdly, tenants can file a petition if the landlord charges excessive rent, and if the board rules for the tenant, the landlord will be ordered to return the excess. Decision by a hearing officer can be appealed to the full board.

The ballot measure would allow landlords to evict for not paying rent, being a nuisance, using the rental for illegal activity, the owner or owner’s family members moving in, repairs and breaching the lease, such as unpermitted subleasing. Subleasing has become common as tenants seek to make their rent affordable. The ballot measure details a procedure for subleasing, prohibiting subleasing evictions if the sublease is a one-for-one replacement, the tenant requested permission in writing and the landlord did not respond within 14 days.

The current city rules are similar but the ballot measure adds more tenant protection, requiring landlords to pay relocation assistance equal to six times fair market rent as determined by U.S. Department of Housing and Urban Development. If a tenant who is unable to pay rent increases of more than 10 percent in a 12-month period is displaced, the landlord must provide relocation assistance at the time of move-out if the tenant has applied to the rent board for help with 15 days of being notified of the rent increase. The measure gives the board authority to set a threshold of less than 10 percent for rental assistance.

If a landlord plans to exit the rental business, the rent board would require forms to be filed. In case demolition is planned, a 120-day notice to tenants would be required, with a year’s notice required for tenants who are 62 or have a disability and have lived in the unit for a year.

More protections are provided for renters who are families. The measure says a landlord cannot terminate a tenant for adding a child, foster child, parent, grandparent, grandchild, sibling, or a spouse or partner of those relatives as long as the number of occupants does not exceed the maximum in state law. The board would have authority to write rules to further protect families of school-aged children.

A landlord cannot evict a tenant who is 62 or disabled and has lived in the rental for five years or who is certified as terminally ill by the treating physician unless the landlord or the relative to occupy the unit is 62, or disabled, or is terminally ill. A victim of domestic violence or sexual assault or stalking can challenge an eviction if the notice to terminate the lease is based on noise, disturbances or police activity related to the stalking or assault.