Item 26 - Long-Term Implementation Plan for the Rent Stabilization and Just Cause Eviction Ordinances

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Long-Term Implementation Plan for the Rent Stabilization and Just Cause Eviction Ordinances September 6, 2022 Page 7 2 9 3 0 one type of petition, fair return petitions for landlords with capital improvements included. This fair return petition allows for relief from the maximum allowable rent increase, provided there is evidence that a rate increase in excess of the annual maximum is necessary to provide a fair and reasonable return for their property. A landlord capital improvement petition is a request by a landlord to pass-through costs associated with certain capital improvements. A capital improvement is one that materially adds to the value of the property (this is often detailed as a specific amount in the ordinance), appreciably prolongs its useful life, or adapts it to new uses, and which may be amortized over the useful life of the improvement of the building. Creating a capital return petition is beneficial because it incentivizes landlords to improve their property knowing they can pass through some of these costs to their tenants. In general, a landlord capital improvement petition would allow a landlord to temporarily increase rents to recover the cost of capital improvements when the improvement(s) benefit the units in question and the improvement(s) were not necessitated by the current landlord’s neglect or failure to maintain the property. The RSO states that the provisions of the ordinance do not apply to residential real property in which each of the units have been substantially rehabilitated within the previous 15 years. "Substantially rehabilitated" means that the cost to rehabilitate the residential real property was at least $40,000 per unit. Creating a landlord capital improvement petition will clear up who is responsible for approving this type of exemption in the ordinance by requiring substantive documentation of the work performed at the property. A tenant petition is a request by tenants to assert a claim against a landlord. Examples include a decrease in rent due to a substantial decrease in housing services, failure to repair or maintain a unit, or failure to discontinue a capital or utility pass-through. Creating a tenant petition is beneficial because it gives tenants an administrative tool to address excess rent based on conditions of the rental unit, reduction in services, issues of habitability, and landlord violations of the ordinance outside of the legal system. These petitions are also beneficial for staff to monitor compliance with the ordinance and help maintain current rental data in the rental registry. 8. Establish Petition Fees and a Petition Review Process Currently, the City’s ordinance requires applicants to pay for the cost of a consultant to review fair return petitions. As a component of the fee study (Recommendation # 5), staff will assume the rental registry fee will fully cover the costs to review each type of petition while keeping the rental registry fee as low as possible. Staff do not want to layer a petition fee on top of the rental registry fee. The administrative work of reviewing and determining petition status varies widely, and as such, these costs will be included in the rental registry fee with a nominal petition deposit. By incorporating the petition fee into the rental registry fee, this will streamline the administration of the ordinance, while a nominal deposit will ensure landlords and tenants share a minimum responsibility for their petitions. The