City of Beverly Hills recently convened two ‘community education workshops’ where staff provided both tenants and landlords with a presentation about rent stabilization. Susan Healy Keene, Director of the Community Development Department, provided an overview of the process and then handed it over to Community Preservation Manager Nestor Otazu. He walked though the relatively recent changes to the rent stabilization ordinances and highlighted the key aspects of state law that apply to those who rent housing (and those who provide it). Here is my takeaway.
It had been a year since the Community Development Department last convened a Community Education Workshop last June. Back then the changes to the rent stabilization ordinances like the 3% cap on annual increases and new relocation fees were still fresh and the workshop addressed them.
Now there is much new ground to cover:
- There now exists a rental unit registry;
- The rent stabilization program is up and running with a new office in City Hall;
- City Council funded a new position for the program director; and,
- An economic consultant is studying rent stabilization and the findings will inform some kind of final rent stabilization policy.
Here are some caveats:
- Registration was not a one-time thing but actually happens annually (the next registration period commences in late summer);
- The program’s office is still under-resourced (Council funded it at only 50 cents on the dollar and some employees are temps);
- The director position remains unfilled eight months (!) after Council gave the OK for a hire; and,
- The city wound up footing the bill for an economic study of rent control in Beverly Hills that the landlord themselves were willing to fund.
The workshop then enumerated the economic study’s key topics because these will be important decision points for City Council this fall:
- Relocation fees (how they may be calculated and who will most benefit);
- Allowed rent increase (how it could be determined and who should be protected);
- Rent ‘banking’ (where rent hikes are deferred but recouped in future years);
- The ’fair return’ standard (which dictates eligibility for a landlord’s supplemental rent increase);
- Exemptions for 4-unit and smaller buildings (which could remove tenant protections for one in seven households); and most crucially,
- No-just-cause eviction and whether the city should put a stop to it.
Finally the workshop described the next steps in the policy process in the months ahead. (But take the city’s timeline with a grain of salt: no firm dates were announced and left out entirely was an anticipated community dialogue, which may be a reprise of last summer’s dialogues.)
What I Learned
From a close listen to this year’s workshops I took away these points:
- The allowed annual increase for Chapter 6 tenants will soon go to 3.5% from today’s 3%. That’s no change in policy but instead reflects the change in consumer prices for the Los Angeles-Long Beach region since last year. According to the Chapter 6 municipal code, the allowed annual increase is the greater of either 3% or the CPI for our region.
- The allowed annual increase for Chapter 5 is still just 1.8%. Why is it so low when we’re all living with the same rise in consumer prices? Because the Chapter 5 rate is calculated according to an arcane formula. Moreover, unlike Chapter 6, the allowed increase is the lesser of either the calculated CPI or a cap (which has never been reached). In other words the rate calculated according to the formula never even comes close to the cap. However that low allowed increase benefits just 3% of households under the old rent stabilization regime. (Fun fact: when I calculate it using the city’s formula I can’t reach the same percentages shown on the city’s rent increase webpage.
- Rental units must be registered (or re-registered) every year. Initially I thought that once registered only units that are vacated and re-rented are due for re-registration. Instead every tenant will receive another round of rent-amount verification letters this fall.
- Tenants have two opportunities to dispute an indicated rent: once when the landlord indicates it upon registration; and afterward once that rent is certified. So like last year each tenant will receive a letter asking her to verify or dispute the indicated rent; but there is also a follow-on appeal period. Either presents an opportunity for the tenant to dig back into the history of rent payments to ensure that the past increases were lawful.
- Negotiations between a tenant and landlord cannot contravene the municipal code. Neither party can negotiate an increase higher than the current allowed increase, for example; and a landlord can’t pressure a tenant to give up a housing service (parking, free laundry, etc.) without reducing the rent. Staff suggested that would apply to a tenant buyout: if a landlord wants a voluntary departure he can’t offer less than the prescribed relocation fee. (I’m not so sure.)
- The tenant coming to the end of her fixed-term lease is not eligible for relocation fees if the landlord will not renew the lease OR allow the tenant to transition to month-to-month. Moreover, the landlord is not obligated to notify the tenant should he not intend to renew; nor need he indicate his intention when asked. However in the past I have received assurance that notice was required and that declining to allow a transition to month-to-month would constitute an involuntary termination. The city has backtracked on that guidance.
- Notice of involuntary termination can be cut to just 30 days if any tenants have taken in a co-tenant (or “any occupant”) in the 12 months prior to the termination. (I knew this and reminded the city!) And of course the relocation fee could be divided. Careful with authorized roommates!
- Community Education Workshops are expected to be held quarterly. (We’ll see!)
If you were not able to attend these workshops you can catch the main points in the PowerPoint presentation. More background and some answers to tenants’ questions can be found in this the video from last year’s event too. Download the city’s recap of the 2017 workshop Q-and-A. For some reason it’s no longer posted to the city’s rent stabilization program website.
My View on this 2nd Community Education Workshop
Read my post ‘Missing from Community Education Workshops: Tenant Empowerment‘ for my view on how these workshops fail tenants. Here is my summary finding. (If you attended I will be curious to know your opinion so please contact me.)
The good. The presentation was relatively comprehensive and much more detailed relative to last year’s workshop. The PowerPoint presentation alone is a useful summation of our current rent stabilization law. And the broader context was a reminder that the current 3% cap will certainly bump-up soon while and rent cap and other important tenant protections like relocation fees may change once Council acts this fall.
The bad. The presentation occasionally bogged down in details and the discussion sometimes veered into the weeds. That’s OK: most attendees were there for the question-and-answer session anyway. The questions surfaced important issues but sometimes the responses were not so clear. (The end-of-lease question prompted several follow-up clarification questions for example.) Indeed the state and local housing laws leave tenants with many questions but the city’s online FAQ documents are brief and rarely updated. A once-yearly question-and-answer session can’t get to them all.
The ugly: ‘Community education’ is not the same as tenant empowerment (as I elaborated in a subsequent post). Other cities provide sessions separately to tenants and landlords and so should Beverly Hills. Tenants do not need studied neutrality or carefully modulated language; we need blunt talk about how we need to protect our own rights because often our rights exist in theory only. More to the point, city officials should be candid about where city support ends and our own lawyering-up should begin. We didn’t get that in these community education workshops, however, which suggests the need for something different going forward.
- Community Preservation is the city’s defacto housing department. Unlike other rent-stabilized cities, Beverly Hills has no program or department to regulate rental housing. Instead Community Preservation is tasked with interpreting local rent stabilization ordinances and in limited cases, such as rent increases and utility charges, it will step in to enforce compliance with local ordinance. ‘Community Preservation’ however is an aspirational notion; this division of the Community Development Department isn’t in the preservation business. In fact the city has no policy or program to ensure the integrity of the rental housing market.) ↩
- Take advantage of the registration process to address what may have been an unlawful increase in the past. Simply review your history of rent increases. Chapter 6 tenants should look for any increase above 10% as well as improper utility charges. The allowed increase is calculated not on total monthly payment but ‘base rent’ exclusive of utility pass-throughs. An increase based on the total monthly charge will multiply the error over time in favor of the landlord and you would be able to recapture at least three years of overcharges. Chapter 5 tenants will especially benefit: with a low effective annual increase cap even a single too-high rent hike decades ago can lead to significant overcharges – especially if it was compounded by additional unlawful increases. Review your rent history and compare the annual increases with the city’s table. Ask the city for allowed increases that range even farther back – even to 1978 if you are that long a tenant. Contact me if you have a question. ↩
- I have been unable to get a conclusive statement from Community Preservation on whether the landlord’s refusal to renew the lease or go month-to-month on the agreement is an involuntary termination. Consider this perverse outcome. A tenant coming up to lease renewal doesn’t hear from the landlord about a lease renewal, or the landlord refuses to commit when asked. As indicated by staff at this workshop, he’s not obligated to notify the tenant at any time. So as the last day of the lease approaches the landlord has extraordinary leverage: he can insist on a new tenancy agreement and demand a rent increase in any amount. If the tenant has made no other arrangement she would be pressured to agree. Surely that can’t be what our law intends! ↩