Culver City Adopts an Interim Rent Control Ordinance

Culver City has adopted an interim rent control ordinance that brings strong tenant protections to a city that had no local tenant protections at all. City Council took action at the August 12th meeting to cap the rent increase at 3% annually (retroactive to June 11th); require a relocation fee; and most importantly to end (at least for now) no-just-cause evictions. Like Beverly Hills, Culver City recognized what we can see with our own eyes: runaway rent increases leads to tenant displacement and greater regulation is necessary to ensure the stability of the renting population.

By adopting the interim ordinance number 2019-011 Culver City becomes the latest locality in the Southland that has fallen out of favor with the Apartment Association of Greater Los Angeles. Pasadena and Long Beach now mandate a relocation fee for terminated tenancies OR when a tenant faces an excessive rent increase (identified as 8.1% and 10% respectively). Those cities have not yet capped the rent increase but these new policies may be a step in that direction. (Or not!)

More aggressive have been Inglewood and Los Angeles County: both have imposed interim price controls on rent. Inglewood this summer embraced a cap on increases of 5% and Los Angeles County has capped the annual increase at 3%. Each has ended no-just-cause evictions for now. Crucially, neither city has yet backed the creation of a rental unit registry. We expect that step if/when they adopt permanent rent control ordinances.

Culver City is the latest to embrace price controls and other tenant protections at least on an interim basis, which then lays the groundwork for what we hope will be a robust final rent control ordinance. The details were agreed in a 4–1 council vote at the conclusion of a 5-hour meeting.

Until the interim ordinance expires on August 20, 2020, the new regulations include:

  • Rent increases capped at 3% annually (with only one increase permitted in a 12-month period — state law allows any number of increases);
  • A petition process for rent decreases (like when a housing service is reduced) and, for landlords, rent increases when the ‘fair return’ on operations is harmed by the new ordinance;
  • Just-cause termination only so that a household can be terminated only for limited reasons (and applies that protection retroactively to any evicted household that has not yet vacated);
  • Lease expiration mandates the landlord to accept rent for a month-to-month tenancy or pay a relocation fee;
  • Mandates a relocation fee when any tenancy is terminated for just-cause and specifies a fee of 3 times the rent plus $1,000 with half payable within five days after notice is served and the other half within five days after vacating; and,
  • The creation of a rental unit registry to track all tenancies.

The creation of a registry is not only required by state law but is essential to any program that would protect tenants. Indeed while the ordinance in its final form may change (pending council review of a required ‘rent control study’) it looks like Culver City has established a strong foundation for rent control. Let’s look at a few specifics.

A Closer Look at a Few Culver City Provisions

Intimidation as a Reason for Termination

The interim ordinance includes the usual reasons for eviction (non-payment, refusing access, material breach, and lawful termination for redevelopment in accord with Ellis Act) but this ordinance goes a step farther by defining more specifically the term ‘nuisance’ as used in state law. Culver City adds language here that explicitly includes intimidation within the definition and makes that a reason for eviction:

A threat of violent crime, which includes any statement made by a Tenant, or at his or her request, by his or her agent to any person who is on the premises that includes the Rental Unit or to the Landlord, or his or her agent, threatening the commission of a crime which will result in death or great bodily injury to another person, with the specific intent that the statement is to be taken as a threat, even if there is no intent of actually carrying it out, when on its face and under the circumstances in which it is made, it is so unequivocal, immediate and specific as to convey to the person threatened, a gravity of purpose and an immediate prospect of execution of the threat, and thereby causes that person reasonably to be in sustained fear for his or her own safety or for his or her immediate family’s safety…. Urgency ordinance 2019–011 Subsection 5(C)(4)

We quote the language at length because it is much more specific than state law with regard to defining ‘nuisance’ for the purposes of eviction. State law says only, “maintaining, committing, or permitting the maintenance or commission of a nuisance…”

The Culver City ordinance is more specific even than the Beverly Hills ‘disruptive tenant’ provision, which identifies intimidation as a reason for termination but does not define it. (We prefer specificity when it comes to terminating a tenancy.)

One interesting caveat is that the ‘intimidation’ reason for termination does not apply when directed at another person sharing the rental unit. Presumably that keeps the city’s decision-maker, a hearing officer, from adjudicating domestic conflicts.

Relocation Fee is Treated Like the Security Deposit

The security deposit can be up to two times the rent in California, and it can be withheld in full or in part for damage beyond ordinary wear-and-tear, to recover back rent, and to replace personal property gone missing. Damages that amount to more than the security deposit must be pursued in a civil claim.

The Culver City interim rent control ordinance makes the relocation fee available to landlord claims for such damages and “other purposes served by the security deposit.” In other words, the tenant who already has on the line her security deposit can find the landlord reaching into her relocation fee to satisfy his damages claim.

Why is that a problem? Because some landlords make it a challenge for tenants to wrest back the deposit. Sometimes a landlord will unlawfully deduct yet provide no documentation (as required by law), fore example. He may not even respond to a demand for the accounting. Disputes over the deposit is perhaps the single most common tenant-landlord issue. Making the relocation fee available to an unscrupulous landlord is simply unnecessary.

Money Penalties are Baked into the Ordinance

The Beverly Hills rent stabilization ordinance is conspicuous in that it entirely omits mention of any specific penalty for a violation of the ordinance. In fact City Council passed a resolution in December of 2017 to sanction landlords who don’t register rental units: they would be denied any rent increase. But Council passed up that opportunity to specify a money penalty. The rent stabilization ordinance points to B.H.M.C. 1–3–106 (PUNISHMENT) for any violation, but subsection 106 shows $100 for an infraction up to $1,000 for a misdemeanor but neither the ordinance, nor the subsection, suggests which penalty may apply.

Contrast that with the Culver City interim ordinance which includes a clear money penalty for violations: $1,000 for each violation of any section of the ordinance. The ordinance also grants the director of the program subpoena power which is unheard of among department directors in Beverly Hills.

Additional Notes on the Interim Ordinance

Culver City was tabla rasa when it came to rent control because the city had none. City Council and staff were then free to shape the ordinance it wanted, which presented an opportunity to think through several important aspects of the new ordinance that go beyond what Beverly Hills offers.

The relocation fee is paid in part even before the tenant vacates. Half of the fee is paid up front; that can be the deposit money for the next place. The Beverly Hills ordinance amendments did not mandate early payment or even escrow. That has left some tenants chasing the relocation fee.

The relocation fee is required even when the landlord has been leasing an unpermitted unit. Or as the ordinance puts it, “regardless of whether the Rental Unit was created or established in violation of any provision of law.” The Beverly Hills ordinance is silent on illegal units. (We know of at least two tenants summarily booted from illegal units including one just recently. It is not clear the landlord will pay any penalty.)

The ordinance creates a local appeals process to allow an occupant to contest a tenancy termination. If the landlord cannot meet the four-criteria standard required for a lawful termination, according to the ordinance, then the termination would be nullified.

However the ordinance falls short in one respect:

The ordinance exempts condominiums and co-operatives but does not note they must have been sold to individual purchasers. Condominium and co-operative each is a form of property subdivision that allows for multiple individual owners. And the state’s Costa Hawkins Rental Housing Act exempts such forms of ownership (including single-family detached homes) from rent control. But only if they have been sold to individual buyers. If the units or co-op shares remain under one owner the property is not exempt.

(The latter point is not hypothetical: we have seen condominium conversions used to evade the rent stabilization ordinance under Costa Hawkins. The units were renovated then simply re-rented. We identified four such properties in Beverly Hills to the city and the rent stabilization ordinance protections were then extended to those tenants.)

Our Take

The Culver City interim ordinance is a big step toward solid tenant protections for a city had not embraced rent control earlier. Though the ordinance expires in 12 months, the footings are in place for a solid program going forward.

And that is exactly what sticks in the craw of Dan Yukelson, executive director of the Apartment Association of Greater Los Angeles. As he lamented to fellow landlords in a RED ALERT today:

The ordinance is supposed to be temporary, in place for just one-year. However, like so many other ill-advised jurisdictions that have gone down the path of imposing 1970s era housing solutions that never work, most likely, the ordinance will eventually become permanent.

Yukelson with characteristic hyperbole decries every aspect of the ordinance not least because, he says, it takes away “inalienable” property rights from owners. Specifically he is concerned with his right to “freely regulate” his rental housing. (Yukelson is also a Beverly Hills landlord.)

But let’s remember that courts have, for decades, upheld the basic tenets of rent control in California and beyond.

A clearer perspective came from Culver City Mayor Meghan Sahli-Wells after the adoption of the ordinance. With a 4-1 vote it wasn’t even a close call by a split city council. Still rent control is always a contentious battle between those who own rental property and those who call it home. She said,

Our challenge is to bridge that divide, to bring individuals together, and to provide stability for those who depend on housing and those who provide housing. I look forward to a constructive community dialogue while we tackle the humanitarian crisis of homelessness, and the immense challenges of housing affordability and displacement.

One added note: Culver City has done well by tenants with this ordinance but we find that the city falls woefully short when it comes to basic open government. The interim RSO item on the agenda included no staff report. The draft ordinance had no included text layer so it was not machine-readable or searchable.

We contacted the City Clerk with these findings — including the fact that the draft ordinance, like all others and many official documents, is not machine-readable. But the City Clerk was remarkably blase at the prospect of facing an ADA lawsuit because sight-impaired web visitors can’t access the city’s public business.

We did get the clerk to post a machine-readable version of the interim ordinance and also staff report to the topic page. But it shouldn’t take such an effort to get Culver City to embrace simple good-government principles like the proper posting of accessible city documents. We are still waiting for the video of the meeting to be posted (three days later)!