City Council Extends and Enhances Emergency Tenant Protections

After another marathon eight-hour  emergency meeting, Beverly Hills city council unanimously agreed to improve our moratorium on eviction for non-payment of rent due to COVID–19 by extending the repayment period from six months to one year AND adding a new protection against Ellis Act eviction. City council also agreed to freeze rent increases, too, so no tenant will see a rent hike while the local emergency is in place.

Imporant: As of Friday afternoon we are still waiting on word from the city about the final urgency ordinance agreed on Tuesday. If you are unsure if you can pay the rent due to a decrease in income related to COVID-19, then I suggest to wait until we hear from the city about the moratorium details. You will not be evicted. If you have received a notice of an April 1st rent increase, and you can pay the rent, it is safe to pay the increase pending additional information from the city. A rent over-payment must be refunded.

City of Beverly Hills is now in the forefront of cities in California — indeed the nation — that have stepped up with protections against eviction. For non-payment of rent that would include only tenants who have been financially harmed due to COVID–19. In Beverly Hills that includes COVID–19 sickness, care-giving for a family member or household member sick with COVID–19, or an inability to pay rent due to a significant reduction in household income from unemployment or loss of work hours related to COVID–19. ‘Extraordinary’ expenses also qualify a tenant for forbearance (relief from timely payment of rent) from the landlord.

When Do These Protections Apply?

Firstly, the moratorium on non-payment evictions, no-fault evictions and rent increases last only for the duration of the local state of emergency. At the conclusion of the state of emergency (to be decided by city council) the landlord can again evict for non-payment, terminate a tenancy for any lawful reason or give notice of a rent increase.

Second, the moratorium on eviction for non-payment of rent applies only to tenants who can demonstrate ‘significant’ material harm due to COVID–19. It does not protect any household that cannot demonstrate an inability to pay related to COVID–19.

Third, the no-fault eviction protections apply to all households in a rented dwelling unit in Beverly Hills. That includes rent-stabilized housing but also tenants renting condominiums and single-family homes. (Only during this local state of emergency does the city regulate housing in non-RSO units. We support extending rent stabilization protection to those tenants too.)

Finally, tenants are protected from eviction for any lawful no-fault reason for the duration of the local state of emergency, but that protection does not apply to the tenant served with an eviction notice for an at-fault reason. (Read the lawful reasons for termination on the city’s RSO website.)

Renters Alliance feels that any tenant who can pay rent should pay the rent. City council presumed good faith on the part of tenants and we want to respect that. We also understand the landlord has costs (and some operate on thin margins). And of course there is a practical reason to pay: rent is not forgiven and back rent accumulates. While the new urgency ordinance allows one year after the state of emergency expires to pay the rent, it is best to keep current if you can.

More About These Protections

While we wait for the final ordinance for the details, we can look at city council’s discussion to learn more about the new urgency ordinance signed on March 31st and what it means for tenants.

Eviction for Non-Payment of Rent is on Hold

City council adopted the moratorium on eviction for non-payment due to COVID–19 at the emergency session on March 16th. City council extended it to commercial tenants as well as residential tenants. However on March 31st city council in the revised urgency ordinance separated the residential moratorium from the commercial moratorium and applied different provisions to each.

We will look only at the residential tenant moratorium. Here are some takeaways.

The moratorium applies when a household has experienced a ‘significant’ material impact on income due to COVID–19. That includes sickness from COVID–19, care-giving for a family member or household member sick with COVID–19, or loss of employment (or hours on the job). ‘Extraordinary’ expenses related to COVID–19 also qualify.

The term ‘significant’ is, well significant because it is threshold for qualifying that was not included in the earlier ordinance. In the revised draft ordinance (as recommended to city council for adoption) ‘significant’ was to mean a drop in household income of 20% or more.

Defining ‘significant’ as a 20% drop in income was a non-starter! Why? Half of Beverly Hills tenant households are ‘rent burdened,’ according to the federal definition which means they pay more than 30% of income in rent. Nearly one-third of households are ‘severely rent-burdened’ and pay half or more of household income in rent. E

Even a marginal drop in income could make the difference for a severely rent-burdened household. City council understood that and stripped the 20% test from the ordinance (another big win for tenants).

The ‘significant’ threshold can be defined broadly. That means a tenant-in-need can argue for a broad interpretation when asking for assistance. City council was looking to provide assistance in cases of material impact to earnings while screening-out applicants that show only a trivial change in income. Fair enough. In any case the significant test must again related to a COVID–19 impact.

City council agreed to define ‘employment’ expansively. Household income now includes that from independent contracting and ‘gig’ working. As defined in the earlier ordinance (and as implied in the Apartment Association form that staff was recommending) such income may have been excluded. Another win for tenants-in-need.

City council extended the rent repayment period from six months to twelve months. Arguably this is the most significant improvement in the new urgency ordinance compared to the prior one. It gives tenants twice as much time to catch up on back rent. This change alone puts Beverly Hills at the forefront of cities grappling with the coronavirus crisis.

The form for requesting forbearance (relief from timely payment of rent) is much less onerous than what was proposed. This is key win for tenants compared to the recommended form options provided to city council. Those forms were intrusive and required tenant disclosure of income and/or assets to the landlord simply to defer a few rent payments. (Read more: Need Rent Forbearance? Beverly Hills May Make it Untenable.)

City council agreed to use the much less onerous West Hollywood form as a model. That form simply requires the tenant to self-affirm her need for assistance and indicate a reason for the assistance. Any required supporting documentation would go to the city — as the city is the final decision-maker to qualify the tenant for forbearance.

The tenant can make a partial rent payment. City council agreed to add this element in case a tenant can make a partial payment. That is not a requirement or condition for forbearance, though council seemed to agree that partial payment of, say, 50% of rent would automatically qualify a tenant for forbearance (no supporting documentation necessary). We will wait to see how this innovation is described in the ordinance.

Ellis Act Evictions are on Hold

City council unanimously agreed to enact a moratorium on Ellis Act evictions in Beverly Hills. The state’s Ellis Act allows landlords to take rental properties off the market. It is often invoked when a property is redeveloped or converted into condominiums. Some less-scrupulous speculators use to to simply empty buildings regardless of redevelopment plans.

Adding Ellis to the existing moratorium on no-fault evictions effectively pauses the clock on the eviction process. This applies to any tenant, not merely one affected by COVID–19. The bottom line is that no tenant will be evicted pursuant to Ellis during our local state of emergency.

Consider a tenant who was lawfully terminated pursuant to Ellis but still remains in the unit. As she watches the clock tick down on the 120 days that is required for notice, the Ellis moratorium as implemented by Beverly Hills would see whatever time remained for her in the unit extended by however long the local emergency lasts.

For example, if the tenant was terminated prior to the local emergency, and had two months in the unit remaining when the emergency was declared, then if the local emergency lasts four months she would have from the time the emergency was declared a total of six months in the unit. The declaration pauses the clock at two months; that clock resumes ticking after the emergency concludes four months later, leaving her the two months left to go.

For a tenant who may be terminated pursuant to Ellis, no notice will be served during the time of the emergency. When the emergency concludes the notice can be served. (Ellis requires 120 days notice of termination for tenants without a fixed-term lease while seniors can request a total notice of one year.)

Closing the Ellis ‘loophole’ in our no-fault eviction moratorium was recommended by outgoing Mayor John Mirisch who put it on the March 31st agenda. Lili Bosse signaled her strong support and councilmembers quickly agreed. Done!

Rent Increases are on Hold

Councilmember Lili Bosse suggested a brake on rent increases not long after the March 31st meeting started. She noted that Los Angeles froze rent increases the preceding Friday and Councilmember John Mirisch quickly signaled his support. Five minutes later Vice-Mayor Bob Wunderlich did too. By the time the freeze was discussed later with the moratorium changes it was a done deal.

Why freeze rent increases? Unbelievably, there are landlords who have already served tenants with a rent increase despite the local emergency. The moratorium invalidates the notice of rent increase for any tenant that has not yet paid it, and prevents such increases for the duration of the local emergency.

The rent freeze applies only to tenants in Beverly Hills rent-stabilized housing. That’s because the city’s rent stabilization ordinance regulates that housing. (State law governs rent regulations for all non-rent stabilized dwelling units.)

Any notice to increase the rent that would take effect after March 31st is no longer valid. The ordinance took effect on March 31st so presumably it is retroactive to any rent increase noticed to take effect April 1st or later. Tenants will not pay that increase. (Any over-payment is refundable.)

Tenants who have already paid on a noticed April 1st rent increase may still have to pay the increase going forward. We are waiting to see the text of the ordinance. However past amendments to the rent stabilization ordinance have allowed a rent increase to proceed if the tenant began to pay it regardless of the retroactive limitation.

Upon conclusion of the local emergency the landlord can serve notice of a rent increase. The usual 30 days notice applies (35 days if the notice is only mailed). If a landlord that had served a tenant with an increase to take effect on April 1st, say, and that increase was mooted by the freeze then the landlord would have to start again with the required 30 days ahead when the local emergency is lifted or thereafter.

This is not a deferral of the increase but a delay in the increase. The landlord cannot later recoup the increment by which the rent was raised; that extra rent is not ‘banked’ to be taken later. The increase simply did not happen.

Delaying the rent increase does not reset the clock that limits increases to once every 12 months. If the landlord notices a rent increase during the emergency, and that increase is delays and subsequently properly noticed at the conclusion of the emergency period, the subsequent rent increase could be noticed to the tenant not 12 months after the delayed increase but 12 months after when that delayed increase was actually noticed (and mooted).

To clarify, city council intended that the delayed increase pursuant to the rent freeze not push back the next increase by however long is the local emergency. An example: the tenant is noticed for an April 1st increase but the notice is invalidated by the freeze. At the conclusion of the local emergency period on May 31st the landlord again notices the tenant, this time for a July 1st increase. When the next opportunity to increase the rent comes around, the landlord could raise the rent on April 1st and not have to wait until July 1st. So just 9 months will have elapsed between rent increases.

Councilmember Julian Gold suggested that provision and city council agreed. It will of course make for some complicated bookkeeping! And ultimately the difference to the landlord is really small change. At a $2000 rent in the example above, at an allowed 3.1% increase, accelerating the subsequent rent increase from 12 months to 9 months totals less than a $200 loss to the landlord.

How we arrived at that savings: $2,000 starting rent is increased in July by 3.1% to $2,062. The rent is increased again 9 months later in April — the earliest opportunity — again by 3.1% to $2,125 (which is a $63 dollar per month increase). If the landlord had to wait the full 12 months, and could only raise the rent a second time in July, he would forgo that $63 for the three months between April and July. That loss would total about $190. Hardly worth the trouble to account for it.

City council heard plenty from tenants during public comment. About the freeze and the forms and much else. And city council responded. Indeed momentum for a freeze on rent increases seemed to build throughout the meeting. By the time the issue came back up for discussion it wasn’t a question of whether but how.

How to Apply for Help

Besides the moratorium’s 12-month repayment period, the new Ellis protection, and the rent freeze, council’s most significant decision was to let the city decide who gets forbearance. The second most significant decision was to make the standardized form filed by the tenant with the landlord and the city not too onerous.

The landlord is the first recourse for the tenant in need. But the landlord is not the last stop: if the tenant and landlord cannot agree then the tenant would turn to the city to evaluate her claim and review her supporting documentation.

The city is the final decision-maker on forbearance. City council put that responsibility in the lap of the new Rent Stabilization Commission, which will hear tenant applications under the moratorium once it is up and running.

Tenant income documentation then goes to the city and not the landlord. Please forward to Renters Alliance any landlord communication that you receive which suggests anything less than good faith on the part of the landlord. The important thing is that the landlord does not establish the terms of the moratorium on non-payment of rent. That is the city’s job.

City council chose the West Hollywood form as a model. It requires only a self-affirmation as to need and suggests a partial rent payment if possible. There is no significant disclosure. The particulars of the process remain to be seen but we expect them to be revealed later this week.

Next Step

Now it is up to the rent stabilization office to communicate to tenants. The office must provide some guidelines for tenants-in-need and it must be timely. (After the previous urgency ordinance was adopted, it took the office ten days to post guidance online.)

Tenants are now asking about their April rent payment but nothing is yet posted on the RSO website to guide them.

In the meantime we advise tenants: If you are unable to pay the rent, or part of the rent, and wish to invoke the moratorium to defer payment of the rent, WAIT before providing any documentation as requested by the landlord. Communicate to the landlord your potential need to defer a payment and then wait for the city to post the guidance and form. Hopefully it’s up by late this week.