City Council Tweaks the COVID-19 Emergency Regulations

Beverly Hills city council adopted a new urgency ordinance at the April 21st meeting making several changes to several emergency measures related to COVID–19. The amendments are part of council’s continuing refinement to the city’s response (to which we gave an A grade). Here we review those changes with specific focus on measures that affect tenants.

At the March 31st meeting, Mark Elliot from Renters Alliance urged city council on behalf of tenants to require the rent stabilization office to alert landlords and tenants to any substantive change in the urgency ordinance within 24 hours. That suggestion was not needed: we are a week beyond the April 21st changes to the urgency ordinance and yet we are still waiting to hear from the rent stabilization office.

So we will go ahead and highlight the changes to the urgency ordinance that specifically affect tenants. These are minor but important changes!

Renters Alliance Recommendations that Changed the Ordinance

There are two tweaks to the urgency ordinance that concern tenants specifically:

  • The landlord who extends rent forbearance “shall not make a negative report to a credit bureau so long as the tenant remains in compliance with those obligations”; and,
  • The moratorium on rent increases now applies to “any rent increase scheduled to take effect on or after March 15, 2020.”

We recommended those changes to city council at the April 21st meeting. We felt the credit-reporting protection is important because no tenant should have to worry that her inability to pay rent due to COVID–19 measures could result in an negative report to a credit bureau. Landlords with mortgages already got that dispensation under the federal CARES Act. Why not extend that protection to tenants too? (Council agreed.)

And that new reference to March 15th in the rent increase moratorium is important because it answers the question, Would a notice of rent increase payable on March 15th still be valid? City council was not precise when it adopted the last urgency ordinance on March 31st. The language only specified “during the period of local emergency declared by the City Council…”

Here’s the timeline: the emergency was declared by the city manager on March 15th but it was not ratified (as required) by city council until the next day on March 16th. Would that give landlords a loophole to demand a rent increase payable on March 15th? The rent stabilization office has provided zero written guidance on the rent increase.

Thankfully city council clarified that the moratorium applies to rent increases scheduled to take effect on or after March 15, 2020 so a notice of rent increase due on that date (or after) is no longer valid. Any rent paid will be refunded and the increase will again have to be properly noticed after the emergency ends.

Recommendations Not Embraced by City Council

In addition to the successful recommendations that changed the urgency ordinance for the better, city council did not embrace several recommendations we hoped would improve the draft urgency ordinance presented to city council for consideration on April 21st.

Retroactively toll all tenancy termination notices. The urgency ordinance in place since April 1st tolls a tenancy termination notice for Ellis Act evictions. That stops the clock on the time a tenant has to vacate and then the clock is restarted after the emergency ends. The provision is effective as of April 1st and it applied only to Ellis notices.

We recommended tolling all no-fault notices of termination and making it retroactive to March 15th. The reasoning is that there are lawful tenancy terminations for purposes other than Ellis (i.e., exiting the rental market) and we want to toll, or stop the clock, on any of those no-fault notices. Heck, the clock should not run for any notice of termination during the emergency hence our recommendation to make it retroactive.

Only two non-Ellis terminations were in progress, said the rent stabilization office, and the clock could be stopped for those separately. (The problem is that we have no data on evictions and haven’t seen any such data since 2018.) Council declined to expand the provision and instead punted: deal with such evictions separately, and there is no retroactive provision to March 15th.

Allow the tenant affected by COVID–19 to choose to apply the deposit to the last month’s rent. This proposal envisions that some tenants who have experienced a substantial decrease in income will choose to vacate their unit rather than incur some unknown back-rent obligation. It also allows the landlord to re-rent the unit to a paying tenant.

The principle seemed sound: the moratorium requires forbearance where household income is negatively affected; so why not enable a tenant to conserve whatever cash she may have by directing that her security deposit be applied to pay the last month’s rent? It could have been a win-win: the tenant does not have to pay for the last 30 days in the unit and so can take that cash with her; and it avoids the too-common problem of landlords who do not return the security deposit.

The proposal was not discussed in any detail, though. A plausible reason is that none of our city councilmembers is a tenant; probably they are unfamiliar with the practical aspects of renting like trying to get a deposit returned in a timely manner. Allowing a departing tenant to avoid that pitfall seemed sensible to us!

Regulate cash-for-keys buyouts. When the landlord offers the tenant cash for voluntarily leaving the unit the landlord scores a big win: either he gets a higher rent if the unit is re-rented immediately; or he gets a much higher rent if he takes the opportunity to remodel. And he does not have to pay a relocation fee or wait for the one-year noticing period to conclude (B.H.M.C. 4–6–6(K)(a)).

Despite those significant potential benefits, a landlord often makes a lowball buyout offer. For that reason some rent-stabilized cities regulate the tenant buyout. Not Beverly Hills.  However the COVID–19 emergency is precisely the time when a tenant not so knowledgeable about her rights should have to evaluate a lowball offer to vacate.

We recommended that the city provide the required buyout form and then approve any buyout agreement after determining that the agreement provides due compensation to the tenant. Councilmembers indicated interest. But Councilmember Julian Gold balked: Why not let the market address it? Why get in the middle of the negotiation? That some cities require the relocation fee at a minimum seemed to be the sticking point.

To explain the importance of a regulated buyout, Mark Elliot from Renters Alliance raised a hypothetical: Let’s say a tenant suffers a COVID–19 related drop in income and receives a buyout offer from the landlord: $5,000 for the keys. While that deal may appear to be acceptable to both parties it is actually disadvantageous to the tenant.

The tenant may not be aware of her right to refuse, for one thing; and the hypothetical $5,000 payment is perhaps half the relocation fee that the tenant would otherwise receive if terminated. It is a lowball offer that a tenant with a hardship may not be able to refuse.

Mark Elliot also pointed out that there is administrative value to regulating a buyout: it allows the city to better understanding the dynamics of the rental housing market. However city council did not agree (though we hope the buyout regulation recommendation comes back for consideration at a later date).

Face Coverings

The new urgency ordinance includes another change that will affect all residents: a tweak to the regulation concerning face coverings. Previously the regulation was enacted through an executive order from the city manager. Now it is incorporated into the ordinance. But with three changes:

  • Now a face covering is required when anyone leaves the home only if “that person has potential to come within six feet of another person not a member of their household.” This relaxes the face-covering requirement so long as distance can be maintained.
  • ‘Essential activities’ is now considered to include a walk in the neighborhood. City council wanted to condone outside recreation so long as distance can be maintained.
  • The offense for not wearing a face covering is no longer criminal but civil, and the penalty is effectively reduced from $1,000 to $100 (for the first offense with the penalty escalating for subsequent offenses).

Council council declined, however, to expand the age exemption for the required face covering so the regulation still applies to any person aged two years or older when in proximity to any non-household member (and in retail stores too).

Our Takeaway

The city council discussion reminded us that tenants receive little support from the rent stabilization office when it comes to making rental housing policy. None of these ideas presented to city council by Renters Alliance — not the 24-hour notice to tenants, the retroactive tolling of termination notice periods, redirecting the security deposit, or regulating the buyout — has come from the rent stabilization office. We have seen little effort by the office to improve the rent stabilization ordinance either.

Want to see what a commitment to tenant protection looks like? Santa Monica’s interim city manager discusses tenant protections in the time of COVID. Check out the comprehensive Santa Monica COVID FAQ for tenants. In contrast, as week after the latest urgency ordinance changes we have yet to hear from our rent stabilization office. Can you even name the Beverly Hills city manager?