City Council Will Revisit Local Moratorium Tenant Protections

Beverly Hills City Council on Tuesday will again reconsider whether or not to end moratorium tenant protections. The moratorium on evictions and rent increase may sunset as early as March 31st. For tenants still affected by the pandemic, the prospect of paying full rent, or facing eviction for nonpayment or no-fault, may be cause concern. And all tenants will likely find the prospect of a rent increase significantly higher than 3.9% a worry too.

Backstory

City Council’s Tuesday, January 18, 2022 afternoon study session agenda includes Item #2: Update and Options Regarding the City’s COVID–19 Related Rent Protections. City Council last visited the issue in October of last year. On that agenda was the Rent Stabilization Commission’s October 6 resolution to recommend that the city end moratorium tenant protections against no-fault evictions and eviction for nonpayment and the moratorium on rent increases during the pandemic.

Council heard COVID-affected tenant concerns about immediately having to pay full rent and tenants were even more concerned about the prospect of a double rent increase which Renters Alliance had identified the prior February — many months before the city acknowledged it. (Read our recap or watch the meeting video.)

In October City Council effectively sidestepped the commission’s recommendation. Instead councilmembers agreed to continue the moratorium through March 31st and thus sunset COVID-related tenant protections by April 1st. Council was unanimous but there was a divide: councilmembers Julian Gold and Les Friedman wanted tenant protections to expire as soon as January 31st; councilmembers Lili Bosse and Bob Wunderlich settled on March 31st; while Councilmember John Mirisch didn’t want an end date but agreed to April.

There was a second, related issue discussed briefly in October: whether or how to allow a landlord to recoup rent increases that may have been delayed during the pandemic. The language in the urgency ordinance that enacted the moratorium was ambiguous. Back in March of 2020 councilmembers seemed to intend that the initial delayed (2020) rent increase could be taken immediately upon an end to the local state of emergency with subsequent rent increases (2021 and beyond) continuing on schedule.

But the pandemic went longer than anyone expected and now allowed annual rent increases are piling up. Depending on how Council acts, tenants could see more than one rent increase: the immediate post-pandemic rent increase envisioned by Council plus subsequent (delayed) rent increases that would be carried forward.

At the October meeting City Council acknowledged their own concern about carrying-forward delayed rent increases but didn’t provide any specific direction on the issue.

On the January 18, 2022  City Council Agenda

Fast forward a few months and now those questions are on back on the January 18th Council meeting agenda. The staff report requests direction on four questions concerning pandemic tenant protections.

1) Whether to end the eviction moratoriums on March 31, 2022. This includes both the moratorium on eviction for nonpayment, which allows tenants to delay the payment of full rent using a city process, and the moratorium on no-fault evictions. The latter has disallowed notices to tenants who may otherwise have been evicted for no-fault for the purposes of redevelopment, condominium conversion, or landlord use of the unit.

We have heard from numerous tenants concerned that the property has been sold and/or the landlord has come around sniffing out tenants about a buyout. If your building has recently sold, or if your landlord appears to be moving forward with a redevelopment project, you cannot be evicted until the expiration of the moratorium because no-fault evictions are not allowed.

Once this aspect of the moratorium ends, however, notice of eviction can go out. Depending on the reason for eviction, the renting household will have at least 90 days, and as much as one year, to stay in the unit after formal notice. Some tenants have accepted buyouts. As we discuss in our explainer, Cash-for-Keys Buyouts: What You Need to Know, tenants have never had more leverage to demand a fair buyout offer.

2) Whether to end the rent increase moratorium on March 31, 2022. Once Council brings this aspect of the moratorium to an end, the landlord will be able to immediately notify tenants of a rent increase and that rent increase can take effect 30 days later. A landlord that is quick on the draw can raise the rent a month after the moratorium ends.

The urgency ordinance language is somewhat ambiguous. Had City Council intended to simply stop the clock on rent increases in March of 2020? Or did it intend delayed rent increases to be carried forward? If the former, then one post-pandemic increase would be allowed upon expiration of the moratorium (currently 3.9% is allowed) but no follow-on rent increase would be available for another 12 months, which is the minimum time between increases allowed by the rent stabilization ordinance.

3) The maximum allowable rent increase that housing providers will have the ability to impose at the end of the rent increase moratorium. If City Council intended to carry-forward delayed rent increases then here is where it gets tricky. By the time the moratorium sunsets (for example on March 31st) all tenants will have had two rent increases delayed and facing another one on the date of regular increase (if any). The staff report puts it this way:

The number of missed annual rent increases depends on the date when a rent increase could have occurred in the absence of the moratorium on rent increases for both Chapter 5 and Chapter 6 units.

That is strictly true only for tenants who receive a rent increase every twelve months on a fixed schedule (for example every June). Some tenants were not increased with regularity and even may have gone two or three years without a rent increase. For these latter households we can’t know how many rent increases may have been denied. That uncertainty complicates the issue of how many rent increases to allow landlords to carry forward.

(Had the city allowed landlords to notice tenants of a rent increase knowing that it would be delayed, we would have today a paper trail of notices to tenants; that would allow the city to know exactly how much additional rent could have been collected but was not collected due to the moratorium.)

For this reason perhaps, the staff report tees-up for City Council the question in terms of a single post-pandemic rent increase rather than ask City Council to consider carrying forward multiple rent increases. So the key question posed to City Council: how large should the post-pandemic increase be? For reference, the current maximum allowed annual rent increase is 3.9% as established in July according to the annual change in consumer prices.

The staff report (p. 5) presents and discusses four options:

  • Allow the first delayed rent increase to be phased in by, for example, allowing landlords an additional 1% rent increase annually for three years on top of whatever percentage is then allowed;
  • Allow the landlord to recover the second delayed rent increase in addition to the phase-in recovery under option #1 but allow only a reduced percentage which reflects the actual change in consumer costs rather than the 3% increase the landlord would have been allowed but for the pandemic;
  • Allow the landlord to recover all or some portion of the delayed rent increase on a schedule that is more frequent than the 12 months between rent increases as the rent stabilization ordinance requires;
  • Allow the landlord the current percentage rent increase once the moratorium sunsets but not allow the rent increases that were not imposed due to the rent increase moratorium.

(These options are better explained with examples so read the staff report.)

4) Whether to provide that the one-year period to pay back rent ends one year after the end of the City’s eviction moratorium for non-payment of rent. The question here is really about when to require tenants who deferred the payment of rent under the local moratorium to repay owed rent. (Rent delayed under the state moratorium is a separate matter.) Today the urgency ordinance says the tenant “must pay in full within one year of the expiration of the local emergency.” However if City Council agrees to end the moratorium on March 31st, as was tentatively agreed last October, should Council establish a date certain and thereby untether rent repayment from the local emergency?

Boiling it Down: Time to End COVID-Era Tenant Protections?

The Rent Stabilization Commission recommended that Beverly Hills sunset our local residential moratorium concurrent with the expiration of the state’s moratorium on eviction for nonpayment. The state moratorium ended on September 30, 2021; City Council took no immediate action at the October 26, 2021 meeting but it did establish a tentative sunset date on March 31, 2022. That date is fast approaching.

The key question for City Council is whether continuing uncertainty about the course of the pandemic justifies extending tenant protections such as the moratorium on eviction and rent increases; OR whether the economy has sufficiently recovered to the extent that most renting households have regained their footing.

From a process perspective, Council needs to decide whether COVID-era tenant protections enacted during the local emergency should be separated from other policies and programs intended to cushion the economic effects of the pandemic on businesses.  While the commercial moratorium on eviction for nonpayment was discontinued last year, the city has continued certain economic supports to local businesses and even expanded medical uses in the city to offer commercial landlords more leasing options.

The staff report provides a fairly thorough discussion of the statutory context for COVID tenant protections and it explores the four questions posed to City Council in some depth. However missing from the staff report is the data that could help City Council assess the past and continuing impact of the pandemic on renting households.

For example we don’t know how many households have received COVID assistance from state or how many are waiting for money to cover rent arrears. Do we have any idea how much rent is still owed to landlords? It would help to have some way to gauge the vulnerability of renting households at this point in the pandemic.

We also don’t have a market study to indicate how robust is the local rental housing market. Have rents rebounded from COVID troughs? Industry says so; if landlords are demanding and receiving sharply higher rents then perhaps there is not the same urgency to end moratorium protections so soon.

The bottom line: Council’s January 18th discussion will likely reflect councilmembers’ own views about how best to balance the interests of tenants and landlords. At the October 26th meeting we had two councilmembers looking to end protections sooner and three comfortable with allowing more time. Given continued uncertainty and a paucity of current data, how will the majority swing this time? (Note: no definitive action will be taken as this comes to Council as a study session item.)

Want to comment at the meeting? Refer to the agenda instructions; comments are taken right up until item #2 is heard. The meeting can be viewed live online starting at 2:30 pm on Tuesday, January 18th and on cable channel 10.

Resources

City Council staff report (January 18, 2022)

City Council meeting video item #F1 Resolution of the Rent Stabilization Commission (October 26, 2021)

Rent Stabilization Commission resolution RSC 9 amendments to 20-O-2818 (October 6 2021)