City Council Potential Modifications to Tenant Protection Ordinance James Wong, Senior Project Manager October 22, 2018

Recommendation Finding of CEQA exemption under “General Rule”, Section 15061(b)(3) Receive staff report on potential modifications to the Tenant Protection Ordinance Provide further direction to staff

Background TPO requires landlords of multifamily rental units to pay relocation benefits under only five (5) circumstances: 1. Demolition 2. Permanent removal of unit from market (including condo conversion) 3. Occupancy by landlord or landlord’s family member 4. Government order to vacate

Background 5. Tenants evicted from educational institution-owned housing who meet the following criteria: Tenant’s status as student, faculty or staff has been discontinued for 365 days or more prior to eviction notice Tenant must be in good-standing and be income-eligible

Background Income-Eligibility for TPO benefits: 140% or less of median income Household Size Median Income 140% Median Limit 1 $48,500 $67,900 2 $55,450 $77,360 3 $62,350 $87,290 4 $69,300 $97,020 5 $74,850 $104,790

Background TPO Relocation Allowance: TPO Moving Expense allowance: $1,306 for adult household $3,935 for household w/ dependents, seniors, disabled persons Unit Size HUD FMR RELO Allow (FMR x 2) Studio $1,067 $2,134 1-BR $1,284 $2,568 2-BR $1,663 $3,326 3-BR $2,231 $4,462 4-BR $2,467 $4,934

Background TPO Cases FY 2019: 6 cases processed $47,471 avg income TPO-eligible tenants $3,874 avg TPO benefit amount 7 cases in progress

Background Survey of Other Cities Only 19 cities in CA have local policies addressing tenant protections, just cause evictions, and/or rent control Within LA County, only 6 cities have adopted one or more of such ordinances: Pasadena, Glendale, Beverly Hills, Los Angeles, Santa Monica, West Hollywood 17 CA cities have just cause ordinances

TPO Modification Options Option #1: Require landlords to pay TPO relocation benefits to all tenants Reason for tenancy termination is other than the five (5) “trigger” circumstances Tenant in good standing, income-eligible per TPO cap, has at least 10 years tenancy TPO relocation amount determined by length of tenancy: “Base” TPO amount if up to 10 years of tenancy, 200% of Base TPO if 20+ years of tenancy.

TPO Modification Options Option #2: Increase or eliminate 140% AMI income cap Current 140% AMI cap for 2-person household is $72,590. Income cap would be $99,801 if increased to 180% AMI However, the five (5) circumstances that trigger applicability of TPO would still apply

TPO Modification Options Option #3: Expand TPO applicability to units vacated for property upgrades and re-occupancy at higher rent. Tenant eligibility to claim relocation benefit is based on landlord certifying that eviction is to upgrade property and increase rent May be difficult to administer/enforce as it would rely on landlord voluntarily providing a written certification

TPO Modification Options Option #4: Expand TPO applicability to large rent hikes which exceed a specified percentage increase. Other cities are considering this option This option requires further study as to legality and impacts Potentially creates a heavy administrative burden due to high number of TPO cases likely to be generated

Possible Unintended Impacts Increase operating costs for apartment owners Cause upward pressure on rents Discourage private investment in rental properties Cause delays in or jeopardize development of projects that contain Inclusionary units Administrative impacts requiring additional staff and funding resources

Potential TPO Modifications End of presentation

Background Just cause eviction ordinances Landlords can evict tenants only for certain reasons, including: Failure to pay rent Breach of lease Owner move-in Permanent removal of unit from market Repairs that make unit uninhabitable