Tenant relocation assistance ordinance

Current status


On Tuesday, March 12, 2019, the City Council adopted Ordinance No. 1053 adding a tenant relocation assistance requirement to the City's municipal code. The ordinance becomes effective on April 11, 2019. 

The March 12, 2019, staff report and ordinance are available for review.

In addition, the City Council discussed the establishment of a community housing fund to support lower income tenants to prevent homelessness. The details of the community housing fund will return to the City Council on March 26, 2019, for approval. 

Background


On January 10, 2017, the City Council held a study session on addressing the concerns regarding residential displacement in Menlo Park. The study session included staff, Housing Commissioners and a panel of four housing experts. Staff presented 10 policies that have been commonly used or considered in other cities, including rent control, just cause eviction, relocation assistance and mandatory non-binding arbitration, among others. At that time, the City Council did not support dedicating any staff resources to exploring rent control or just cause eviction. The City Council referred the remaining eight recommended policies, along with seven others introduced by the expert panel, to the Housing Commission for prioritization. The Housing Commission reviewed the policy table over the course of three consecutive monthly Housing Commission meetings, received input from stakeholders and experts and developed a recommended prioritization list.

Staff presented this recommended prioritization list at the August 22, 2017, City Council meeting where the City Council approved the Commission’s recommendations without changes.

At its July 11, 2018, regular meeting, the Housing Commission reviewed a draft of the proposed tenant relocation assistance ordinance and recommended changes in regards to the urgency of the ordinance, the household eligibility criteria, the indexing of rent increases to the consumer price index plus 5 percent, the definition of applicable residential units, inclusion of special circumstance provisions and a rental subscription service.

At its August 8, 2018, regular meeting, the Housing Commission modified the eligible tenant definition to include any tenant residing in a rental unit for 12 months or more, subject to an annual household income limit equal to two-hundred percent (200%) of the area median household, and added an owner move-in exemption. The Commission also scheduled two public meetings for September 2018, to gather further public input.

The September 2018 meetings were noticed during the week of August 27, 2018, via mailed postcards to all Menlo Park properties and property owners (including out of town property owners). Additionally, interested organizations who had previously contacted the city about the draft ordinance were also invited to provide comments. These organizations included housing advocacy groups, landlord-tenant mediation services, the California Apartment Association and realtors.

During the September 12, 2018, Housing Commission meeting and the September 13, 2018, community meeting, the City received approximately five hours of public testimony.

At the October 10, 2018, Housing Commission meeting, the Commission made its final recommendation, which will be presented to the City Council. At the City Council meeting, there will be further opportunity for public input and discussion on the proposed ordinance.

On February 12, 2019, the City Council conducted a study session on the tenant relocation assistance ordinance developed by the Housing Commission. At the study question, the City Council provided some general feedback on a series of policy questions posed by staff, including:
  1. Whether tenants’ right to benefits should be linked to a means test
  2. Whether there should be an exception for natural lease expirations
  3. Whether there should be a “significant rent increase” trigger
  4. Whether the ordinance should apply to single family homes and homes built after 1995
  5. The appropriate relocation payment amount
  6. Whether the ordinance should be adopted on an urgency basis
As there were differing views on some of these policy issues, the City Council provided some general feedback and directed staff to return with two different tenant relocation ordinances – one to be modeled after Redwood City’s recently adopted tenant relocation ordinance and the second ordinance to be a modification of the Housing Commission’s ordinance. Mayor Pro Tem Cecilia Taylor and Councilmember Betsy Nash were asked to work with staff on additional modifications. The City Council also provided feedback that a community fund should be explored to provide additional relocation assistance for tenants who were at risk of homelessness, or to assist landlords who could not afford to make payments. Finally, some city councilmembers expressed interest in pursuing mediation or establishment of a rent board to address significant rent increases and perhaps other landlord tenant disputes.

At the February 26, 2019, City Council meeting, the City Council voted 3-2 to introduce the ordinance language below. It is modeled largely off of a similar ordinance from Redwood City, CA. The second reading and possible adoption of this ordinance is scheduled for Tuesday, March 12, 2019.

Ordinance language



ORDINANCE NO. ____
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF MENLO PARK ADDING CHAPTER 8.56 OF THE MENLO PARK CODE REGARDING RELOCATION ASSISTANCE
The City Council of the City of Menlo Park does hereby ordain as follows:

SECTION 1. FINDINGS AND DETERMINATIONS.

A. There is a total of 12,347 residential units in Menlo Park. Of those, 6,927 (or 56 percent) units are owner occupied and 5,420 (or 44 percent) units are tenant occupied. In the Belle Haven neighborhood, 57 percent of the total population are tenants. 

B. The City of Menlo Park currently does not regulate rent increases or reasons for evictions from residential property and certain aspects of public peace, health, and safety are not adequately protected due to the lack of regulation.

D. The California Housing Partnership Corporation estimates there is a shortage of 25,882   affordable rental homes to accommodate low-income renters in San Mateo County, which has a population of 748,732 and 106,289 renting households, according to the U.S. Census.

E. The report Displacement in San Mateo County: Consequences for Housing, Neighborhoods, Quality of Life, and Health found that after being displaced, only 21 percent of households reported staying in the same neighborhood (within 1 mile of their previous home). Thirty-three percent of households left San Mateo County, generally moving to the Central Valley or eastern communities in the East Bay.

F. The rents in San Mateo County and Menlo Park in particular have been steadily increasing. Increasing rents combined with a housing shortage places substantial pressure on the existing city residents who rent housing. In particular, rising rents can lead to tenant displacement of longstanding residents.

G. On August 22, 2017, the City Council directed City Staff to prioritize housing policies, with tenant relocation assistance being part of the priority one recommended policies. 

H. On July 11, 2018, the Housing Commission held a regular public meeting to discuss and consider for recommendation to City Council for adoption of a draft tenant relocation assistance ordinance. 

I. On August 8, 2018, the Housing Commission held an additional regular public meeting to discuss and consider for recommendation to City Council for adoption of a draft tenant relocation assistance ordinance.
 
J. The Commission scheduled two additional community meetings, one at the Menlo Park Senior Center, September 12, 2018, and one at the City Council Chambers, September 13, 2018, in order to hear additional public comment on the matter.

K. Members of the community expressed concern that in light of this proposed relocation assistance ordinance, they would receive eviction or rent increase notices from their landlords. 

L. The process of adopting a relocation assistance ordinance regulating substantial rent increases and no cause evictions by requiring landlords to pay relocation fees in certain instances creates uncertainty and concerns among some landlords that if they do not evict tenants or raise rents before the effective date of the ordinance, they will be required to pay relocation fees later by the new regulations and such actions would defeat the intent and purpose of the new ordinance and substantially impair its effective implementation. 

M. According to the Legal Aid Society of San Mateo County (“Legal Aid”), at least 20 “no fault” eviction notices were issued within the past 32 months in Menlo Park and this sample of eviction activity, self-reported by the Menlo Park residents who elected to consult a lawyer, is a fraction of the total. Legal Aid further reports that at least an additional 10 Menlo Park households reported rent increases of more than ten percent (10%) during the past 32 months. Again, this fractional sampling does not capture the full-scale of significant rent increases in the city. 

N. This data is also supported by reports received by the City from tenants and community organizations that indicate at least 20 instances of “no fault” evictions and at least 10 instances of tenants having received rent increase notices greater than 10 percent (10%) since December 2015.

O. Tenants evicted in Menlo Park are forced to incur substantial costs related to new housing including, but not limited to, move-in costs, moving costs, new utility hook-ups, payments for temporary housing, and lost work time seeking housing. Move-in costs commonly include first and last month’s rent plus a security deposit equal to one month’s rent, leading to total relocation expenses in excess of three months’ rent.

P. The impacts of evictions are particularly significant on low-income, elderly, and disabled tenants and tenants with minor children, justifying an additional payment for households with these tenants.

Q. In light of the numerous concerns noted herein, including but not limited to, the current and immediate threat to the public peace, health and safety by the fact that tenants are not adequately protected due to the lack of regulation and the adverse impacts that would result from displacement of City residents, this emergency measure is necessary to preserve the public peace, health, and safety of the community.

R. In enacting this ordinance, the City is exercising its right to regulate and monitor the basis for eviction.

SECTION 2:  ADDITION OF CODE. Chapter 8.56 [Tenant Relocation Assistance] of Title 8 [Peace, Safety and Morals] is hereby added to the Menlo Park Municipal Code to read as follows:


Chapter 8.56
TENANT RELOCATION ASSISTANCE
Sections:
8.56.010  Short Title, Authority and Applicability
8.56.020  Purpose
8.56.030  Definitions
8.56.040  Requirement to Provide Relocation Assistance
8.56.050  Relocation Assistance
8.56.060  Relocation Assistance Payments
8.56.070  Tenant Displacement Notices
8.56.080  Landlord Submittal Requirements
8.56.090  Alternative Mitigation
8.56.100  Administrative Regulations
8.56.110  Mitigation not Exclusive
8.56.120  Retaliation prohibited
8.56.130  Failure to comply


8.56.010 Short Title, Authority, and Applicability
 A. This Chapter shall be known and may be cited as the “Relocation Assistance Ordinance.”

 B. The requirements established pursuant to this Chapter are adopted under the authority of California Constitution Article XI, Section 7, which provides: "A county or city may make and enforce within its limits all local, police, sanitary, and other ordinances and regulations not in conflict with general laws," and in accordance with the purpose set forth in the ordinance codified in this Chapter.

 C. This Chapter shall apply to the extent permitted by the statutes and laws of the State of California.

 8.56.020 Purpose
The primary purpose for relocation assistance is to minimize disruption to tenants and their families caused by a need for relocation by addressing financial impacts. Securing replacement housing generally requires a significant amount of money for expenses related to a physical move, such as first and last month's rent and security deposits. Projects assisted with Federal and State funds are subject to requirements to provide relocation assistance to households displaced by those projects. There is currently no state mandate for landlords to assist displaced tenants by compensating for relocation costs. While an unanticipated move may be challenging for any tenant, it is especially difficult for extremely low, very low and low income households.

 8.56.030 Definitions
The following words and terms as used in this Chapter shall have the meaning respectively ascribed thereto:

 A. Application. Any application required to be submitted to the City for discretionary or ministerial approval of a land use change or improvement of real property that will result in a permanent displacement of a residential household.

 B. Displace or Displacement. The vacating of one (1) or more rental units on properties with five (5) or more units by residential households upon notice from the landlord as the result of or to enable any of the following:
1. The landlord seeks to withdraw all rental housing units from the rental housing market as provided in Government Code Section 7060, et seq.;
2. The landlord seeks to recover possession to demolish or otherwise remove a residential rental housing unit from residential rental housing use after having obtained all proper permits from the City, if any such permits are required;
3. The landlord seeks to recover possession to remodel, renovate or rehabilitate the unit(s) resulting in permanent displacement of tenants;
4. The landlord seeks the conversion of a building into a condominium, community apartment or stock cooperative, as those terms are defined in California Government Code and Business and Professions Code; or
5. A change of use of real property from a residential use to a nonresidential use that requires a permit from the City.

 C. For the purposes of this Chapter, a displacement does not include a vacation of a rental unit as the result of the following:
1. A conversion of any portion of a mobile home park regulated and processed pursuant to Chapter 28 of this code;
2. A landlord's compliance with an enforcement order of the City chief building official for which the property owner has been ordered to pay relocation expenses pursuant to Health and Safety Code Section 17975, et seq., or any other state or federal law;
3. The residential household is required to vacate the rental unit due solely to damage resulting from an earthquake, fire, flood, natural disaster, civil disturbance, or accident outside the control of the landlord; or
4. Temporary displacement where tenants have been provided with alternative housing on-site or nearby provided that such displacement shall be for a period of no more than one year.
5. Expiration of a lease that was not extended by the operation of Civil Code Section 1945.

 D. Eligible residential household. A displaced residential household whose annual household income does not exceed eighty (80) percent of the area median household income for San Mateo County as adjusted for household size according to the United States Department of Housing and Urban Development, as may be adjusted from time to time, and whose rental payments to the landlord remain current through the date of displacement. The presumption of eligibility specified in the preceding sentence shall not apply where the landlord provides evidence of any of the following circumstances:
1. The residential household's occupancy ended due to the expiration of a term lease or termination of a month to month rental agreement and the tenancy was not extended by the operation of Civil Code Section 1945; or
2. The residential household (a) is in the process of being evicted pursuant to the terms of the rental agreement for failure to pay rent or other breach of the rental agreement; or (b) has been found guilty of unlawful detainer pursuant to Subdivisions 2, 3, 4 or 5 of Section 1161 of the Code of Civil Procedure as evidenced by a final judgment of a court of competent jurisdiction; or (c) has entered into a stipulated agreement in an unlawful detainer action which requires vacation of the premises; or
3. The residential household received written notice, before entering into a written or oral agreement to become a tenant, that an application to convert their rental unit to another use was on file with the City or had already been approved and would result in their displacement.

 E. Landlord. An owner, lessor or sublessor of property (including any person, firm, corporation or other entity) who receives or is entitled to receive rent for the use of any rental unit, or the agent, representative or successor of any of the foregoing.

 F. Lease. Any form of rental agreement, whether written or oral.

 G. Rental unit. A habitable structure offered for rent and used as a place of permanent or customary and usual abode of a residential household. Rental units include a building, a group of buildings or a portion of a building used and/or designed as dwellings. A rental unit shall not include:
1. A room or any other portion of any residential unit which is occupied by the landlord or a member of the landlord's immediate family.
2. Properties where four (4) or fewer dwelling units are located on one (1) lot, including single-family, duplex, tri-plex or four-plex homes, and accessory dwelling units.
3. A mobile home.
4. Housing accommodation in hotels, motels, inns, tourist homes and boarding or lodging houses.
5. A unit in a common-interest development where units are owned by different individuals who share ownership of common areas and facilities.
6. An on-site manager's living unit.
7. A unit where the tenancy is an express condition of, or consideration for, employment by a landlord.

 H. Residential household. Any person or group of persons entitled to occupy a rental unit under a valid lease or rental agreement (written or oral) with the landlord.

 I.i. Special-circumstances households. An eligible residential household with any of the following characteristics:
1. At least one (1) member is sixty-two (62) years of age or older.
2. At least one (1) member qualifies as disabled as defined by Title 42, United States Code, Section 423 or handicapped as defined by California Health and Safety Code Section 50072.
3. A household with one (1) or more minor children (under 18 years of age) who are legally dependent (as determined for federal income tax purposes).
4. A household that has occupied their unit as their primary residence for five (5) or more consecutive years.

 J. Tenant. A tenant, subtenant, lessee, sublessee or any other person entitled to use or occupancy of a rental unit under a valid lease or rental agreement (written or oral) with the landlord.

 K. Third-party agency. Relocation assistance specialist, agency and/or other third party agency hired by the City and paid for by the landlord to assist with the relocation assistance process set forth in this ordinance.

 L. Primary Residence. A primary residence is a dwelling unit where a person has been physically present and that the person regards as home. A person may only have one primary residence at any given time. Evidence of a person's primary residence includes, but is not limited to, documentation from income tax statements or a driver's license. If a property has multiple dwelling units, including an accessory dwelling unit or apartment complex, each dwelling and accessory dwelling shall be considered a separate residence subject to the primary residence requirement.

 8.56.040 Requirement to Provide Relocation Assistance
Any landlord that shall cause the permanent displacement of residential households shall be subject to paying eligible residential households relocation assistance in accordance with the provisions of this Chapter. 

 8.56.050 Relocation Assistance
A. The landlord shall provide relocation assistance, where required by Sec. 8.56.040, to eligible residential households in accordance with the following requirements, unless an alternative mitigation strategy as defined in section 8.56.090, below, has been approved by the City:
1. A full refund of a tenant's security deposit, except for funds that may be necessary to repair tenant's damage to property in rental units that will be reoccupied before undergoing renovation or demolition.
2. A sixty (60) day subscription to a rental agency service. The costs of a rental agency shall be fair and reasonable based on current market pricing.
3. The cash equivalent of three (3) months' rent shall be paid to the residential household renting a unit. The amount to be paid shall be calculated at the time the relocation application is approved by the City based on the most recent Department of Housing and Urban Development's Fair Market Rent calculation for San Mateo County for a similar-sized unit with the same number of bedrooms.
4. Special-circumstances households will be paid one (1) additional month of rent for a maximum of four (4) months' rent.
5. An administrative fee as set forth in Section 8.56.060(F) below.

 8.56.060 Relocation Assistance Payments
A. Third-party processing. The City shall hire a third-party agency to provide tenant relocation assistance. Landlord shall pay the fees for the third-party agency and shall deposit sufficient funds with the third-party agency and/or City (as determined by the City) when an application is filed to cover the estimated cost of the relocation assistance services. The third-party agency shall provide bilingual assistance, as necessary, and hold an informational meeting with tenants, respond to questions, verify current household incomes, disperse checks to eligible households and provide an accounting of dispersed funds to the landlord and City.

 B. Payments escrow account. The landlord shall open an escrow account with an entity qualified to provide escrow services within the State of California and deposit relocation assistance funds into that account no later than thirty (30) days after filing an application that will be used by the third-party agency for relocation assistance payments to eligible residential households. The amount of the deposit shall be determined by the Community Development Director or his/her designee and unused funds shall be returned to the landlord after all relocation assistance has been paid as verified by the third-party agency.

 C. Relocation assistance claims. Tenants requesting relocation assistance must provide the necessary information to the third-party agency who will determine their eligibility for relocation assistance and eligible residential households must complete a claim form. Tenants must file a claim before the date to vacate as stated on the notice of termination in order to be eligible for relocation assistance payments. After determination of eligibility, half of the relocation assistance shall be paid to eligible residential households within fifteen (15) days of the date the claim form is submitted to the third-party agency and the remaining half shall be paid when the household vacates the unit.

 D. Payments to eligible residential households. Relocation assistance is paid per rental unit, not per tenant. If multiple households or individuals occupy a rental unit, relocation assistance shall be paid to the household or individual entitled to occupy a rental unit under a valid lease or rental agreement (written or oral) with the landlord.

 E. Verification of payment. Before issuance of demolition permits, building permits or other City permits that would result in the removal of a rental unit subject to this Chapter, the City must receive verification from the third-party agency that all eligible residential households who applied and qualified for assistance have received relocation assistance. This verification shall be submitted in a form acceptable to the City.

 F. Administrative costs. The City shall collect the administrative fee in an amount to be set by resolution of the City Council.

 8.56.070 Tenant Displacement Notices
A. Notice of intent. No later than thirty (30) days after filing an application, either the landlord or the landlord's agent shall notify each residential household residing on the subject real property that the landlord has filed an application with the City. The notice shall be sent by regular and certified mail and posted on the door of each rental unit. The landlord must submit evidence of compliance with this section to the City in order for the application to be deemed complete.
For each such notice, the landlord shall use a notice of intent form provided by the City that shall contain the following information:
1. The name and address of the current property owner and the project developer;
2. A description of the application(s) being filed and a general time frame to complete the work described in the application;
3. An explanation of the relocation assistance available to eligible residential households and special-circumstances households, information on eligible residential household incomes and the procedure for submitting claims for relocation assistance;
4. Contact information for the third-party agency that will be assisting with the relocation assistance process. This contact information and a brief explanation of the purpose of the notice shall be translated into non-English languages as provided by the City;
5. The residential household's right to receive written notice for each hearing and right to appear and be heard at land use hearing, if applicable; and
6. Other information deemed necessary or desirable by the Community Development Department.

 B. Notice of intent verification. The landlord or agent of the landlord shall submit to the City a duplicate copy of the notice of intent form given to each residential household and a declaration indicating that each notice was sent by regular and certified mail and posted on the door of the rental unit.

 C. Notice of application approval. No later than fifteen (15) days after receiving final approval of a project application (including any appeal period), the landlord or the landlord's agent shall notify each residential household residing on the subject real property that the application has been approved. The notice shall be sent by regular and certified mail and posted on the door of each rental unit.

 D. Notice of termination. Landlord shall provide a written notice of termination to all tenants subject to displacement pursuant to Civil Code Section 1946 and Section 1946.1.

 8.56.080 Landlord Submittal Requirements
Concurrent with the filing of an application, the landlord shall provide the Community Development Department with the address number of each unit in the rental development, the monthly rents for those units and the names of every member of the residential household who is a signatory on a written lease or rental agreement for that unit, the household income as shown on the lease or rental agreement and the number of household members included on the lease or rental agreement. Where there is no written lease or rental agreement, the landlord shall provide the name of every person the landlord considers to be a resident under an oral lease or rental agreement.

 8.56.090 Alternative Mitigation
A. All applications governed by this section shall be required to submit the required information; however, the landlord may also submit an alternative mitigation strategy that meets the goals of this section. An alternative strategy may include, but shall not be limited to, providing other mitigation and concessions to tenants such as permanent relocation of displaced tenants into similar apartments on-site or nearby, ongoing rent concessions or suitable notice and other elements of mitigation that would serve the goals and purposes of this Chapter. Prior to submitting any alternative mitigation strategy, a landlord shall discuss the strategy with existing tenants and make good faith efforts to arrive at an alternative mitigation strategy that is acceptable to existing tenants. Evidence of tenant agreement with an alternative mitigation strategy may be submitted to the City for review. With each such alternative submission, the landlord shall provide complete information as determined necessary by the Community Development Director.
After an alternative mitigation strategy is submitted, the landlord shall provide notice of the submission by regular and certified mail and posted on the door of each rental unit. Tenants shall have fourteen (14) days from the date notice is posted or mailed, whichever is later, to submit comments on the alternatives to the Community Development Director.
Alternative mitigation proposals shall be approved or denied by the Community Development Director. Within seven days of the decision, the City shall provide notice of the decision to the landlord and all tenants. The Landlord or tenants may appeal any decision of the Community Development Director to the City Manager or designee within fourteen (14) days after notice is provided.

 B. Landlord's temporary withdrawal of residential rental units from the market shall not be subject to this Chapter for any units where, in the opinion of the Community Development Director, the landlord has provided suitable alternative temporary replacement housing accommodations on-site or nearby.

 8.56.100 Administrative Regulations
The Community Development Director may, from time to time, promulgate regulations implementing the provisions of this Chapter, violations of which shall be considered a violation of this section.

 8.56.110 Mitigation Not Exclusive
Nothing in this section shall be interpreted to interfere with the City's ability and/or obligation to require relocation assistance for displaced tenants who are not covered by this Chapter.

8.56.120 Retaliation prohibited
Commencement of eviction proceedings against a tenant for exercising his or her rights under this Chapter shall be considered a retaliatory eviction. Under Civil Code Section 1942.5, it is illegal for a landlord to retaliate against a tenant for lawfully and peaceably exercising his or her legal rights. 

8.56.130 Failure to comply
A landlord’s failure to comply with any requirement of this Chapter may be asserted as an affirmative defense in an action brought by the landlord to recover possession of the rental unit. Additionally, any attempt to recover possession of a rental unit in violation of this Chapter shall render the landlord liable to the tenant for damages permitted by law in a civil action for wrongful eviction. The tenant may also seek injunctive relief and money damages for wrongful eviction and/or failure to pay relocation assistance. A landlord may seek money damages for a tenant’s failure to reimburse relocation assistance if the tenant ultimately fails to vacate the rental unit after receipt of a notice of termination. The prevailing party in an action for wrongful eviction and/or failure to pay relocation assistance or reimburse relocation assistance shall recover costs and reasonable attorneys’ fees. 

 SECTION 3. SEVERABILITY. If any section of this ordinance, or part hereof, is held by a court of competent jurisdiction in a final judicial action to be void, voidable or unenforceable, such section, or part hereof, shall be deemed severable from the remaining sections of this ordinance and shall in no way affect the validity of the remaining sections hereof.

 SECTION 4. CALIFORNIA ENVIRONMENTAL QUALITY ACT DETERMINATION. The City Council hereby finds that this ordinance is not subject to the provisions of the California Environmental Quality Act (“CEQA”) under Sections 15378 and 15061(b)(3) of the of the CEQA Guidelines.

SECTION 5. EFFECTIVE DATE. This Ordinance shall take effect 30 days following adoption.

INTRODUCED on the __ day of , 2019.

PASSED AND ADOPTED as an ordinance of the City of Menlo Park at a regular meeting of said City Council on the ___ day of _________, 2019, by the following vote:

AYES: Councilmembers:
NOES: Councilmembers:
ABSENT: Councilmembers:
ABSTAIN: Councilmembers: