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City Council Report

 

City Council Meeting: December 16, 2014

Agenda Item: 7-C  

To:               Mayor and City Council 

From:           Marsha Jones Moutrie, City Attorney

Subject:        Introduction And First Reading Of Ordinance To Expand Protections Under Tenant Harassment Ordinance

 

 

Recommended Action

Staff recommends that the City Council introduce for first reading the attached ordinance which would amend the City’s Tenant Harassment Ordinance (“THO”) to expand protections to tenants, by modifying the state-of-mind requirement, clarifying the scope of certain prohibited conduct, and increasing penalties.

 

Executive Summary

The proposed ordinance would amend the THO in the following respects:

·       Modify the required state of mind for violations of the THO from “malice” to “bad faith”

·       Clarify the scope of prohibited conduct as to improper entries into units and invasions of privacy

·       Increase the maximum potential civil penalty for violations to $10,000

·       Increase civil penalties for violations committed against senior or disabled tenants

The proposed ordinance would also add new notice and reporting requirements for owners who engage in buyout negotiations with tenants similar to those recently adopted in San Francisco.

 

Background

At its meeting on September 23, 2014, Council directed staff to evaluate various proposals to expand tenant protections under local law to address concerns expressed at the meeting.

 

Staff’s current proposal fulfills Council's directive by making several changes to the existing THO as well as creating a new section of the law to address concerns over tenant buyout offers and agreements.

 

Santa Monica’s Tenant Harassment Ordinance (S.M.M.C. sections 4.56.010-040) was adopted in October 1995 in the wake of statewide vacancy decontrol, to protect residential tenants from abuses by property owners intended to cause tenants to vacate their units to make room for new, market-rent tenants. The THO currently prohibits twelve different kinds of wrongful actions by landlords when performed with “malice,” i.e., an intent to annoy or harass the tenant. It contains civil and criminal remedies and can be enforced by the City, the tenant, or any other person.

 

Discussion

Amendments To The THO

Staff recommends five amendments to the THO. The first three are intended to clarify existing language, while the latter two provide added penalties for violations.

 

First, staff proposes changing the current requirement of “malice” on the part of the landlord in the THO, to a standard of “bad faith.” The operative state of mind standard will stay essentially the same, but community input indicates that the use of the term “malice” in the THO may have been confusing, since that word has a narrower meaning in other legal contexts. So, changing the standard to bad faith should help avoid such potential confusion in the future.

 

Second, staff proposes clarifying the sub-section relating to improper entries into tenants’ apartments (S.M.M.C. section 4.56.020(d)), by specifying certain types of misconduct covered by the law. There have been increased reports of owner and managers making unlawful “inspections” of units solely as a pretext to search for possible grounds for eviction; and of otherwise valid entries that were extended into improper areas for similar reasons, or simply to harass tenants. Although the THO already prohibits such conduct, staff agrees that specifying some examples will increase the law’s deterrent effect and increase public understanding of its scope.

 

Third, staff proposes clarifying sub-section *(l) of the THO relating to invasions of privacy in a similar manner and for the same reason. This area has substantial overlap with sub-section (d) and improper entries. However, clarifying the scope of privacy protections with examples is important on its own as well since some privacy violations occur independent of any entry into the tenant’s unit.

 

Fourth, staff proposes increasing the civil penalty for violations of the THO from the current fixed sum of $1,000, to an amount of up to $10,000. The new rule would give courts important discretion to award various amounts of penalties depending on the severity of the case, rather than the single fixed amount under current law. Also, staff believes that the law should provide a far greater deterrent than $1,000 for those cases with serious misconduct but where there is only one violation (or a small number of violations). In such cases, the amount of $1,000 may be too small either to deter unlawful behavior in advance, or to provide a meaningful deterrent to other potential violators. In a similar vein the City of New York recently increased its maximum tenant harassment penalty from $5,000 to $10,000, as reported in the New York Times on September 30, 2014.

 

Fifth, staff proposes adding a separate civil penalty for violations of the THO that are committed against elderly or disabled tenants. Staff has noticed that these vulnerable segments of the population are especially susceptible to being harassed out of their apartments and entitled to increased protection under the law. The added penalties are intended to further deter owner misconduct directed at these two groups.

 

New Requirements For Buyout Negotiations And Agreements

Staff also recommends that Council add a new local law to increase protections for tenants who receive buyout offers from their property owners.

 

With the rebounding of both the rental and real estate markets, the disparity between rent-controlled and market rate rentals has continued to grow in recent months. As such, landlords have greater incentives to induce tenants in rent-controlled units to move out. Similarly, many landlords are selling their property knowing that an unoccupied unit can command a significantly higher sale price than an occupied one.

 

Instead of evicting tenants, some landlords offer cash buyouts in exchange for the tenants vacating rental units. Even buyouts worth tens of thousands of dollars, or more, can be recouped by a landlord retaining ownership and re-renting at market rates or selling the unit. Anecdotal evidence indicates that many buyout negotiations are not conducted at arms-length, and landlords sometimes employ high-pressure tactics or intimidation to induce tenants to sign the agreements. Some landlords threaten tenants with eviction if they do not accept the terms of the buyout. For example, by threatening a specific no-fault eviction (such as under the Ellis Act) and then convincing a tenant to vacate rather than receiving the eviction notice, a landlord will avoid various legal responsibilities and restrictions.

 

These tactics sometimes result in tenants entering into buyout agreements without a full understanding of their rights. The buyouts vary widely in amounts and, in some cases, are even below minimum relocation benefits which are required to be paid for all no-fault evictions. Disabled, senior, and catastrophically ill tenants can be particularly vulnerable, and can face greater hurdles in securing new housing.

 

The main purpose of the proposed new law is to increase the fairness of buyout negotiations and agreements by requiring landlords to provide tenants with a statement of their rights and allowing tenants to rescind a buyout agreement for up to 30 days after signing the agreement, thus reducing the likelihood of landlords pressuring tenants into signing buyout agreements without allowing the tenants sufficient time to seek advice. Another goal of this new provision is to help the City collect data about buyout agreements. At present, the City and Board lack comprehensive information about the number, location, and terms of such agreements, making it hard to understand the true level of tenant displacement in Santa Monica. Likewise, it would help even the playing field of buyout negotiation if tenants had information available from other buyout agreements at similar properties.

 

The City and County of San Francisco recently approved a similar ordinance to protect tenants subject to buyout offers. The same policy considerations apply here, and staff recommends that Santa Monica follow a similar approach, with limited exceptions.

 

Under the proposed ordinance:

·       All buyout offers would have to be in writing.

·       Landlords would have to give tenants a written disclosure of their rights before making buyout offers. (San Francisco broadens this notice period to any time “prior to commencing buyout negotiations,” which is somewhat vague and subject to dispute.)

·       Landlords would have to file copies of all buyout agreements with the Rent Control Board, or if the Board chooses not to implement this requirement, then filings could be made with the City.  The data would be available to the public.

·       Tenants would have a 30-day period to rescind buyout agreements. (San Francisco extends the period to 45 days.)

·       Tenants and others could bring a civil action for damages and penalties for violations of the new rules.

San Francisco's ordinance goes further in several respects.  It extends the cooling-off period to 45 days; it requires landlords to register offers with the Rent Board in addition to agreements; and it requires the Rent Board to maintain a searchable database of such offers and agreements. 

 

The proposed ordinance would apply only to rent-controlled units. This is primarily because the profit incentive and rent discrepancies described above exist only in those controlled units that are rented below market rates. Also, the logical agency to receive and disseminate information from the buyout agreements is the Board, whose jurisdiction extends only to controlled units.

 

Other Developments Related To Tenant Harassment Protections

The City Attorney’s Office has hired a new Community Liaison, whose duties will include investigating claims of tenant harassment and providing information to the public regarding the City’s landlord-tenant laws. The new hire is starting work this month. 

 

The City Attorney’s Consumer Protection Division and the Rent Control Agency co-presented a public forum on landlord-tenant laws in Virginia Park on December 3, 2014. Staff has disseminated written materials on landlord and tenant rights and responsibilities to all local renters and owners, and will continue this process with upcoming information sheets, including a specific form designed to educate the judiciary about Measure RR and just-cause protections.

 

Finally, the City Attorney’s Office will convene a task force to address issues and trends related to tenant harassment on a regular basis. The group will include representatives from the City Attorney, Rent Control Agency, Code Compliance, Police Department, and Legal Aid.

 

Alternatives

Council could consider whether to extend the proposed amendments to the law as described above, including Council could also consider taking the amendments yet further, in the manner adopted by San Francisco.   

 

Financial Impacts & Budget Actions

The increased educational and enforcement measures included in the proposed ordinance would be performed by existing City staff. No significant financial impact or

budget action is anticipated beyond the addition of the Community Liaison Position for the City Attorney’s Office. That position is already in the office’s budget.

 

 

Prepared by: Adam Radinsky, Chief Deputy, Consumer Protection Division

 

Approved:

 

Forwarded to Council:

 

 

 

 

 

 

Marsha Jones Moutrie

City Attorney

 

Rod Gould

City Manager

 

 

Attachment:  Ordinance Amending Chapter 4.56 of the Santa Monica Municipal Code