By Amanda Biers-Melcher
Even before a global pandemic tore a gaping hole in the fabric of our local economy, it was pretty clear to anyone paying attention that a lack of affordable housing was a problem in our community — with more people experiencing homelessness, more families living in RVs and vans around Los Angeles and in the quiet corners of Burbank, more young adults moving back home and families doubling up and too many people teetering on the brink of financial disaster.
And even with a 6 percent drop compared to this time last year, the average rent for a two-bedroom apartment in our city (as of August 11, 2020) is $2,495.
That’s less than a mortgage payment on the average home (a 30-year with 10 percent down on an $839,000 home —with a friendly interest rate of 3.5%) which would set you back $3,391 a month, but it’s still a lot.
Here’s a quick calculation — if you were to rent the average two-bedroom home in Burbank you’d be paying just shy of $30,000 over a twelve month period. For this to represent a third of your household budget you’d need to bring home $90,000 a year after taxes. Ouch.
And, in addition to the exorbitant cost, renters pay another price when they rent a home: uncertainty — the fear that a landlord might suddenly raise the rent, or come up with a reason to evict you in order to squeeze more profits out of his real estate investment and force you and your family out of your home and back into a rental market where affordable homes are in short supply.
Last year, a new state law sought to address those problems, at least partially, by barring residential landlords from raising rent more than 5 percent plus the local rate of inflation, in any one year, and requiring landlords to show “just cause” when terminating a lease.
The Tenant Protection Act of 2019, which took effect in January, applies (mostly) to multi-family rental buildings in Burbank that are at least fifteen years old — and that’s a rolling date, so if a rental until was built in 2006 it will be covered in 2021, 2007 in 2022 and so on. The rationale for exempting newer buildings from regulation is that this will encourage developers to continue to build affordable housing.
It should come as no surprise that the new state law is pretty controversial; landlords are not big fans of it and even some academics have weighed in to say that rent control can actually drive up housing costs by creating a shortage of options for those looking to rent.
I don’t know if they’re right. But I do know that if you didn’t like the state law, you’re going to like Burbank’s own much stricter rent control measure — which after lots of legal maneuvering and controversy will be on the ballot in November — even less.
And, frankly, I don’t like the “2020 Just Cause Eviction and Rent Regulation Measure” much either, primarily because I believe the lack of oversight over a newly-envisioned Landlord-Tenant Commission provides far too much opportunity for abuse.
But that’s a discussion I will save for another day. Here I intend to do my best to compare the state law with the rent control measure headed for the ballot in Burbank.
Both the state law and the proposed ballot measure share two central features. They regulate how much landlords can charge to rent property they own and prevent landlords from evicting tenants for no reason.
But there are important differences between the two in terms of what types of rentals they cover, how strict the regulations are and how (and by whom) they are enforced.
To what kind of housing units would each apply?
Rentals that are at least fifteen years old; multi-family buildings and condo and single-family homes owned by a corporation or a real estate investment trust are subject to both the rent control and “just cause” eviction provisions of the state law as long as the tenant has lived in the rental unit for at least a year.
The regulations don’t apply to a new tenancy — if a unit is vacant, a landlord can charge whatever he wants for it — or to a duplex where the landlord lives in the other unit.
Units that were already under local rent control law when the state law took effect and some other types of housing — like school dormitories and government subsidized housing — are also exempt from state regulation.
Rental units built before February 1, 1995 would be subject to rent regulation and eviction protections with very few exceptions (e.g. government housing, housing designated as affordable, dorms).
Single-family homes and condos and apartments built after February 1, 1995 would only be subject to “just cause” eviction provisions and buyout agreement restrictions and not rent regulation. That’s because another state law — The Costa-Hawkins Rental Housing Act of 1995 — places limits on local governments and gives landlords the exclusive right to set rents for new tenants at whatever rate they choose (typically the market rate).
A landlord who rents out a room in a house he or she lives in would be exempt from the ordinance as long as — take note — they share a kitchen or a bathroom with their tenant. Short term temporary rentals would also not be covered by the new local law.
How much can my landlord jack up my rent?
5 percent, plus the local inflation rate but no more than 10 percent. So if you’re paying $2,495 and the inflation rate is, let’s say, 3 percent, your rent can still go up 8.3 percent — or $207 — a year.
This will be set by the Landlord-Tenant Commission based on the annual percentage increase in the Consumer Price Index for the LA area, ending in March of that year and capped at 7 percent.
Landlords would be allowed to raise the rent according to the percentage set by the commission, once a year, in September.
So if, for example, the Consumer Price Index went up by point-5 percent from April 2020 to March 2021, the most a landlord subject to the new ordinance would be able to raise the rent the following September, would be point-5 percent.
The rent on that $2,495 two-bedroom apartment would go up $12.47.
If the landlord wants to increase rents by any more than that, she’d have no choice but to file a petition with the Landlord-Tenant Commission.
This newly-imagined agency — whose members are appointed by the City Council but which is completely independent of it, the City Manager or the City Attorney (more on that in another article) — would then schedule a hearing during which the landlord could make a case for why she needs to raise rents by more than the standard percentage.
The Commission would analyze the landlord’s operating expenses (with rules governing which types of expenses may be considered) and then determine what percentage increase — if any — would allow the landlord to enjoy a “fair return” on her investment in the property.
Something important to note: the first rent increase — which would become effective September 1, 2021 — would be based on whatever the rent was as of September 30, 2019 — presumably so landlords can’t raise their rents in anticipation of the passage of this measure.
Under what conditions can a landlord kick his tenants to the curb?
Landlords have to show “just cause” (like failure to pay rent or a crime committed on the property) and give proper notice, to evict tenants. If the tenant has lived at the property for at least one year the landlord has to give them a chance to “cure” violations.
There are also a few instances in which landlords can evict tenants who have done nothing wrong — like when the landlord wants to take the apartment off the rental market, move in a family member, comply with a government order or do substantial renovations that will take at least 30 days and make the unit unsafe to occupy.
In such “no fault” evictions, the landlord is obligated to pay the tenant the equivalent of one month’s rent.
The city ordinance is similar to the state law in describing circumstances under which a tenant could be evicted for cause — and it would only permit no fault evictions under conditions like those provided for by the state law — taking it off the rental market, moving in a family member, etc — with a few key differences.
For example, if a landlord wants to substantially remodel a rental unit, he has to give his tenant the right to move into any comparable apartment owned by the landlord, at the same rent, or allow that tenant to return to the original rental when the repairs are finished, at the same rent as before.
The tenant can also elect to move out, in which case the landlord would pay a relocation fee — and these fees amount to much more than the month’s rent mandated by the state law.
For example, under the proposed ordinance, if a tenant has lived in the unit for more than three years, he’d be entitled to a $10,550 relocation payment — unless he is over 62 or disabled in which case, he’d be entitled to double that amount— or $20,050
If the tenant has lived in the rental unit for less than three years, she’d be paid $8,050 — unless she’s disabled or over 62 — in which case, again, the fee would be doubled.
However, a tenant whose household income is 80 percent below the Area Median Income (as defined by the US Department of Housing and Urban Development) would be paid the higher amount, regardless of how long that tenant has lived in the home.
This same relocation fee structure would apply if a landlord wants to permanently take the unit off the rental market, if the property is condemned or if the landlord wants to evict a tenant to move herself or a family member into the unit — although that fee could be slightly less for a family member move-in if:
— they have not kicked out a tenant to move a relative into one of their units within the three previous years;
— they own fewer than six rental units; and
— the relative does not own any residential property in the city of Burbank,
In this case, the landlord would only be on the hook for $7,750 per tenant (or double that amount for tenants who are disabled or over age 62).
Also, the landlord or relative must intend — in good faith — to move into the re-claimed rental unit within sixty days after the tenant leaves and remain in the unit for at least 24 consecutive months.
The Landlord-Tenant Commission would have the power to measure whether or not the landlord acted in good faith — and if it determined he did not — could force the landlord to let the tenant move back into the original apartment and pay the tenant’s moving expenses.
Can my landlord just decide to convert my building to condos?
Short answer: yes.
The Ellis Act, a 1986 law, gives property owners the right to take their rental units off the market and tear them down or turn them into condos or hotels.
And this is a bit of a hot button issue in the rent control battle. Most so-called Ellis Act evictions are used to change the use of the building from a rental to a condo or coop.
That’s because taking a rent controlled unit off the rental market only completely removes that rental unit from regulation if it stays off the market for ten years. Prior to that the owner must offer any unit he puts up for rent to the evicted tenant at the same price the tenant previously paid, plus the yearly allowable rent-control increases.
That tenant would pay the rent control rate for the first five years after moving back in and market rates the following five years. And, if the displaced tenant does not move back in, any new tenant gets to pay the rent-controlled rental rate for five years.
Condo conversions are not subject to any of this.
The Burbank ballot measure can not supersede the state law which permits owners to take their units off the rental market, but it can — and does — impose additional notification requirements and set a higher relocation fee than state law provides (as discussed above).
Can a landlord buy out a tenant’s lease?
Absolutely. As long as the tenant agrees to it.
The Costa-Hawkins Act (see above) allows landlords to charge the market rate for new vacancies — which creates an impetus for creating such vacancies when the rental real estate market gets “hot.” To this end, landlords will frequently offer tenants a lump sum payment (cash-for-keys) to voluntarily vacate the lease and move out.
The Burbank measure can’t bar buyout agreements but it does attempt to provide tenants with additional protections— including allowing tenants to back out of a buyout agreement thirty days after signing it and providing additional oversight. Landlords would be required to file buyout agreements with the Landlord-Tenant Commission and the ordinance would grant that agency the power to impose additional requirements on landlords, in accordance with state law, if and when it deems that necessary.
What about enforcement of all these regulations?
Tenants who believe their rights under the state law have been violated can sue landlords in court.
Both tenants AND the Landlord-Tenant Commission can take the landlord to court (separately or together) and the commission has the power to enforce additional penalties as well — including a $250 fine for a first violation and $500 fines for a second, third or fourth violation.
Landlords who violate the city law five times in a year could face misdemeanor charges, under the proposed ordinance. And, according to the city code, a person convicted of a misdemeanor charge in Burbank could face six months in prison, in addition to fines.
Any other major differences?
Automatically expires in 10 years.
Does not expire and is pretty bulletproof.
In fact, it expressly prevents the Burbank City Council from changing “substantive provisions” of the ordinance or from taking “any action that contradicts the express terms and purpose” of it or from passing any local laws that are not “non-conflicting or complementary.”
As with most things, the devil is in the details when it comes to the “2020 Just Cause Eviction and Rent Regulation Measure” and while I endeavored to highlight some specific provisions of the proposed law and its relationship to existing rent control laws, there are likely some components of the proposed ordinance I failed to expand upon and potential consequences I failed to anticipate.
To this end, I invite you to read it yourself and am posting a pdf version of the proposed ordinance right here.