Kumbaya

Two years after its predecessor lamented the plight of tenants being forced out of their apartments by rising rents, the current Council is scheduled Tuesday to pass an ordinance that supposedly reflects a “consensus” solution to the problem.

The Merry-Go-Round expects that Council will declare that the “community engagement” approach succeeded and the proposed ordinance “strengthens” the rent review process. Bows then will be taken all around – by the “facilitator,” by the “stakeholder representatives,” by staff, and by the politicians themselves.

But, in our view, they’ve all labored mightily to produce a mouse.

The primary effect of the ordinance is simply to codify the procedures already being employed by the Rent Review Advisory Committee.  It establishes no new substantive protections for tenants, and, although it imposes two new duties on landlords, it is so poorly drafted that the consequences of a failure to comply are unclear.

(N.B.:  We’re not going to start calling landlords “Housing Providers” until the Inner Ring invites us to join and tells us what we’re supposed to call tenants – “Housing Consumers”?)

The RRAC, which consists of five members – two landlords, two renters, and one “neutral” – appointed by the Mayor, was established in 1979.  According to the Website for the Housing Authority (which administers the program), the RRAC “has served as an effective alternative to rent control in the City of Alameda.”  Put somewhat more modestly, it is the only mechanism provided by the City for tenants to seek redress from an “egregious” rent increase.

Based on the description on the Website, here’s how the RRAC process operates today:

  • A tenant who has received a rent increase (in any amount) fills out a Rental Increase Complaint form and submits it to the RRAC.  The form asks for a history of the rents, a description of the size of the unit and the amenities of the building, and any complaints regarding maintenance.
  • Staff calendars a hearing on the complaint at the RRAC’s next regularly scheduled meeting.  Notice of the hearing is mailed to the landlord and the tenant.  (The landlord also gets a copy of the complaint).
  • The RRAC holds a hearing and makes a recommendation about the appropriate rent for the unit.  Sometimes it approves of the higher rent the landlord wants to charge; other times, it does not.  Neither the landlord nor the tenant is bound to accept the RRAC’s recommendation.
  • If the parties do not agree on the rent recommended by the RRAC, the matter may be referred to Council, which can direct the Mayor to write a stern letter to the recalcitrant party.

And how will the new process work?

Pretty much, exactly the same.

Job Advice 2The major difference between the current practice and the system set out in the ordinance is that landlords will be subject to two new duties.

First, the ordinance requires the landlord, when she sends out a notice of rent increase, to include a notice of the “availability” of the rent review procedure.  At present, the latter notice is not necessary.

Second, it requires both the tenant and the landlord (or an authorized representative) to attend the RRAC hearing.  At present, according to the Website, the landlord is merely “expected” to appear in order to “enable the Committee to carry out its role.”

Neither of these requirements seems especially onerous. (Indeed, the ordinance helpfully includes the text of the “notice of availability” for the landlord to use).  If the landlord sends out the notice and shows up at the hearing, the rest of the RRAC process will play out just as it does now.

The ordinance does provide a non-exhaustive list of factors the RRAC should consider in reviewing the rent increase:  “the financial hardship to the Tenant, the frequency and amount of prior Rent Increases, the Housing Provider’s costs associated with owning and maintaining the Residential Property, [and] the Housing Provider’s interest in earning a reasonable rate of return on the Housing Provider’s investment . . . .”

But we would hope – and expect – that the RRAC already takes these factors into account. The ordinance furnishes no guidance about how to weigh them, nor does it establish any standards for determining when a rent increase is “excessive.”  The RRAC members are supposed to act like arbitrators – do whatever’s fair – rather than like judges or jurors.  (Could it be a coincidence that the “facilitator” is a professional arbitrator?)

Most importantly, the ordinance does not enhance the RRAC’s power to redress grievances.  All it can do is make recommendations; it cannot issue orders.  If a landlord is dissatisfied with the RRAC’s suggested rent, she can ignore the committee’s opinion and charge whatever she wants to.  Indeed, the ordinance does not give even Council itself authority to order a landlord to rescind or reduce a rent increase.  As Councilman Jim Oddie put it, in what he probably intended to be reassuring words, “This is not rent control.”

If the goal of the “community engagement” exercise was to “strengthen the RRAC process,” the ordinance doesn’t accomplish that.  Although the new law purports to create sanctions for non-compliance with its two new requirements, it is hardly a model of clarity.  As a result, it may take litigation – sorry, Council members for using the word you hate to hear – to resolve the ambiguities.

As originally written, the ordinance contained a section entitled, “Violations” that read as follows:

Any Rent Increase accomplished in violation of this Ordinance shall be void, and no Housing Provider shall take any action to enforce such an invalid Rent Increase. A violation of this Ordinance shall operate as a complete defense to an unlawful detainer action based on a Tenant’s failure to pay any Rent Increase accomplished in violation of this Ordinance.

For some reason, virtually identical language was included in the section addressing the notice of availability.  (Why say the same thing twice?  You’ll have to ask the drafter).  But the separate section dealing with failure to appear at the hearing omitted any reference to a “complete defense.”  This omission left one to wonder whether the remedy stated in the “Violations” section was supposed to apply in this situation, too.

Then, when the City Attorney revised the ordinance after the May 5 Council meeting, the sections about notice of availability and failure to appear remained exactly the same, but the “Violations” section was changed.  The words “complete defense” – still used elsewhere in the ordinance – were replaced with the phrase “evidence in a Tenant’s defense.”

So, as the ordinance now reads, a rent increase is “void” if the landlord doesn’t give notice or show up at the hearing.  But it’s only the failure to do the former that gives the tenant a “complete defense” in an unlawful detainer action.  The failure to do the latter – or any other violation of the ordinance – is only “evidence.”  Go figure.

There’s another oddity in how the ordinance treats non-compliance with its two new requirements.

The failure to give notice apparently is curable.  At least that’s what we understood Community Development Director Debbie Potter to say at the May 5 Council meeting:  “If a property owner fails to notify the tenant of the rent review process, the proposed rent increase is null and void until the property owner properly notifies the tenant of the process.” (emphasis supplied)

We have a hard time figuring out what this means.  Suppose the landlord brings an unlawful detainer action.  Can the landlord cure her initial failure to give the “notice of availability” by serving a copy with the summons and complaint?

By contrast, the failure to appear seems to be irremediable.  If the landlord fails to show up at the originally noticed hearing, she doesn’t get a second chance.

This ain’t the way it works in the world of ordinary civil litigation.  For example, if the defendant fails to respond to a complaint, the plaintiff may request the clerk to enter a “default” – but the plaintiff still must “prove up” her damages before she can get a judgment.  In the meantime, the defendant has the right to move to “set aside” the default on the grounds of “mistake, inadvertence, surprise, or excusable neglect.”

The ordinance contains no similar provision for obtaining relief from the consequences of a failure to appear.  As a result, a landlord who blows off a RRAC hearing suffers a harsher fate than a party to a lawsuit who ignores service of a summons and complaint.

And one more thing.

According to the May 5 staff report, the RRAC chair observed that, recently, rather than sending a notice of rent increase to the current tenant, landlords were using a 60-day notice to vacate to get her out of the building altogether.  Then, they would charge the higher rent to the new tenant.

“It is not clear,” the staff report stated, whether the ordinance “will have any effect” on this tactic, but it’s hard to see how it would.  In fact, Community Development Director Debbie Potter was quite blunt about the matter at the May 5 Council meeting.  Absent an ordinance requiring “just cause” for eviction, Ms. Potter said in response to questions from Councilwoman Marilyn Ezzy Ashcraft, “there is nothing the City can do” about landlords using 60-day notices to evict tenants so they can raise rents.

We still think that all Alamedans, landlords, renters, and innocent bystanders alike, would have been better off if the former Council had followed then City Manager John Russo’s advice to have the community development department grapple first with the issue of rising rents.  (Mr. Russo did – occasionally – get it right).  Under his proposal, staff would investigate the facts about the local rental market, research rent stabilization laws adopted by other Bay Area cities, and then recommend what, if any, legislation would be desirable in Alameda.  (Which might very well be:  None).  Had Council heeded Mr. Russo, at least we would have had an informed debate.

Instead, the former Council chose to take the “community engagement” route, and the current Council agreed to make only those changes in the status quo for which a “consensus” existed among the “stakeholders.”  By so doing, the Council members guaranteed that the lowest common denominator would prevail.  The resulting ordinance may enable all of the participants in the “community engagement” exercise to feel good about themselves.  But we would have preferred that it actually made progress toward solving the problem.

Sources:

Staff and other reports: 2015-01-20 Report from the Rental Housing Community Discussion Group; 2015-03-17 staff report2015-05-05 staff report re rent ordinances2015-07-21 staff report re amendments

Ordinance drafts: 2015-05-05 Ex. 4 to staff report – Ordinance A2015-07-21 Ex. 1 to staff report – Redlined Rent Review Ordinance A

About Robert Sullwold

Partner, Sullwold & Hughes Specializes in investment litigation
This entry was posted in City Council, Housing and tagged , , , , , . Bookmark the permalink.

11 Responses to Kumbaya

  1. notmayberry says:

    hey, bob…why weren’t you or janey at the recent town hall to discuss what Alamedans want in a new city manager? Don’t feel too bad..only myself and one other person showed up, plus Tony D.
    The Mayor appeared at the end. But none of the other councilors showed up. How much are we paying this search firm to reach out to nobody-only $25K?

  2. Bill2 says:

    Robert. Another well written and well founded blog. I would ask the question – how high or at what increase would renters take the action of filing a complaint and going through the process described here? Is it the amount of rent increases or is it simply the act of an increase that upsets the renter and if either one, what is the “tipping point” for them? Jim Oddie seems to be correct with his comment that “this is not rent control.”

  3. Steve Gerstle says:

    Does the ordinance require a cause for eviction (Just Cause Eviction)? If not. then wouldn’t it be wise for the landlord to simply evict the tenants and then charge the new tenants whatever he or she wants? There is no shortage of renters willing to pay higher and higher rents. Why would a tenant challenge a rent increase if the outcome is eviction? The ordinance seems to create the illusion that City Government is doing something, while offering only a potential defense against unlawful detainer based on not having dotted the i’s and crossed the t’s. Without a cap on rent increases, this seems little more than a padding of political resumes.

    Does this ordinance do anything to require a cause for eviction, or is it simply at the discretion of the property owner? Does it require property owners to pay a relocation fee for those evicted?

    • The ordinance does not require “just cause” – or any cause – for ending a tenancy, nor does it require payment of relocation expenses.
      As the piece notes, the RRAC chair told staff that precisely the phenomenon you describe – the landlord serving a 60-day notice to vacate on the current tenant, then charging the higher rent to the new tenant – is actually happening. But the ordinance itself provides no remedy in this situation, and, according to the City’s Debbie Potter, “there is nothing the City can do” about it.

  4. Steve Gerstle says:

    Then, the main beneficiaries seem to be local politicians and the City Attorney’s Office. It joins a list of other laws that the Council passes yet have no realistic enforcement mechanism.

    Many decades ago, I served as a member and then chair of a rent control board — a rather thankless unpaid job. I could not in good faith advise a renter to seek redress under the proposed ordinance. The Council seems to be saying that it has no interest in controlling rents and then offers a fiction that may cause tenants more harm than good. We really won’t know how this ordinance works until the first tenant facing eviction hires an attorney (if an attorney will take the case) that offers the lack of adequate notice as a defense. The likelihood of such a situation arising seem remote as most tenants will simply exit. Will an attorney take a case on contingency considering the nature of the ordinance? If this is the best thinking that can come out of City Hall, then I would be concerned about the quality of other legislation.

  5. Steve Gerstle says:

    I am showing my age here, but it reminds me of “Let’s not and say we did.”

  6. Lisa Loeb says:

    Here’s the problem with giving notice about the availability of the RRAB with a rent increase – what if a tenant is not happy with the 2% cost of living increase and decides to go to the board – now the landlord must spend their time and energy ‘defending’ this minimal increase, and it creates no shortage of bad will between landlord and tenant. It would indeed be easier for a landlord to serve the proper 30/60 day notice and just re-rent the unit (for far more than 2% increase) as opposed to having to hassle with the RRAB and tenant, which is exactly what most landlords are likely to do. I guess problem solved.

  7. William Smith says:

    As a landlord for years, I expect that providing notice of a rent increase of any magnitude and appearing before a well functioning RRAB will take less time and be less hassle and expense than evicting a tenant, preparing the home for a new occupant, and then finding that new occupant – all the time not collecting rent. While there may be a few landlords who do prefer on principle to evict rather than participate in the RRAB process, I doubt that it will be a significant number. If the number is significant, then we need to document that number and we will have grounds to pursue “just cause eviction.”

  8. FAM says:

    Very informative writing. We are taking real estate advice from two attorneys who are no longer part of the work force ( Ashcraft & Spencer ), a want to be politician who can’t mangage his own finances ( Oddie ) , and Tony Daysog. These are people who are no longer serving the community , but their own egos. Without the council would you listen to any of them regarding matters of real estate? We need leadership that will serve and leave , not those with nothing better to do. While I’m
    Writing lets talk about Angela Hochabouts story . She lost her home because her husband lost his job. This fact was shared to me by Angela Hockabout. She chooses not to work and raise her kids ( very commendable ) , there are financial consequences to splitting your income in half. In my household we both worked. We worked because we wanted to get somewhere . We did not stay home ( while my kids were in preschool ) and write comments on Google. Seriously WTF? Can one person please expose the facts she has freely admitted .

  9. FAM says:

    I love that we are now using Richmond as a business model to follow! They just passed rent control. Are we in a hurry to become Richmond? What does rent control do to market rents? …. Raise them! Why is this council night requiring higher percentage of ” affordable ” housing on the old base? Fun fact – all those units are exempt from all this nonsense.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s