Why wait for the City Attorney?

We can’t blame the members of the Alameda Renters Coalition if they’re feeling frustrated, and maybe even a little annoyed, these days with the members of Council.

Between the last two Council meetings, the Coalition started an online petition demanding that Council “immediately enact a moratorium on rent increases and no fault evictions.”  It quickly garnered more than 1,400 signatures.  (As of Friday, the count was 1,540).

Last Tuesday, during the public comment period, the Coalition’s Catherine Pauling presented the petition, and a packet of emails supporting it, to Council.  “This is a crisis,” Ms. Pauling declared.  “It needs action.”  She added:  “Waiting until December” – when staff has promised a “report” on the impact of rising rents – “is tearing us apart.”

(Those of us of a certain age couldn’t help but think back to the ‘60s:  “What do we want?”  “Peace!”  “When do we want it?”  “Now!”)

For a brief moment, it looked as if Council members, who always cluck sympathetically when renters make their case, actually might schedule a special meeting to consider the Coalition’s demand.  After all, minutes before, in response to a far less urgent entreaty by the group of Bay Farm Island residents known as Harbor Bay Neighbors, they’d agreed to a special meeting to discuss the appropriate zoning of the Harbor Bay Club property.

Alas, for the renters, the wheels of justice would have to turn more slowly.  Council needed “legal input on our options,” Mayor Trish Spencer said.  That would require a “fair amount of research,” Interim City Manager Liz Warmerdam opined.  And the legal issues were “complex,” the Mayor added.  Yes, they were, City Attorney Janet Kern concurred.

So how long would it take for Ms. Kern to complete this time-consuming and difficult task?  Long pause from the City Attorney.  “We can’t make a promise right now when we could find a time and what exactly we’ll need,” she eventually replied.  “We understand the sense of urgency from the community, but there are a myriad of legal issues involved with this so we will do our best to bring something as quickly as possible.”

And that’s where Council left it.  If you’re keeping the calendar, the next scheduled hearing on the rental “crisis,” as Ms. Pauling feared, is set for December when staff presents its report.  For any further discussion of the moratorium, you’ll have to mark down, “TBD.”

Well, the Merry-Go-Round suspects that some members of the Coalition, and even some of our readers, may not be pleased about having to wait indefinitely while Ms. Kern and her staff of three assistant city attorneys hit the books.  Fortunately, the legal issues raised by the Coalition’s petition really aren’t that complex after all.

So we thought we’d do what any private lawyer whose client sought advice on an urgent problem would do:  give an immediate answer.  Today we’ll provide an overview of what the legal issues are – and how the courts already have ruled on them.  And then, lest anyone worry that staff will have to start from scratch if Council decides to enact an ordinance imposing rent control or requiring just cause for eviction, we’ll also present information about the kind of ordinances that cities in northern California already have adopted.

Let’s start with the “big questions.”  We’ll use the format we were taught many years ago as a big-law-firm associate:

Questions presented

  1. Would it be legal for the City of Alameda to adopt an ordinance imposing limits on rent increases?
  2. Would it be legal for the City of Alameda to adopt an ordinance requiring just cause for eviction?
  3. Would it be legal for the City of Alameda to impose a moratorium on rent increases or “no fault evictions” pending a decision on the first two issues?

Short answers

  1. Yes.
  2. Yes.
  3. Yes.

The California Supreme Court settled the issue of whether a city could legally adopt a rent control or a “just cause” ordinance nearly forty years ago.

The case, Birkenfeld v. Berkeley, upheld a charter amendment – passed as an initiative by the voters – imposing maximum limits on residential rents and restricting the grounds for evicting tenants.  A municipal law adopted for these purposes, the Court held, constituted a proper exercise of the City’s police power:

The charter amendment includes in its stated purposes for imposing rent control the alleviation of the ill effects of the exploitation of a housing shortage by the charging of exorbitant rents to the detriment of the public health and welfare of the city and particularly its underprivileged groups. The amendment thus states on its face the existence of conditions in the city under which residential rent controls are reasonably related to promotion of the public health and welfare and are therefore within the police power.

There was one caveat:  to pass constitutional muster, a municipal law setting maximum rents must contain provisions for adjusting the otherwise allowable rent to ensure that the landlord receives a “just and reasonable return” on her investment.  As the Supreme Court stated in a later case involving another initiative passed by the Berkeley voters (Fisher v. City of Berkeley), no particular formula or method is required.  Rather, the test is whether the mechanism adopted by the municipality gives it “sufficient flexibility to avoid confiscatory results.”

Until 1995, when the Legislature passed the Costa-Hawkins Act, cities were permitted to define for themselves the categories of property a rent control ordinance covered.  That statute did not reverse the result in Birkenfeld – rent control was still legal – but it reduced the scope of coverage.  Under Costa-Hawkins, apartments constructed after 1995, as well as single-family homes and other units like condominiums, are exempt from local rent control laws.  (The statutory exemption does not extend to laws requiring just cause for eviction).

After Costa Hawkins, courts continued to rely on Birkenfeld and its progeny to uphold rent control and “just cause” ordinances.  To take an example close to home, in Rental Housing Association of Northern Alameda County v. City of Oakland, the Court of Appeal sustained the validity of Measure EE, the “just cause” ordinance passed as initiative by Oakland voters.   “Under existing law,” the Court stated,

municipalities may by ordinance limit the substantive grounds for eviction by specifying that a landlord may gain possession of a rental unit only on certain limited grounds.  (See Fisher, supra, 37 Cal.3d at p. 707; Birkenfeld, supra, 17 Cal.3d at p. 149.) But they may not procedurally impair the summary eviction scheme set forth in the unlawful detainer statutes and they may not alter the Evidence Code burdens of proof.

(The Court of Appeal excised a few specific provisions in the ordinance on the latter grounds).

Faced with these precedents, opponents of rent control laws turned to the federal courts to bring claims under the due-process and equal-protection clauses of the U.S. Constitution.  These challenges have fared no better.  In the most recent case, Rancho de Calistoga v. City of Calistoga, the Ninth Circuit once again affirmed the lower court’s rejection of a constitutional attack on a rent control ordinance.  Indeed, the Court even seemed a little peeved by having to deal yet again with such a claim, which it characterized, quoting Yogi Berra, as “déjà vu all over again.”

So the message to our Council members cannot be clearer:  if you decide, as a policy matter, to adopt an ordinance imposing rent control or requiring just cause for eviction, neither state nor federal law will stand in your way.

What about a moratorium on rent increases and/or “no fault” evictions in the meantime?   Here, there is no California Supreme Court or Ninth Circuit Court of Appeals case directly on point, but this is not a novel issue, either.  Recently, other northern California cities have considered adopting moratoria on rent increases – and turned to their outside counsel for legal advice.  Thanks to the public records act and the Internet, our Council can get the benefit of that advice for free – and without having to wait for it.

Below is a link to the legal memorandum prepared for the City of Lafayette and the City of Santa Rosa by the law firm of Best, Best & Krieger, whose website lists 38 California cities and three counties as clients.  “The city can adopt a moratorium limiting rent increases” (emphasis supplied), the memorandum concludes, and it cites two separate sections of the Government Code authorizing such an action.

Both statutes require a finding of an impact on public health and safety and a four-fifths vote.  The major difference is that, under one of them, the initial moratorium lasts for 45 days, but it can be extended twice, first for 10 months and 15 days, then for a year and, under the other, the council can determine how long the moratorium lasts.  The law firm recommends that, to be safe, a city council cite both statutes as grounds for the moratorium.

Ordinarily, we’d hate to suggest that our Council should rely on a legal analysis that the City hasn’t paid for.  But, if time is of the essence (as the Coalition insists), why not trust the conclusion reached by the municipal law specialists two other northern California cities (and 36 others) rely on?

It didn’t take us very long to do the research necessary to reach the foregoing conclusions.  So, finding ourselves with time on our hands, we decided to take a look at a few of the ordinances other cities actually have adopted.  (Click on the links below to see the texts of the ordinances themselves).  If our Council does vote to pass a rent control or “just cause” law, maybe the time the City Attorney and her team of lawyers will need to spend on drafting can be reduced by piggybacking on existing work.

Six cities in northern California have enacted rent control and “just cause” ordinances:  Berkeley, East Palo Alto, Hayward, Oakland, San Francisco, and, most recently, Richmond.  (According to the City of Richmond website, the effective date of the ordinance has been suspended pending a possible referendum challenge).  In addition, San Jose has a “rent control” ordinance of a sort:  Any annual rent increase greater than 8% is “subject to review.”  As the ordinance isn’t mandatory, we haven’t included it in our group.

Here’s a chart that shows the key rent control provisions in the six ordinances:

City Permitted annual increase Most recent permitted annual increase
Berkeley 65% of increase in CPI, but not greater than 7% 2% for 2015
East Palo Alto 80% of increase in CPI, but not greater than 10% 2% for July 1, 2015 – June 30, 2016
Hayward Not greater than 5%
Oakland 100% of increase in average of CPI – all items and CPI – shelter, but not greater than 10% annually or 30% over five-year period 1.7% for July 1, 2015 – June 30, 2016
Richmond 100% of increase in CPI, but not greater than 6% [New ordinance]
San Francisco 60% of increase in CPI, but not greater than 7% 1.9% for March 1, 2015 – February 29, 2016

As required by Birkenfeld, all of the ordinances also provide for adjusting the otherwise allowable maximum rent to ensure that the landlord gets a “just” return.

All of the ordinances we reviewed also identified conduct by either the tenant or the landlord that would justify eviction (or, as the ordinances put it, entitle the landlord to “recover possession”).

The following acts by the tenant made all of the lists (often with specific exceptions and conditions):

  • Failing to pay rent;
  • Violating a “material” term of the rental agreement;
  • Damaging the premises;
  • Committing a “nuisance” or otherwise interfering with the use and enjoyment of the property by others;
  • Engaging in illegal acts;
  • Refusing access to the landlord;
  • Refusing to agree to an extension on the same terms.

The individual ordinances also set out other tenant-related causes.  Our favorite was Hayward’s:  a tenant could be evicted for threatening, “either verbally or in writing,” to “commit a crime which would result in the death [of] or great bodily harm to a tenant, guest, manager, owner or other person on the premises, for which a report has been filed with the Hayward Police Department.”   (Apparently, a tenant can threaten her neighbor all she wants as long as the neighbor doesn’t call the cops).

Similarities among the ordinances also exist in their identification of conduct by the landlord that would justify eviction.  To one extent or another, all allow the landlord to “recover possession” in order to make “substantial” repairs to bring the building into compliance with health and safety codes.  Likewise, all recognize that, in some circumstances, the landlord is entitled to end the tenancy if she intends to occupy the unit herself as a “principal residence” or to allow family members to do so.  And the majority of the ordinances permit the landlord to boot out the tenant in order to remove the unit “permanently” from rental use.

So there you have it:  Maybe not everything you always wanted to know about rent control and “just cause” eviction, but enough to demonstrate that our Council can legally adopt those kind of ordinances (as well as a moratorium on rent increases and “no fault” evictions pending a final decision), and to show the types of limitations on rent increases and causes for eviction that such ordinances typically provide.   When Ms. Kern and her team get around to presenting their report to Council – assuming that it’s made public – we invite our readers to use this column as a checklist.

We do have an ulterior motive for providing this information.  During the last administration we saw fit to criticize Mayor Marie Gilmore and her colleagues for what we considered to be their misuse of legal arguments.  Too often, the public was told that Council was forced to take a particular action because “the law” required it, or that Council couldn’t take another action because “the law” prohibited it, when in fact “the law” did neither.  Instead, the politicians decided to do (or not do) something for political or other reasons, then used “the law” to try to camouflage their decisions.

We hold the current administration to the same standard.  The issues raised by rent control and  “just cause” ordinances are complex – but the complexity derives from the need to choose among competing policy objectives, not from any difficulty in discerning or applying the governing legal principles.  It’s about time, in our view, for that policy debate to occur – without any further delay.  If, instead, Council decides to dilly-dally and, with or without the connivance of the City Attorney, to hide behind “the law,” its members will deserve the charge leveled against them by one of the speakers Tuesday:  “You’ve actually become the city council from hell for renters.”

Sources:

Case law

Birkenfeld v. Berkeley, 17 Cal.3d 129 (1976): Birkenfeld v. Berkeley,17 Cal. 3d 129

Fisher v. City of Berkeley, 37 Cal.3d 644 (1984): Fisher v. City of Berkeley, 37 Cal. 3d 644

Rental Housing Assn. of Northern Alameda County v. City of Oakland, 171 Cal.App.4th 741 (2009): Rental Housing Assn. of Northern Alameda County v. City

Rancho de Calistoga v. City of Calistoga, _ F.3d _, 2015 U.S. App. LEXIS 15742 (9th Cir., September 3, 2015): Rancho De Calistoga v. City of Calistoga_ 2015 U.S. App

Legal memorandum re rent increase moratorium: BB&K legal memo re rent increase moratorium

Rent control and just cause ordinances

Berkeley: Berkeley rent stablization ordinanceBerkeley just cause eviction ordinance

East Palo Alto: East Palo Alto rent control & just cause eviction ordinance (2010)

Hayward: Hayward rent control & just cause eviction ordinance (1983)

Oakland: Oakland rent adjustment ordinanceOakland just cause eviction ordinance

Richmond: Richmond just cause eviction ordinance

San Francisco: SF rent control ordinanceSF just cause eviction ordinance

About Robert Sullwold

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

8 Responses to Why wait for the City Attorney?

  1. David says:

    did you find any examples of successful moratoriums? Both Richmond and Lafayette failed to follow through with implementing their proposed moratoriums.

    • The councils in both Richmond and Lafayette did indeed fail to pass moratoria. So did the council in Santa Rosa. But I didn’t do a comprehensive search for other stories.

      • David says:

        Please read closely the gov’t code cited in the BB&K memo re: moratoriums. I’m a layman, not an attorney, but I’m skeptical that a rent increase moratorium would survive a legal challenge over the genuine “current and immediate threat” to public health, safety and welfare.

        Any municipality would really be hanging its hat on the “welfare” requirement.

  2. Richard Hausman says:

    Great job, Robert!

  3. Thank you Robert! We appreciate the clarity and help.

  4. The crisis for those getting evicted by rent increases is certainly real. And the social distortion, by which those who can least afford extra commuting expenses (gas, auto wear and tear) end up paying what amounts to a transit penalty for not making over, say, $100,000 a year, is an unquantified consequence of exorbitant rent increases. And the broken social ties and weakened social fabric is another. But just to cite one city that does have rent control, San Francisco, how many people will rent control impact and for how long? This recent SF Chronicle article suggests not very long: http://blog.sfgate.com/ontheblock/2015/09/07/san-francisco-rent-jumps-again-in-august-as-does-bay-areas/ I’m not against rent control or just cause eviction ordinances. But it’s not helpful in the long run to foster illusions about the social impacts that may be achieved by one ordinance.

    The other side of the equation is the one that is never touched: The virtual anarchy in municipal planning that welcomes unlimited job creation in a centralized location with no associated requirement to build housing that the added workforce can live in. Almost every high-rise office job created in San Francisco or Santa Clara County can just as easily be performed in outlying cities. There’s always a lot of talk about building more housing where the jobs are, but never any talk about locating new jobs where there are plenty of people living but no jobs.

    • David says:

      It’s well-document that some 70% of Alameda’s workforce leaves the island each day – it’s been documented in Planning Dept. documents, Housing Elements and the like.

      Should Alameda create more multi-family housing to respond to the crisis? Or work to create more jobs so more people can live and work on the island, taking transit, riding bikes etc. to work on-island, rather than driving or busing to BART, or driving further afield?

  5. Steve Gerstle says:

    The struggle for affordable housing in the Bay Area goes way back.
    http://www.sfgate.com/video/article/Forgotten-6423996.php

    State legislators placed severe limitations on rent control in the mid-1980s. Prior to that, it was possible to keep rents controlled even if a vacancy occurred (vacancy control). I served on a Bay Area rent control board during that time. Was rent control a success? For people of modest means trying to protect their families and stay in their communities, it was. For landlords seeking to maximize profits, it was not. Is it okay for those who have more money to displace those of modest means? Is it okay for those who are stronger to push aside the weaker? Depends on your value system.

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