On February 14, 2017, the City Council directed staff to prepare a non-binding mediation or, “rent review,” ordinance.  The City Attorney’s Office has prepared the outline of the non-substantive components of a potential rent review ordinance and now seeks direction from the City Council regarding the substantial procedural components of a potential rent review ordinance.  The provisions that the City Attorney’s Office seeks direction on include, but is not limited to, the following:

• Eligible units for review
• Threshold for eligibility for review
• Whether to utilize a hearing officer or rent board and associated processes
• Appeal rights

The City Council formed a Rent and Tenant Taskforce (“Taskforce”) in July 12, 2016 in order to assist with the consideration of possible tenant protection measures.  The Taskforce held multiple public meetings between October 2016 and January 2017. 

City staff returned to the City Council with the Taskforce’s recommendations on January 31, 2017.  On February 14, 2017, the City Council directed staff to prepare a non-binding mediation, or “rent review,” ordinance after considering potential tenant protection measures including rent stabilization. 

The City Attorney’s Office prepared the outline of a rent review ordinance (see attachment) and now seeks direction regarding the substantive and procedural components of the rent review ordinance. 

Recommended Base Components of Ordinance

The City Attorney’s Office recommends that the rent review ordinance require the following basic process related to the review of a proposed rent increase:

1. Notice of Eligibility: Landlords must provide tenants with a notice of rent review eligibility concurrently with the notice of a rent increase.  The notice provides a summary of the tenant’s rights under the ordinance  and must be provided in the 3 predominant languages spoken within the City.
2. Request for Review and Landlord Response: Tenants have 21 calendar days to request rent review following receipt of a rent review notice.  Landlords must provide a response to the request within 10 calendar days of receipt of the request for rent review.
3. Rent Review Mediation: A rent review mediation is set within 60 days of receipt of the rent review request.  The hearing body or hearing officer can consider various factors including, but not limited to, the following when making a recommendation for a resolution: hardship to the tenant, the frequency and amount of prior rent increases, the landlord’s mortgage payments and other costs associated with owning and maintaining the property, and the landlord’s interest in earning a reasonable rate of return.

The rent increase will be void and unenforceable if the landlord fails to either: 1) properly provide the tenant with notice of rent review eligibility; 2) provide a landlord response to a request for rent review; or 3) appear at the rent review mediation.       

Additionally, the attachment includes a provision requiring that City staff provide an annual review of the effectiveness of the rent review ordinance to the City Council. 

Components of Ordinance Requiring City Council Direction

Below are the components of the rent review ordinance, in addition to any other components that the City Council deems necessary, that require City Council direction:

1. Eligible units:  The rent review ordinance may include all residential units within the City or may be limited to certain specified units (I.E. housing units in a parcel that contains two (2) or more tenant-occupied housing units.).
2. Threshold for eligibility for review:  The rent review ordinance may set a threshold for the minimum rent increase amount before a tenant is eligible to seek rent review.  For example the ordinance requires a rent increase at a set dollar amount or at a set percentage of the existing rent or both.  The ordinance can also include a provision establishing eligibility for rent review where there are two or more rent increases over a 12 month period.
3. Additional processes or procedures:  The attached outline of a draft ordinance currently establishes the right of the tenant to immediately proceed to rent review following receipt of notice of an eligible rent increase and following a request for mediation.  The City Council could consider adding required additional informal processes and procedures such as informal conciliation through City staff or a service provider.
4. Hearing officer or board:  The rent review ordinance can require that the landlord and tenant mediate the rent dispute before either a hearing officer or an appointed board.
5. Appeal rights:  The rent review ordinance can provide appeal rights in the event that the landlord and tenant are unable to resolve a rent dispute during rent review.  If the City Council desires to have appeal rights in the rent review ordinance, the City Attorney’s Office seeks direction regarding: a) the process and procedure for invoking those rights; and b) the appellate officer/body.
6. Mandatory reporting to City:  The rent review ordinance can establish other reporting requirements to the City related to proposed rent increases. 

There are no direct fiscal impacts as a result of receiving this report.

Provide direction to staff regarding substantive procedural provisions of a draft rent review ordinance.