Introduction of Ordinance Amending the Alameda Municipal Code by Amending Article XV (Rent Control, Limitations on Evictions and Relocation Payments to Certain Displaced Tenants) to Adopt and Incorporate Provisions Concerning Capital Improvement Plans (CIP) for Rental Units in the City of Alameda.  (Community Development 265)
The introduction of ordinance amending the missile code by amending Article 15 rent control, limitations on evictions and relocation payments to certain displaced tenants to adapt and incorporate provisions concerning capital improvement plans for rental units in the city of Alameda. And we are promoting the other staff. As the safe. Right now. All right. And counsel, you know, this is all a matter of time management. We will get as far as we possibly can. We don't have to feel that we we don't have to take our entire 9 minutes that are allocated to us. But if you do, it just means we probably get less and less territory covered. So who is presenting this item? I believe. Michael Roche. Michael Roche, there he is. Good evening. There he is. Hi. Nice to be here in council. How are you? I've been with you all. All evening. You know, rather than be here. We had a slide presentation. But I think in. Light of where the council is, why don't we just open it up to questions? And if the questions become more complex, we can either refer to the slides. But I think the council's generally aware of the of the issues with rent control, etc.. So unless the council objects. Why don't we jump. Into clarifying questions? You know what I'd like to ask you? What I would like to ask you do Mr. Roush is just give a brief overview for members of the public. So they just bring them along with us and then we'll go into our clarifying questions. The the issue is a capital improvement plan policy. And what this would allow landlords to do would be to make certain improvements to their property. These improvements have to be substantial. They can't just be routine repairs or maintenance. They would be they would have to be a total of $25,000 and the overall amount and 20 $500 per unit in terms of the improvement. But if they make those improvements, then they would be allowed to pass through those costs to the tenants. So that's the that's the overarching principles of this. And the goal is to encourage landlords to improve the housing stock of the community. But the ordinance is set up in such a way that tenants will not be displaced because of this, which I think is an important aspect. They won't be displaced temporarily during this. The work cannot be done with the tenants safely in the building. And the other part of it is that tenants will know what the pass through amount is upfront, and so they can make an informed decision whether they want to pay that when the work is done or else they can tell the landlord, No, I'm not willing to pay that. And the landlord then has the option of not imposing the pass through on the tenant or having the tenant find alternative housing, in which case the landlord would have to pay permanent relocation payments. But the idea is to keep tenants in place, have landlords, make improvements of a substantial nature. Have that cost amortized over a. 15 year period in order to increase the housing stock, yet keep the tenants in place. Thank you, Mr. Roush, and nice to see the rest of staff there on screen. Okay, Counsel, any clarifying questions before we get to our public speakers? Councilmember Spencer and then Councilmember Knox Way. Thank you. Um, Tony Roush. We received, uh, I think opposition to this from the Alameda local, um, the realtors group and I. And part of their concern was that the number I guess is too high, the 25,000 to do a lot of the work that they think they need to do to cover most of the eligible major capital improvements and whatnot. I assume you got this letter. Can you discuss, you know, why we're here to support this or how this makes sense? Where you came by the 25,000 or so that they can keep the units that are good enough condition. Certainly the. $25,000. Was sort of a staff driven number, thinking that the improvements ought to be so substantial that it's that most of the improvements that we have listed there in the ordinance are such that it's likely to cost that much. You're talking typically about, say, new utilities, new new plumbing, new electrical, new h-back for the whole the whole building you're talking about typically painting the whole outside of the building. Often we are we also added converting the the gas to electrical. All of those things we believe would probably be $25,000. But if the council is not comfortable with that number. It certainly could reduce that number, say 25 to 15 or something else. We just felt that that was a a good solid number that would warrant the kind of capital improvement that the list contemplates. Grandpa Spencer. Yeah. Thank you. So was there outreach to the these groups or this group to find out what is the number that they would be comfortable with? We met with the we met with the group in August and we did discuss the number with them. At that time, the number was was certainly higher than that. And as a result of that, we did reduce the number. But again, I understand the concern that that some of the landlord community has, that the number is still too high. But we feel if, for example, if a new group was only 15 or $20,000, that perhaps there would be other capital improvements that could be undertaken at the same time in order to get to the $25,000 threshold . Okay. Thank you. Okay, counselor. Did you like your Heather? Yeah, I do. So, you guys, there's nothing I. I'm asking just. Just so that there's awareness of my thinking before the public comment, but there would be nothing from prohibiting us from actually delaying the implementation of the pass through till later in the year given the COVID crisis. Is that correct? That is correct. Okay. Thank you. And can you just add sorry, the question, how is how is a new roof, which is a you need to do it every 20 to 30 years. So it's actually just maintenance. Can you describe can you talk about how the how this process identifies what's just routine maintenance and what's a large capital project? Well, the the way it's set up, it's talking about a new roof that I think, as you suggest, isn't going to occur every four or five years. It's going to be a 15 or 20 or 25 year before a new roof is on. The amortization period for these proposed improvements is 15 years, which we feel is a reasonable amount given all the various improvements. So again, you know, we kind of looked at all of the items generically, felt that if we took it out to say 20 or 25 years, it probably wouldn't result in a a very high or not a high enough pass through to encourage landlords to make the improvements now. And by by doing the 15 years, we felt that that would be more encouragement to make these kind of capital improvements as they are needed. Thank you. Any other clarifying questions? Council counts over Spencer. Thank you. One more. So my understanding is that Oakland, for instance, has a CSP program modeled after Santa monica that has a whole list of approved a list of approved improvements that can be amortized over different periods. Why aren't we seeing after that? The Santa monica ordinance. And Mr. Shane can certainly Chip can chime in on this. It is not the same kind of of a capital improvement plan provisions that we're suggesting in the Santa monica situation. It's done as part of what's called a fair return process so that the amortized cost becomes a an operating expense against the revenue that a landlord then uses to determine whether or not the landlord is getting a fair return. So it's a much different process. And we felt we felt that this process that we're suggesting really is more is more beneficial in terms of encouraging landlords to make the improvements rather than through a fair return process, which might be seen as discouraging landlords from undertaking that process. Also under a fair return process. And this process that we're suggesting. Here can be done administratively through the program administrator. If we go to a fair return process for capital improvements, it will require petitions, hearings by a hearing officer. And again, that's going to just be more difficulty, we think, for most landlords, especially landlords with have to have fewer units. And that's why we're suggesting that it be a more simplified process as set forth in the ordinance. Okay. Any further clarifying questions? Then I understand we have. Oh, I'm sorry. Vice President's your hand up by square villa. Yeah, I did have a question about why we're moving. Moving away from the net, operating the A.I. to this new structure. What would staff's reasoning for that? For making that proposal. We're not moving away from it. Right now, it is a stand alone item in itself and in fact, the way it is set up right now. If a person had gone through the capital improvement plan process, they would have added that amount not as a pass through, but it actually would be added to the tenant's rent as a rent increase. And therefore the annual general adjustments would be based on a higher number than what's been suggested here. So we're not moving we're not we're not moving away from the fair return process. The fair return process is a separate way. And certainly if the council is interested in in in having that, we could come back with that. But we're not changing the matter. We're just sort of fine tuning, as it were, the current policy. And for you. Yes. Okay. So with that, we're going to go to our public speakers. How many do we have? We have two public speakers already. Go ahead. Tony Grim. Good evening. This Grim. But evening, everyone. I hope the City Council will take a serious look at the concept of past rules and the effect they have on rent increases. This may not be the only pass to request that you will receive. In my opinion, passives has the potential to destroy the protection of the Rent Cap Council Pass Ordinance 32 safety. After hearing from two consultant reports that the disparity of income between renters and property owners was increasing, as well as the rise in the percentage of income that renters have to use just for rent. What good does it do to establish a rent cap and then add on to it with pass rules? It clearly goes against the intention of the rent cap ordinance. In this particular case, the proposed department ordinances looking at amateur possession theories of 15 to 30 years for a continued pass through in addition to an increase every year . This is a heavy burden, and I completely disagree with Attorney Ross respectfully that it won't lead to displacement. I think it will lead to displacement. One more point that I'd like to make since I have more time. I do not believe that guaranteeing a fair rate of return will discourage a landlord from making property improvements. Why should it? It really shouldn't. Thank you. Thank you, Mr. Greer. My next speaker. Aaron Pauling. Good evening, Ms.. Pauling. Just mute. Miss Pauline. Are you able to mute? Madam Clerk. Oh, there you are. There you. Are. So sorry. So. Good evening, Council. The Alameda Renters Coalition believes strongly that City Council should not implement a new capital improvement plan in pass through during the local emergency period. The City Council has already passed an emergency ordinance for this same period to protect renters against the economic hardship of rent increases and displacement. If you do choose to proceed, our request that the changes not begin until after the time period renters are given to pay back rent due to COVID. And we strongly, strongly oppose the pass through. And I agree and agree strongly with Tony Graham on how can guaranteeing landlords a fair return somehow prevent them from this process. Having these kind of automatic pass through is a way that most large complexes and investors basically undo the work of having a rent or rent cap. Thank you. Thank you. And that was our last public speaker. Yes, that was. So with that, we we closed public comment. Councilmember Knox White. Remind me for you, was that a motion you were making in the beginning? No, but I'd be happy to make one just for discussion. Sure. Well, I'm going to be lovely for. The staff recommendation with the following adjustment that while the well the capital improvement program can, people can start applying for it, no pass through. Payments will be allowed to start until January 1st of 2021. Okay. Do we have a choice? You said 2021. I think you mean 22. Thank you. That's what Michael. Michael as well. Yeah. 20, 22. Yeah. It sounded right to me. Do we have a second for that? For the for council. And that's why it's motion. Vice Mayor Vella. All second for the sake of discussion. Okay, let's have a discussion. Let's have a expeditious discussion. Who wants to lead? Councilmember Daisuke. Great. Well, thank you. You know, I'm just going to quickly comment this way. I think we really should be working closely with the small mom and pop landlords in understanding what the right number is. It sounds to me the 25,000 threshold is is a number that's generated in city hall. And I'm not frankly sure that city hall is is the right place to generate the number. I think we we have the experience and capacity to evaluate numbers. But but I think we really should be working with smaller mom and pop landlords on that. And for that reason, I won't be supporting the motion. Thank you. Thank you. Councilmember de SAC. Other comments? Okay. I will go. I think I am comfortable with the vice mayors, vice mayor or the former vice mayors. Motion seconded by the current vice mayor. Because I do worry about the condition of our rental housing stock, and I think that it is very reasonable to delay any implementation in the applications until January of 2022. And I think that I am satisfied with the the analysis and the thought that staff has put into this. So by spirit, did you want to. You seconded the motion that we have heard from you? Yeah. My my only concern was a couple of concerns, but one is, is that I am concerned about it the starting faster than the 12 months beyond the period of the state of emergency. So I don't know if the maker of the motion is amenable to changing it to that. Okay. Just words that are sent that you want to throw something out. But just to amend the motion to have it not go into effect until 12 months from the end of the declaration of the state of emergency. Yeah, I support that. Okay. And I. This is a council policy. It's an ordinance or an ordinance. Ordinances obviously can be amended. I do think that there potentially are problems with the calculation of the pass through and the duration of time potentially. But I for the sake of this motion and trying to start addressing some of the concerns relative, I'd be amenable to voting for this tonight. Okay. So I believe we've all had a chance to speak. Madam, quick, may we have the motion and the roll call vote? Councilmember de SAG. No. Not quite. Hi. Spencer. No. Velma. I may or as the Ashcroft I. That carries 3 to 2. Thank you. All right. With that, we move quickly. Thank you very much for your time and your perseverance, waiting to get to this item. And with that, we move to item six, see. Thank you. Sorry.