Summary title: Related to the Rent Review, Rent Stabilization and Limitations on Evictions Ordinance Consider: 1) A Resolution Adopting Policy Concerning Capital Improvement Plans (CIP), and 2) An Appropriation of Funds. Adoption of Resolution Adopting Policy Concerning Capital Improvement Plans; AND Appropriation of $300,000 from the General Fund to Fund a Rent Program Fee Study and to Cover the Cost to Administer the Rent-Related Programs through June 30, 2016. (City Manager 2110) [The Public Hearing was held on February 16, 2016 and the Council discussion was continued to March 1, 2016 at 5:30 p.m. Therefore, there will be no additional public comment.]
Good evening, Mayor, Mayor and members of the city council. I'm Debi Potter. I'm the community development director for the city of Alameda. And as has been noted, this item before you and this meeting this evening is a continuation from the February 16th meeting. At that meeting, the agenda recommendations called for an introduction on first reading of a rent stabilization rent review and limitations on eviction ordinance, adoption of a resolution governing the program and policies of the capital improvement plan and an appropriation of $300,000 from the General Fund to conduct a study and fund the rent program through June 30th of this year. And embedded in that last recommendation was a request for direction from the Council about how to pay for for the administration of the ordinance. On the 16th, the Council did introduce an ordinance on first reading. And second reading of that ordinance is scheduled for later this evening. And for purposes of this meeting, I will be presenting on the Capital Improvement Plan Resolution and the program fee. As you know, one of the provisions in the ordinance for a no fault eviction is for substantial rehabilitation and staff. And the ordinance does capture that concept of preparation of a capital improvement plan when a property owner is undertaking substantial rehabilitation. And the ordinance contemplates that the city will adopt an ordinance will adopt a resolution excuse me, a resolution that contains the requirements of the capital improvement plan. And that the purpose of the capital improvement plan for substantial rehabilitation is to encourage housing providers to reinvest in their rental property. It ensures that providers get a fair return on investment, and it also provides tenants with relocation benefits if they are required to move as part of the substantial rehabilitation. Hmm. Did it? The Capital improvement plan as contained in the resolution requires that before you increase rent or you terminate tenancies in connection with a substantial rehabilitation project, you must prepare a capital improvement plan and capital improvements as they are defined. For purposes of a capital improvement plan is that they must add material value or prolong the useful life of the property. They would not include routine repairs or maintenance. The cost of the proposed capital improvements must be more than eight times the amount of the monthly rent, times the number of rental units to be improved. And as we've said, the plan must be approved by the city before undertaking any rent increases or terminations of tenancies. Under the proposed capital improvement plan. If a tenant decides to permanently relocate rather than pay the increased rent, they would be eligible for relocation benefits, relocation assistance. And those benefits would be the ones that are outlined in the ordinance, which are tied to the length of tenancy and then and can be exchanged for time versus money. So it's the same provisions for relocation benefits that are contained in the ordinance. And then if the tenant wants to stay and pay the increased rent but needs to be relocated during the construction, the improvement plan policy provides that the housing provider must relocate the tenant to a vacant unit on site while the work is being done, or if there is no onsite vacant unit, then the tenant would be permanently relocated with the payment of relocation assistance. So that is an overview of the proposed capital improvement plan. And before I move on to a presentation on the program fees, I do want to note that staff is recommending one slight revision to the proposed policy. So it's on page one, the resolution. So Exhibit A of the resolution is the policy. So on page one, on number two, capital improvement. Wait a minute. You're way ahead of me. Okay. Where is this? Yes. So on the resolution and there is a page A-1, which is exhibit A to the resolution. It comes up as page to honor the resolution. But. Okay. But at the bottom of the page, it's printed A-1. And then number two is called Capital Improvement. And so what staff is proposing. Yeah. Page one. That's the page numbering system they have. So a capital improvement. And what we want to insert is a capital improvement comma. For purposes of the capital improvement plan policy, comma shall be any improvement to the rental unit. And then it goes on with the definition. And the reason that we're asking for this additional phrase to be added is because we want to ensure that the policy is consistent with the definitions in the Ordinance of Capital Improvement and Capital Improvement Plan. So by making it clear that the capital improvement as defined in the capital improvement plan, then we are making sure that we are consistent with the definitions in the ordinance. Okay. So you were planning to talk about capital improvement plan now and then continue to talk about all three the other issues. Now, without feedback from us. I was going to present on the capital improvement plan, then the program fee. But if the Council would prefer to take questions on the capital improvement plan before we move on. I'd like to do that. I'd like to address this issue because the motion could pose to this issue by itself also that. That's correct. Yeah. So that's what I would suggest. All right. So then Amber Ashcroft. What I just want to say is, Porter, can we get this in print form? I mean, rather than you reading us some delineation because that's the language you just read to us is not here, is it? No, it's not. And why is that? We don't have a hard copy in front of us is my question. Because. Well, I apologize for that. The the the desire to make it to make sure that the language was consistent was with the ordinance definitions, was determined on Friday. So I apologize that that we didn't turn it around for the council in writing. But if I understood correctly, it's just a one, it's a capital improvement comma as defined by what was it's eight words. Yeah. So it's. Just. Okay. And where in paragraph two. Capital improvement. Yes, a capital improvement comma. Okay. So it would be a capital improvement comma for purposes of the capital improvement plan policy comma. Which is what this document is. So it's just pertaining to this then. That was the only change in. Okay. Well, I, you know, not wanted to be too nit picky, but we get emails from the city clerk's office all the time and it's really easy and electronically document it just added and it gets downloaded next time we refresh. So I think I have that added text. Thank you. All right. Member, only. A couple of questions, but just a point of information management. We. Viewing our comments on this at this point to. Clarifying questions, calm both her clarifying questions. Right. And then she could sit down and we can have our deliberation or we can just go ahead and have it with her standing there. I don't have a problem with it. I guess. Well, two quick questions. So under nine nine, be relocation assistance for the work associated with a capital. Improvements cannot be accomplished reasonably and safely with the rent a page. Mr. Audi A4. A4. It okay paragraph so. 99. So who determines if the work can or cannot be accomplished reasonably and safely? And the reason I ask that is, you know, roofing is one of the options where you can have a capital improvement and pass it on. But I can't imagine that, you know, majority of the times that a tenant would have to vacate in order to have a roof done. But if the landlord, you know, says you have to, I mean, who gets to make that call? Is that the city? Is that some hearing officer? Is that the landlord? I mean, there's because there's a lot of wiggle room there. So the it would be the program administrator. And are we providing guidance? Yes. So the administrator with factors and then a housing provider must relocate the tenant to a vacant unit. If there's no vacant unit, then they get permanently relocated. But presumably the existing unit, when repaired, will be vacant. So is there any provision where a tenant that wants to stay and pay the rent increase can move back when the repairs are done? So the provision is that they if they would be temporary, they would be able to be temporarily relocated. If there was a vacant unit on site, if there was no vacant unit on site, they would be permanently relocated with relocation benefits. And if there was a desire to come back to that unit, they could certainly do that. But that's not spelled out in the plan now. I mean, that's a big concern of mine that, you know. We're going to have tenants being mass evicted for these capital improvements and then maybe they're perfectly willing and happy to pay the additional rent of the improved unit and happy to be in an improved unit with, you know , better heating, better kitchens, you know, not a leaky roof, no pests, whatever, whatever, whatever. But they're not going to have an opportunity to do that. So I think that's a big chunk that's missing from this plan. And then the other question I had is that I didn't see and maybe I didn't, you know, read it close enough , but I didn't see that there was any time limit on these improvements. I mean, because they're there two months. Are there six months? In terms of the amount of time it takes to undertake the repairs. I mean, what's how are we going to judge what's reasonable? So once again, the program administrator would take in the capital improvement plan. They would render the judgments or the decisions about how much, you know, what's the appropriate rent increase based on the cost and the amortization, the interest rate, that kind of thing, whether or not permanent or temporary relocation was required based on the proposed improvements and the length of time that would be reasonable for undertaking the improvements. Those are all the kinds of factors that the program administrator would look at when determining what an approved capital improvement plan would look like. Because I guess what I'd like to see in that is some provision where a tenant whose unit is being substantially rehabbed can have an opportunity to move back in. When those rehab and those rehab work is done, that rehab work is done, and it's not an excessive amount of time. I mean, we may have to quibble with, you know, how the relocation is handled, you know, because, you know, they're not they're technically relocating temporarily, but they're not relocating permanently. And I think that's kind of a big chunk that's missing. And I think it's a huge loophole that could be used to, you know, produce mass evictions. And that's, you know, that's kind of counterproductive to what we're trying to do here today. And I hope that I'm going quickly into my comments. They're going to be really brief, and I'll listen to the rest of my colleagues. You know, I've heard from landlords that they want to make sure that this is an easy to understand process. I'm sure tenants would prefer that as well, although I haven't heard that. And I'm really concerned that, you know, there's no standards in working. You're kind of asking us to take a leap of faith on how these things are going to be approved and the time length and how long people are going to be out of their houses. That's kind of where, you know, I stand on that one. And the other member. Ashcroft. So for clarification, we're still at Ms.. Potter's presentation asking clarifying questions, and then we'll come back to council deliberation. And I would prefer that just because I think we get the continuity of the of the report and some of the questions might be answered. I've heard from members of the public that they would they would like us to let staff while we. Were finished with these things and we were into questions. Yeah. Yes. I feel we're doing okay. Yes. On the capital. On the capital improvement plan portion of the presentation. Yes. We were going to bifurcate the two issues so that we could finish one before we start the next. Well, there are two separate votes. Right? Right. So that was what we had agreed upon. Vice Mayor. My comment and I think Mr. already raises some good points and that's one of my reasons for of. Standing that this the termination of tenancy and relocation should be a mediated process because every case is different and you could have a large flat top 1960s building that when the roof is opened up, there's substantially more work that is needed than was anticipated. And to have all that sit in a hearing officer or program administrator at the city level, I think is a is a daunting task. And and if a tenant really does want to come back in, I think working out that temporary lodging for the tenant while the work is being done, I think depends on the case and depends on the relationship between the landlord and tenant. That's why I strongly believe in a mediated rather than a mandated approach. Or for this, I do think it's necessary to have a capital improvement plan if you're going to give no cause termination of tenancy so that it's real. Because the problem was that people were being turned out and there were no permits taken. It was like, Well, yeah, I'll do it. But the eviction notices went up and I think there is some sort of protection in, in our limiting. Limiting people to this particular activity by presenting a real plan that says that, yes, we are going to do this. We have our permits in place, we have tentative contracts, whatever, whatever those might be. But as far as the movements of the tenants, I think that's best mediated. So staff the recommendation from staff to have the approval of the capital improvement plan be done by the program administrator was because there are technical aspects to the review and approval of the plan so that the expertize to to understand that the the reasonable cost of the proposed improvements to imputing the interest rate to the amortization over the 15 years to understanding whether or not it makes sense that tenants be relocated. Those are kind of more technical questions. So staff felt it was probably more appropriate to have the CIP process be handled by staff versus the rack who might not have that technical expertize. But there is definitely a process where it will be done case by case each. Property owner who wants to come in and propose a capital improvement plan, that that owners plan will be evaluated on its merits and on its merits alone, so that decisions would be made on a case by case basis. A lunch spot you want to finish, right? Are you finished? I said my piece. Okay. All right. I remember. Did you? That's my right hand. Thank you. Um. So, um. To Ms.. Potter. And I understand what the vice mayor is proposing. I would also be reluctant to have these items decided by the rack. I know we're starting a training program and that sort of thing, but I still I think we need to just see how well that body functions going forward. But what about, um, a mediator is we're going to use a mediator for some aspects of this. What about having these items go to a mediator instead who presumably would be informed of the technical aspects that need to be applied? I you know, it could be a mediator. I think that we've been just proposing that it go to a staff person who would have the technical expertize. But if the council felt like there was something else that a mediator brought to the table in addition to the analysis of the technical documents, then we would you know, we could we could contract for that for that service. I don't think that that's I mean, that's certainly a possibility. So remember day soccer. Remember Africa for you? Finished for the moment. Okay. Because then I'm going to rotate. Yeah. We may go back over to thug. Quick question on page a-1 item number for you reference, prime rate plus, I imagine you mean plus one percentage point. So. I think the issue there is if the interest rate that someone. It's for a project. Is above the prime rate. What you're saying is that. Only that portion that's mathematically within the prime rate. Is subject to being recovered by rent, is that what you're saying? Well, we're proposing that. The prime rate plus one, and we essentially contacted a couple of commercial banks to understand what the interest rate was for, you know, loan renovation loans. And that's that's how we arrived at this formula. Why a? Why don't you just say the interest rate that the person has. Done so well for for 70 central? For example, if you ask the owner of that building, he'll tell you that he his interest rates on his balloon loan is like 10%. And I don't know that we really want to reward, you know, business decisions that might not necessarily make sense for the tenants and that kind of thing . I think we felt like we should go and see if you go to a a standard commercial bank who does construction loans on multifamily property as a routine part of doing business, that that might be a good interest rate to use and that we might not want to encourage really high interest rates that are going to drive up the rents that you're going to have to charge to recover your cost. And then people aren't going to be able to continue to live there. So you think? That a landlord. Seeking renovations. That are perhaps in the million dollars is purposely going to go after higher interest rates? No, I'm just saying that it could happen. And that is the case that happened with 470 Central, which there was a proposal to evict all of the tenants to do substantial rehab. And he was proposing a doubling of rent because of the the financing that he had arranged for himself. And. You know, maybe maybe that's not an appropriate financing structure and to undertake your substantial rehabilitation. So I think we were just looking for, well, kind of standard business. Maybe number four should be rewritten to capture various possibilities as opposed to having this one. It just seems a little too. Thank you. All right. Mayor Brody? No, I mean. Well, if you wanted to. Go ahead, I'll go after. You. Okay. Thank you, Madam Mayor. So I'm kind of intrigued by the comments and that the vice mayor added, because I think he's right. These are probably all going to be unique, almost one off circumstances. And if we did, at least for the relocation and maybe just for the relocation at the tenant wants to come back and we can have some type of of mediation, you know, after a staff report or even semi-private mediation, because I'm not sure these are issues that should be now resolved out in like a public hearing, like the rec. I'm not sure if the rec can handle something like this, but, you know, some type of mediation on these particular this is kind of a small, smaller subset of all of the tenant protections we're trying to enact. So, you know, I'm kind of intrigued by that idea. And then if it you know, if it works and if our ordinance if we pass it, you know, has some struggles around the eviction area, you know, we at least have a model to look at and say whether or not that might work or not, because I was a little bit intrigued by it at the last meeting, not quite ready to vote for it. But, you know, I think this might be a good, good opportunity to I don't want to say experiment, but at least have kind of a trial or a pilot of that. And, you know, especially if somebody wants to come back, you know, if they want to come back, then there's a lot of issues like, you know, if you go off for six weeks and maybe your rent is the same, you know, maybe all you need is moving and maybe you don't need relocation and moving back. You know, if your rent is higher, you know, maybe there's some negotiation or some mediation. I mean, if you're in is lower or if you find a hotel and that's lower. I mean, there's a lot of, you know, combinations you can have to deal with that interim period. So, I mean, I think that's kind of an intriguing idea. So your what your if I can just rephrase back, what you're proposing is potentially a mediator who would handle the capital improvement plan for any particular project. And one of the things that they would be able to mediate would be the temporary relocation. Right. I mean, if a tenant wanted to leave. Okay, fine, cut the check it out. Go forward. But if they wanted to come back, you know, have, you know, whatever type and maybe not have a mandated relocation because the reality, you know what, if, you know, they just hypothetically they find a place that's cheaper, you know, and the total cost of that place to live temporarily plus the cost of moving is actually less than they would have paid. I mean, granted, that's probably not likely, but it's possible, you know, then, you know, maybe they shouldn't have any relocation, but, you know, if they can if it's only two weeks and then they could put up in a hotel room and it could still come back, I mean, that might be something the landlords are willing to do. And plus, like I said, it gives us kind of an opportunity to try this out and pilot this idea of mediating evictions. Can I go ahead? Go ahead. You want to jump in? I'll go ahead and let you jump in because. No, I have I have general comments. Where. General, go ahead. We'll come back. All right. So I appreciate that, vice mayor. All right. Thank you. First of all, when I look at this, I see a housing provider being used instead of landlord, and I would prefer reuse in or to be consistent that everyone's okay with that in regards to staff versus semi-private mediator and actually some of these other things, can I ask staff, where did you find this? This is something that you were able to look at other other cities to see what they're doing or. The basic outlines of the city. Yes, we did look at the city of Los Angeles, city of Berkeley, other jurisdictions that have capital improvement plans for substantial rehabilitation. And do they have a staff person? Yes, they they typically have a hearing officer, which is a staff person. It's a little bit different than our model, which is where you have a contract hearing officer. Right. If you're not going to agree with with the decision. Most cities with rent control have staff hiring officers. So when I say so, I would think it would require some sort of expertize. Does this go through the planning department then? Well, it would go it would go through the program administrator, whoever ultimately ends up administering the ordinance and the program, which I'm hoping would be the housing authority, and then they would hire staff with this expertize. So the whomever is doing this would have to get permits through our planning department? That's correct. So why wouldn't this somehow connect to our planning department? Well, it would that the permits would be the basis on which you would understand valuation and the length of time and that kind of thing. So there would be coordination. The staff would already be getting the expertize from the staff, the current staff that issues the permits then. Is that is there more expertize than that needed in regards to the repairs or but sort of expertize is needed for a hearing officer versus a mediator. Well, the here I believe that a mediator or a hearing officer could have the same skill sets. But essentially you want someone that is familiar with, you know, someone you know, familiar with construction and and the, you know, bidding process and what reasonable bids look like. And when a property owner is telling you this is how long it takes to do the improvements, you want to know that they have a good sense of that idea, that they understand kind of imputing the interest rate to come up with the value to calculate the allowable rent increase. Okay. But that's to me a separate issue, the monetary part versus the part of how much time it takes to do the job. And I would actually think that that's going to be our planning department, that they're very familiar with what happens here in the city and how long it takes to do these different jobs. That is true that the staff has familiarity. They don't typically weigh in or opine about the length of time if it takes one contract or six weeks to do something and another four weeks. You know, we don't really weigh in on on that, but they definitely have that knowledge. Okay. So I don't I would think that there's some way to work with those people that already have that expertize, because I would not want to count on someone who's. Whomever a mediator is to just look at this like they look at all cities. And we have people here in our city, in our planning department, that are very familiar with the type of work, how much time it takes, that that sort of thing. So I'm not sure how how this really works. Let me finish. Sorry. Okay. And then in regards to the interest rate and what you charge. I actually think it needs to be based on the real number of whatever the loan is that the average being financed from the. Interest rate changes all the time. So the idea was to pick a formula so that if, you know, today this might be 3% in a year, it might be 6%. So the idea is to. But when they finance it, they're going to be getting, I think, a loan that has a set interest rate or or it would say that it's always going to be prime plus one or whatnot, whatever that is for. Then I would think that that's the information that gets plugged into this formula because that's the real number. And I actually think that the landlord would be trying to get it financed at the best rate that they could. And whatever that number is, is the number. And then in regards to nine A, if a tenant notifies the landlord, they want to pay a higher rent. Now that is language in here. So what a lot of staff thinks happens then. Because it sounds so. So that is an option. The tenant can advise the housing provider, the landlord, within 30 days that they plan to remain in the unit and pay the increase. Right. So so in regards to what member already was saying, does the staff connect this? You have your tenant that does want to stay. They want to accept the higher rent. Right. So as as this is drafted now, if they have notified the the landlord that they want to stay and pay the higher rent if they need to be relocated, that temporary relocation is available to them only in the event that there's a vacant unit on site that they can be temporarily relocated to. And then they would move back into their renovated unit and they would pay the higher rent and they would go. They would go forward. If there's no vacant unit as this is drafted, they would be permanently relocated. Okay. So, so I would think that they should be there. So I don't know what the solution is, but I would think they should be able to come back. Just because a landlord doesn't does not have another unit available, right. Then they will eventually have that unit available. And if the tenant is agreeable to paying the increased rent, then I would think that that's reasonable that they should have. Right? So one should do the right of first. So one criterion could be when evaluating the capital improvement plan is to hash out what that temporary relocation would look like, whether it was a vacant unit or being put up in a hotel, or if you can, you know, take a little bit of money and stay on your friend's house if it's, you know, a couple of weeks, that kind of thing. And probably right up to some Saturday, if it's going to take more than a certain number of days then. And can I be clear that you're suggesting that that the landlord is responsible for relocating the tenant if there's no unit available? Are you just suggesting they have the right to come back if they're willing to pay the increased? So I was speaking about having them come back. However, I think this does include relocation assistance if they're not able to house them. Isn't that in here? Yes. If they are, then here if there is not any any temporary relocation solution, then the proposal says that you would be permanently. The guidance says you would be permanently relocated and you would get relocation as. To the same formula that reflected the oil. That's that's what's in here already. I mean, in the real world, you know, for example, if you have mold remediation in the landlord responsible for putting up the tenant in some temporary lodging and, you know, the tenant does not have use of the premises which they have a valid lease for. So they get compensated for loss of use. And then the landlord usually pays for some type of a temporary relocation. I mean, that's what happens in the real world when there's situations like this, like mold remediation, where it's just not the fault of the tenant at all. Right. And then, I mean, there's is precedent for doing this, right. And often often you're moved into a vacant unit that might not have the mold or you're put up in a hotel. That's correct. So I'm a swimmer. Damn, that's what I wanted to circle back. Well, I mean, you wouldn't. I'm. I'm thinking you're. You're suggesting that not only do they get relocation assistance that could be close to eight, $10,000, they get the relocation assistance and they have. No one or they just want to. Be closer to. One or the other. Okay. Correct. You. So under this ordinance, they are they would receive the relocation assistance. If there's no unit available and they are permanently relocated. Correct. However, as member already was speaking about what if you have this tenant that wants to pay the higher rent, they you know, they don't have there's not another unit available for them. What happens to that? And my preference would be that we do have an some sort of ability to have that same tenant return. But but I would say the caveat would be that the repairs could be done in six months versus a year. I don't know. That doesn't make sense. Yes. I think this maybe ties back into what the vice mayor was raising, that this is this it's hard to speculate because every situation is going to be a little different. So maybe this really is I would favor this going in cases and I don't think every one will be like that. But in cases where people might want to come back and circumstances might be different, it might be even more of a negotiation, if you will, with a mediator or an arbitrator. But I would caution one thing about the length of repairs. We happen to be homeowners of an old house, and it would be really difficult even going in signing a contract with a contractor. You always have to realize that there are things the suppliers you need might not come in on time. There's some delay for weather. And so I think we are we don't want to be tying our property owners hands inordinately. And that's why I agree with the mayor and Councilmember Desai on this interest rate. I mean, rather than some set formula and based on what the property owner at 470 Central did, and I know we all want to cast him as the boogie man, but we also have a policy that we want to see our old and decaying buildings improved. And if it takes a loan with the less than favorable interest rate to do that, why are we. Why are we penalizing that that building owner for doing that? So as long as you could show the documentation, I don't see why we need to have a set formula in here that's a little too cookie cutter. But I should be vice mayor, and. I'll clarify my point. My point is that I wanted two things I wanted termination of tenancies and evictions is subject to mediation. And second, if you're going to do an eviction to do substantial renovation, you have to prove it. And I think we can strip the rest away and still accomplish the protections that both sides need, though. And that's why I had that position of of and I strongly believe in in the mediation process. And I think at the point that I'm hearing, which I think is a good point, is a private mediation before it goes to the rack. I think is is time and money well spent. But the ordinance doesn't contemplate that. The ordinance looks at termination of tenancies and evictions as formulaic and mandated. So I think that's a problem. And that's why I voted no on the first time. That's why we're voting no on it again the second time. But I do I do think there's a place for mediation on the tenant landlord relationship there, and I'd strip this thing down the capital improvement land to subject to proof. Do you have do you have permits? Do you have your financing? And the rest is as do it. And we're going to watch until you get it done. And no landlord is going to want to have their units empty while they're renovating the building. They want to do it as fast as they can in the real world so that they can start getting the revenue back. So I'm thinking we're we're building this monster here. It's going to be impossible to administrate and it's going to hurt more people than it helps. So member so I can. Just weigh in on the rate. And one of the premises for me on this whole thing is to try to treat everyone equally, though, as much as possible. And, you know, I. You know, there's a comment about penalizing the landlord, but then you're also penalizing the tenant. If the landlord has bad credit and or was only able to get financing, you know, at ten, 12, 15% or whatever it turns out to be. So I. Maybe there's some middle ground, but. And I just hate to hear the word penalize being thrown around like this is a penalty. Well, then let's say let's not use the word penalty. Well, I guess it's just this is an interest rate that we're talking about imposing. I actually want to circle back to the vice mayor. So did you weigh in on this issue on the interest rate? I think it should be the real rate because whatever the bank will not lend at favorable rates on a building that's crappy. And that's correct. That that. Penalized the tenant for. That. Well, no one tantalizes the tenant. It is. But nobody. Is to bring the building up to. No more than the landlord's being penalized. It's the same when someone is, you know, the landlord will be paying it. The tenant will be going to use those words, throw those words around. We could throw them around on boats. I don't think we are using the word penalty. Sorry, that's not use that word penalty. This is this is the interest rate that's being imposed. By the mayor. So were you sort of. Yeah. Member Did you want to any more. I mean, nothing more than I already said. Okay. So in regards to the interest rate, you know, what I'm hearing is that we would have to agree on principles and have this thing circle back again like we did before that. So should we look at that, for instance, the interest rate? Is there consensus that we would impose the actual interest rate? All I'm saying in terms of the interest rate is that I just felt that the way that number four is read, it's really hard and fast that it's going to be prime plus 1%. So if the interest rate is roughly 2 to 2 or 3% and well, and probably for a construction loan, that's not going to be that low. But let's just hypothetically say, if the interest rate if the prime rate was 7%, then. And the interest rate that would be subject to number four would be 8%. All I'm saying is that and that's the formula by which every you know, all the different possible reimbursements would be done. But in the real world. Every property is different. And while there is the prime rate for purposes that people know, at least you know, what is the rate? The ultimate rate is subject to a variety of on the ground conditions and market factors. That's that. Instead of seven plus one, the real interest rate turns out to be maybe 8.5%. And then it's just that increment, which is a reasonable difference, is not captured in this. I think the reason why you created this is because of the situation where for 70 came in saying, you know, there they have a 10% rate . I don't know if that if if that's true or not. I mean, I'm not sure what the what the going rates are for construction loans, for major rehabilitation loans. But, you know, I think I mean, if I had to look at 30 year mortgages, they must be going at around, what, 5% right now or so somewhere around there, or maybe even lower than that, -4.7. So. All I'm asking for is just a little bit more flexibility. That's all I'm hearing that the council consensus is that when we come back with the policy, we would reflect the actual rate that's been approved as part of the submittal for the work. That's I think that's the consensus. So we'll actually sell. So here's my point, though. My point, though, is just in case someone does come up with this phony, which I don't I really don't practically see that happening. I don't I don't see. Someone actually these projects penciling out with, you know, a 15% interest rate. And then without doubling the rent, I believe that project will be upside down. That's correct. Okay. All right. I mean that everyone is acting in good faith. Yeah. Yeah. Landlords and tenants. That's really where we've been. I mean, isn't this along the same lines as documenting the actual construction work? Rehabilitations just document. Just because someone comes in and tells you something, you don't have to do it. But but, you know, we require documentation. And I also agree with I think it was the vice mayor, but maybe it is. Councilmember Brody said that these are the sorts of cases that are more appropriately handled in a semi-private setting of a mediation or an arbitration rather than in the rack. I think some sensitive situations like this and if, you know, if we were to consider when we talk about evictions, there might be some circumstances also, but we're not there right now. And the proposal is to have this handled by staff, whether it's mediation or or a staff who's trained. And I think we're really looking to accomplish three things with the capital improvement plan, and that is to understand the cost of the capital improvement. And then it rises to the level of eight times the rent, times the number of units, and that it is not repair and maintenance, but it's really to prolong the useful life, to set the proper rent increase that reflects the amortized cost of the investment and then to to determine the the relocation, whether it's permanent or temporary . So those are really the three things that are intended to be achieved by the plan. And I don't know for us from staff, it feels like four pages is pretty, pretty succinct. But we can, you know, we that really is what we're trying to achieve with the policy. Are those three key things, a mechanism for approving the work, for setting the the allowable rent increase and for resolving what the the relocation should look like. So in regards to proceeding tonight. Am I hearing that this needs to come back with corrections and that it would be a semi-private mediator? Or is that something that staff would have as part of an administrative regulation? Does that need to be reflected here? It's it's actually not reflect. I mean, it's the fact what's reflected here is that this would be handled by staff. But what? But who that staff is is not specified. And I think from our perspective, we would leave it to the program administrator to determine that the best qualified staff to handle this based on training and expertize . But I'm hearing that the Council is very interested in somebody who is trained and versed in mediation, and that can be part of what is looked for in that skill set for the staff person. I think we're estimating when we looked at the program fees, perhaps 15 ships a year, maybe, you know, it's and we'll you know , we'll see. But that gives us time to to really think about the kinds of skills and put something together where, you know, somebody somebody has the capacity to do this as well as other things. Vice mayor. I think I understand that the and the way I break the two down is the CFP. The actual work that's being done, the valuation is, is a technical exercise. It's, it's, it's formulas. It's measuring against, against, against interest rates, against cost, etc.. But the relocation side of it to me is, is a negotiation if we can separate those. To somehow in this and describe it better, at least it might be understandable. And Brody. Thank you. But just just a mediation on the relocation at the tenant wants to come back and how the temporary relocation would or would not be done. They want to leave. You know, we have a formula. Write the check. Leave if they want to come back, willing to pay the rent, then that would be something to mediate. But not mediating the interest rate and. No, no, no. No, no, no. That's the formula. And I. And I. And I. I understand the distinction that's being requested. I'm not sure that it needs to be two separate people. There could be one person that could work with the tenant and the the owner to to get to the conclusion on everything. But I understand and I'm hearing that the desire on the part of the council to have that mediated. All right. Any other comments on on the side on this part, the CFP. And we kind of have a recap on what we think. I'm happy to do that if I'm that. Yes. So we will make that we will insert the eight words that I mentioned earlier as part of the definition of of a capital improvement. We are going to go back and have language on the interest rate being the actual rate of the loan that is secured. Or the one on that. For me. 4 to 1 on that. Okay. And we are going to talk a little bit more on some guidance about whether or not the work that's being proposed actually triggers the need for relocation. So we will we can beef up that. We are going to talk about temporary relocation that we are going to have a process for discussing options for temporary relocation beyond just a vacant unit on site. And that that would be that would be negotiated or discussed. We are going to look at a cap on the temporary relocation so that, you know, six months, eight months, if the work takes longer, then it's going to be a permanent relocation with a payment of of the relocation fees. So those were the items that that I had noted that the council would like to see when this comes back. All right. You make comments member. And is a question as far as timeline, when do you anticipate can move back? So I think that we would come back on April 5th and I would note that. Well, so the moratorium right now, I think the ordinance also says that you cannot evict, terminate for substantial rehabilitation until the CIP is adopted. So I believe that there won't be kind of any gap in coverage so that there wouldn't be evictions for a substantial rehabilitation without the CIP in place. So if we come back on the fifth, I think that would be timely and a resolution is effective immediately. Okay. Because the ordinance would be it takes 30 days to become effective. Right. So this would become effective immediately. So then that that would work. And then the part about substituting the word landlord instead of housing provider. I believe we actually did that on one of the versions. So we. Okay. Thank you very much. Any other comments from Council on this part? Are we sure about the timing on that? Because that the moratorium is extended, we're extending it to. But I believe the ordinance says that there aren't of. Those things in the words. Yeah, it's in the or it's in the ordinance it's in the ordinance itself says that there there is you can't evict for substantial we have until the council has adopted the CIP. Yeah. That there. Yes. Okay. Okay. So then we can move on to the second part of this agenda item appropriation of thank you. And we appreciate the direction provided this evening program fee. So how to pay for the ordinance and the ordinance does need to be funded. I mean, this discussion we just had on the cap was a good example or an illustration of a component of the ordinance that will need to be enforced. It needs to be funded and staffed to be successful. And staff's proposed funding mechanism is a program fee. We are proposing that a program be imposed on all housing providers, landlords on a per unit basis, and that one half of the fee can be passed on to the tenant and not calculated as part of the rent increase . The 5% that would trigger the mandatory notification to the rack. We have been working closely, city staff has been working closely with housing authority staff to come up with with an estimated budget of what it would take to administer the ordinance as it stands at first reading. The Housing Authority staff has been handling all of the public education and questions around the moratorium since November, so they have a good sense of the kinds of questions and what's involved they have put together. There were several flow charts that were in the staff report about how they think the process, the ordinance would be administered. They've come up with an estimated cost of 1.9 million annually, which is $129 a unit. However, by law, we are required to do a study to determine what the program fee would be. So we are not requesting that the council approve a program fee this evening, but that we get direction regarding the Council's willingness or desire to fund this program through a program fee. And then we'll come back at before July 1st with the actual results of the fee study. And we thought I showed this slide on the 16th. I'll just go quickly. But just if you assume a 50 unit property in Alameda with the average rent just over 2100 a month, and if we look at program fees for cities in the Bay Area, sampling of cities with rent control and add in the business license, you would see at 129 units a fee. Alameda is kind of in the bottom half of of the cities with business licenses as well as program fees. So we feel like we would still be competitive as a place to to conduct, you know, business as a rental property owner. And then if the council is interested in where we sit just with our business license, you can also see once again, assuming a 50 unit property with an average rent of 20 $100, we are also in the bottom half just with our business license fee. So this these two slides are just kind of to show you that even if we were to adopt a program fee, we would still be kind of in the middle of the pack relative to the cost of conducting rental property and still residential rental property business in the city of Alameda. So what would the program fee be used for? It's you know, the biggest part of the fee is to administer the program. And that would range from scheduling and conducting rack hearings to coordinating all of the public education, to verifying that evictions are being done pursuant to the ordinance dealing with the CIP data collection for the binding hearing process. This fee. Presumes that we would contract out with hearing officers because that's not a full you know, there's not going to be hearings to justify a full time staff. The city attorney office would have a role to play because it would provide legal advice. When questions came up, if we were sued or we looked to enforce our ordinance, we would look to the city attorney's office to carry out those activities. And then staff's proposal is that the fee be part of the annual business license billing. So the finance department would also have to bill for and collect the program fee, manage the database, you know, do collections, that kind of thing. So those are the components of the fee. And so as I mentioned tonight, we are we are tonight asking for an appropriation of funds in the amount of $300,000, $50,000 to conduct the fee study that would we would provide to the consultant all of the data that's been prepared to date. A consultant would work with us on the fee study. We would come back before July one because we're proposing that if the fee is adopted, it would be effective July one and run on the fiscal year and then an appropriation, the balance of the 300,000 that we're requesting to be appropriated. This is me this evening would be to fund the program through June 30th of this year. So that that is a request that we're looking for this evening. If later on tonight the council approves the ordinance on second reading, we are going to we will have an ordinance in 30 days and we're going to need a way to implement it. So we are going to need the appropriation for the general fund. So. All right. Member Ashcroft. I'm thank you, Madam Mayor. So, um, on the. The anticipated expenses, the one area where I would like to see some comparison done is on this. I think it was three full time equivalent equivalents in the legal staff. And I'm assuming you're meaning three full time equivalent attorneys as opposed to paralegals, or are. These two attorneys and one paralegal? So I would I would like to see a comparison of what it would cost us to outsource some of that work to a firm that does specialize in this area and also anticipated litigation. I mean, we probably may get some, but not every day, all day. And so do we really need an attorney sitting there waiting to defend, or is that something that we could outsource to a a specialist? Because bear in mind, we pay we pay benefits when we hire people full time. And so we have to factor that into the costs. So I'd like to see a comparison of the two methods of staffing. Did you have any other comments? Remember Ashcroft vice mayor? I think I'd like to hear what the city attorney says, and then I'll make a comment. Madame Mayor, may I respond to the council members Ashcroft's comments? Councilmember Ashcroft, We're thinking that this is a very conservative estimate of three full time FTE ees, and we're looking at that from a dollar perspective, not a body perspective. I think that your instincts are correct and that the city attorney, if she were here, would tell you that her intent would be to hire outside counsel as needed in the initial stages to see how this program works. If we determine at a later time that there is a need for full time hired staff. We would make that determination. And then there would be a job allocation, a job slot. That would come to you, and we would do that. So hopefully those costs will be less. But as a conservative matter, we wanted to make sure that we had enough money to see the program through until the program fee was adopted. Okay. So if I understand correctly, you are contemplating outside counsel at the outset. Yes. And we and we get the three full time PhDs because we figure one would be an advice counsel to help educate landlords and tenants on the program supported by a paralegal and one litigator specializing in this area. That sounds reasonable. Remember? So procedurally, you know, are we being asked to. Approve. This $300,000 appropriation before the second reading? Yes. Okay. I mean, you could you could come with that or. I'm sorry, but we don't know for sure. And the reality is we don't know for sure it's going to pass. If it didn't pass them. Which is appropriate. Okay, great. Okay. All right. And it's just a continuation of the meeting from the 16th. Okay. Vice Mayor. I think the reality is the $300,000 between now and June, we have to do the study and this has to be administered between now and then. So I think we should appropriate the money. We can always if it's not all spent or if something radical changes, we can always re re distribute them this appropriate. What's the right word. To put it back? Unencumbered. Unencumbered. So I have no problem with that. And I think this budget is is conservative as it should be. Although I can anticipate. Problems that would make this realistic. And I see that. Legal fees because this is a legal entanglement are 25% of the entire budget. And to me that seems. Reasonable, given what we've constructed here. Brody So thank you for allowing me that clarifying question. This is just kind of my general comments, and I think it's fair that this is allocated equally between the landlord and the tenant. Hopefully when the fee study comes out, you know, we'll see that there may be some classes of tenancies that don't cost as much. For example, single family residents that are not subject to cost. The Hopkins are not going to ever go through the, you know, the hearing process or the finding the. Binding hearing price. That's correct. So, I mean, I think there's some justification to say that the fee on those might be less. And if we ever adopt something like a model lease that may calm tensions, then, you know, in theory, that may be a situation where the fees might be less. So hopefully when that study is completed, you know, we're given different options. Remember Daisuke. I'm of the opinion that the city of Alameda should. It, find the money with it within its own budget to run this program. So I don't support a study. I think we should make decisions that look into our own reserves or budgets and. You know, I fundamentally I just think it's unfair that that that you're sticking this to especially the smaller mom and pop landlords. And I mean it's it's just seems unfair that and not only have this draconian project and then well here's the bill like I can't support the study on which is predicated any fees. All right. So in regards to the B study, are they going to come back? They'll come back with what they estimate the cost will be. And then what will they look at? What is the proportion in it? I also have concerns about how much of this should. Who should bear the costs of this. And I would like to see. I actually think the arbitration, if it goes beyond rack, should be somehow shared between the parties that require that next level. I think that we want to encourage settlement Iraq and that that would that would actually encourage meaningful participation at Iraq. And so so will they be looking at things, you know, things that may increase the cost? Because I think if the two parties don't have that, I'm going to call skin in the game and then everyone goes on to arbitration, then the costs will be extremely it could be extremely expensive. So I think at least I would like to see the parties pay at least 25% if they go on to that next level. I'm concerned about unlimited use of arbitration beyond Iraq because I really want the focus to be on meaningful participation in Iraq. Yes. If I just can clarify the fees, not going to tell us who's going to pay fees. Going to the fee study is going to tell us how much. Okay. But if they're assuming. Our decision to decide so. Then they must be making some assumptions of how many cases are going on to arbitration. And I see that as a what could be a very big cost. So we assume 20 cases, which is $90,000, but we can certainly look at both. And that's why when we did the math, the fee was really the same for the the exempt and the nonexempt units because the 90,000 was a very small percentage. But we can certainly when we get the fee study, if the counsel is asking us to look at pain, you know, a pain for a portion of the hearing officer process and or looking at a different fee, we can certainly do that. When we come back with the analysis from the fee study, from the policy perspective. And how many cases go to rack currently as you come up with the 20 cases that go to arbitration? Well, that's the number. Just trying to make an educated guess. Okay. Okay. So and it's 50,000 for that study. And then when it circles back, we would be able to see how to allocate the money. And I would agree that at least some of the money should come from the general fund, because I really think that this is not simply a landlord tenant issue. I think this is a community issue, and I think that is why we've gotten here at a council. And if it's a community issue, then at least some of it should come from the general fund, I would think. Yes. So we will have another opportunity to discuss who, if at all, should be paying for program fees or helping to underwrite this this the costs of these. Yes, we it is useful for staff to get a sense at the council about whether it should be a fee that's required to be paid by the property owner with an opportunity to pass through a portion of the cost. I hear some direction about it, potentially some of the general fund. We will look at all of that. It's helpful to have a sense not. Knowing to interrupt you. I would say on this point, I think it's fair to say there is not consensus of the council. So you should look at the whole range. So it will. Yes. And then I believe somewhere in these materials you look at what other jurisdictions charge for program fees, is that correct? Right. We showed a slide on that. Yeah. Okay. Thank you. Member desk. Of course, I have my qualms with the fees, but I'm just going to ask a question about the fees. The way that is structured is that it's it'll be potentially split $65 by the landowner landlord and $65 by the tenant. And. Can the tenant write the check to City Hall instead of having once a year, instead of having the landlord have to pick it up so that it doesn't get included into the roll, into the rent. Because we want to keep the rent as low as possible and that the tenant understands that this is a program run by the city by making that annual payment. And that's something else I'd like you to look at. You can look at that and bring that back. But then Brody like to move on comments. Like to move approval of appropriation of 300,000 from the general fund to fund a rent program piece, study, and cover the cost to administer the rent related programs through June 30th, 2016, should they be passed? It was. Did you say the 50,000? Well, the 300 includes the 15. In the training. I'd like to, if I could offer an alternative approach of bifurcating the $50,000 fee study and the $250,000 to fund the program. We could do two separate motions. We could do to separate motions. Break it up. I prefer to keep it at one, but, you know, it's whatever emotion gets a second rate. Okay, well. That'll be our second emotion. Who's. It's mine. Yours. So I'm. Sorry. Councilmember Otis. So? So we have a motion and a second. And I do want to speak to it. When a council member suggests bifurcation of an issue like this, we have traditionally separated issue. So then a council member can vote yes on one and no on the other and not have to vote no on both. I would prefer that we have two separate motions. We have a motion on the table. In favor of that so that we can separate them. Thank you. Oh, he's in favor of separating. There's three of us would appreciate that. So. Okay, so. I call the question. One. Friendly and then. I'll move the 250,000. Second. Okay. All those in favor. I, I I'll move the 50,000 for the few second. Although some favor. I oppose. One. Or two one. So they both passed. One was unanimous, the other was 41. So thank you very much, Council. I appreciate that. And I mean, look back at our agenda. That was the final item on the regular city council meeting at February 16th. So I will now adjourn that meeting and we will take a we will start, you know, 7 p.m. with our regular city council meeting. Thank you, everyone. Thank you. For listening. You can do this well. One. Good evening. Pop. Hello, everyone. Okay. Sorry. All right. Good evening, everyone. Welcome to our regular city council meeting. 10 minutes after seven, we're starting. And we have representatives from Alamitos Boys and Girls Club that are going to come up to the podium and lead us on the pledge. A. Yeah. Yeah. Back here, behind the podium. Horrible. I pledge allegiance to the flag of the United States of America into the republic for which we stand, one nation under God, indivisible, with liberty for all. Thank you very much. And later this evening, they'll be receiving a proclamation. All right. All right. Roll call. Council member states. Up here, here, here, here they are, Spencer. Here, five present agenda changes. Six RD Which is? Which item is that? The Wetlands Mitigation Bank. The Council referral regarding possible wetlands mitigation bank at Alameda Point is going to be continued to March 15th. That will not be heard this evening. Were there any other agenda changes?