Burbank official presents City Council with pros and cons of rent control

Simone McFarland, an assistant community development director for the city, said that cities in California are limited in how they can implement rent control within their jurisdictions due to three state laws.
(File Photo)

A Burbank city official gave an overview Tuesday about the pros and cons of implementing a housing regulation in the city, and touched on alternatives, such as relocation allowances and affordability covenants that could be useful for Burbank to deal with its affordable-housing issue, she said.

Simone McFarland, an assistant community development director for the city, said that cities in California are limited in how they can implement rent control within their jurisdictions due to three state laws.

The main legislation is the Costa-Hawkins Rental Housing Act, which was enacted in 1995 and exempts housing units built after February 1995 from local rent controls. Additionally, the law states that single-family homes and condominiums are exempt from those controls.

Should Burbank decide to have rent control on its books, McFarland said that about 10,416 units, or 46% of the multifamily housing units in the city, could be eligible.

She added that the leases of rent-controlled units can be reset by landlords to any price if existing tenants move out.

Another state law is the Ellis Act, which was passed by the state legislature in 1986 and allows property owners to take their housing units off the market and repurpose them for another use, such as converting them to condominiums, hotels or to be demolished. The law states that if a city has a rent-control ordinance, property owners cannot withdraw their units from the market and bring them back into the market for five years.

Additionally, the Ellis Act allows local agencies to mitigate any adverse impacts on residents who are displaced by their property owners withdrawing housing units from the market.

McFarland said the city of Pasadena does not have rent control, but has a tenant-protection ordinance. Its law requires that a landlord must pay their tenants a relocation allowance if they are at or below 140% of the median income of Los Angeles County if the tenant is required to leave their unit due to demolition, a government order to vacate or permanent removal of the housing unit from the market.

Pasadena established the relocation allowance be equal to two months of fair market rent as established by the U.S. Department of Housing and Urban Development, or HUD. Additionally, landlords are required to pay tenants a moving expense allowance of $1,120 for adult households or $3,364 if the household has dependents, or disabled or senior tenants, McFarland said.

Burbank has a similar ordinance on its books, in which the landlord is required to pay a relocation amount of $2,500 for each unit they are converting from an apartment into a condominium. The city’s law also requires a 180-day notice of intention to convert to tenants and gives tenants whose building is being converted an exclusive right to purchase the unit, McFarland said.

The final state legislation cities have to be mindful of is AB 1505, which was signed into law by Gov. Jerry Brown on Sept. 29. The new law, which was a part of a 15-bill housing-reform package, allows for inclusionary housing and lets local agencies require that new housing projects include a specific percentage of affordable units for extremely-low, very-low, low and moderate income households, McFarland said.

She said Burbank has not been meeting its Regional Housing Needs Allocations numbers set by HUD, but has been trying to do so with its Inclusionary Unit Requirement Ordinance. Burbank’s law requires that at least 15% of all newly constructed housing units in residential developments be offered to and sold or rented to very-low, low and moderate income households.

Aside from traditional rent control, McFarland said the City Council could pursue affordability covenants with developers, in which a certain number of units in a housing project would be deed-restricted for a given number of years.

The city was recently successful in this venture with approval of the First Street Village mixed-use project, in which 14 deed-restricted micro-units would be affordable to qualifying moderate-income households.

The agreement states that those units would remain affordable to that specific group of renters for 30 years. Additionally, the covenant remains in effect even when the tenant moves out within the 30-year period, McFarland said.

She added that the covenant for the First Street Village project also requires that the starting rent of those units be $3 per square foot and rent increases will be limited to 2% per year during the 30-year term.

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