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Pi ED

C I T Y

O F O A K L A N D

cl^l^m AGENDA REPORT

T D : Officeof theCityAdministrator

A T T N : DeannaJ . Santana

F R O M : CommunityandEconomicDevelopment

Agency

D A T E :

October

25,

2011

RE A

Resolution

Approving An

Amendment

To The

Rent Adjustment

Program

Regulations

Revising

Regulation10.2.2(3)

(Appendix

A)Regarding

Justifying

Rent

IncreasesFor CapitalImprovementsTo CorrectHazardousOr

Uninhabitable Conditions

S U M M A R Y

The currentrentordinance allows owners topassthrough the cost of major repairs as a

Capital

Improvementsrentincrease. There is alimitedexception to

Capital

Improvement increases set

forth

inAppendixA of the

Regulations.

The exception isforrepairsthatwouldbe considered

Priority andPriority2 by a

City

ofOakland HousingCode Enforcement Inspector. These

repairs areidentifiedas hazardous or inhabitable conditions.' On

July

14, 2011, the Rent

Board

voted

5-1 to adopt changes to the regulations,which clarifytenantresponsibilityforreporting

Priority andPriority2conditions andlandlordresponsibilityforrepair ofsaidconditions. In

addition,itclarifiesthe scope and authority of the HearingOfficerinmaking decisions about

Priority andPriority2conditionswhichhave not been cited by a Code Enforcement Inspector.

FISCAL IMPACT

The

proposedamendments

to the Capital

Improvement regulations

have

no

direct fiscal impact.

B A C K G R O U N D

Underthe Rent Ordinance,CapitalImprovements materially add to the valueo fthe property and

appreciably prolongsusefullifeoradaptsit to new

building

codes. The costs of improvements

are amortized over 60 months and must

primarily

benefittenants.

Examplesof

eligible

CapitalImprovements include:

Exteriorpainting

Permanently

affixed

equipment

Repairs completed to comply

with

Code requirements

'

Rent

Adjustment

Regu lat ions,

Appendix,

Section

10.2.2

(3) 2.7 2.8

Item:

C E DCommittee

October 25,2011

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Deanna J. Santana

C E D A :

Amendment toCapitalImprovement Regulations Page 2

Repairs consideredPriority 1andPriority2conditions may not be consideredCapital

Improvements. Priority1and

Priority

2conditions are defined inAppendixA ofthe Regulations

asfollows(the

list

o fPriority 1and2conditions is included as AttachmentAto this

agenda

report):

2.7 Priority1Condition: TheCityofOaklandHousingCode Enforcement

Inspectors

determine housing condition(s)/ repair(s) as a

Priority

1 condition when housing

condition(s)/repair(s) areidentifiedas a major

hazardous

or inhabitable condition(s). A

Priority

1 conditionmustbe

abated

immediately by correction, removal or

Disconnection.

ANoticeto Abatew i llalways be issued.

2.8 Priority2Condition: TheCityofOaklandHousing Code Enforcement

Inspectors

determine housing conditions(s)/repair(s) as a

Priority

condition when housing

condition(s) /repairs(s) areidentifiedas majorhazardousor inhabitable condition(s)

that

may be deferred by anagreement

with

the Housing Code enforcement Section.

KE Y ISSUESAND

IMPACTS

Tenant responsibility for reporting

Priority

and

Priority

2conditions.

Landlordresponsibilityfo rrepairing code violations before oraftera citation is issued

within

specified

time fi*ames.

The authoritythatHearingOfficerswouldhaveto determine ifrepairsmeetthedefinition

o fPriority

orPriority2conditions without citation ofCity

Building

Services

Inspector.

Rent

Board

Discussion

of CapitalImprovements

A tthe regular meeting oftheHousingResidentialRent andRelocationBoard H R R R B )held on

February 24, 2011, the Board decided to hold apublic

forum

onCapitalImprovements. The

purposeof theforumwas to consider possibleamendmentsto the Capital Improvements

regulations to

clarify

the responsibilities of

landlords,tenants,

and HearingOfficerswhen

addressing

Priority

1and

Priority

2conditions.

Adiscussion ofCapitalImprovements took place at the Regular meeting ofthe

H R R R B

held on

Apr i l 14, 2011. Priorto the meeting, an

announcement

was posted on the Rent Adjustment

Websiteinvitingwritten comments to be considered by theBoard. In addition, written

notificationwas mailed to six landlord and

five

tenantorganizations. Written comments were

submitted by two landlord organizations and fourtenantorganizations.

Afterthe discussion, theBoardvoted toforma committee to further discuss possible

amendmentsto Capital Improvement

Regulafions.

Item:

CE DCommittee

October2 5, 2011

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DeannaJ .

Santana

C E D A :Amendment to

Capital

Improvement Regulations Page 3

Board Action

O nJune 9, 2011, the

Capital

Improvement Committee held a meeting and voted unanimously to

adopt the draft proposed changes to regulations regardingPriority andPriority

2

condifions

submitted by

Staff

O n

July

14,2011,the Committee presented their recommendations to adopt

Staff

proposed

regulations. The

Board

voted 5-1 to adopt the Committee's recommendations.

Effecto fRegulationChanges

TheBoard

adopted the changes to

allow

a

fair

and balancedapplicationofthe

Capital

Improvement

Regulations.

The exact language oftheproposed new regulafions isincludedas

Attachment

A

to this report; staff summarizesthosechanges asfollows:

Repairs

for

Code

Violations

Repairs

forcode

violafions

may not be considered capital improvements iftherepairs were

performed in order to correct aPriority

orPriority

2

condition,providedthatthetenantproves

thefollow ing:

1. Theconditionwas not caused by thetenantand was cited byCity BuildingInspectors

as aPriority

orPriority2

condition;

2. Thetenantproduces

factual

evidence todemonstratethathad the unit been inspected

bya

City

BuildingInspector, the Inspector

would

have determinedthatthecondition

was aPriority orPriority

2

condition;

3. Thetenant

notified

thelandlordofthecondition inw r i fingor provedthattherewere

exceptionalcircumstancesthatprohibitedthe

tenantfrom

submitting needed repairs

in

writing;

and

4. Thelandlordfailedto complete repairswithina reasonable time.

Reasonable

Time

Frames

for

Repairs

Reasonable time frames are determined asfollows:

1. The

condifion

is repaired

within

thefime

framespecified

by a

Building

Services

Inspector;

2. Repairs are completed 90 days afternoficeof

condifion

is

received,

unless efforts to

Item:

C E D

Committee

October 25,2011

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DeannaJ .Santana

C E D A :Amendment to

Capital

Improvement Regulations Page 4

Complete

repairs areunsuccessfiildue to circumstances beyond the landlord's

control;

3.

Repairs of

conditions

considered health and safetyviolafionsare completedwithin15

Business

days, unless thetenantcan prove a shorter time is reasonable based on the

Hazardousnatureofthecondition;and

4. Attempts to get the required permits or approval are evidence of

good

faithand

Landlordsare not penalizedfordelays by the approving government agencies.

Authorityof

Hearing

Officers

WhenPriority orPriority2conditions are not cited by a

City

BuildingServices Inspector, the

HearingOfficermay do thefollow ing:

1. Consider

factual

evidencethatdemonstratesthathad the property been inspected by

aCity

BuildingInspector, the inspectorwouldhave determined thecondifionto be

a

Priority orPriority

2

condition;and

2. Require expert testimony to decide

i fa

conditionis aPriority orPriority2

condition.

SUSTAINABLE

OPPORTUNITIES

Pursuant to

City

Coun cilResolufionN o .74678C . M. S . ,adopted December 1, 1998, staff

encouragesproperty owners tooperatesustainable projects. StabilizingOakland's existing

residential

tenancies

wi l l

continue tostabilizeneighborhoods. Thechanges

in

the

Capital

Improvement Regulations are consistentwiththe goal ofallowingproperty owners tooperate

sustainable projects,

while stabilizing

Oakland's residential tenancies.

Economic

Preserve the

affordable

housing inventoryfor families,seniors, and disabled

people in the

City

ofOakland;

Protect

tenantsfrom

exorbitantrentincreaseswhileencouraging owners to invest

in

the housing stock oftheCity.

Environmental

Mitigate

adverseenvironmental impacts resultingfromexisting rental housing;

Encourage cohesion and vested interest

o f

owners and

tenants

in established

neighborhoods.

Item:

C E D Committee

October 25,2011

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Deanna

J .

Santana

C E D A :Amendment to

Capital

Improvement Regulations Page 5

Social Equity

Improve the landscape and climate of

Oakland's

neighborhoods by encouraging

long

term tenancies

in

rental housings.

Assist low and

moderate

income

families

to

save

money to become homeowners.

DISABILITYANDSENIORCITIZEN

ACCESS

The

City's

Rent Adjustment staff complies with legal requirements to provide

access

to all Rent

Adjustment Program services for people with disabilities and to

ensure

thatthe units rented to

people with disabilities complywithapplicable codes. TheJustCause forE victionOrdinance

and theE llis

A ct

Ordinance provide special protections against evictions and relocation benefits

for

seniors and people with disabilities.

RECOMMENDATION(S) ANDR A T IO N A L E

Staff

recommends

that

the

City Counciladopt

the

Resolution.

The

changes

in the

Capital

Improvement Regulations provide clarity to

tenants,

landlords, and Hearing

Officers.

A C T IO N R E Q U E S T E D O FT H E CITY

COUNCIL

Staff

requeststhatthe

City

Coun ciladoptthe attached Resolution approving theamendmentto

the Rent Adjustment Regulations.

Respectfully

submitted,

Walter S. Cohen, Director

Community and

Economic

Development

Agency

Reviewed

by:

Michele

Byrd,

Deputy

Director

HousingandCommunity

Development

Prepared

by:

Connie

Taylor,

Program

Manager

Housing

andCommunity Development

D ivision

A P P R O V E D

A N D

F O R W A R D E D

T O

T H E

C O M M U N I T Y

A N D E C O N O M I C D E V E L O P M E N T C O M M I T T E E :

Office

of the

City

Administrator

Item:

C E D

Committee

October25,2011

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Attachment

ExistingRegulationto bedeleted

[Repairs

completed

Inorder tocomply

with

the Oakland Housing Code may be

considered

capitalimprovements.Iftherepairsareconsideredas Priority 1 or1 condltion(s)as

defined

in

this

resolution;then

the

repairs

may not be

eligible

for

consideration

as

capital

improvements.]

NewRegulations

CAPITALIMPROVEMENTS

FOR

CODEVIOLATIONS

REGULATIONS

10.2.2

Eligible

capital improvements

include,

but are notlimitedto, the

following

items:

3.

. Except as set

forth

in

this subsection, repairs completed in order to

comply

with

the

Oakland HousingCodemay be considered capital improvements. Repairsforcodeviolations

may not be considered capital improvements

if

the Tenant proves thefollowing:

a. That a repair was performed to correct a

Priority

lor 2

Condition

thatwas not

created bythe Tenant,

which

may be demonstrated by any of thefollow ing:

theconditionwas cited by aCity Building

Services

Inspector as a

Priority

or

2 Condition;

the Tenant produces

factual

evidence to show

that

had the property or unit

been inspected by a

CityBuildings

Services Inspector, the Inspector

would

have determined theconditionto be a

Priority

or

2 Condition,

but the

HearingOfficermay determinethat

in

order to decide if

a

conditionis a

Priority

or

2 Condition

expert testimony is required, in

which

case the

HearingOfficermay require such testimony.

b. That the Tenant

informedthe Owner oftheconditionin

writing;

otherwise provesthatthe landlord knew ofthe

conditions,

or

provesthattherewere exceptional circumstancesthatprohibited thetenant

from

submitting needed repairs in

writing;

and

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c. That the Own er failed to repair the condition within a reasonable time after the

Tenant informed Owner of the condition or the Owner otherwise knew ofthe

cond ition. A reasonable time is determined as follows:

i. If the con dition was cited by a City Building Services Inspector and the

Inspector required the repairs to be performed

with

in a particular time

frame, or any extension thereof, the time frame set out by the Inspector is

deemed

a reasonable time ; or

ii. Ninety (90) days after the Owne r received notice o ft he condition or

otherwise learned of th e condition is presumed a reasonable time unless

either ofthe following apply:

(1) the violation rema ined unabated ninety (90) days after the date of

notice to the Own er and the O wner demon strates timely, good faith

efforts to correct the violation within the ninety (90) days but such

efforts were

unsuccessful

due to the nature ofthe work or

circumstancesbeyond the Owne r's con trol, or the delay was

attr ibutable to other good cause;o r

(2) the Tenant dem onstrates that the violation was an imme diate threat

to the health and safety of

occupants

ofthe property, fifteen (15)

business

days is presum ed a reasonable tim e unless:

(a) the Te nant proves a shorter tim e is reasona ble based on

the hazardous nature of the cond ition, and the

ease

o f

correct ion,

o r

(b) the Owner demonstrates timely, good faith efforts to

correct the violation within the fifteen (15) business days

after notice but such efforts were

unsuccessful

due to the

nature of the work or circumstances beyond the Owne r's

control, or the delay was attributable to other good cause.

iii.

If an Ow ner is required to get a building or othe r City perm it to pe rform

the work, or is required to get approval from a government agency

before comm encing work on the

premises,

the Ow ner's attempt to get

the required p ermit or approv al within the tim elines set out in (I) and (II)

above

shall be deeme d evidence of good faith and the O wner shall not be

penalized

for delays attr ibutable to the action of th e approving

governmen t agency.

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| L D

Approved as to FormrflfTd Legali ty

211U0CT13 pw Oakland City Council

R E S O L U T I O N NO. C .M.S.

RESOLUTION APPROVING AN AMENDMENT TO THE RENT ADJUSTMENT

PROGRAM REGULATIONS

REVISING

REGULATION 10.2.2 3) APPENDIX

A) REGARDING JUSTIFYING RENT INCREASES FOR CAPITAL

IMPROVEMENTS

TO CORRECT HAZARDOUS OR UNINHABITABLE

CONDITIONS

W H E R E A S , the Rent Adjustment Program Regulations ( Regulations ) provide

that

a

landlord may not

pass

along capital improvements undertaken in order to repair a hazardous

condition, referred to in the Regulations as Priority

1

or Priority 2 Conditions (Regulation

10.2.2,

subsection 3 (Appendix A); and

W H E R E A S , the Housing, Residential Rent and Relocation Board ( Rent Board ) has

considered appeals of hearing officer decisions

that

involve interpretations of Regulation

10.2.2,

subsection 3; and

W H E R E A S , the landlord and tenant parties to the appeals and membersoftheRent

Board

have disagreed over the interpretation of Regulation 10.2.2, subsection 3 and the

procedures for allowing or disallowing repairs to Priority 1Priority 2 Conditions; and

W H E R E A S ,more specifically the disagreements of interpretation have included:

whether a citation of the conditionfromthe city is required in order to disallow the repair as a

capita

improvement, whether prior notice to the landlordofthecondition is required, and

whether the landlord should have a reasonable opportunity to make the repair prior to being

denied the costoftherepair as a capital improvement; and

W H E R E A S ,the City Council and Rent Board believes it is in the best interests of Rent

Adjustment Program and landlords and tenants to revise Regulation 10.2.2, subsection 3

suchthat

the landlord must know of the Priority

1

or Priority 2 Condition prior, which notice is

not required to be made through a citation, and

that

the landlord should have a reasonable

time

following notice to repair the conditions; and

W H E R E A S ,the Rent Board at its meeting of July 28, 2011 approved the amendment

to the Regulations set out in Attachment A; and

W H E R E A S , the Rent Board hereby requests

that

the Oakland City Council approve

amendment to the Regulations amending and restating Regulation 10.2.2, subsection 3 to

read as set out in Attachment A attached hereto and made aparthereof; now therefore be it

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R E S O L V E D :

That the City Counc il hereby approves the ame ndment to the R ent

Adjustm ent Prog ram R egu lations set out in Attachment A, and be it

F U R T H E R R E S OL V E D : That said ame ndme nt s hall be effective se ve n (7) daysafter

the date of City Council approval.

IN C OU N C IL ,

O A K L A N D ,

C A L IF ORN IA ,

P A S S E D B Y T H E F O L L O W I NG

V O T E :

A Y E S - B R O O K S , B R U N N E R , D E LA F U E N TE , K A P L A N , K ERNI G H AN, NAD EL ,

S C H A A F , A N D P R E S I D E N T RE ID

N O E S -

A B S E N T -

A B S T E N T I O N -

ATTEST:

L A T O N D A

S IM M O N S

City Clerk and Clerk

ofthe

Counci l of

the City of Oakland, California