RSO & Relocation

1. RSO & Relocation December 2008

2. What Does Rent Stabilization Do? • Controls rents (Vacancy decontrol) • Limits evictions (12 Legal Reasons) • Requires relocation assistance for no-fault evictions

3. Subject Properties • Basic Rule • Housing accommodation rented or offered for rent • In the City of LA • C of O on/before 10/1/78 • 2 or more on a lot • Inventory • Over 129,000 properties • Approximately 636,000 rental units • Includes condos, co-ops, rooming houses, mobile home parks*, hotels & motels

4. Not Covered • Single one-family dwelling on a lot • Units built after October 1, 1978 • Non-profit units approved by LAHD • Luxury Units approved by RSO • Hotel & motel rooms, occupied less than 30 days • Rental units in converted commercial buildings (adaptive re-use projects w/1st rental use after 10/1/78) (Full list in LAMC 151.02 “Rental Units”)

5. When Rent $ is Not Controlled: • Properties not subject to the RSO • “Vacancy Decontrol” • Units Voluntarily Vacated • Initial Rentals Following Certain evictions • Non-payment • Lease violation • Compliance with City Attorney order • Failure to relocate • Condos * • Still subject to rent registration and eviction controls • Pre-1996 tenants protected by full rent control

6. Allowable Rent Increases(2 Kinds)1) LAHD Approval Not Required • Vacancy Decontrol – set to market upon re-rental after voluntary vacancy • Annual Automatic Rent Increase • 3% - 8% per RSO • 3% as of 7/1/2008 • Additional 1% each for gas & electric if owner-paid • Increases for additional tenants • 10% for each additional tenant • Does not include 1st minor dependent child

7. Allowable Rent Increases2)Need City Approval • Individual Adjustments • Capital Improvements – improvements or replacements in rental units or common areas • Primary Renovation – major upgrades/renovation • Just & Reasonable – Review based on landlord’s NOI • Approved through administrative review process, appealable to a Hearing Officer

8. Tenant at fault Non-payment of rent Lease violation (but not for unilateral change in terms) Nuisance (garden variety, drugs & gangs*) Illegal purpose* Failure to renew lease Denial of reasonable access Unapproved subtenant Failure to relocate per Tenant Habitability Plan* No-fault Owner/manager occupancy* Ellis (demo & withdrawal)* Government order* HUD foreclosure* Eviction Grounds * Landlord declaration required

9. RSO & Changes in Ownership • Sale or foreclosure is not a legal reason for eviction! • Also not a basis for a rent increase. • A change in ownership does not change the terms of the tenancy under the RSO. • Lender who forecloses assumes the role of the landlord.

10. Eviction Requirements • Eviction notice • Reason given to tenant • 60 days as of January 1, 2007 for tenancies of at least 1 year (no-fault evictions) • Extended notice for Ellis • 120 days minimum • Seniors/disabled up to 1 year • Landlord declarations • Filed with LAHD

11. Relocation Requirements – Landlord Responsibilities • Landlord must provide relocation assistance in following evictions: • RSO units • Owner occupancy • Ellis eviction • Compliance with government order • HUD foreclosure • Permanent relocation in approved Tenant Habitability Plan • Condo Conversions • Demolitions • Mobilehome park closures

12. New Relocation Amounts As of July 1, 2008:

13. Relocation Process • For RSO units, file Landlord Declaration of Intent to Evict • File with LAHD Relocation Contractor Services Application • Pay required LAHD Relocation Contractor fees • Pay required administrative fees to LAHD • Pay relocation to tenants LAMC 151.09.G (RSO) / LAMC 47.06 (Condo-Conversions) / LAMC 47.07 (Demolitions)

14. Relocation Contractor • LAHD refers property to Relocation Contractor (Paragon Partners) • Paragon meets with tenants • Based upon Tenant Assessment Form completed by tenant, Paragon completes Relocation Determination Form. Copy provided to tenant, owner, LAHD. • Paragon provides tenants with counseling, referrals, listings, additional services for disabled and elderly.

15. Payment of Relocation Fee • Payment required within 15 days of serving 120 day notice (RSO) or 60 day notice (non-RSO) on tenants. • Or within 15 days of tenant’s request for relocation after Planning’s approval of tentative tract / parcel map. • May deposit relocation payments in escrow accounts instead (RAC Regulation 960.00) • If tenant claims higher relocation based on low income status, owner may request LAHD hearing if disputes basis.

16. Failure to Pay Relocation • Tenant may file a complaint with LAHD. LAHD will investigate, issue determination, refer non-compliance to City Attorney for prosecution. • Failure to pay correct relocation amount is also a defense to an eviction in Superior Court. • LAHD will not clear demolition permits until owner proves payment of relocation.

17. Ellis Act Restrictions New Construction • After Ellis eviction, if demolished RSO building is replaced w/newly constructed rental units, the new units are subject to the RSO if rented within 5 years of the filing of the Ellis Landlord Declaration with LAHD (LAMC 151.28) • The initial rent = unrestricted.

18. Ellis Act Restrictions - New Construction Exemptions • Exemption for rental units constructed after Ellis eviction (demolition): • Owner does a one for one replacement of each demolished RSO units with an affordable housing unit, capped at 20% of total number of newly constructed rental units. • Building of 4 units or less was owner occupied for 3 years prior to its demolition.

19. Restrictions on Re-Rental of Ellised Units • If unit re-rented unit within 2 years of removal from rental market (tenant’s surrender of premises), owner is liable to tenant for actual and exemplary damages. City may also sue him. • If re-rented within 5 years of filing of Ellis Dec, must be rented at old rent plus allowable RSO increases & tenant has right of 1st refusal if tenant requested.

20. No-fault Owner/manager occupancy* Ellis (demo & withdrawal)* Government order* HUD foreclosure* Permanent Relocation per approved THP Payment within 15 days of notice Direct payment Escrow account 7/1/08 – 6/30/09 $9,300 or $17,600 seniors, disabled, families $7,000 - $9,300 everybody else (per household) $ Relocation Assistance