October 10, 2017--Oakland, CA-- For at least the past year, the San Leandro City Council has been weighing whether or not landlords should be required to pay tenant relocation costs. When presented with a draft ordinance in July, the City Council backed off, sending the proposal back to the drawing board for further revision.
“I have really not heard anybody say, ‘I like this,’ not from the renters and not from the landlords, and that should say something,” Councilwoman Corina Lopez said at the time. The City Council’s apprehension led some to believe that relocation assistance would be put on the backburner for the foreseeable future.
But that wasn’t the case.
Earlier this month, the City Council heard a revised proposal concerning tenant relocation costs. Under the terms of the proposal, the “Tenant Relocation Assistance Program” would require landlords to pay tenants up to $7,000 in relocation costs. The City Council voted in favor of the ordinance by a 4 to 2 margin.
“I realize that one size doesn’t fit all, but what we’re trying to do is give our renters some assurance here,” explains San Leandro Mayor Pauline Cutter.
The new program stipulates that landlords must pay relocation assistance when a tenant decides to move as a result of “landlord-caused” actions. Examples include capital improvements, demolition, owner move-in and rent increases of greater than 12 percent.
Exemptions to landlord-caused actions include:
- Tenant breach of rental contract or engaging in illegal activity on site;
- When the property becomes uninhabitable through no fault of the landlord (e.g., tenant negligence, natural disasters, fire or flood);
- Tenant’s lawful termination of employment, if that was a stipulation of the lease;
- When temporary repairs are being made to the property and landlord is willing to provide suitable short-term housing as an alternative; or
- When the landlord had given tenants notice of renovations prior to the tenants signing leases (in this case, landlords must renovate the property within one year and submit plans to the City at the time of tenancy termination).
San Leandro’s new tenant relocation assistance ordinance applies to all rental properties with two or more tenant-occupied housing units. Rental houses with recorded affordability restrictions are exempt, as are single family homes or individual condos offered for rent.
Calculating Relocation Payments
San Leandro landlords will be obligated to pay relocation assistance equal to three times the tenants’ current monthly rent, OR three times the current federal Fair Market Rent for the region – whichever is higher. Households with children under the age of 18, residents over 65 years old, or residents with disabilities may qualify for an additional $1,000 per rental unit.
However, as mentioned above, tenant relocation assistance may not exceed $7,000.
For example, if a unit is rented for $3,000 per month, the formula would indicate the landlord is obligated to pay $9,000 ($3,000 x 3 months’ rent). Because of the cap, the landlord will only have to pay the $7,000 maximum. This provision is somewhat unique among tenant relocation programs within the Bay Area, which often stipulate the landlord pay the equivalent of three months’ rent, regardless of what that total amount may be.
Landlords will be expected to pay relocation assistance in two payments: 50% within five days of serving tenants with notice to vacate; and the remaining 50% within five days of the last day of tenancy.
A few additional provisions have been added to protect San Leandro landlords. For instance, if there are damages to the rental unit that exceed the amount of the security deposit being held, the landlord may withhold that amount from the final relocation payment. And if the tenant decides to return to the unit after renovations or capital improvements are complete, the tenant will be required to reimburse the landlord for any tenant relocation payment received.
Finally, the ordinance allows landlords and tenants to reach a mutually agreeable solution in lieu of tenant relocation payments as long as both parties are acting in good faith.
Under the new program, San Leandro landlords will be expected to give tenants notice of their relocation benefits. There are two types of notice landlords should be aware of:
- For landlord-caused terminations, the landlord will be required to attached a relocation notice to the tenants’ termination notice at least 90 days prior to termination of tenancy; and
- For landlord-caused terminations resulting from rent increases in excess of 12 percent, the landlord must attached relocation notice to the rent increase notice at least 60 days prior to the date the rent increase will become effective, in accordance with State law.
The ordinance requires notices to be delivered in English, Spanish and Mandarin.
Next Steps Toward Implementation
With the 4-2 vote, the San Leandro City Council authorized the City to go back and formalize the language in the ordinance. It remains to be seen when the ordinance will be formally adopted and submitted to the Municipal Code, but the final language is unlikely to differ much from what has been approved to date. San Leandro landlords should brace themselves for these impending changes and plan accordingly.
As always, we’ll update our audience when the ordinance takes effect. Subscribe to our Landlord Journal to have updates delivered right to your inbox!