On February 13, 2018, the Santa Cruz City Council passed two emergency ordinances that took effect immediately. 

 The first is a rent control ordinance that limits rent increases on specified properties to 2% annually.  The second is a just cause eviction ordinance that specifies the circumstances under which landlords may evict tenants.

These new laws may apply to your property.  

Purpose

  1. Prevent landlords from imposing unreasonable rent increases prior to a rent control initiative being placed on the November 2018 General Election Ballot
  2. Prevent landlords from terminating tenancies without cause, thereby possibly displacing many tenants at a time of critically low vacancy rate and requiring tenants to pay higher rents.

 

Timeline

  1. If the rent control initiative fails to obtain the 8,000 city of Santa Cruz registered voter signatures for the ballot, the ordinance will sunset in September 2018.
  2. If the rent control initiative qualifies to be placed on the ballot but fails to pass, the ordinance will sunset in November 2018.
  3. If the rent control initiative is passed by the voters, the ordinance stays in place until the effective date of the new measure.

 

Rent Increase Ordinance: 2% per year cap on Rent Increases

Calculated based on 65% of the (SF Bay Area) CPI rate (represents maintenance costs vs speculation costs). 

  1. Rent increases in the City of Santa Cruz
  2. Applies to an estimated 5,100 - 5,800 units or less than 24% of the city’s housing stock
  3. Includes all multi-residential built prior to February 1, 1995.
  4. Excludes vacation rentals, section 8 housing, single family homes, condos, townhomes, and multi-residential built on or after February 1, 1995 (Costa-Hawkins)
  5. Does not apply to rent increases in effect prior to the date of the ordinance.
  6. Appeal process - Landlord may petition to the Santa Cruz City Manager for a “reasonable rate of return on investment”.
  7. Fines for violations will be up to $4,000.00 Tenant may sue for cost plus attorney fees. Awarded treble damages.

 

Just Cause Eviction Ordinance

  1. Applies to all housing, including single family.
  2. Excludes housing (that is the Landlords sole rental property) and whereby landlord lives onsite: (in the same residence, a duplex or a single family with an ADU).
  3. Landlords must have just cause for terminating tenancy. (see comments below)
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Are You A Landlord?

LEARN WHAT THIS MAY MEAN FOR YOU

 

Just Cause Conditions to include any of the following:

  1. Failure of Tenant to pay rent.
  2. Material breach of a lease condition - an addition of a family member (such as a child, grandparent) is not considered a material breach as long as the additional member has not caused a violation of HUD occupancy standards.
  3. Nuisance or caused damage to the unit.
  4. Illegal activity/use.
  5. Tenant has failed to give Landlord reasonable access to the property after being served proper notice.
  6. Necessary and substantial repairs requiring temporary vacancy for 30 days or greater and the Tenant must vacate the unit. The Landlord must provide the Tenant the right to reoccupy the unit at the same rent rate or a comparable unit.
  7. Landlord wants to recover possession and to move-in as a primary residence. Must meet conditions:
    1. Landlord has at least 50% recorded interest
    2. No eviction if the Landlord already occupies a unit on the property or a vacancy already exists.
    3. The Landlord must move into the property within 60 days of the Tenant vacating.
    4. The Landlord must occupy the unit as a primary residence for at least 36 consecutive months.
    5. If the Landlord does not move into the property within 60 days, the Landlord must offer the unit to the Tenant that vacated at the original rent rate.
    6. If the Tenant has resided in the rental unit for 5 years or 62 years or disabled - the Landlord may not evict a Tenant unless the Landlord is also 62 years or disabled and there are no other available units.
  8. Permanent withdrawal from the rental market (sale) - provide Tenant with a 120-day written notice. Provide one-year notice to Tenants 62 or disabled.

 

Questions concerning the implementation of rent control

  • What is the effect of rental control on our community?
  • What is the effect on the local economy?
  • What is the impact on property owner rights?
  • How will the rent board policy impact future housing?
  • Will rent control cause landlords to neglect units?
  • Will rent control shrink the supply of housing?
  • Will rent control reduce housing investment in Santa Cruz?
  • How will this impact section 8 and subsidized housing units?

 

Santa Cruz County Association of Realtors Position on Rent Control

  • Discourages new development
  • Existing housing deteriorates
  • Property owners take rental property of the market
  • Reduces property tax revenues - rent control reduces the value of the property
  • A rent control board creates substantial administrative costs
  • Creates housing discrimination
  • Infringes on property rights
  • Reduces the housing stock
  • Takes away choice from the landlords to choose tenants

 

Resources

Originally Published by Linda Chatten, Principal & Property Manager at CIF Property Management

City of Santa Cruz Ordinances: http://www.cityofsantacruz.com/government/city-council/publication-of-ordinances

Rent Control Ballot **Initiative: https://movementforhousingjustice.org/rent-control-act/#text

** this initiative must be placed on the 11/18 ballot and be voted to pass

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Maybe Now Is A Good Time To Sell.

Its A sellers Market. inventory is low & demand is high.