DATE: March 2, 2023
TO: Homelessness-Housing Task Force
FROM: Assistant City Manager
SUBJECT
Title
Informational Report on Rent Stabilization Administration Fee Increase
End
RECOMMENDATION
Recommendation
That the Homelessness-Housing Task Force (HHTF) receives and reviews this staff report proposing an increase to the annual rent stabilization administration fee, which is necessary to meet the Rent Stabilization and Tenant Protection Ordinance (RRSO) requirement that the costs of administering the RRSO be reimbursed in full through the imposition of the annual fee.
End
SUMMARY
Hayward City Council adopted the Residential Rent Stabilization and Tenant Protection Ordinance (RRSO) in July 2019. The RRSO includes Section 12-1.17, which establishes that the costs of administering the RRSO shall be reimbursed in full through the imposition of a rent stabilization fee, paid annually with an amount recommended to Council by the City Manager and Housing Division. When the RRSO was adopted, Council authorized fees of $40 per Covered Rental Unit and $19 per Rental Unit. Covered Rental Units have a higher per unit fee because they are covered under the rent increase threshold and rent dispute resolution provisions of the RRSO, which requires additional staff and consultant work to administer. Owners of Covered Rental Units may pass through half the cost of the fee to the tenants. Owners of Rental Units are not restricted by the City’s RRSO on increases that may cover the cost of the fee, though they may be subject to a State rent increase threshold.
The annual fee has not been increased since it was established in July 2019. The fee was developed based on best estimates for the number of Covered Rental Units and Rental Units in the City and the anticipated costs of implementing the RRSO. Since then, City Council adopted the Tenant Relocation Assistance Ordinance (TRAO) without an increase in fees to cover administrative costs. In recent years, administrative expenses have exceeded collected revenues. Staff has not recommended fee increases since FY 2020 due to increased economic constraints experienced by tenants and property owners during the peak of the COVID-19 pandemic. Other non-restricted housing funds were used to offset the RRSO and TRAO administration costs; however, it is no longer feasible to use other revenue funds to offset expenses.
Staff proposes increases to both the Covered Rental Unit and Rental Unit fees to account for the following administration expenses, which have substantially increased since the RRSO was adopted:
• Increase staffing capacity: City staff are currently allocating hours to the Rent Stabilization Fund that significantly exceed the planned allocation due to the substantial demand on staff time for implementing the RRSO and TRAO. By increasing staffing from 2.75 FTE to 4.0 FTE, the City will be able to meet the full administrative obligation of the RRSO and TRAO.
• Increase consultant capacity: The City contracts with the non-profit Project Sentinel to manage the rent dispute resolution process, develop implementation resources and tools, and provide outreach and education support to Hayward community members. They have not increased their rates in several years and the City has seen an increase in petitions of nearly 50% from the first year of implementation to the most recent fiscal year. Increasing the contract with Project Sentinel will account for inflation and increased petition volume.
• Increase marketing efforts: Through participation in the national 18-month Eviction Prevention Learning Lab, staff identified several opportunities for improving information accessibility, particularly for Hayward community members who are most challenging to reach by traditional means. By increasing the budget for marketing efforts, the City will better meet the obligation to advise tenants and landlords of their rights and responsibilities under the RRSO and TRAO.
Staff is not requesting an increase to the Mobile Home Space Rent Ordinance fee because the level of services is relatively unchanged. Based on analysis of the above expenses and current budget projections, staff recommends the following increases:
|
|
Proposed Fee Increase |
|
|
MH |
RU |
CRU |
|
FEE PER UNIT |
$5 |
$32 |
$66 |
|
INCREASE FROM FY 19 FEE |
$0 |
$13 |
$26 |
|
PERCENT TOTAL INCREASE |
0% |
68% |
65% |
|
TOTAL PROJECTED REVENUE |
$1,034,823 |
|
Legend: MH = Mobile Home Unit; RU = Rental Unit; CRU = Covered Rental Unit |
ATTACHMENTS
Attachment I Staff Report
Attachment II Benchmarking Research