Honorable Mayor and Members of the Hermosa Beach City Council Regular Meeting of January 26, 2021
Title
ADOPTION OF AN URGENCY ORDINANCE OF THE CITY OF HERMOSA BEACH, CALIFORNIA, CLARIFYING AND EXTENDING THE TEMPORARY COMMERCIAL AND RESIDENTIAL MORATORIUM ON EVICTIONS DURING THE COVID-19 PANDEMIC AND SETTING FORTH THE FACTS CONSTITUTING SUCH URGENCY
(City Attorney Michael Jenkins)
(Assistant City Attorney Lauren Langer)
Recommended Action:
Recommendation
Staff recommends that City Council:
1. adopt an Urgency Ordinance No 21-XXXXU of the City of Hermosa Beach to clarify and extend the commercial and portions of the residential eviction moratorium through March 31, 2021, setting forth the facts constituting such urgency (Attachment 1); and
2. direct staff to bring back additional revisions to the residential eviction moratorium on February 9th to conform to any action by the State Legislature to extend statewide eviction protection for evictions related to non-payment of rent due to COVID-19, if necessary. If statewide protections are not extended by January 31st, provide direction on whether to reinstate a local residential eviction moratorium for non-payment of rent due to COVID-19, or defer to Los Angeles County’s countywide eviction protections.
The urgency ordinance requires four-fifths vote of the city council and if approved, will take effect immediately.
Body
Executive Summary
The City of Hermosa Beach (“City”) has an eviction moratorium in place protecting current commercial and residential tenants from eviction for failure to pay rent due to financial impacts related to COVID-19, effectively deferring payment of rent during the during the eviction moratorium period. The moratorium period is set to expire on January 31, 2021. The proposed ordinance would: (1)extend the moratorium period for commercial tenants through March 31, 2021, which is in line with Governor Newsom’s current Executive Order 80-20, authorizing commercial eviction moratorium ordinances at the local level and (2) eviction protections for residential tenants unrelated to the non-payment of rent due to COVID-19 through March 31, 2021. Additional action may be required in February, once the state legislature determines whether to extend additional statewide eviction protections.
Background:
On March 4, 2020, California Governor Gavin Newsom declared a State of Emergency to address the global pandemic caused by a respiratory disease which has been named “COVID-19”. On March 15, 2020, the Mayor of City, declared a state of local emergency. At a special meeting on March 16, 2020, the City Council approved and ratified the declaration of local emergency.
On March 24, 2020, the City passed an Urgency Ordinance, which instituted an eviction moratorium covering nonpayment of rent due to COVID-19 retroactive to March 16, 2020 for commercial and residential tenants. Due to some changes in the state law, the commercial and residential eviction moratoriums are separates for purposes of discussion.
Commercial Eviction Moratorium
The current eviction moratorium allows commercial tenants to avoid eviction for non-payment of rent due to financial impacts related to COVID-19 and ultimately, to defer paying that rent during the moratorium period. The moratorium is set to expire on January 31, 2021, at which time tenants would be required to begin paying back deferred rent (“repayment period”).
The proposed ordinance would extend the moratorium period for commercial tenants through March 31, 2021, which is in line with Governor Newsom’s current Executive Order 80-20, authorizing commercial eviction moratorium ordinances at the local level. Commercial tenants must continue to provide documentation of COVID-related financial hardship to receive protection under the City’s moratorium, and pay a pro-rated share of their rent if they suffered only a partial loss of net income. The amount of time to repay rent in arears would continue to be six months after the end of the moratorium period, and landlords would not be allowed to evict a tenant during that six-month period if the tenant is paying rent that is due in a timely manner and repaying past due rent.
The proposed ordinance makes the following changes to the commercial eviction moratorium:
1. Extends the moratorium through March 31, 2021;
2. Clarifies that in order to receive the protection of the ordinance the tenant must demonstrate that the tenant’s business is closed or limited to prevent the spread of the virus and the tenant demonstrates lost income and inability to pay rent; and
3. Clarifies that notice to the landlord of inability to pay and documentation must be provided for each month that the tenant is unable to pay full rent (not one time for the moratorium period).
This is to ensure that tenants utilizing the protections in the ordinance are in regular contact with their landlords about their ability to pay each month.
Currently, the ordinance requires that if a tenant suffers only a partial loss of net income, the tenant shall pay the pro-rated share of their rent that corresponds to the net income they generated during the period of loss. There are not specific parameters for how to calculate this, as it may be different for different tenants and under different leases. Accordingly, and given that the ordinance has already been implemented for so many months with its current terms, staff does not propose any other substantive changes to the ordinance at this time.
However, the Council may want to consider requiring businesses that are open and operating under the Health Orders without specific limitations from the County Health Order to pay a certain percentage of rent, for example 25% of rent. This requirement mirrors the statewide residential eviction protections and some cities’ commercial eviction protections. As the pandemic goes on, some businesses that are not limited in operation by the Health Orders have effectively evolved to a new normal and are able to operate and pay a portion of their rent. If the Council wants to require these businesses (office uses for example) that are not limited in capacity to pay a minimum 25% of rent, the following underlined language could be added to the ordinance:
If a tenant suffers only a partial loss of net income, the tenant shall pay the pro-rated share of their rent that corresponds to the net income they generated during the period of loss. Notwithstanding and beginning on February 1, 2021, a commercial tenant that does not have capacity or other mandatory operating limitations from the state or county Health Officer to prevent or reduce the spread of COVID-19 shall pay a minimum 25% of the monthly rent due, or the pro-rated share of their rent that corresponds to the net income generated during the period of loss, whichever is more.
Residential and Commercial Eviction Protections Unrelated to Non-Payment of Rent due to COVID-19.
On November 24, 2020, the City adopted Urgency Ordinance No. 20-1420U, that amended the City’s commercial eviction moratorium ordinance to:
• Prohibit a landlord, during the moratorium period, from evicting a commercial tenant in order to demolish or “substantially remodel” the commercial real property unless and until the landlord secures all permits necessary to perform the work.
Similar eviction protections were adopted by the City for residential tenants on
December 8, 2020 through Urgency Ordinance No. 20-1422U to:
• Prohibit a landlord, during the period of: December 8, 2020-January 31, 2021 from evicting a residential tenant in order to demolish or “substantially remodel” the residential real property unless and until the landlord secures all permits necessary to perform the work; and
• To the extent applicable, require landlords to provide relocation assistance and satisfy other requirements in accordance with the Tenant Protection Act of 2019 (Cal. Civil Code § 1496.2) for a no-fault just cause eviction.
The proposed ordinance extends the above residential and commercial eviction protections unrelated to the non-payment of rent due to COVID-19 through March 31, 2021.
Residential Eviction Protections for Non-Payment of Rent due to COVID-19.
For residential evictions for non-payment of rent related to COVID-19, the following rules have applied. From March 16- September 30, 2020, the City’s local eviction protections applied. The proposed ordinance clarifies that this time period is called the local moratorium period (to distinguish it from the period of time covered by state law). To prevent a wave of evictions and piecemeal regulations throughout the state, Governor Newsom signed Assembly Bill 3088 (“AB 3088”) on August 31, 2020. The bill, which took immediate effect, enacted the COVID-19 Tenant Relief Act of 2020 (“Act”) to provide statewide eviction protections for residential tenants experiencing a financial hardship relating to COVID-19. Thus beginning October 1, the state eviction protection rules took over in Hermosa Beach. For the period of time of October 1, 2020 through January 31, 2021, tenants have been required to follow the preconditions for eviction protection under the Act to receive eviction protection, which include providing a declaration of hardship to their landlord within 15 days of receipt and payment of partial rent. The state protections are scheduled to sunset on January 31, 2021. AB 15 is pending, which proposes to extend the statewide protections through the end of 2021.
As of the date of writing this report, the bill has not been approved; but, Governor Newsom reports being committed to getting the extension adopted. Accordingly and because the state law has preempted local regulations, more specific changes to the ordinance are not proposed at this time. If the bill is adopted after this report is published but before the City Council meeting, the report and ordinance will be updated accordingly. If the bill is adopted after the City Council meeting on the 26th, the City can adopt any necessary ordinance amendments at its first meeting in February to conform the ordinance to the expanded state law. In the event that the state protections are not re-adopted, the City can adopt another local eviction moratorium as an urgency order for ratification by the City Council on February 9th, or can defer to Los Angeles County’s residential eviction moratorium which applies in all incorporated cities that have not adopted local ordinances. The County’s protections are currently in place through February 28, 2021 and will likely be extended if the state does not extend statewide protections. Either way, Hermosa Beach residents will be protected from eviction.
Summary of the Residential Eviction Protection in Hermosa Beach for Non-Payment of Rent Due to COVID by date range:
• From March 16- September 30, 2020 (“local moratorium period”): Repayment period for deferred rent is October 1, 2020 through March 31, 2021
• October 1, 2020- January 31, 2021: State law controls. Tenants must provide a declaration of hardship to their landlord within 15 days upon request from landlord and payment of 25% of the rent for those months by January 31, 2021. Additional documentation may be required for high-income tenants.
• January 31, 2021 and December 31, 2021: Waiting for state legislature to extend the statewide protections through the end of the year. If the state does not extend, the City can adopt another local moratorium or defer to Los Angeles County countywide protections (which are currently in place through February 28, 2021).
Eviction protections are still very much warranted and an important part of slowing the spread of COVID-19, and recovery from this global health pandemic. News reports have cited a UCLA study last year, which determined that as many as 449,000 people in L.A. County could face eviction due to the economic slump caused by the COVID-19 pandemic and tenants' inability to pay rent. The degree of the health and economic impact of the pandemic is unprecedented and unknown. Federal and state relief efforts are unknown at this time. Millions of people have filed for unemployment, further fueling a decline in business revenues. Local hospitals are reporting zero percent capacity in the ICUs and as of the date of writing this report, over 1000 COVID deaths were reported in LA County in a four day period. The unprecedented surge is expected to remain high after the winter holidays.
Proposed Urgency Ordinance
The proposed ordinance would prohibit commercial landlords from terminating a commercial tenancy in order to demolish or substantially remodel the property unless and until they obtain all permits necessary to commence the work. The ordinance does not prevent commercial landlords from evicting tenants from property they want to demolish or substantially remodel; it merely changes the sequence of steps needed before they may do so. “Substantially remodel” means to make a modification of the property that requires a permit from the City. This proposed ordinance applies to tenancy termination notices, and eviction notices, and unlawful detainer actions based on such notices, served or filed on or before the effective date of this ordinance; but, where the time to vacate the property has not passed. These tenant protections would expire on January 31, 2021, the end date of the City’s existing moratorium period.
The degree of the health and economic impact of the pandemic is unprecedented and unknown. Millions of people have filed for unemployment, further fueling a decline in business revenues. The City has been hit hard economically. By preventing premature evictions, the proposed ordinance ensures that employees remain employed for as long as possible and vacated commercial spaces do not stay empty for long periods, potentially resulting in blight, vandalism, and trespassing.
In light of the foregoing, the proposed ordinance should be adopted on an urgency basis, taking effect immediately pursuant to Government Code section 36937, for the preservation of the public peace, health, and safety of residents living within the City, based on the facts described herein and set forth in the Urgency Ordinance.
Fiscal Impact:
There is no anticipated direct fiscal impact from this ordinance. The City of Hermosa Beach initially incurs all costs related to the City’s response to the COVID-19 Pandemic, but will submit requests for cost recovery to the California Office of Emergency Services (CalOES) for Federal Emergency Management Agency (FEMA) reimbursement.
Attachments:
1. Urgency Ordinance No. 21-XXXXU to clarify and extent the temporary commercial moratorium on evictions during the COVID-19 pandemic and setting forth the facts constituting such urgency
Respectfully Submitted by: Michael Jenkins, City Attorney
Concur:
Noted for Fiscal Impact: Viki Copeland, Finance Director
Legal Review: Lauren Langer, Assistant City Attorney
Approved: Suja Lowenthal, City Manager