Recent Housing Policy Developments

Richmond Fair Rent, Just Cause for Eviction, and Homeowner Protection Ordinance
Passed by popular vote, November 2016

What is it? The law establishes “Just Cause for Eviction” requirements for all rental units in the City, and sets a “Maximum Allowable Rent” for multi-family housing built before 1995. Just Cause for Eviction laws make it such that a tenant can only be asked to move out for specific “just causes.” In some instances, such as if the owner wants to move into the property, or needs to complete substantial repairs, the landlord must provide relocation payments to the tenant(s).

The Maximum Allowable Rent is equal to the base rent (the rent on July 21, 2015 (or the first time a tenant paid rent if they moved in after that date) plus the annual change in the consumer price index (historically around a 3 percent increase per year). For example, for tenancies that began before September 1, 2015, the Maximum Allowable Rent is equal to the base rent plus 6.56 percent. This 6.56 percent includes compounded 2016 and 2017 Annual General Adjustments (3.0 percent and 3.4 percent). Any rent increases (for tenants living in rent-controlled units) in excess of 6.56 percent are illegal. Landlords and tenants may submit a petition to the Rent Program to be granted an increase or decrease in the Maximum Allowable Rent, for reasons such as capital improvements or habitability issues.

The Rent Program’s hearing examiner, or “judge,” will make a determination of how much the rent can be increased or decreased due to the unit’s conditions. Tenants and landlords may appeal the hearing examiner’s decision to the city’s five-member rent board. The ordinance also requires landlords file all rent increase and termination of tenancy notices with the city. A landlord’s failure to file these notices with the city may be used by the tenant as a defense in an unlawful detainer (eviction) lawsuit. Finally, the law establishes a five-member rent board, responsible for hearing appeals to petitions and complaints, approving the Annual General Adjustment (AGA) rent increases, and making important policy decisions about additional fees and policy implementation through the adoption of rent board regulations, which seek to further interpret and implement the ordinance. The Rent Program budget is funded through the Rental Housing Fee, which must be paid annually by all landlords.

Effects? The rent control section of the law covers approximately 10,800 units, or about 60 percent of the city’s total occupied rental units. Just Cause for Eviction covers all rental units in Richmond. Rent control appears to slow the loss of units affordable to low-income renters; Berkeley (with rent control) saw a 26 percent decline in units affordable to low-income renters between 1980 and 1990, while the decline was twice that rate in Alameda County and in the nine-county Bay Area region.78 In addition, evidence shows that rent control does not slow the production of new housing.

Limitations? A California state law known as the Costa-Hawkins Rental Act prohibits rent control on any housing built after 1995 and single-family homes and condominiums built in any year. In Richmond, Costa-Hawkins covers approximately 7,188 existing units,79 and would apply to any new construction. As of November 15, 2016, 1,415 market rate units are in the pipeline.80

Implementation priorities. Raise awareness and inform tenants of their rights. A stronger public campaign can help tenants to challenge illegal rent increases and evictions, and win rent rollbacks on rents raised more than 6.56 percent between July 21, 2015 and 2017.

Expand access to legal representation for unjust evictions. The rent board adopted a budget that includes $150,000 for legal services contracts for housing issues, with services expected to begin in early 2018. This will fill some of the gap between tenant legal needs and available services. The gap mainly affects those who cannot afford private representation but do not qualify for free legal representation. Even for those who qualify for free legal aid, capacity is highly limited. For example, Bay Area Legal Aid which has a location in Richmond had only one housing attorney for all of Contra Costa County until late 2017.

Establish Fair Return regulations and all regulations necessary to administer petition process. The petition process continues to have a number of details that need to be clarified in order to regulate the process. For example, if a tenant hasn’t had heat for two months, what type of rent reduction is warranted? If a landlord makes major upgrades like a new foundation or roof, how much of a rent increase is justified?

Public participation at rent board meetings to ensure the most equitable implementation of the law. The rent board meets on the third Wednesday of every month at 4 p.m. in the City Council Chambers (440 Civic Center Plaza. Minutes and agenda packets can be accessed via http://www.ci.richmond.ca.us/3375/Rent-Board

Support statewide organizing efforts to repeal Costa-Hawkins.

More information

  • City of Richmond Rent Program, 510-620-6576 or rent@ci.richmond.ca.us, located at 440 Civic Center Plaza, 2nd Floor. To learn more about the rent program, rent board, and access recently adopted regulations and resources, visit www.richmondrent.org. 

  • Tenants Together, 415-495-8100. Tenants Together and Alliance of Californians for Community Empowerment host a monthly clinic in Richmond, CA on the 2nd Wednesday of each month at 6 p.m. - ACCE Contra Costa Office: 322 Harbour Way, #25 Richmond, CA 94801

  • The ordinance: http://www.ci.richmond.ca.us/DocumentCenter/View/41144

Relocation Requirements for Tenants of Residential Rental Units Ordinance
Passed by City Council, November 2016

What is it? The ordinance, which was required by the Fair Rent ordinance, outlines the requirement of temporary and permanent relocation payments by landlords to tenants. Temporary payments are required when a landlord needs to make substantial repairs to bring a unit into compliance with codes and laws regarding health and safety. Permanent payments are required in the case of owner move-in (OMI) or the withdrawal of the unit from the rental market. Tenants have a right to return if the unit later returns to the market.

Effects? The ordinance covers all rental units in the city. It creates financial support for tenants who must move for the above reasons. These practices are commonly employed by landlords in other local cities with rent control and just cause for eviction ordinances. The amount of payment is determined periodically by a resolution of the city council.

Limitations? The Ellis Act is a state law that permits landlords to unconditionally evict tenants if they are “going out of business.” Evictions under this law are frequently used to convert rental units into condominiums or tenancy-in-common (TICs), or to demolish and rebuild a property. OMI evictions are also a common practice. In San Francisco OMI evictions became such a common practice that San Francisco supervisors, with the support of housing rights organizations, voted in June 2017 to require owners to sign a declaration of their intent to move in, and created a method for non-profits to sue owners who violate that promise.81 Finally, tenants in units exempted from rent control (due to Costa-Hawkins, see “Limitations” in Fair Rent section above) can face rental hikes that do not require relocation payments or an eviction process.

Implementation priorities. Monitor Ellis Act and OMI evictions in rent controlled units. For over a decade after it was passed, Ellis Act evictions were relatively rare. When housing costs spiked in San Francisco, the number of Ellis Act evictions also spiked.82 It is unclear how Ellis Act and OMI evictions will be used in Richmond, but monitoring them can clarify if further action is needed.

Engage in the City Council process to set the relocation payment amounts. The ordinance is strongest when the payment supports tenants in finding new, comparable housing and/or deincentivizes landlords from Ellis or OMI evictions. This amount is set by the City Council and subject to a public process at council meetings.

More information

Fair Chance Access to Affordable Housing 
Passed by City Council December, 2016

What is it? The law prevents affordable housing providers from asking about prior conviction status of housing applicants and of individuals being added to the lease of current tenants. Landlords must also keep records of applicants and participants to their programs for three years in order to track implementation and effect of the law. The law also outlines the processes by which an applicant may appeal denials on the basis of prior conviction.

Effects? According to research conducted by Safe Return Project (which was also central to the passage of the law), one of the most important needs for formerly incarcerated people for successful reentry is secure and stable housing. As of November 15, 2016, the law covers 3,476 units in Richmond.83

Limitations? The law does not cover private housing, excluding a large portion of the housing market. The law allows landlords to ask about convictions that occurred within the previous two years (from the date of sentencing).

Implementation priorities. Raising awareness of the passage of the new law among the formerly incarcerated and the family members of the currently incarcerated so that they can exercise their rights. The law requires that housing providers post information (publicly and online) in multiple languages that clarifies that they cannot ask about prior conviction status of housing applicants. The law also includes the requirement of public workshops to inform residents of their rights.

Establishing and creating the infrastructure at the city level for the appeal process. The law calls for the appointment of an appeals hearing officer to manage appeals. The city is exploring how to leverage the establishment of the rent program to further the implementation of the Fair Chance ordinance (e.g. data sharing, coordinated outreach, sharing of hearing examiners).

City enforcement of the “ban-the-box” element on rental applications of affordable housing developers. A review of existing online housing applications reveals that all providers are not in accordance with the law. The law requires the city to coordinate enforcement of the law and for the city manager to produce quarterly reports on the law’s implementation.

More information

Social Impact Bond for Housing Renovation Program 
Approved by City Council, June 2, 2015

What is it? The program uses the sale of a new category of bonds (“social impact bonds”) to fund the renovation and sale of abandoned properties in Richmond to low-income residents. The city council approved the issue of up to $3 million in bonds for the purpose of funding this program (the city acts only as a conduit for the bonds), all of which were purchased by Mechanics Bank, which also holds all of the risk for repayment. With these funds, the Richmond Community Foundation (RCF) is facilitating the program, from acquisition of currently abandoned properties to the final sale. RCF typically looks to purchase homes that are unappealing to private investors because they require probate fees (see limitations section below) or because the taxes, penalties, interest and liens on the properties exceed the value of the home. In the latter case, the City of Richmond will reimburse the city liens paid by RCF once the property has been renovated and sold. Low-income families which have participated in the SparkPoint financial literacy programs have the first option to buy the properties without competition from other buyers. Prices are set based on estimates from multiple brokers.

Effects? The city currently manages over 250 abandoned properties, which could be available for this program.84 According to RCF as of October 2017, four properties had been completely renovated and occupied, and 17 were in the process of renovation. While the homes do not have a deed restriction regarding affordability in the case of resell, in all cases so far, lenders have added restrictions to the resell of the homes to account for subsidy programs used by the homebuyers. The city is at no financial risk and all of the bonds issued were purchased.

Limitations? The primary challenge is that abandoned properties are slow to purchase, thereby limiting the scale of the program. One state law requires properties to be tax delinquent for five years before a tax sale, while nuisance or blighted properties must wait three years. Another challenge relates to vacant properties where the owner is deceased. The county tax collector cannot sell the homes until probate fees have been paid (around $7,000 per home), but the entity that pays those fees has no priority in then purchasing that home before it goes to public sale.

Implementation priorities. Seek an extension of the bond term or the issuance of a second bond. Due to the slow nature of purchasing the properties, the program will need to demonstrate current impact in order to make the case to the city and private investors that long-term support will continue to be beneficial for residents and investors.

Share the model in the region. Having proven small scale success, sharing the model in the region can help build pressure for an expedited transfer process and address the housing need across the region.

Address regulations around fees in order to prioritize the program in home purchases. The policies that most hinder this program are not set at the local level. Adjusting regulations around probate fees and the payment of taxes and other fees could speed up the process of this and additional housing renovation programs. Such policies would need to be clear to articulate the priority of programs serving low-income residents, as easing these regulations without a targeted practice would make the properties more attractive to private investors and increase competition.

More information

  • Richmond Community Foundation, 510-234-1200

Section 8 Voucher to Homeownership Program
Federal HUD program, administered by the Richmond Housing Authority

What is it? Administered by the Richmond Housing Authority, the little-used program helps move low-income renters into homeownership by applying rental voucher assistance to homeownership costs instead. Participants are still required to pay 30 percent of their total housing cost but can apply their voucher to homeownership costs, including mortgage payments, utilities, taxes, insurance, and major repairs. One individual of the family must be working full-time.

Effects? Homeownership remains one of the single greatest factors driving the racial wealth gap, a fact that was exacerbated by the impact of the foreclosure crisis in Richmond. Through moving to homeownership, Section 8 holders can begin to build wealth and stability, strengthening Richmond overall. Richmond is well-suited for this program, where homeownership costs can be lower than rental costs. For example, while a Section 8 voucher for a three-bedroom home can cover a rental up to $3,167, the monthly payments (principal, interest, tax and insurance) on a three-bedroom, $300,000 home with a $10,000 down payment (15-year FHA loan) would be around $2,500.

Limitations? Though the program exists, it is unclear if any Richmond resident has successfully been approved by the Richmond Housing Authority to use their voucher for home payments. If the RHA is dissolved the future of the program will be uncertain because not all public housing authorities have the program. Finally, the program has a 10- or 15-year limit depending on the type of loan taken by the homeowner.

Implementation priorities. Raise awareness. This is not a widely advertised program. There is only one line on the RHA website about the program. Recognizing the potential of the program for building wealth, Richmond Neighborhood Housing Services has been hosting workshops to inform residents of the program and support them in preparing for the process.

Ensure that the program continues regardless of which public housing authority is administering Section 8. If the RHA is dissolved advocates will need to speak to the potential of this program and the need for the new public housing authority that serves Richmond to continue the program.

More information

  • Nikki Beasley, Richmond Neighborhood Housing Services

Tiny Homes and Accessory Dwelling Units

What are they? Two separate ordinances that focus on the development of small units to increase housing supply. 

Tiny homes: Tiny homes are small units on wheels built by organizations and residents that will be available for homeless residents. The council voted unanimously (July 25, 2017) to direct staff to develop a pilot plan for the tiny homes, so the policy is only in a research stage. 

Accessory Dwelling Units: ADUs allow property owners to convert an existing structure on a property into a living unit and/or build a new unit on their property (max. 1,200 sq. ft., one ADU per lot). Junior Accessory Dwelling Units refers to one additional unit constructed within the walls of the existing property. The City of Richmond’s Zoning Ordinance update (passed by council November 15, 2016) outlines the regulations for ADUs in Richmond (section 15.04.610.020 of zoning ordinance).85 A state law (SB 1069, passed September 27, 2017) further facilitates the development of ADUs by changing the review process to an administrative review instead of a city design review process, thereby saving residents time and fees.86 ADUs may also be subject to rent control laws.

Effects? Tiny homes: The ordinance allows for the construction and placement of tiny homes, opening the door for other groups to build and pilot the homes. The pilot program is for six homes, and does not direct city resources towards the creation of the homes. The Contra Costa Council on Homelessness counted 109 people sleeping outside in one night in 2017 and another 198 throughout the county who had lost their permanent shelter in Richmond.87

ADUs: While it is unclear how many ADUs already exist in Richmond, a 2012 study found that 16 percent of single-family residential homes in the East Bay had an (unpermitted) secondary unit.88 ADUs increase the housing supply in Richmond, generate income for the city through regulating unpermitted units, and provide a wider range of prices in the market. The same 2012 study also found that ADU rents in the East Bay were 19 percent less than non-ADU alternatives.

Limitations? Tiny homes: Primarily a program designed to address homelessness, it is unclear how the homes will be funded, both for the creation of the homes and for their maintenance and upkeep. Tiny homes will also need access to infrastructure (waste, electricity, water) and land. The pilot program should provide evidence on the applicability of tiny homes to the 32 percent of homeless people in families.89

ADUs: Previously, the parking requirement on Richmond ADUs was a major barrier to their development. Although still requiring one parking spot, the zoning ordinance update created important adjustments that allow for tandem parking in an existing driveway and require no additional parking if the accessory unit is located: (1) within a half mile of public transit; (2) in an historic district; (3) in part of an existing primary residence or an existing accessory structure; (4) in an area requiring on-street parking permits that are not offered to the occupant of the second unit; or (5) within one block of a car-share pick up/drop-off location.

Implementation priorities. Implement the tiny homes pilot program study and develop first tiny homes. The development of the first tiny homes will help the city and organizational partners understand the feasibility of the program at scale, what infrastructure will be required, and if the homes will function as transitional or long-term residences.

Education and outreach around ADUs as an affordable housing option. ADU demonstration projects are one way to educate homeowners around the feasibility of ADUs.90 In addition, workshops for owners of unregulated ADUs as well as those looking to build new units can speed up their creation and increase the number of ADUs.

Update Richmond ADU ordinance to reflect new state law. The new state law SB 1069 preempts local ordinances and makes permitting an ADU easier and more accessible. The Richmond ADU ordinance has not been updated to reflect the requirements of SB 1069.