AgdaPkt 2025.10.13 Joint SA PFA - Laserfiche WebLink

Browse Search

ATTACHMENT F – Right to Return Policy Considerations Policy Consideration Legal Feasibility and City’s Capacity to Enforce Right to Return Policy As part of the research and development process of forming the right to return recommendations, several options were explored for setting the rental rate when the unit is offered back to the tenant. Each option came with different legal considerations and challenges related to the City’s ability to enforce them. One option was to base the rent increase on the Construction Cost Index (CCI), which reflects changes in construction costs. However, this index was found to be too unstable for reliable use. Another option was a flat rate increase, where landlords could raise the rent by a fixed amount. This approach raises concerns and practical challenges. Other options included allowing landlords to petition for a rent increase based on either a fair rate of return or the actual cost of the remodel. While possible, these options would require a hearing officer or rent board, which the City currently does not have, and would be more expensive and complicated to manage. There was also the option of not allowing any rent increase, which would let tenants return to the same rent they paid before the remodel. However, this also raises concerns and practical challenges. Ultimately, the TPA increase option aligns with State law, is more straightforward to implement, and provides landlords with a reasonable rent increase. See Attachment E (HHCC memo) for a more detailed review of these options and Attachment G a financial analysis of the TPA option. Data Driven Considerations To assist in determining how frequently these substantial remodel cases might occur, staff reviewed multi-family building permit data from 2019 – 2024. Staff looked at permits that could potentially meet the substantial remodel definition – job valuations of $5,000 or more and permits that took 30 days or more between issuance and finalization. In reviewing this data, staff found that there were 196 building permits meeting these criteria over the five-year period. Of those, 101 permits likely did not require the displacement of tenants as the work was minor (e.g., repairing or replacing air-conditioning units, water heaters, or electrical panels) or involved exterior repairs only. 84 permits involved repairs to bathrooms and kitchens and 9 were for flood or fire damage. However, building permits do not collect sufficient information to definitively ascertain whether a job required the unit to be vacant for at least 30 consecutive days. There was only one permit for the demolition of a unit and one permit for the full renovation of 36 units at Redwood Oaks Apartments, a 100% affordable housing property where tenant relocation assistance was provided. Avoiding Investment The City contracted with Economic and Planning Systems (EPS) to prepare a financial analysis of the proposed right to return policy that would require landlords to re-offer a rental unit to a tenant at the same rent that was in effect at the 9.A. - Page 71 of 84 176