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Economic & Planning Systems, Inc. 42 Impact on City Finances <br />5. Impact on City Finances <br />This section evaluates potential financial and operational impacts to the City <br />associated with implementation and administration of the proposed Ordinance. <br />The initial 9212 report estimated the direct annual cost of administering a rent <br />stabilization and tenant protections program. This supplemental analysis builds on <br />that work by incorporating additional information regarding tenant legal services, <br />Human Resources (HR) implementation costs, start-up funding, reserve <br />requirements, and fee sufficiency. <br />The proposed Ordinance would create a new City-administered renter protection <br />program funded through annual fees paid by landlords. Program responsibilities <br />would likely include a rental registry, rent increase tracking, termination notice <br />tracking, tenant safety plan review, petitions and appeals, landlord and tenant <br />education, enforcement, annual reporting, data management, and legal services <br />for low-income tenants. <br />The Ordinance identifies annual fees of $84 per partially covered unit and $120 <br />per fully covered unit 30. However, the initial 9212 Report found that these fees <br />are substantially below the amount likely needed to administer the program. <br />Because the Ordinance does not allow ongoing General Fund support, program <br />fees would need to recover all ongoing operating costs, start-up cost repayment <br />obligations, and reserve contributions. <br />Annual Program Administration Cost <br />The initial 9212 Report estimated annual program administration costs ranging <br />from approximately $4.0 million under a minimum enforcement scenario to <br />approximately $10.1 million under a maximum enforcement scenario, with a <br />midpoint estimate of approximately $6.6 million annually. These costs reflected <br />staffing, office space, technology, hearing administration, enforcement activities, <br />and other ongoing program expenses. EPS estimated that a basic program would <br />require at least seven full-time staff, while a more active enforcement model <br />could require up to 18 full-time staff. Actual costs could vary depending on final <br />program design, compliance rates, petition volume, enforcement activity, legal <br />disputes, registry complexity, tenant safety plan workload, and the number of <br />covered and partially covered units. <br /> <br />30 Under the proposed Ordinance, “fully covered” units generally refer to units subject to the Ordinance’s full set of requirements, <br />including local rent stabilization and applicable tenant protection provisions. “Partially covered” units generally refer to units that <br />are exempt from local rent stabilization, such as units exempt under Costa-Hawkins, but remain subject to the other tenant <br />protection, noticing, reporting, or administrative requirements. <br />8.A. - Page 101 of 168 <br />111