Will Tenants Ever Find Relief?

Screen Shot 2019-02-26 at 11.38.43 PMThe El Cerrito City Council postponed a decision on a package of tenant protections following almost 4 hours of a presentation and public comment at the February 19th meeting.  The crowd, composed of a majority of single family home landlords, spoke out against “just cause eviction” and “rent control”.  The landlords sported bright yellow tags identifying themselves as “responsible housing providers”, compliments of the California Apartment Association (CAA).  Members of the CAA also circulated a document on rent control, which according to one tenant in the audience, read like “gobblygook.” The photocopied document, without a credited author, basically served as a rant against the Richmond rent control model, citing the high salaries of the department members and overall cost of the program.  Again, a reminder to the reader, the city council agenda that evening did not address rent control, nor were any of the tenant protections remotely similar to that referenced anonymous rent control article. The circulation of this document seemed to be an extension of a scare campaign aimed at single family home landlords.

The study session began when he Affordable Housing Analyst Aissia Ashoori, led the council through a lengthly overview of the tools:   Just Cause for Eviction  Rent Registry  Tenant Relocation triggered by rent increases.

The Powerpoint, which can be accessed at this link, Tenant Protections Presentation  did little to relieve the fears of the numerous landlords worried about creating a new bureaucracy that might ultimately cost them additional money.  A graphic display of the Rent Registry information flow system, intended to collect data on number of rental units, and rental rates, resembled a full size checkerboard.  The number of steps from start to finish were so numerous and burdensome, even those of us in support of a Registry questioned the wisdom of this system.  Council member Fadelli commented in this vain stating  something similar at the close of the presentation .  Ashoori attempted to clarify the process, verbally offering a simpler explanation of the Rent Registry syste.

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Although the Rent Registry drew a great deal of heat from the landlords, mainly because of the bureaucracy and a potential cost, a Just Cause Eviction Ordinance truly stood front in center as the enemy of the “responsible housing provider”.  Biggest objection:  Landlords claimed that they could not afford the cost of eviction, and that their rentals represented their 401k or retirement plan.

After the meeting I approached one landlord who schooled me on “landlording as a business”. She explained that her rental was an investment and every investment has a risk factor. At some point if the risk factor outweighs the benefit, or in this case the profit, then she, as a smart investor, would simply take her house off the market.  The council heard similar threats from many of the landlords who spoke at public comment.  Just a side bar- the cost for eviction doesn’t change with “just cause”.  What does change is that the landlord can no longer evict for “no cause”.

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I found irony, sitting in a meeting for tenant protections with  a room dominated by people identified as “responsible housing providers” speaking fearfully about what amounts to be fairly weak protections for tenants.  But fear won the wrestling match, pinning compassion to the ground, and in this case using a choke hold.  One tenant said to me, “I thought this meeting was suppose to be for tenants?”

For those who are concerned about maintaining an economically and racially diverse community, a community where we can house our teachers as well as our IT workers, our grocery clerks as well as our lawyers, our seniors or others on fixed income, this meeting missed the mark.  Notable was the absence of this concern in the discussion. Two speakers both spoke to their disappointment with the landlords/investors, with  one speaker calling out the reactions and threats as selfish and clearly not in the interest of the greater community.   To be fair, a few landlords did express sympathy with those tenants facing eviction and proposed some type of community fund for renter relief on a case by case basis.

After 50 or more speakers, with the clock nearing the 11th hour, the council voted to hold over discussion and action until March 5th.  They will re-adjourn at 5:30 p.m. without public comment at the onset.  This decision seemed to be in the best interest of all parties, as people were tired, the presentation seemed to leave more questions than answers, and most importantly, if the city acts they should get it right.

Honestly, the meeting disturbed many of us who are concerned about tenant protections, as we are not certain that the staff  or council is getting it right.  On December 18th the Human Relations Commission put forward a recommendation for tenant protections.  This recommendation included a temporary rent cap, just cause eviction ordinance,  and the convening of a community task force comprised of tenants, landlords and homeowners to hash out a more permanent solution.  If the council had paid attention to the HRC resolution,  the meetings and discussion in January might have lead to an ordinance by as early as March.

While the City staff and Council drag out this arduous process, other cities, regional bodies and the State of California is moving forward.  The State is contemplating a state-wide anti-rent gouging legislation as well as just cause for eviction, and the  CASA Compact 2019 drafted by the Committee to house the Bay Area includes similar recommendations for the Bay Area region.

Please write the Mayor and Council Members prior to the March 5th meeting El Cerrito City Council E-mail  and ask them to reconsider the HRC Resolution on Tenant Protections.  Let’s get the predatory landlords out of El Cerrito and lets tell the “responsible housing providers” to turn their ears away from the fear mongering of the CAA.  

 

City Council Set to discuss tenant protections…….again.

evictionOn December 18, 2018 more than 25 speakers, including tenants telling compelling stories of near homelessness, severe rent hikes and heightened anxiety, the El Cerrito City Council directed city staff to come back with an ordinance for Just Cause Eviction and a plan to develop a Rent Registry.  In January, when Council reconvened for the first meeting of 2019, the staff did not present an ordinance for review.  Instead, the city staff recommended, and the city council accepted the proposal to have  a study session in February.

Let’s fast forward to February.  The city council will be meeting on the 19th to review a package of “tenant protections.”   These protections include:

 Just Cause for Eviction

 Rent Registry

 Tenant Relocation triggered by rent increases

What is missing from the agenda on Tuesday is a discussion about a temporary anti-gouging measure for rent increases to be in effect while the city establishes new policies to disrupt displacement of our residents. In December, at the city council meeting, the Human Relations Commission made a compelling argument for such a measure, in addition they asked for the formation of a housing committee to craft a long term solution to rising rents.  The resolution can be read here.

El Cerrito Human Relations Commission Resolution on Tenant Protections

 

Come out for either meetings and help us maintain a city where all people can afford to live.

Follow up to City Auditor’s November 2018 Report

FOLLOW UP THE CITY AUDITOR’S REPORT OF 2018

 

audit lookBackground

Last year the Finance Director of El Cerrito, Mark Rasiah, hired a new auditor to ensure that the city had a thorough review of the finances. In November of 2018 the City Council received a report from this auditor that raised concern among council members as well as residents in attendance. The ECP initial blog post on that presentation can be found here.

The auditor’s findings raised quite a few questions for us, and we submitted questions in a letter sent to the Finance Director soon after the meeting.  We met with the Finance Director and the new City Manager, Karen Pinkos, on January 24, 2019. Both the City Manager and Finance Director were eager to clarify what they felt were misrepresentations by the auditor when he spoke at the city council meeting. We also had a follow up phone call with the Finance Director on February 6, 2019.

What We Learned

The City Manager and Finance Director explained that the “transfer” of funds is actually a common practice for continuous operating costs.For example, the Integrated Waste Management (IWM) (Recycling Center) continuously generates revenue into the general fund and continues to expend those funds on a revolving basis.What is not  part of a continuously operating budget is the debt that began to accumulate in 2012 due to the statewide shutdowns of redevelopment agencies. According to Mr. Rasiah, the city completed several projects that were never repaid as anticipated, when our Redevelopment Agency ceased to exist. According to the City Manager, the city is involved in litigating the taking of redevelopment money to pay down state debts.  We link to several articles on that below. The Finance Director explained all of this to the city council on January 15, 2018. The presentation can be found here and his slides can be found on page 174 here.

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Currently, the city plans to comply with the audit findings by selling several properties previously purchased by Redevelopment. The Finance Director aims to eliminate the loan from the Recycling Center in the 18/19 Fiscal Year through a mid-year budget modification. If he cannot pay it all off then the balance will carryover into FY 19/20 for repayment. The balance of the loan as of June 30, 2018 is $317,966.

Timing and the Audit – Who Knew What and When

The entire audit was done much later than usual due to the availability of the new auditor. The Finance Director received the initial report in August, and the document required a thorough review by him before release. The former City Manager, Scott Hanin in his report to Council on September 6, 2018, stated that the audit had been released but only made an very vague reference to the issues raised by the auditor. He stated “This was the first year that the new auditors audited the City’s financial records and as a result they made several prior period adjustments in accordance with auditing standards that had not been applied before by the previous auditors, Maze and Associates. The link to that report is here. He also stated that the council would be getting their copies of the CAFR that week which is earlier than the Finance Director told us they received it. There is a question as to why none of the city council members asked staff about the issues after reading the CAFR (which is admittedly a difficult document to read and understand.)

The Finance Director reported that City Council received a hard copy of the Comprehensive Financial Report (CAFR) in October and it went online as public information in early to mid October.

audit findingsIn mid-October, with the report finalized,  the Finance Director made the decision to bring the auditor  to the city council to provide further explanation. The Finance Director said it is atypical that the auditor report the findings to council and this is the first time for a city council presentation in recent memory.  The presentation occurred on November 20, 2018.

Although some community members speculated that the timing of the report was intentionally delayed given the Measure V election, the City Manager and Finance Director both stated that the presentation after the election was a coincidence and that the CAFR was online prior to the election. In regards to the Financial Advisory Board (FAB) The Finance Director stated that FAB did not see any issues with the auditors report that required further review.

Future Plans

The issue of fund transfers alarmed the auditor as well as the staff and city council.  The presentation, which the City Manager thought to be more alarming than necessary, did shed light on the need for the Finance Department to be more transparent and create a paper trail. The Finance Director commented on the lack of documents or even notes to explain some of the earlier practices of the fund transfers conducted by the Finance Department. The Finance Director stated that the city will continue to budget  continuous operating funds like IWM, but these would be handled differently than what the auditor called loans. When asked if there would be a written policy, the Finance Director stated that the Financial Advisory Board (FAB) reviews the policies of the city annually. The FAB is just finishing up this years review. This item will be addressed during the 2019 review which occurs at the end of the calendar year. FAB also reviews the CAFR annually. The review happened as part of a budget review this year (because the CAFR was not completed until August). This past year the review happened in June 2018 and the minutes are linked to here.

The City Manager did agree that the city could do a better job of getting information to the public in a more accessible way. She did point out that the city budget is now easily accessible online via a contract with Open Government. That can be accessed here.

Further Resources/Information

El Cerrito Settles Redevelopment Case.

El Cerrito Surrenders Redevelopment Money to the state

 

City Council takes “heat” from organized landlord groups

rentersstand updon't pack up (2)When tenants gathered in double digits on December 18th to speak up about protections, they were met by support from three of the City Council members (Mayor Pardue-Okimoto, Council member Lyman, and Council member Fadelli). By the end of a long evening of moving testimony from tenants and discussion amongst themselves, the Council directed staff to draft a Just Cause for Eviction Ordinance and an enforceable mechanism to obtain data from landlords.  Furthermore, they strengthened a Relocation Allowance Ordinance to include additional compensation for vulnerable populations. For details on the Ordinance see the Agenda Packet for the Tuesday, January 15th  meeting. Ordinances for Discussion

Tenants, do not rest! The Statewide California Apartment Association and the Contra Costa Association of Realtors is working diligently and with much funding to stop cities from implementing protections for tenants.  As a result of the Council’s action at the last meeting, According to the staff report, “Both the Contra Costa Association of Realtors (“CCAR”) and California Apartment Association Contra Costa (“CAA”) submitted separate letters alleging that the City Council violated the Brown Act at the December 18, 2018, meeting. CCAR alleged that the amendment to the Tenant Relocation Assistance Ordinance had to be agendized as a separate item of business prior to Council consideration because it constitutes a form of rent control. It also alleged that the direction to staff to prepare Just Cause Eviction and Rent Registry ordinances also had to be agendized. CAA alleged that the Council adopted the amendment to the Tenant Relocation Assistance Ordinance without discussion of the amendment.”  According to the City, none of the claims are supported in the Brown Act itself or applicable case law.

CAA  and the organized realtors are a powerful body.  Their mission is to support landlords.  But we all know not all landlords are equal.  El Cerrito is a relatively small community with a number of local responsible owners who care about their tenants, who do not rent gouge, and who are not making fortunes from their investments.  On the other hand, tenants can speak of landlords who repeatedly raise the rent, refuse to make repairs, and who have the upper hand – evicting renters at will.  At the December Council meeting, both tenants and landlords agree that no one wants to support greedy landlords or negligent  landlords.  The City Council and the community are asking the question, what policies can target those landlords who are putting profit first and community last? How can we develop policies that protect tenants and not punish those landlords who are responsible and providing housing as a service to the residents. What are  your thoughts?

Auditor Findings to El Cerrito City Council Raises Red Flags

At the November 20, 2018 El Cerrito Council meeting the new independent City Auditor Ahmed Badawi presented on the findings.

cityhallFirst a bit of history. The City of El Cerrito’s last 6 audits were conducted by the same auditor. For the 2016-2017 audit,  the El Cerrito Financial Advisory Board (FAB) recommended that the city put out a bid for a new auditor. The bid was late and as a result, the 2016-17 audit only recently came before the City Council in November. Although the auditor completed the final Comprehensive Annual Financial Report (CAFR) in August of 2018, it is not known why the presentation to the Council did not occur until this November meeting.

The findings of the auditor are sobering, according to City Council Member Quinto. To see the video please click here and then go to the Baldawi presentation. Findings included the following:

  • For the last three years the City has been borrowing money from the General Fund to various agencies such as Integrated Waste Management. Those loans totaled about 2 million dollars. For the most part very little if any of that borrowed money has been repaid. The auditor stated that typically loans such as these are used as bridge funds.

For example, city projects that are grant funded are often reimbursable grants.  The City can temporarily use general funds to front projects costs and the City is then reimbursed. This is generally done on a quarterly basis and considered short-term. However, in this case, funds have been outstanding, without reimbursement for almost three years.  As a result, the “so called” balance budget reported by the City staff, and passed by the Council, is by no means balanced. When funds were transferred out of the general fund it was done without action by the Council and without a plan for repayment. The auditor also reported most of those agencies did not have any identifiable ways to pay back the money. He also stated in most cities something like this would normally be approved by council and there would either be a write off of these funds or a repayment plan.

  •  As a result of the above borrowing for the the last three years, the city budget has been showing these loans as assets even though they were not. That money should have been marked as unusable. Essentially the city was spending money they did not actually have.City staff convinced the auditor to postpone the adjustment of  the city budget for this approximately 2 million dollar deficit for FY 16/17 until the completion of the 2018 audit.  There is the suggestion that revenues not previously reported may be forthcoming and reimbursed into the General Fund based on the timing of the review.  The auditor reported that thus far in FY 2018 approximately $300, 000 has been repaid. He anticipates a budget deficit of over 2 million dollars.
  • According to the auditor, the deficit needs to be addressed before any other spending priority. The city cannot operate with a negative balance sheet.
  • During the presentation Councilperson Abelson suggested using transfer tax monies (the result of the passing of Prop V). City staff also said none of that money should be spent until this was figured out.
  • Other council members asked questions that seemed to indicate that they did not understand the severity of this issue. They were talking about building a reserve. The auditor clearly stated you cannot have a reserve if you have a deficit.
  • There was no discussion on how this happened or what was going to change to make this not happen again. The auditor suggested a policy that such loans be approved by city council and the council asked if other councils did this. He answered” yes.
  • The auditor also found a few additional deficiencies. A prior financial report had to be amended due to be incorrect.
  • The closing of the fiscal year was reported to be not done in a timely manner.

Again the auditor is currently working on the FY2018 audit and more information will be known when that report is completed.

Tenant Voices Muted in City Tenant Protection Proposals

When El Cerrito adopted the El Cerrito Affordable Housing Strategy  the staff identified four pillars to address affordable housing needs.  The Community Workshop (above) emerges from staff’s research to address the second pillar: Reduce the Risk of Displacement and  Stabilize At-Risk Populations. In other words, mitigate gentrification as the region grows in this next decade and protect those renters who are on fixed, low or middle incomes and paying over 50% of their income in rent.

In early November,  City Staff  hastily organized a Community Workshop on Tenant Protections. It was no surprise that only a hand full of tenants attended, matched by a similar number of landlords.  The majority of those in attendance were members of El Cerrito Progressives, including tenants and allies.  We learned that non-binding rent mediation anchored the proposal for tenant protections.  Also known as the Rent Review Program, once implemented, the  tenants and landlords sit down together when there is disagreement on rental terms.  Sounds good?  Let’s say the mediator decides that the tenant has a case and that the 20% rent increase is unwarranted, that would be a victory for the tenant, right? Wrong.  The mediation is non-binding and the landlord can ignore the mediator’s decision.  According to Carol Lamont, previous Housing Director for the City of Fremont, and the developer of a rent mediation program for the City of Fremont:

The best the mediation process offered was additional time for tenants to move out before a rent increase that they could not afford went into effect. Now I have been told by one of the mediators, who is a long time resident, that Fremont’s ordinance is useless, and that it reflects poorly on the City.

Many members of the audience  urged staff not to put forward the Rent Review Program. Audience members cited poor evaluation reports of similar programs from San Leandro and Concord as well as Fremont, all pointing to the weaknesses of non-binding resolution.  Even landlords spoke up against the program, but for obvious different reasons.

But most voices were muted, and continue to be muted over the call for a Rent Review Program.  The Rent Review Program will be heard by the City Council on December 18th, when our local officials make decisions on tenant protections.   Tenants and homeowners continue to be concerned that the protections being suggested will be too little too late.  But there can be an alternative or additional course of action.

When the Human Relations Commission met in September of this year, Commissioner Makalia Aga raised the issue of a moratorium on rent increases and help with eviction. As a long time resident, senior citizen and renter, she faces a 20% rent increase in the next few months, and worries about her future in El Cerrito.  Members of the Commission took up the banner and returned the following October to present a strongly worded resolution recommending that the City Council adopt an anti-gouging measure and just-cause eviction ordinance to protect tenants. They voted in the majority to bring the resolution to the City Council for the November agenda. So where is that resolution and why does it not appear on the November Agenda?

El Cerrito Progressives and other concerned residents will be at the meeting on Tuesday, November 20th to ask that question, and hopefully reset the volume so that tenants can truly get some needed protections. (BTW – we know there are good landlords and encourage you to join us !)