Santa Ana officials could repeal the city’s temporary cap on rent increases amid outcry by state and local landlord groups, who at first supported temporary renter protections during the coronavirus public health crisis but are now voicing opposition to those protections becoming law.
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City Council members could vote to rescind or affirm the rent hike restriction — enacted last month by City Manager Kristine Ridge through an executive order that’s currently in effect until May 31 — at their Tuesday meeting.
Tenants’ rights advocates say rescinding the order could be “devastating” for the city’s large renter population, arguing it would allow landlords to pile financial burdens on tenants who were put out of work as a result of stay home orders and health separation guidelines that have either closed or landed hits to local businesses.
Landlord groups like the California Apartment Association and the Apartment Association of Orange County, among others, in an April 23 letter to council members criticized officials for “prioritizing tenants and banks over taxpaying property owners,” some of whom the letter said “do not have the cash nor credit to defer their expenses for more than a month.”
One option, staff say, would be to maintain its temporary rent increase freeze and ask landlords’ groups to allow staff “to speak to those property owners who intended to increase rents prior to May 31, 2020, so the City might better understand the consequences to specific property owners and how regulations might be balanced to protect renters and landlords alike.”
But another option would be to “rescind that portion of [the order] pertaining to the temporary prohibition on rent increases.”
The rent increase cap last month added to existing emergency measures the city enacted back in March, banning utility shut-offs and the eviction of tenants over an inability to pay rent due to the financial constraints of the health crisis.
That order, like the rent increase freeze, doesn’t waive tenants’ rent payments but stalls the eviction process by landlords for the duration of the local emergency. Renters under the order also have to prove they’ve taken critical financial hits from the health crisis, and they’ll have to pay the rent amounts within six months of the expiration of the order.
The council’s scheduled Tuesday discussion on the rent increase freeze comes in response to the landlord groups’ letter, which said there are “several issues” with the city’s emergency rent increase restriction, such as “the (1) cascading effect government regulation has on taxpaying property owners, (2) the City’ s nonconformance with state law, and (3) lack of consistency with the City’s Charter.”
The groups’ letter contends there’s little government relief for rental housing providers, and argues that while local government under state law can impose substantive limitations on residential or commercial evictions, “no such authority exists in the order to regulate rental rates.”
The letter adds: “In addition to ongoing expenses like mortgage payments, housing providers need the flexibility to have tenants who can pay their rent in order to subsidize tenants who are unable to pay rent.”
Santa Ana city spokesman Paul Eakins in a Monday email said the city doesn’t keep data on the number of small landlords who depend on rent payments for a majority of their income versus the number of landlords in the city who had enough capital and the financial standing to recover from delayed rent payments.
The groups in their letter specified they have no issue with Santa Ana’s evictions ban — only the rent increase freeze. Meanwhile in Costa Mesa, City Council members will also meet tonight to discuss requests by landlords to rescind an evictions ban currently in effect there.
But just as tenants are expected to responsibly communicate with landlords and work out ways to make sure they can meet all of their financial obligations, landlords too should be expected to communicate with their loan providers and banks and let them know they’re in the same situation, said Ruben Barreto of Santa Ana Building Healthy Communities (SABHC).
“They too should call their lenders and banks to ‘work something out,’” Barreto said in a Monday phone interview.
One point of contact for the city on the landlord groups’ grievances has been the California Apartment Association’s Vice President of Public Affairs, Victor Cao.
Cao in a phone interview said “smaller landlords” — commonly referred to as mom-and-pop landlords — don’t have the “financial wherewithal” of larger ones in the city, and said the city creating “the same set of guidelines, codifying them as law and applying them to all landlords” is “wholly unfair.”
Barreto said “it all starts coming down to the details” — “where do you draw the line of what becomes a so-called mom-and-pop?” He questioned whether individual people who own sizable apartment complexes would also fall under that criteria. “It’s important for this rent increase restriction to be across the board.”
“Obviously not all landlords are ‘villains,’” Barreto said. “But when you leave it up to just let those tenants work it out with landlords, there’s a lot of misinformation, and tenants” — especially non-English speaking ones — “are left to fend for themselves. They sign documents that might bind them to something they could be unaware of.”
“Clear communication of what tenants’ rights are,” he added, “is rare.”
Mextli Lopez of local advocacy group Tenants United said renters under the city’s emergency evictions and rent increase ban orders are still expected to pay back their April and May rent within the six months after the order expires.
“During that they still have to pay rent for those months plus parts of the rent they previously owed,” she said. “If landlords are able to increase rent at the same time, it’s building a giant mountain of debt that people aren’t going to be able to fully recover from.”
“Folks are going to crumble under that pressure,” she added, “and people could eventually be displaced.”
Asked about the possibility of legal action should the council keep its emergency order, Cao said the landlord groups “want to work more cooperatively with local agencies — that’s not to say if we find they’re overreaching it’s certainly possible; but it’s not what we’re leading off with. We’re trying to help the city identify something with which they could have legal exposure to.”
City staff in their report defended the legality of the order, arguing that while Santa Ana “might be the only charter city without a rent control ordinance to impose the temporary rent freeze,” there were “strong findings to support the protection of Santa Ana residents who pay rent to landlords.”
“The temporary rent prohibition is not a rent control ordinance, it does not include any of the far- ranging regulations of a rent control ordinance, and it is temporary in nature,” staff said in their report.
Staff also noted that their order was consistent with an earlier position landlord groups like the California Apartment Association took at the start of the coronavirus crisis.
The group on its website had advised property owners up and down the state to “freeze rents on all residents and pledge to not issue any rent increases, halt evictions on renters affected by COVID- 19, absent extraordinary circumstances,” and “waive late fees for residents who pay rent after the rent due date because they have been affected by the COVID- 19 pandemic and related government actions.”
Lopez criticized the group for “pushing back now that there’s an actual ordinance with teeth to enforce tenants’ protections.” She added that her group has already heard about property owners and landlords not complying with the local evictions ban and rent increase freeze.
Eakins said no residents “have returned to us to report that their landlord is violating” either the evictions ban or rent increase freeze orders, and that the city “has not had to take enforcement action against any landlords related to these matters.”
The landlord groups’ letter argues the rent increase freeze order was in breach of public oversight in regards to city policymaking. Despite the law being enacted through emergency order powers, staff said the city circulated public notices on it and placed FAQs, sample letters, and information on the City’ s COVID- 19 information website.
Meanwhile, SABHC — along with other local community groups like Resilience OC and Cooperacion Santa Ana — have set up their own fund to help residents and businesses with rent payments, medical bills, and Deferred Action for Childhood Arrival status renewals, and are accepting donations online.
Of the $50,000 the groups started out with, Barreto said they’ve been able to give out $20,000 and are hoping to help “at least another 200 to 300 people.”
Brandon Pho is a Voice of OC reporting fellow. Contact him at bpho@voiceofoc.org or on Twitter @photherecord.