The Rent Control Board delayed a decision on collection of rental buyout agreements for a second time at its March meeting, but the group did move forward with regulation to force landlords to notify tenants of their rights in a buyout negotiation.
Discussions of a rental buyout database began at the board’s February meeting and a staff report presented on March 12 recommended against adopting buyout collection rules until the issue could be studied further. The board asked staff to draft a more detailed report on the options for collecting buyout information with the goal of discussing the issue for the third time in April.
Renters’ rights advocates have supported a proposal to collect information on rental buyouts — private contracts between a renter and landlord that pay the renter to leave the unit. They argue landlords use the agreements to pressure tenants to leave rent-controlled units, thereby resetting the rents to market rates. Proponents of municipal collection of agreements say the process would allow tenants to see what kind of offers are being made and make educated decisions. Opponents say the database would commoditize the buyout market, increasing what they say is currently a rare occurrence.
City staff had recommended against mandating collection of buyout agreements on March 12, citing privacy and legal concerns.
“Staff’s recommendation however, is to tonight enact a regulation that would implement the disclosure of rights portion of the ordinance but not yet enact a regulation that would address the filing of the executed agreements part of the anti-harassment ordinance,” said J. Stephen Lewis, General Counsel for the board. “Staff recommendation is not to refrain altogether from doing that, just not to do it tonight because there were, in staff’s view, non-frivolous legal issues that were raised and staff would like more time to address those issues.”
Those issues, including the legality of collecting information on private contracts, privacy concerns and the use of personal information will be discussed in detail at the board’s April meeting.
While the board chose not to require the filing of agreements, it will require any buyouts to come with a board-approved form that lists tenants’ rights in a buyout, which include: refusing the landlord’s buyout offer, consulting with a lawyer before deciding whether to accept or reject the offer, visiting the board for information about buyout agreements in the tenant’s neighborhood and other relevant information, and, if he or she accepts a buyout offer, rescind his or her acceptance for up to 30 days after a buyout agreement is executed.
The disclosure requirement will be active by the end of the month.
Several speakers at the meeting were in favor of the City collecting buyout information.
Denise McGranahan, senior attorney at Legal Aid Foundation of Los Angeles, said there are ways to gather and disseminate valuable information without compromising the privacy of those involved.
“I actually oppose the recommendation of staff that you not adopt a regulation that records the recording of collection of agreements with respect to buyouts,” she said. “We have six Ellises this month that were filed, we have a lot going on with respect to the rental market and it’s heating up more and more and people are going to be facing these voluntary buyouts and I don’t think we should delay.”
McGranahan was referring to Ellis Act evictions that allow landlords to remove affordable housing from the market. The fear of ongoing losses in the rent-control market was a persistent theme among speakers.
Jennifer Kennedy, chair of the Planning Commission, said she had personal experience with the issue after being forced out of her unit in 2001 and that the Rent Control Board was the first line of defense to protect low-income residents from landlords that want to circumvent the existing regulations.
“A buyout offer does not mean they are going out of the rental business for that unit or the building, it means they can turn around and rent that unit at a market rate,” she said.
Wes Wellman, a local property manager, spoke on behalf of the Action Apartment Association and cautioned against an overreaction to what he said was a rare occurrence. “(Buyouts) are currently isolated and infrequent and we would like it to stay that way,” he said. “Most apartment owners are responsible business people that obey the law, even though they don’t like the law. As with any group our industry has a few bad actors, you want to punish them, we want to strangle them because they cast an unfavorable shadow over the overwhelming majority of good owners.”
Wellman said complicating the process would create an industry around buyouts. He said the end result would be bad for renters as a whole because if prices rise, more tenants will be likely to take a buyout and that will begin to deplete the population of renters paying affordable rates.
“I think this complication of the process is going to create a buyout industry that will set off a speculative frenzy to do these,” he said. “From my industry standpoint we really don’t want that, and from the renters’ rights perspective it’s counter productive.”
Board Chair Christopher Walton said the action taken during the meeting is an important first step.
“I hope staff will take to heart everything we have talked about tonight and get rolling on part two and three, collection of information, dissemination of information in a way that is constitutional,” he said. “I think that by getting this disclosure out tonight we have gone a long way towards resolving the issue of these buyout agreements.”