SF Apartment : June 2016


Background Checks Be Gone

Landlords nationwide have been put in a difficult position by the U.S. Department of Housing and Urban Development, who issued a statement recently that those with an across-the-board ban on renting to people with criminal records could be charged with violating the federal Fair Housing Act. However, landlords who fail to screen tenants for criminal records could still be liable if the unscreened tenant causes harm to any neighboring tenants.

HUD gave few specifics on how to comply with the new guidelines, and the Fair Housing Act still does not protect people with arrest or criminal records. However, minorities, especially African-Americans and Latinos, “face disproportionately high rates of arrest and incarceration,” HUD wrote in its new guidelines.

Therefore, if landlords refuse to rent to people who have been arrested or convicted, and this policy unintentionally ends up discriminating against a protected class of people, the policy is unlawful “if it is not necessary to serve a substantial, legitimate, nondiscriminatory interest of the housing provider, or if such interest could be served by another practice that has a less discriminatory effect,” HUD said.

The guidance does not prohibit landlords from asking about conviction records but says that “arbitrary and overbroad criminal history-related bans” will probably run afoul of HUD’s interpretation of the FHA. Even a housing provider that excludes individuals with only certain types of convictions “must show that its policy accurately distinguishes between criminal conduct that indicates a demonstrable risk to resident safety and/or property and criminal conduct that does not.” HUD gave no examples as to what types of criminal conduct, such as assault or grand theft, could be excluded under this policy.

But HUD did say that the act does not prohibit discrimination (intentional or not) against a person who has been convicted of making or distributing illegal drugs, as defined in the Controlled Substances Act. In this case, if a housing provider proves that its policy is necessary to achieve its “substantial, legitimate, nondiscriminatory interest,” the burden shifts back to the plaintiff tenant to prove that the landlord’s interest “could be served by another practice that has a less discriminatory effect,” HUD says.

HUD made two other things abundantly clear: renting to white ex-cons but not African-American or Latino ex-cons is intentional discrimination and an outright violation of the FHA. Also, refusing to rent to people who were arrested but never convicted would violate HUD’s new interpretation of the law.

California law already prohibits a consumer report from including arrests that did not result in a conviction and convictions that are older than seven years from their disposition, release or parole date. And, as of 2014, San Francisco’s Fair Chance Ordinance prohibits certain employers and housing providers from asking about arrest or conviction records.

The FCO also prohibits covered housing providers from ever considering the following: an arrest not leading to a conviction, except for unresolved arrests; participation in a diversion or deferral of judgment program; a conviction that has been dismissed, expunged, otherwise invalidated, or inoperative; a conviction in the juvenile justice system; an offense other than a felony or misdemeanor, such as an infraction; and a conviction that is more than seven years old.

San Jose Approves Stricter Rent Control

After a marathon hearing that stretched well past midnight, city leaders voted to reduce annual rent hikes to 5% in San Jose’s rent-controlled apartments.
The city council voted 6-5 to lower allowable rent increases in the 44,000 rent-controlled units—about a third of the city’s total—from 8% to 5% a year. The council rejected a plan that would have tied rent control increases to inflation, as is the policy in San Francisco.

More than 500 renters, landlords and housing advocates came to state their cases at city hall. Landlords said tightening rent control would hurt their abilities to maintain buildings and stay in business, while tenants said the 5% cap was not enough to keep the city affordable.

Tenants did claim an undisputed victory when the council also approved an anti-retaliation ordinance, which safeguards against evictions after a renter requests repairs or reports a code violation. This type of ordinance has never been passed before in San Jose. Councilmembers also eliminated a program that allowed landlords to pass through debt to renters, but approved the continuation of a program that allowed passthroughs for major capital improvement projects.

After the board meeting, many San Jose landlords threatened to sell their properties, leading the city’s housing director to recommend adopting an Ellis Act ordinance, which would provide relocation benefits to displaced renters if a landlord chooses to go out of business.

State Legislature Focuses on California’s Housing Crisis

A wide range of bills proposed in the state legislature this year take aim at California’s dearth of affordable housing. The proposals, consistent with recent recommendations from the state’s nonpartisan Legislative Analyst’s Office, would provide funding to build housing and homeless shelters, while lifting obstacles to private residential construction. The following are pro-housing bills supported by the California Apartment Association.

AB 1934 (D-Santiago) would clarify that a local government may issue a density bonus (allowing for more units in a project) to commercial developers when they include affordable housing as a component of their commercial development. AB 2501 (D-Bloom) would make it faster, easier and more economical for developers to obtain density bonuses in exchange for including affordable housing in the developments. This bill is co-sponsored by CAA.

AB 2319 (D-Gordon) would authorize the California Infrastructure and Economic Development Bank (IBank) to provide loans to local governments and nonprofit corporations for affordable housing construction. AB 2728 (D-Atkins) would extend a current funding program, known as the California Organized Investment Network, currently scheduled to expire in 2017. It would extend the funding credit for another 10 years, providing funding to underserved communities in California. COIN is a collaborative effort between the California Department of Insurance, the insurance industry, and community economic development organizations. DOI administers the COIN program, which awards up to $10 million in tax credits per year to support $50 million in capital from insurance companies and other investors for community development.

AB 2734 (D-Atkins) would direct the Department of Finance to calculate the state savings resulting from the elimination of redevelopment agencies and require that 50% of those savings or $1 billion dollars, whichever is greater, be redirected to local governments to address affordable housing needs. AB 2817 (D-Chiu) proposes to increase the state Low-Income Housing Tax Credit allocation by an additional $300 million for the creation and preservation of affordable rental homes.

AB 2584 (D-Daly) authorizes organizations such as CAA to bring legal action against a local government that denies housing projects in violation of state law. This bill is sponsored by CAA. AB 2208 (D-Santiago) would require that, before construction, rooftops of public buildings be offered to private or nonprofit developers for the construction of affordable housing. AB 2299 (D-Bloom) would mandate that local governments allow for the construction of second units on residential lots if those units meet specific standards and are located within one-half mile of public transportation. This bill is sponsored by CAA.

AB 2180 (D-Ting) proposes to expedite the building permit process by shortening the number of days that a local government must take to approve a new housing project. This bill is sponsored by CAA.

AB 1500 (R-Maienschein) would provide that if a local government elects to identify supportive or transitional housing developments for the homeless in its housing plans, the development must be allowed as a permitted use without additional permits or a lengthy approval process.

Separately, California legislators propose to allocate $2 billion to build housing for the homeless. Officials estimate the construction funds, combined with federal and local money, could generate 10,000 to 14,000 units for California’s 116,000 homeless.

For more information about these bills and other bills in the legislature, go to CAA’s website at caanet.org.

Ballot Measure Could Put Street Tree Maintenance Back on the City

Supervisor Scott Wiener, with the backing of Friends of the Urban Forest, recently introduced a ballot measure that would remove the responsibility of tree maintenance from property owners and give it back to the city. San Francisco has around 105,000 street trees and about two-thirds of them are currently under the care of private property owners.

Under current city policy, property owners are responsible for the care and maintenance of the street trees and sidewalks in front of their properties, as well as liable for any damage they cause. But Wiener and FUF believe that it’s unacceptable for the city to place street tree maintenance responsibilities on owners, and that the city should take back control of the trees, and the damage their roots can cause to sidewalks.

The ballot measure requires support from two-thirds of the Board of Supervisors for it to go on the November ballot, and the board has until the end of July to vote on it.

If approved, the cost of tree maintenance would be covered by $8 million a year from the general fund and a parcel tax that is expected to raise an additional $10.8 million annually.

Office Rental Crackdown

The San Francisco Planning Department is investigating landlords who lease industrial spaces to office tenants and has looked into more than 100 cases of tech and professional service firms allegedly filling up buildings zoned for manufacturing, automotive repair, warehousing or the arts.

After responding to just two such complaints in 2013 and four in 2014, the San Francisco Planning Department’s zoning enforcement team opened 108 cases in 2015. Only two months into 2016, it had already launched 21 investigations. The law gives property owners 15 days before an inspection is required. Once a violation is found, the fine is $250 a day.

So-called production, design and repair (PDR) jobs have been getting priced out of the city for years. A 2014 study found there were about 60,000 in San Francisco at that time. Forty years ago there were 165,000 such jobs.

When office tenants are willing to pay well over twice what PDR command, it’s not surprising that landlords and real-estate brokers might be tempted to look the other way on zoning. In fact, the city recently hosted a forum with 80 commercial real-estate brokers to advise them on “compliance in PDR zones.”

The irony is that locally made products are actually having a bit of a renaissance. SFMade, a trade group that promotes manufacturing in the city, says the city needs to add at least 200,000 square feet of PDR space a year to keep up with demand. SFMade Executive Director Kate Sofis said that she has yet to see the crackdown on illegal uses of PDR space yield any new successes, but pointed to previous zoning wins for manufacturers. For example, a building in the Mission that Google declined to buy because of its zoning was instead acquired by Dandelion Chocolate, which will use it for production and was able to gain a variance to include retail. Heath Ceramics took over a former laundry the owner had hoped to knock down for housing.

Of the 129 complaints about PDR violations filed in the past 14 months, 26 have been settled. About 10 of those were found to have no violation; for example, a business that mixes product creation with computer-based design would not be in violation. The rest have been “abated”—generally by the property owners finding a new tenant who complies with the zoning.