Chapter 7.44 — RENTER PROPERTY TAX RELIEF

Sections: 7.44.010 Title for citation. 7.44.020 Purpose. 7.44.030 Definitions. 7.44.040 Applicability. 7.44.050 Partial applicability to subsidized housing. 7.44.060 Maximum allowable rent until December 31, 1978. 7.44.070 Notice of maximum allowable rent until December 31, 1978. 7.44.080 Tax relief determination--Maximum allowable rent for 1979. 7.44.090 Property tax relief and maximum allowable rent notice. 7.44.100 Renter remedies. 7.44.110 Retaliation. 7.44.120 Rent increase allowed when. 7.44.130 Rent adjustments after January 1, 1980. 7.44.140 Violation deemed misdemeanor.

This chapter shall be known as the "renter property tax relief ordinance of 1978." (Ord. 5109-NS § 1, 1978)

The passage of Proposition 13 on June 6, 1978 has provided some property tax relief to homeowners and owners of rental property without providing any tax relief to renters. The shortage of affordable rental property in the City, and rising rents resulting from this shortage, has produced a severe problem for a significant proportion of residential and commercial Berkeley renters, and has endangered the health, safety and welfare of all Berkeley residents. In view of this serious problem, it is necessary as well as fair that renters be provided with a portion of the benefits of the property tax relief resulting from Proposition 13. Therefore, the purpose of this chapter is to ensure that renters, who have shared the burdens of property taxes, will receive a fair share of the benefits of property tax reductions on rental property established by the passage of Proposition 13, enacting Article XIIIA of the Constitution of the State of California. (Ord. 5109-NS § 2, 1978)

The following words or phrases as used in this chapter shall have the following meanings:

A. "Owner" means an owner, lessor, sublessor or any other person entitled to receive rent for the use or occupancy of any rental unit, or an agent or successor of any of the foregoing.

B. "Property" means a parcel of real property which is assessed and taxed as an undivided whole.

C. "Rent" means the consideration, including any bonus, benefit or gratuity demanded or received for or in connection with the use or occupancy of rental units or the transfer of a lease for such units including, but not limited to, money demanded or paid for parking, pets, furniture and subleasing, or for the installation and use of equipment and fixtures.

D. "Rental agreement" means an agreement, verbal, written or implied, between an owner and a renter for the use or occupancy of any rental unit.

E. "Rental unit" means any building, structure, or part thereof, or land appurtenant thereto, or any other real property rented or available for rent for any purpose located in the City, together with all services connected with the use or occupancy of such property.

F. "Renter" means a tenant, subtenant, lessee or sublessee of a rental unit, or any group of tenants, subtenants, lessees or sublessees of a rental unit. (Ord. 5109-NS § 3, 1978)

This chapter shall apply to all real property which is being rented or is available for rent in whole or in part except for the following:

A. Such property which is exempt from property taxes;

B. Rental units in hotels, motels, inns, tourist homes and roominghouses and boardinghouses which are rented primarily to transient guests for a period of less than fourteen days;

C. Units in nonprofit cooperatives owned and controlled by a majority of the residents;

D. Rental units in any hospital, extended medical care facility, asylum, or nonprofit home for the aged;

E. Residential property which is divided into a maximum of four units where one of such units is occupied by the owner as her or his principal residence. However, for the purpose of applying the exemption in this subsection the term owner shall not include a sublessor or an agent of an owner. (Ord. 5109-NS § 4, 1978)

Any unit of subsidized housing exempted or preempted by federal or state law or administrative regulation from the imposition of maximum rents by municipal ordinance shall not be subject to any maximum rents imposed by this chapter.

Eighty percent of the property tax savings calculated pursuant to Section 7.44.080 shall be passed on to renters of subsidized housing and apportioned among rental units in a property in a manner substantially consistent with Section 7.44.080, unless such manner of apportionment among units is otherwise provided by federal and/or state law or administrative regulation or regulatory agreement with the governmental agency empowered to regulate such subsidized housing. (Ord. 5109-NS § 5, 1978)

Every owner of rental property shall make the following appropriate calculations as indicated in this section for each property covered by this chapter:

A. For the purposes of this chapter, the rent under the rental agreement in effect on June 6, 1978, for each rental unit covered by this chapter shall constitute the base rent. For rental units where no rent was in effect on June 6, 1978, the last rent in effect for that unit in the preceding six months shall constitute the base rent. For rental units where no rent was in effect on June 6, 1978, or in the preceding six months, the base rent shall be a good faith estimate of the average rent in effect for comparable units in the City on June 6, 1978.

B. Commencing on the date on which rent is next due and payable following the date of adoption of the ordinance codified in this chapter and until December 31, 1978, the maximum allowable rent for any rental unit covered by this chapter shall be the base rent as determined in subsection A of this section. (Ord. 5109-NS § 6, 1978)

Within fifteen days after the adoption of the ordinance codified in this chapter, but in no event later than the date on which rent is next due and payable after adoption of the ordinance codified in this chapter, the owner shall provide the renter of each rental unit covered by this chapter with a written notice of the rent in effect until December 31, 1978, as determined by Section 7.44.060. (Ord. 5109-NS § 7, 1978)

Upon the issuance of property tax bills for 1978--79 reflecting the provisions of Article XIIIA of the Constitution of the State of California, every owner of rental property shall make the following appropriate calculations, as indicated in this section, for each property and rental unit covered by this chapter:

A. Total Base Rent.

1. For property which includes only rental units, the total base rent shall be the sum of the base rents, as
calculated pursuant to Section 7.44.060, for all rental units in that property;

2. For property used partly for rental purposes, a good faith estimate of the fair market rental value of the
unrented portion of the property, including any owner-occupied portion, shall be made based on the average
rent in effect on June 6, 1978, for comparable portions of property in the City. This estimate plus the sum of
the base rents for all rental units in the property shall constitute the total base rent.

B. Property Tax Savings. For the purposes of this chapter, property tax savings shall constitute the total taxes due, including all installments, as listed on the 1977--78 property tax bill less the total property taxes due, including all installments, as listed on the 1978--79 property tax bill. A difference of less than zero shall be considered as zero.

C. Property Tax Relief to be Allocated. The property tax relief to be allocated among units in a property shall be eighty percent of the property tax savings for that property.

D. Allocation of Property Tax Relief Among Units.

1. For property covered by this chapter, the property tax relief as defined in subsection C of this section
shall be allocated among rental units and any unrented units in the property, including owner-occupied
portions. Such allocation shall be made by determining the percentage of the total base rent of a property
that the base rent for each unit in that property constitutes, and multiplying this percentage by the property
tax relief to be allocated for that property. For each rental unit in a property, the resulting dollar amount shall
be the rental property tax relief to be apportioned over the calendar year 1979.

2. In the case where base rents for different units in the same property are not directly comparable to each
other, such as where rents for some but not all units are based on gross receipts, the necessary calculations
shall be made so that the allocation of renter property tax relief is determined in an equitable manner
consistent with the purposes of this chapter.

E. Apportionment of Renter Property Tax Relief as Rent Reductions Over Calendar Year 1979. The renter property tax relief for each rental unit covered by this chapter, as determined in subsection D of this section shall be apportioned over the calendar year 1979 by reducing the base rent of the rental unit by an amount equal to that unit’s allocated renter property tax relief divided by the number of rent payments to be made in 1979 by the renter of the unit pursuant to the rental agreement. For example, if rent is paid on a monthly basis, one-twelfth of the unit’s allocated renter property tax relief shall be the monthly rent reduction over calendar year 1979. If a rental unit covered by this chapter is rented to a particular renter for only part of the calendar year 1979, the renter property tax relief to be provided to that renter in 1979 shall be proportional to the percentage of time during 1979 the rental unit is rented to that renter.

F. Rounding to Dollar Amount. In order to simplify the calculations made under this chapter, money amounts may be rounded to the nearest dollar.

G. Maximum Allowable Rent for Calendar Year 1979. Commencing on January 1, 1979, and until December 31, 1979, the maximum allowable rent for any rental unit covered by this chapter shall be the base rent, as determined in Section 7.44.060, reduced by the apportioned renter property tax relief allocated for that unit as determined in this section. (Ord. 5109-NS § 8, 1978)

A. By December 15, 1978, or within fifteen days of the issuance of the property tax bills for fiscal year 1978--79, whichever is later, the renter of each rental unit covered by this chapter shall be provided by the owner with a written notice of the renter property tax relief for that rental unit and the rent in effect for that rental unit for calendar year in 1979 as calculated pursuant to Section 7.44.080. Such notice shall substantially follow the form set out in Appendix A, attached to copies of Ordinance 5109-NS, on file in the City Clerk’s office.

B. When a rental unit covered by this chapter is rented to a new renter during the calendar year 1979, the new renter shall be provided by the owner with a written notice of the allocated renter property tax relief for that unit and the rent in effect for that rental unit for calendar year 1979 as determined under Section 7.44.080. Such notice shall be provided by the date the first rent is due and payable and shall substantially follow the form set out in Appendix A, attached to copies of Ordinance 5109-NS, on file in the City Clerk’s office.

C. After the date on which notices required by this section must be issued, the owner must provide, within seven days of the receipt of a written request by a renter of a rental unit in the owner’s property, a written list of the amounts of base rents and renter property tax relief for all units in the property including unrented units. Whenever possible, this list shall not identify specific units.

D. A sublessor may satisfy the notice requirements of this section by providing notices to sublessees within one week of receipt of the corresponding notice from the lessor. (Ord. 5109-NS § 9, 1978)

A. If a notice required by this chapter has not been provided in good faith by the date required, a renter may notify the owner to issue such a notice within three days. If, after three days, the required notice has not been provided to the renter, the renter may take any or all of the following actions until compliance is achieved:

1. A renter may withhold one-half of the rent otherwise due the owner. If the owner files an action for nonpayment of rent or an action for eviction for nonpayment of rent, the renter must deposit the withheld rent with the appropriate court when and if the owner requests such deposit of rent with the court, and if the court so orders;

2. A renter may seek injunctive relief on behalf of herself or himself and on behalf of other affected renters to restrain the owner from demanding or receiving any rent until the owner has complied with this chapter.

B. If an owner demands, accepts, receives or retains any payment in excess of the maximum allowable rent permitted by this chapter, a renter may notify the owner to return such excess payment or rescind any demand for excess payment within three days. If the owner has not returned any excess rent to the renter or rescinded any demand for excess rent within three days of such notice, the renter may:

1. Take any of the actions set out in subsection A of this section until compliance is achieved;

2. File a damage suit against the owner for actual damages.

Upon proof of wilful violation of this chapter by an owner, the renter shall receive a judgment of up to two hundred dollars or three times the amount by which the payment or payments exceeds the maximum lawful rent determined by this chapter, whichever is greater.

C. The City Attorney may bring an action for injunctive relief on behalf of renters seeking compliance by owners with this chapter. (Ord. 5109-NS § 10, 1978)

No owner may retaliate against a renter for the renter’s assertion or exercise of rights under this chapter by threatening to bring or bringing an action for possession, causing the renter to quit involuntarily, decreasing any services or increasing the rent. In an action by or against the renter, evidence of the assertion or exercise by the renter of her or his rights under this chapter within three months prior to the alleged act of retaliation shall create a presumption that the owner’s conduct was in retaliation for the renter’s assertion or exercise of rights under this chapter. "Presumption" means that the court must find the existence of the fact presumed, unless and until evidence is introduced which would support a finding of its nonexistence. (Ord. 5109-NS § 11, 1978)

A. Notwithstanding the provisions of Sections 7.44.060 and 7.44.080 of this chapter, an owner may charge a rent greater than the rent allowed under Sections 7.44.060 and 7.44.080 if the increased rent represents increased costs actually paid by the owner to the extent these costs exceed the twenty percent of the property tax savings retained by the owner. The total amount by which rents for a rental unit are increased under the provisions of this section shall not exceed the total cost increases allowed under this section reduced by the twenty percent of the property tax savings retained by the owner. Such increased costs must be related to the rental unit on which the increased rent is charged, and are limited to:

1. Increased costs resulting from the sale or refinancing pursuant to a sale of property which requires
higher current payments on that property, provided such sale or refinancing is not made to evade provisions
of this chapter;

2. Increases in taxes and/or fees related to the operation of the property except for state and federal
personal and corporate income taxes;

3. Increases in insurance premiums for the same type of coverage previously held on the property, and for

new coverage required by law or the lenders;

4. Unavoidable increases in maintenance and operating expenses, including increases in the costs of
utilities provided to the property at the owner’s expense; and

5. Increased costs of substantial rehabilitation of capital improvements undertaken after June 6, 1977, and
on or before the date of adoption of the ordinance codified in this chapter, or with the informed consent of all
renters in the property when such rehabilitation or improvements are undertaken after the date of the
adoption of the ordinance codified in this chapter, or when such rehabilitation or improvements are
undertaken as required to bring the property into compliance with the implied warranty of habitability and
applicable housing codes; provided, that such costs are apportioned over a good faith estimate of the life of
such rehabilitation or improvements.

B. An owner wishing to increase rents to cover increased costs under this section must notify renters in writing at least thirty days in advance of such rent increase and provide a clear financial statement which explains and documents the increased costs which necessitate the rent increase. (Ord. 5109-NS § 12, 1978)

If, on or after January 1, 1980, the rent for a rental unit covered by this chapter is increased by more than five percent on an annual basis above the maximum allowable rent determined according to this chapter for the calendar year 1979, the notice to the renter of this increase shall contain a clear and detailed financial statement which documents the reasons for such an increase. (Ord. 5109-NS § 13, 1978)

An intentional failure to comply with the provisions of this chapter shall be a misdemeanor. (Ord. 5109-NS § 14, 1978)