Sacramento Municipal Code Art. XIV Rent Escrow Account Program

This article shall be known as the rent escrow account program of the city of Sacramento. (Prior code § 49.14.1400)

A. Purpose. It is the purpose of the provisions of this article to provide a just, equitable and practical method, to be cumulative to and in addition to any other remedy available at law, to encourage compliance by landlords with respect to the maintenance and repair of residential buildings, structures, premises and portions thereof.

B. Scope. The provisions of this article shall apply to all residential units in all existing buildings, structures, and premises which consist of or contain one or more rental units.

C. Role of Housing Code Advisory and Appeals Board. The housing code advisory and appeals board shall be responsible for carrying out the provisions of this article.

It shall have the authority to issue orders and promulgate policies, rules and regulations to effectuate the purposes of this article.

It may make such studies and investigations, conduct such hearings, and obtain such information as it deems necessary to promulgate, administer and enforce any regulation, rule or order adopted pursuant to this article.

D. Other Provisions of the City Code Unaffected Hereby. The provisions of this article shall not be deemed to repeal by implication any other provision of the Sacramento City Code and the adoption hereof shall not be deemed to affect or diminish the power or authority of an officer or employee of the city to condemn, demolish, or repair any building or structure erected or maintained in violation of any provision of said code. The application of the provisions of this article shall not be construed as constituting ownership, operation, or management by the city of any building.

E. Cumulative Nature of Remedies and Penalties. Unless otherwise expressly provided, the remedies and penalties provided by this article are cumulative to each other and to any other remedies or penalties available under law. (Prior code § 49.14.1401)

The following words and phrases, whenever used in this article, shall be construed as defined in this section:

"Board" means housing code advisory and appeals board.

"Interested party" means any person, firm, corporation, partnership, or other entity listed in the title report as having an interest in the real property or known to the building inspections division as claiming an interest in the real property.

"Landlord" means an owner, lessor, or sublessor (including any person, firm, corporation, partnership, or other entity) who receives or is entitled to receive rent for the use of any residential unit, or the agent, representative, or successor of any of the foregoing.

"Proof of compliance" means documentation, on such form as the citing department may provide, that the deficiencies noted in the order or citation have been corrected. The board, by regulation, may specify the acceptable evidence for proof of compliance. The burden is on the landlord or the interested party to obtain and provide to the board or the building inspections division any proof of compliance.

"REAP" means the rent escrow account program provided by this article.

"Residential unit" means a unit rented or used for residential purposes in an existing residential building, structure, or premises which consists of or contains one or more rental units.

"Secretary" means the secretary of the housing code advisory and appeals board.

"Tenant" means a tenant, subtenant, lessee, sublessee, or any other person entitled to use or occupancy of a residential unit.

"Untenantable residential unit." A residential unit shall be deemed untenantable for the purposes of this article, if it or the common area of the building, structure, or premises in which it is located is the subject of a housing code citation or order pursuant to this chapter and substantially lacks any of the affirmative standard characteristics set forth in Civil Code Section 1941.1:

1. Effective waterproofing and weather protection of room and exterior walls, including unbroken windows and doors;

2. Plumbing or gas facilities which conformed to applicable law in effect at the time of installation, maintained in good working order;

3. A water supply approved under applicable law, which is under the control of the tenant, capable of producing hot and cold running water, or a system which is under the control of the landlord, which produces hot and cold running water, furnished to appropriate fixtures, and connected to a sewage disposal system approved under applicable law;

4. Heating facilities which conformed with applicable law at the time of installation, maintained in good working order;

5. Electrical lighting, with wiring and electrical equipment which conformed with applicable law at the time of installation, maintained in good working order;

6. Building, grounds and appurtenances at the time of the commencement of the lease or rental agreement in every part clean, sanitary, and free from all accumulations of debris, filth, rubbish, garbage, rodents and vermin, and all areas under control of the landlord kept in every part clean, sanitary, and free from all accumulations of debris, filth, rubbish, garbage, rodents, and vermin;

7. An adequate number of appropriate receptacles for garbage and rubbish, in clean condition and good repair at the time of the commencement of the lease or rental agreement, with the landlord providing appropriate serviceable receptacles thereafter, and being responsible for the clean condition and good repair of such receptacles under his control;

8. Floors, stairways, and railings maintained in good repair. (Ord. 2000-017 § 4(a)(22); prior code § 49.14.1402)

A. Referral to Board. The building inspections division, fire department or department of environmental management shall refer to the board any building containing any untenantable residential unit within ten (10) days after the expiration of the period allowed for compliance with an order or citation issued by the citing division or department where there has not been such compliance, or ninety (90) days after the date such order or citation was issued, whichever first occurs.

The referral to the board shall contain the street address of the property, a description of the uncorrected deficiencies, the names and addresses of the landlord, any interested parties, any tenants as shown on the records of the citing department, the apartment number or address of each untenantable residential unit, and any other information as required by such regulations as the board may promulgate. The citing division or department shall specify that the noncompliance with the citation or order appears to render the building or a portion thereof untenantable. In any appeal, a referral shall not be invalidated solely because required information is not included, or is inaccurate or incomplete.

B. Notice of Eligibility. Within ten (10) working days after receiving the referral, the board shall give to the landlord, tenants, any interested parties and any other person who has requested such notification in writing, a notice of eligibility to place the building into REAP.

The notice of eligibility shall provide written notification to the landlord of the eligibility of the building for placement into REAP and shall list the street address of the property, a description of the uncorrected deficiencies, the apartment number or address of each untenantable residential unit, and any other information required by such regulations as the board may promulgate. The notice of eligibility shall specify a date and time, not less than fourteen (14) and not more than thirty (30) calendar days from the date of the notice, at which the landlord may appear for a formal conference before the secretary of the board or a designee of the secretary. The notice of eligibility shall also state that if the building is placed into REAP, the city shall establish an escrow account for the deposit of monthly rent payments, with a nonrefundable administrative fee of fifty dollars ($50.00) per individual rent payment.

C. Manner of Giving Notice. The notice described in this section shall be given in writing and may be given either by personal delivery thereof to the landlord or by deposit in the United States mail in a sealed envelope, postage pre-paid, addressed to the landlord at the address known to the citing division or department, or as shown on the last equalized assessment roll if not known. Service by mail shall be deemed to have been completed at the time of deposit in the United States mail. The failure of any landlord or other person to receive such notice shall not affect in any manner the validity of any of the proceedings taken thereunder. Proof of giving any such notice may be made by a declaration signed under penalty of perjury by any employee of the city which shows service in conformity with this section.

D. Formal Conference. At the formal conference, and in accordance with any regulations which the board may promulgate, the landlord may demonstrate that the deficiencies have been corrected, that the landlord has obtained the necessary permits and has substantially commenced the work necessary to abate the deficiencies, or that the building does not come within the scope of this article. Prior to the date specified in the notice of eligibility, the landlord, in lieu of or in addition to the personal appearance provided for in this subsection, may submit to the secretary written information upon a form and with the number of copies prescribed by the board. Such submissions shall be accompanied by a declaration stating that the information is true and correct.

The secretary, or the designee of the secretary, shall provide a written report concerning the eligibility of a property for REAP to the board within five working days of the formal conference or the date set for the formal conference where no conference is held. (Prior code § 49.14.1403)

A. Review Process. The board shall receive the report of the secretary with respect to each building for which a notice of eligibility was sent to the landlord, including the results of the formal conference, if any. The board shall review each building with respect to its suitability for inclusion in REAP. The board shall complete its review within ten (10) working days of its receipt of the report of the secretary, unless additional time is necessary. In such event, the time for review shall be extended only so long as is reasonably necessary and only in accordance with such regulations as the board may promulgate. At the completion of the review process, the board shall vote for one of the following options:

1. Acceptance. If the board determines that a building meets each of the findings set forth in subsection C of this section, then the board shall vote to accept the building into REAP.

2. Rejection. If the board determines that a building does not meet all of the findings set forth in subsection C of this section, then the board may vote to reject a building for inclusion into REAP. Where a building is rejected, the secretary shall notify the landlord, any interested parties, any tenants known to the secretary, and any other occupants of the building that the building is not included in REAP at that time. The notice shall state the reasons for the rejection and shall state that such rejection does not relieve the landlord of criminal or civil liability under any other provisions of the law, and, where appropriate, that the building may be placed into REAP at a future date.

3. Suspension of Consideration. If the board determines that a building does not meet all of the findings set forth in subsection C of this section because work has commenced or been completed to correct the deficiencies, and the citing department has not yet issued proof of compliance, then the board may vote to suspend consideration of the building. However, the board shall specify a date, not later than the time reasonably necessary for the landlord or interested party to complete the work and obtain the proof of compliance, at which time the board shall reconsider the eligibility of the building for REAP. The requirements of Section 8.100.1090 of this chapter shall not be applicable to such reconsideration.

Upon such suspension, the secretary shall notify the landlord, any interested parties, any tenants known to the secretary, any other persons who requested notice in writing, and any other occupants of the building that the building is not included in REAP at that time. The notice shall state the reasons for the suspension and shall state that such suspension does not relieve the landlord of criminal or civil liability under any other provisions of the law. The notice shall also specify the date that the board will reconsider the eligibility of the building for REAP unless the board is provided with proof of compliance prior to such date.

B. Application for Release of Funds.

1. At any time during a building's participation in REAP, a landlord, any interested party, a tenant, and any creditor, including any utility, contractor, or subcontractor, whose debt arose from the purchase, repair, maintenance, or operation of the building may apply to the board for a release of funds from the escrow account. The board shall review such applications and, where the landlord concurs, may order the release of funds from the escrow account where it has been demonstrated to the satisfaction of the board that such release is necessary to prevent a significant diminution of an essential service to the building, including utilities, or is necessary for the correction of the deficiencies. Where specifically ordered by a court, the board shall order the release of funds from the escrow account irrespective of concurrence by the landlord.

2. The board shall deny the application where it determines that the application for payment of the debt is intended, in whole or in part, to circumvent the provisions of this chapter. A debt incurred subsequent to notice to such creditor that the building is under consideration for or had been selected for participation in REAP, shall be presumed, subject to rebuttal, to be for the purpose of circumventing the provisions of this article.

3. At any time during a building's participation in REAP, a tenant may apply to the board for a release of funds from the escrow account. The board shall review such applications and, where the landlord concurs, or fails to object within a reasonable time as determined by the board, may order the release of funds from the escrow account.

C. Findings. In reviewing whether a building should be included in REAP, the board and the city council shall find that each of the following factors exists:

1. The building contains one or more untenantable residential units as the result of the deficiencies noted in the citation or order; and

2. The landlord has refused or has consistently failed to correct the deficiencies. (Prior code § 49.14.1404)

The secretary shall have the following duties upon the instruction of the board:

A. Determination of Interested Parties. The secretary shall obtain a title report. The report of interested parties shall list all persons on the records of the county recorder as having an ownership interest or liens or encumbrances or other interests in the real property on which the building is located, in addition to any other interested party known to the secretary.

B. Contact with Tenants. The secretary may contact the tenants of any building during or after review. Such contact may be in person or by mail or by both. The secretary may contract with other persons or organizations to carry out this activity. During such contact, the tenants shall be informed of the principal provisions of REAP, of the mechanism for voluntary payment into the escrow account by tenants of untenantable residential units where the building is accepted into REAP, and of their legal rights with respect to eviction under the provisions of this article.

The specific responses of tenants and any information in a form which is identifiable to any individual tenant shall not be a public record and shall not be disclosed to the landlord, any interested party, or the general public.

C. REAP Trust Fund. The secretary shall establish and maintain the REAP trust fund in accordance with the provisions of this article. (Prior code § 49.14.1405)

A. Notice of Preliminary Acceptance. Within ten (10) working days of the acceptance by the board of a building into REAP, the secretary shall mail notification of the preliminary acceptance to the landlord as identified in the title report, any creditors of the landlord known to the secretary, to SMUD, to PG&E, to city revenue division, any interested parties, all tenants in the building who are known to the secretary, and the occupants of each untenantable residential unit, and any other person who has requested such notice in writing.

The notice of preliminary acceptance shall state that the property, subject to the final approval of the city council, has been accepted into REAP and shall state the following:

1. The street address of the property;

2. A description of the uncorrected deficiencies;

3. Which residential units in the building are eligible for payment into the escrow account;

4. The proposed date upon or after which an escrow account shall be established into which tenants of untenantable residential units may deposit their rent in lieu of payment to the landlord;

5. That a nonrefundable administrative fee of fifty dollars ($50.00) per residential unit per monthly rent payment shall be collected by the city from the escrow account;

6. The date, if no appeal is filed, on which the city council will consider, by resolution, whether to approve the acceptance of the building into REAP; and

7. The right of the landlord or other interested party to appeal the determination of the board to accept the building to the city manager.

B. City Council Approval of Acceptance.

1. The city council, by resolution, may accept a building into REAP, adopting the determination of the hearing officer or the board where no appeal is filed, and finding that each of the factors set forth in Section 8.100.1100(C) of this chapter exists. The action of the city council accepting a building into REAP shall be final, except as provided in subsection (B)(2) of this section.

2. The city council may, at any time, upon its own motion or the application of the board, rescind the resolution of acceptance if it finds that the resolution is no longer necessary.

C. Notice of Acceptance. Within ten (10) working days of the acceptance by the city council of a building into REAP, the secretary shall mail notification of the acceptance to the parties entitled to notice under subsection A of this section.

The notice of acceptance shall state that the property has been accepted into REAP and shall state the following:

1. The street address of the property;

2. A description of the uncorrected deficiencies;

3. Which residential units in the building are eligible for payment into the escrow account;

4. The date upon or after which an escrow account shall be established into which tenants of untenantable residential units deposit their rent in lieu of payment to the landlord; and

5. That a nonrefundable administrative fee of fifty dollars ($50.00) per residential unit per monthly rent payment shall be collected by the city from the escrow account.

D. Service of Notices. The notice of preliminary acceptance and the notice of acceptance shall be sent to each landlord and interested party both by certified mail, postage prepaid, return receipt requested, and by first-class mail, postage prepaid, at the address or addresses of such person as it appears on the last equalized assessment roll of the county or as known to the secretary. Service on other persons entitled to a notice may be sent by first-class mail, postage prepaid. In addition, a copy of the notice of preliminary acceptance or the notice of acceptance shall be posted in a conspicuous place upon the building involved. The failure of any landlord or other person to receive such notice shall not affect in any manner the validity of any proceedings taken thereunder.

E. Declaration of Service. The designee of the secretary, upon giving notices as provided in this section, shall make a declaration under penalty of perjury certifying to the date and manner in which such notice was given. Any receipt card which may have been returned to the secretary in acknowledgment of the receipt of such notice by certified mail shall also be filed with the declaration.

F. Recording. At the time that the secretary gives the notice described in subsection A of this section, the secretary shall file and record with the county recorder of the county of Sacramento a certificate legally describing the real property and stating that the subject building has been placed into REAP and that the owner thereof has been so notified. After the building has been removed from REAP, the secretary shall file and record with the county recorder a certificate terminating the above-recorded status of the subject building. The board may, by regulation, provide for the reimbursement to the secretary from the escrow trust account for the fees and costs incurred. (Prior code § 49.14.1406)

A. Appeal. A landlord or interested party may appeal the determination of the board. The request for a hearing must be filed within ten (10) calendar days after the mailing of the notice of acceptance as provided for in Section 8.100.970(A) of this chapter, and such request shall be in writing and filed in the offices of the secretary upon a form and with the number of copies required by the secretary. The landlord shall include a current list of all of the tenants in the building with the application. Each request for hearing shall be accompanied by a filing fee in an amount to be set by resolution of the city council.

The request for hearing shall set forth specifically wherein the requesting party believes there was an error or abuse of discretion by the board in the determination. Additionally, a request for hearing may be made based on new, relevant information which was not submitted to the board at the time of the original determination due to mistake, surprise, inadvertence or excusable neglect, and which information would have affected the determination of the board if it had been submitted earlier.

B. Hearings.

1. The requested hearing shall be held and conducted by a hearing officer designated by the city manager. Notice of the time, date and place of the hearing shall be mailed by the secretary at least ten (10) calendar days prior to the hearing date to the landlord, any interested party, and the tenants and shall be posted on the subject building at least ten (10) calendar days prior to the hearing date.

2. At the time of the hearing, the landlord, any interested party, or any tenant, or their representatives or council, may offer such documents, testimony, written declaration or evidence as may be pertinent to the proceedings. The burden of proof shall be on the appellants to demonstrate their cases by a preponderance of the evidence.

3. The board, the secretary, and the hearing officer may rely on the records of the citing departments as prima facie evidence of their contents. The board, the secretary, and the hearing officer shall be bound by the determination of the citing department as to the existence of any deficiencies or as to any proof of compliance.

C. Determination.

1. A final decision shall be made by the hearing officer within fifteen (15) calendar days of the hearing.

2. The hearing officer may affirm, modify, or reverse the determination of the board. The hearing officer shall find that each of the factors set forth in Section 8.100.1100(C) of this chapter exists in affirming the acceptance of a building into REAP. The hearing officer may modify or reverse the determination of the board only upon making written findings setting forth specifically either (i) wherein the action of the board was in error or constituted an abuse of discretion, or (ii) there is new, relevant information which was not previously submitted either at the time of the board review or the formal conference due to mistake, surprise, inadvertence, lack of notice, or excusable neglect, which information supports such modification or reversal.

3. Within five working days of receipt of the findings and determination from the hearing officer, the secretary shall mail a copy of same to the landlord, any interested party, all tenants, the representatives or counsels of such persons, and any other person who makes a written request. Where the determination is the acceptance of the building into REAP, the secretary shall forward a report, including the findings and determination to the city council within five working days of the receipt of the findings and determination.

4. A determination that a building is accepted into REAP is subject to acceptance by the city council. With respect to all other issues on appeal, the decision of the hearing officer is final. (Prior code § 49.14.1407)

A. Within ten (10) working days after the decision of the board or the hearing officer accepting a building into REAP becomes final, the secretary shall establish as part of the REAP trust fund an account for such building into which tenants of untenantable residential units of such building may deposit rent payments. The secretary shall mail notification to all such tenants of the existence of the account, including an explanation of how payments may be deposited into the account. The secretary shall provide a receipt to each tenant making a deposit. The secretary shall provide, at least once a month, a periodic report to the landlord and the tenants concerning the activity in such account. The records of such account shall be reasonably available to the landlord or any interested party, or their representatives, in accordance with such regulations, including the provision for payment of reasonable fees, as the board may promulgate.

B. The gross amount of payment made into the account by or on behalf of a tenant shall be deemed as a payment in the same amount to the landlord, including, but not limited to, for the purpose of determining whether a tenant has paid rent. In any action by a landlord to recover possession of a residential unit, the tenant may raise the fact of payments into REAP as an affirmative defense in the same manner as if such payments had been made to and accepted by the landlord.

C. A landlord may bring an action to recover possession of a rental unit that has been accepted into the REAP program only upon one or more of the following grounds:

1. The tenant has failed to pay rent into REAP or to the landlord.

2. The tenant has violated a lawful obligation or covenant of the tenancy and has failed to cure such violation after having received written notice thereof from the landlord.

3. The tenant is committing or permitting to exist a nuisance in, or is causing damage to, the rental unit or to the appurtenances thereof, or to the common areas of the complex containing the rental unit or is creating an unreasonable interference with the comfort, safety, or enjoyment of any of the other residents of the same or any adjacent building.

4. The tenant is using or permitting a rental unit to be used for any illegal purpose. The term "illegal purpose" as used in this subdivision includes, but is not limited to, the conviction of a tenant or tenants of possession for sale or sale of illegal drugs from the rental unit.

5. The tenant has refused the landlord reasonable entry pursuant to Civil Code Section 1954.

D. Prior to or at the same time as the written notice of termination described in Civil Code Section 1946, or the three days' notice described in Code of Civil Procedure, Sections 1161 and 1161a, is served on the tenant of a rental unit, the landlord shall serve on the tenant a written notice setting forth the reasons for the termination with specific facts to permit a determination of the date, place, witnesses and circumstances concerning the reason. This notice shall be given in the manner prescribed by Code of Civil Procedure, Section 1162.

E. If the landlord is seeking to recover possession of a residential unit in retaliation against the tenant for exercising his or her rights under this article or because of his or her complaint to an appropriate agency as to the tenantability of a residential unit, or because of city action under this article, then the landlord may not recover possession of a residential unit in any action or proceeding or cause the tenant to quit involuntarily.

F. If any action by a landlord to recover possession of a rental unit, the tenant may raise as an affirmative defense any of the provisions set forth in subsections B, C, D, and E of this section or Section 8.100.1160 of this chapter. Violation of subsections B, C, D, and E shall not constitute a misdemeanor.

G. The secretary shall deduct a nonrefundable administrative fee of fifty dollars ($50.00) for each individual rent payment made into the account. Only one such fee shall be deducted for each residential unit for each month.

H. The funds paid into the escrow account shall only be expended on the following items:

1. The nonrefundable administrative fee provided under Subsection D of this section;

2. Funds returned to the landlord where the landlord has provided the secretary with proof of compliance that the deficiencies have been corrected;

3. Funds paid in accordance with a court order;

4. Funds paid to the landlord, an interested party, tenant, creditor, utility, or other person or entity pursuant to an order of the board;

5. Funds paid in accordance with and pursuant to such regulations as the board may promulgate. (Prior code § 49.14.1408)

A. Request for Removal. The landlord or any interested party may apply to the board for an order removing a building from REAP on the ground that the deficiencies noted in the citation or order have been corrected and that continued placement in REAP is not necessary to ensure continued compliance by the landlord with respect to required maintenance of the building. A request to terminate the payment of rents into a rent escrow account may be made at any time. A request to remove a building from regulation pursuant to this chapter may only be made after the expiration of twelve (12) months from the date the deficiencies noted in the citation or order were corrected.

B. Report and Hearing. The secretary shall prepare a report to the board containing a recommendation on the request by the landlord. A hearing on the application shall be scheduled no later than sixty (60) days after the request is received, with notice thereof given to those parties who would be eligible to receive a notice of eligibility under Section 8.100.1090(B) of this chapter. At the hearing, the board shall determine whether the deficiencies have been corrected and whether termination of the escrow account or removal from REAP is appropriate. The board shall be bound by the determination of the citing department as to the existence or correction of deficiencies. The decision of the board shall be forwarded to the city council by the secretary within five working days of the date of the decision for their consideration.

C. Notice of Removal. Within ten (10) working days after the decision of the board, notice of the board's decision shall be given to all persons who were sent a notice of acceptance pursuant to Section 8.100.1120 of this chapter. (Prior code § 49.14.1409)

The landlord shall not increase the rent for any rental unit included in REAP during such time as the rental unit or units remain in the REAP program, except that, for a rental unit which is voluntarily vacated by all of the tenants after all of the deficiencies noted in the citation or order have been corrected, the landlord may increase the rent to any amount upon rerental of the rental unit. The board shall promulgate regulations setting forth what constitutes a voluntary vacation of the rental unit. (Prior code § 49.14.1410)