Santa Ana Municipal Code § 8-3145 Petition process

(a) Increases in Rent on Residential Real Property or Mobilehome Spaces in the City of Santa Ana in excess of three percent (3%), or eighty (80%) of the change in the Consumer Price Index, whichever is less, and more than one Rent Increase in any twelve (12) month period, are prohibited, unless expressly exempt under the Costa-Hawkins Rental Housing Act codified in California Civil Code section 1954.50, et seq., or the Mobilehome Residency Law codified in California Civil Code sections 798, et seq. If the change in the Consumer Price Index is negative, no Rent Increase is permitted. The term Consumer Price Index means, at the time of the adjustment calculation completed by the City pursuant to subsection (b), the percentage increase in the United State Consumer Price Index for all Urban Consumers in the Los Angeles-Long Beach-Anaheim Metropolitan Area published by the Bureau of Labor Statistics, not seasonally adjusted, for the most recent twelve (12) month period ending prior to the City's calculation pursuant to subsection (b). A violation of this section occurs upon the service of notice or demand for a prohibited increase in Rent.

(b) No later than June 30 each year, beginning with the year 2022, the City shall announce the amount of allowable Rent Increase based on subsection (a) herein, which shall be effective as of September 1 of that year.

(Ord. No. NS-3027, § 3, 10-18-22; Ord. No. NS-3052, § 6, 10-17-23; Ord. No. NS-3073, § 1, 11-5-24)

This article allows for an annual adjustment of Residential Real Property or Mobilehome Space Rent of up to three percent (3%), or eighty (80%) of the change in the Consumer Price Index, whichever is less. A Consumer Price Index-based increase is found and determined to provide a just and reasonable return on an Owner's property, and has been adopted to encourage good management, reward efficiency, and discourage the flight of capital, as well as to be commensurate with returns on comparable investments, but not so high as to defeat the purpose of curtailing excessive Rents and rental increases. Notwithstanding the foregoing, however, any Owner of Residential Real Property or a Mobilehome Park who contends that the limit on rental increases set forth in Section 8-3140 above will prevent the Owner from receiving a fair and reasonable return on their property may petition for relief from the cap set forth in section 8-3140 pursuant to the procedures set forth in this Division.

(Ord. No. NS-3027, § 3, 10-18-22; Ord. No. NS-3073, § 1, 11-5-24)

(a) A Landlord may submit a Fair Return Petition to the Program Administrator in accordance with the procedures set forth in this Division requesting a Rent Increase in excess of that provided in this Division in order to obtain a fair and reasonable return on the Rental Unit.

(b) Standard of Review. All relevant factors shall be considered when evaluating a Fair Return Petition, including, but not limited to, the following:

1. Changes in the Consumer Price Index for All Urban Consumers in the Los Angeles-Long Beach-Anaheim Metropolitan Area published by the Bureau of Labor Statistics;

2. The Rent lawfully charged for comparable Rental Units in the City;

3. The length of time since the last determination on a Fair Return Petition, or the last Rent Increase if no previous Fair Return Petition has been made;

4. The completion of any rehabilitation work related to the Rental Unit, and the cost thereof, including materials, labor, construction interest, permit fees, and other items deemed appropriate;

5. Changes in property taxes or other taxes related to the Rental Unit;

6. Changes in the Rent paid by the Landlord for the lease of the Rental Unit;

7. Changes in the utility charges for the Rental Unit paid by the Landlord, and the extent, if any, of reimbursement from the Tenants;

8. Changes in reasonable Operating Expenses;

9. Changes in Net Operating Income;

10. The need for repairs caused by circumstances other than ordinary wear and tear;

11. The amount and quality of Housing Services provided by the Landlord to the Tenants;

12. Compliance with any existing Rental Agreement lawfully entered into between the Landlord and Tenants; and

13. Landlord's substantial compliance with this Article and applicable housing, health and safety codes.

(Ord. No. NS-3027, § 3, 10-18-22; Ord. No. NS-3073, § 1, 11-5-24)

(a) Effective July 1, 2023, or as modified by resolution of the City Council, a Landlord may submit a Capital Improvement Petition to the Program Administrator in accordance with the procedures set forth in this Division requesting a pass-through cost to the Tenants to cover expenses incurred by the Landlord to complete Capital Improvements for the Rental Unit pursuant to the following provisions:

1. The Capital Improvement was paid for and completed after November 19, 2021 (the effective date of the first adopted Rent Stabilization Ordinance);

2. The Capital Improvement was paid for and completed prior to the filing of the Capital Improvement Petition;

3. A Capital Improvement Petition must be initiated by the Landlord within two (2) years of completion of the Capital Improvement;

4. A Capital Improvement Petition shall not apply to Rental Units or new Tenants whose initial Rent was established after the Landlord completed the Capital Improvement;

5. The Landlord may not require a Tenant to pay any amount of any cost that is attributable to any period of time that the Tenant was not entitled to use and occupy the Rental Unit;

6. The Landlord may not require a Tenant to pay more than the Tenant's share of the cost attributable to that Tenant's Rental Unit that is permitted to be passed through to the Tenant;

7. If the Capital Improvement inures solely to the benefit of one or more of the Rental Units, but to less than all, the surcharge shall be so annualized, but shall be applied and/or prorated only with respect to the one or more Rental Units actually so benefited;

8. Equipment otherwise eligible as a Capital Improvement will not be considered if a "use fee" is charged (i.e. - coin operated washer and dryers); and,

9. Pass through costs for Capital Improvements shall not be considered Rent and shall not be increased when Rent Increases, nor shall they be considered Rent for purposes of calculating a Rent Increase.

(b) Calculating Capital Improvements. Any Capital Improvement pass-through cost must be calculated according to the following:

1. Capital Improvement costs must be amortized over the useful life of the Capital Improvement, not to exceed ten percent (10%) of the current Rent; for the purposes of such computation, the current Rent for any time period shall not include any Capital Improvement pass-through amounts;

2. For mixed-use structures and Landlord-occupied Rental Units, only the percent of residential square footage will be applied in the calculations;

3. If a unit is occupied by an agent of the Landlord, this unit must be included when determining the average costs per Rental Unit; and,

4. If the Landlord is reimbursed for Capital Improvements (i.e. - insurance, court-awarded damages, subsidies, etc.), such reimbursement must be deducted from the Capital Improvements before costs are amortized and allocated among the Rental Units.

(c) Standard of review. All relevant factors shall be considered when evaluating a Capital Improvement Petition, including the following:

1. Capital Improvement completed;

2. Landlord's Petition made within two (2) years of completion of Capital Improvement;

3. Distinguished from ordinary repair or maintenance;

4. For the primary benefit, use, and enjoyment of the Tenant;

5. Permanently fixed in place or relatively immobile and appropriated to the use of the Rental Unit;

6. No "use fee" or other charge imposed on Tenants for its use; and,

7. Cost-factored and amortized.

(Ord. No. NS-3027, § 3, 10-18-22; Ord. No. NS-3073, § 1, 11-5-24)

(a) Effective July 1, 2023, or as modified by resolution of the City Council, a Tenant may submit a Petition to the Program Administrator in accordance with the procedures set forth in this Division on any one (1) or more of the following grounds:

1. To request review of a Rent Increase in excess of the maximum allowed Rent Increase;

2. To request a reduction in Rent based on decreased Housing Services;

3. To request a reduction in Rent based on failure of the Landlord to maintain a habitable premises, including health, safety, fire, or building code violations;

4. To contest a Capital Improvement cost as an unauthorized or excessive pass through; or,

5. For any other violation of this Article by the Landlord.

(b) Tenant's time to file a Petition. Where applicable, a Tenant filing a Petition under this Division shall do so within the following time limits:

1. Tenant receiving a notice of Rent Increase shall have thirty (30) days after service of such notice to file a Petition for review of Rent;

2. In instances where notice is not provided as required, the Tenant shall file a Petition for review of Rent within thirty (30) days after Tenant knew of the alleged failure to comply with the requirements of this Article; and,

3. For any other violation(s) of this Article by the Landlord, the Tenant shall file a Petition within one hundred and eighty (180) days of the alleged violation(s).

(c) Standard of Review. All relevant factors shall be considered when evaluating a Tenant Petition, including the following:

1. Landlord allows violations of this Article or other applicable state and local statutes to persist;

2. Any reduction of Housing Services, living space, or amenities;

3. Substantial deterioration of the Rental Unit other than as a result of ordinary wear and tear;

4. Landlord's failure to provide adequate Housing Services;

5. Tenant provided Landlord with reasonable notice and opportunity to correct the conditions that provide the basis for the petition; and,

6. Landlord's failure to comply substantially with this Article or applicable housing, health and safety codes.

(d) Restoration of Rent Decrease. Where a Rent decrease has been ordered pursuant to this Division due to a decrease in Housing Services or failure to maintain habitability, the amount of Rent decreased (return of excess Rent) may be restored in accordance with procedures set out in the regulations when the former Housing Services or maintenance levels are reinstated.

(Ord. No. NS-3027, § 3, 10-18-22; Ord. No. NS-3073, § 1, 11-5-24)

A Landlord or a Tenant may file Petitions with the Program Administrator, as provided in this Division. For purposes of this Petition process, the Landlord and each Tenant of a Rental Unit that is the subject of a Petition shall be a "party" to the Petition. The Program Administrator shall promulgate regulations regarding procedures for Petitions filed under this Article. Petitions shall be governed by such regulations and by the provisions of this Section. Petitions shall be available in the language that the Owner and Tenant used to negotiate the terms of the Tenancy (e.g., Spanish, Chinese, Tagalog, Vietnamese and Korean), as well as English.

(a) Filing Petition. Upon the filing of a Petition, the Program Administrator shall notify the petitioner of the acceptance or denial of the Petition based on the completeness of the submission. The Program Administrator shall not assess the merits of the Petition, and shall only refuse acceptance of a Petition that does not include required information or documentation or comply with the requirements of this Division.

(b) Filing Fee. Fees for the filing of any Petition shall be established by City Council resolution in the City's Miscellaneous Fee Schedule.

(c) Prior Petition. Notwithstanding any other provision of this Division, no Petition shall proceed if a decision has been made with regard to a prior Petition based on the same or substantially the same grounds within the previous one hundred and eighty (180) days.

(d) No Landlord Petition or upward adjustment of Rent shall be authorized under this Division if the Landlord:

1. Has continued to fail to comply, after order of the Board, with any provisions of this Article and/or orders or regulations issued thereunder by the Board; or

2. Has failed to bring the Rental Unit into compliance with the implied warranty of habitability.

(e) Notice of Petition. As soon as possible after acceptance of a Petition, the Program Administrator shall provide written notice to the Landlord, if the Petition was filed by the Tenant, or the Tenant, if the Petition was filed by the Landlord, of the receipt of such a Petition. The written notice shall inform the parties of the Petition process, the right to respond, and include a copy of the completed Petition and supportive documents. Any response submitted by the responding party will be made available to the petitioning party.

(f) Hearing Officer. An impartial Hearing Officer appointed by the Program Administrator shall conduct a hearing to act upon the Petition. The Hearing Officer has the following powers:

1. To make a determination on a Petition; and

2. Any other powers delegated to the Hearing Officer by the Board.

(g) Board Action in Lieu of Reference to Hearing Officer. The Board, on its own motion, in the Board's sole discretion, may hold a hearing on a Petition without the Petition first being heard by a Hearing Officer.

(h) Time of Hearing. Each accepted Petition shall be scheduled for a hearing by the Hearing Officer to be held on a date not more than sixty (60) days from the date the Program Administrator accepts the Petition. With agreement of the parties, the Hearing Officer may hold the hearing beyond the sixty (60) days. In no event later than ten (10) days prior to the hearing, the Hearing Officer shall notify all parties as to the time, date, and place of the hearing.

(i) Consolidation. All Landlord Petitions pertaining to Tenants in the same building shall be consolidated for hearing, and all Petitions filed by Tenants occupying the same building shall be consolidated for hearing, unless the Program Administrator or Hearing Officer finds good cause not to consolidate such Petitions.

(j) Right of Assistance. All parties to a hearing may have assistance in presenting evidence and developing their position from attorneys, legal workers, or any other persons designated by said parties.

(k) Rules of Evidence. Formal rules of evidence shall not be applicable to hearings on Petitions. At such a hearing, the parties may offer any documents, testimony, written declarations, or other evidence that, in the opinion of the Hearing Officer, is credible and relevant to the Petition. The Hearing Officer may consider the results of inspections of the property in question and the results of any other investigations conducted by or at the request of the Hearing Officer or Program Administrator. Evidence unduly repetitious, lacking credibility, or irrelevant evidence shall be excluded upon order by the Hearing Officer.

(l) Evidence. Any party may appear and offer such documents, testimony, written declarations, or other evidence as may be pertinent to the proceeding. The Hearing Officer may require either party to a Petition to provide any books, records, or papers deemed pertinent, in addition to that information contained in the Petition and Rental Registry. The Hearing Officer may request the City to conduct a current building inspection if the Hearing Officer finds good cause to believe the current information does not reflect the current condition of the Rental Unit. All documents required under this section shall be made available to the parties involved prior to the hearing. In cases where information filed in a Petition or in additional submissions filed at the request of the Hearing Officer is inadequate or false, no action shall be taken on said Petition until the deficiency is remedied.

(m) Quantum of Proof. The party who files the Petition shall have the burden of proof. No Petition shall be granted unless supported by the preponderance of the evidence submitted at the hearing.

(n) Time for Decision. The policies and procedures adopted by the Board shall provide for final action on any Petition within a reasonable time.

(o) Notice of Decision. The Hearing Officer shall make a determination on the merits of the Petition and shall provide a written statement of decision, including findings upon which the determination is based. The Hearing Officer's decision on a Petition may be reasonably conditioned in any manner necessary to effectuate the purposes of this Article. Additionally, the parties to the hearing shall also be notified of their right to any appeal allowed by the Board and/or to judicial review of the decision pursuant to this Division.

(p) Hearing Record. The record of the hearing shall include: the Petition; all exhibits, papers, and documents required to be filed or accepted into evidence during the proceedings; a list of participants present; a summary of all testimony accepted in the proceedings; a statement of all materials officially noticed; all recommended decisions, orders and/or rulings; all final decisions, orders and/or rulings; and the reasons for each final decision, order and/or ruling. All hearings shall be recorded.

(q) Appeal. Any person aggrieved by the decisions of the Hearing Officer may appeal to the Board. An appeal to the Board shall be filed no later than thirty (30) days after receipt of the notice of the decision of the Hearing Officer. On appeal, the Board shall affirm, reverse, or modify the decision of the Hearing Officer. Unless the Board elects to conduct a de novo hearing, Board review of the Hearing Officer's decision shall be based on the hearing record without holding a new hearing. The Board may consider additional evidence for good cause, including evidence which did not exist at the time of the hearing or which could not be discovered using due diligence by a party. If no Board exists, any appeal of the Hearing Officer decision on a Petition shall proceed pursuant to the administrative appeal procedures found in Chapter 3 of the Santa Ana Municipal Code.

(r) Finality of Decision. The decision of the Hearing Officer shall be the final decision of the Board in the event of no appeal to the Board. The decision of the Hearing Officer shall not be stayed pending appeal; however, in the event that the Board on appeal reverses or modifies the decision of the Hearing Officer, the Board shall order the appropriate party to make retroactive payments, as applicable, to restore the parties to the position they would have occupied had the Hearing Officer's decision been the same as that of the Board.

(Ord. No. NS-3027, § 3, 10-18-22; Ord. No. NS-3073, § 1, 11-5-24)

(a) Voluntary mediation services shall be provided by the City. Upon request, the Program Administrator shall appoint a Mediator and set a date for a mediation no later than thirty (30) days after the acceptance of the subject Petition, unless the Program Administrator determines that additional time is required under the circumstances. The Program Administrator shall notify the Landlord and Tenant(s) in writing of the date, time, and place of the mediation hearing at least ten (10) days prior to the mediation. This notice shall be served either in person or through ordinary mail or electronic correspondence.

(b) It is the intent and purpose of mediation to provide a process in which Mediators may assist disputants in reaching a voluntary agreement. Accordingly, except as otherwise expressly provided herein, there shall be no penalty or disability, either civil or criminal, for failure to participate in the mediation process, and there shall be no penalty, either civil or criminal, for failure to reach agreement with a disputant in the mediation process.

(c) Mediation is a voluntary collaborative process wherein the Landlord and Tenant(s) who have a disagreement can develop options, consider alternatives, and develop a consensual agreement. The role of the Mediator is to facilitate open communication to resolve a dispute in a non-adversarial and confidential manner.

(d) If the Landlord and Tenant agree to a resolution, the Mediator may assist the parties in preparing a written settlement agreement for the signature of the Landlord and the Tenant, provided that in doing so the Mediator confines the assistance to stating the settlement as determined by the parties. Such agreement shall constitute a legally enforceable contract.

(e) Should the parties fail to agree to a resolution, or the Mediator determines that the parties have reached an impasse, the Mediator may refer the Petition back to the Program Administrator to continue the Petition review process detailed in this Division.

(f) All documents and results related to mediations and facilitations held pursuant to this Article shall be kept confidential and shall be inadmissible as evidence in any subsequent administrative or judicial proceeding.

(g) The Mediator and/or Program Administrator shall provide documentation and translation services in the language that the Owner and Tenant used to negotiate the terms of the Tenancy (e.g., Spanish, Chinese, Tagalog, Vietnamese and Korean), as well as English.

(Ord. No. NS-3027, § 3, 10-18-22; Ord. No. NS-3073, § 1, 11-5-24)

(a) Pursuant to the Costa-Hawkins Rental Housing Act, the provisions of this ordinance regulating the amount of Rent that a Residential Real Property Owner may charge shall not apply to the following: any Residential Real Property that has a certificate of occupancy issued after February 1, 1995 (California Civil Code section 1954.52(a)(1)); and, any other provisions of the Costa-Hawkins Rental Housing Act addressing exemptions, as applicable.

(b) Pursuant to the Mobilehome Residency Law, the provisions of this ordinance regulating the amount of Rent that a Mobilehome Park Owner may charge for a Mobilehome Space shall not apply to the following: any Mobilehome Space subject to a long term (more than one year) Rental Agreement (California Civil Code section 798.17); any newly constructed Mobilehome Space first offered for rent on or after January 1, 1990 (California Civil Code section 798.45); Mobilehomes not being used as a person's primary residence that are not being leased to someone else (California Civil Code section 798.21); and, any other provisions of the Mobilehome Residency Law addressing exemptions, as applicable.

(c) Pursuant to the Tenant Protection Act of 2019, Civil Code section 1947.12(d), the provisions of this ordinance regulating the amount of Rent that a Residential Real Property Owner may charge shall not apply to the following:

(1) Housing restricted by deed, regulatory restriction contained in an agreement with a government agency, or other recorded document as affordable housing for persons and families of very low, low, or moderate income, as defined in Section 50093 of the Health and Safety Code, or subject to an agreement that provides housing subsidies for affordable housing for persons and families of very low, low, or moderate income, as defined in Section 50093 of the Health and Safety Code or comparable federal statutes.

(2) Dormitories owned and operated by an institution of higher education or a kindergarten and grades 1 to 12, inclusive, school.

(3) Housing that has been issued a certificate of occupancy within the previous fifteen (15) years.

(4) Residential Real Property that is alienable separate from the title to any other dwelling unit, provided that both of the following apply:

A. The Owner is not any of the following:

i. A real estate investment trust, as defined in section 856 of the Internal Revenue Code.

ii. A corporation.

iii. A limited liability company in which at least one (1) member is a corporation.

B. i.

The Tenants have been provided written notice that the Residential Real Property is exempt from this section using the following statement:

"This property is not subject to the Rent limits imposed by Santa Ana Municipal Code section 8-3140 and the Owner is not any of the following: (1) a real estate investment trust, as defined by section 856 of the Internal Revenue Code; (2) a corporation; or (3) a limited liability company in which at least one (1) member is a corporation."

ii. For a Tenancy existing before the effective date of this ordinance, the notice required under clause (i) may, but is not required to be provided in the Rental Agreement.

iii. For a Tenancy commenced or renewed on or after the effective date of this ordinance, the notice required under clause (i) must be provided in the Rental Agreement.

(5) A property containing two (2) separate dwelling units within a single structure in which the Owner occupied one (1) of the units as the Owner's principal place of residence at the beginning of the Tenancy so long as the Owner continues in occupancy, and neither unit is an accessory dwelling unit or a junior accessory dwelling unit.

(Ord. No. NS-3027, § 3, 10-18-22; Ord. No. NS-3073, § 1, 11-5-24)

No Rent Increase shall be effective if the Owner:

(a) Fails to substantially comply with all provisions of this Division, including but not limited to the failure to provide notices as required; or

(b) Fails to maintain the Residential Real Property or Mobilehome Space in compliance with California Civil Code Sections 1941.1 et seq. and California Health and Safety Code sections 17920.3 and 17920.10, except as to Mobilehomes and Mobilehome Spaces in Mobilehome Parks that are subject to the Mobilehome Parks Act, Health and Safety Code section 18200, et seq.; Manufactured Housing Act, Health and Safety Code section 18000, et seq.; or the National Manufactured Housing Construction and Safety Standards Act of 1974, 42 U.S.C. sections 5401, et seq., as applicable; or

(c) Fails to make repairs ordered by the City or court of competent jurisdiction.

(d) No Rent Increases shall take effect for any Rental Unit unless the Landlord has accurately completed the Rental Unit Registration.

(Ord. No. NS-3027, § 3, 10-18-22; Ord. No. NS-3073, § 1, 11-5-24)

(a) An Owner of any Residential Real Property or Mobilehome Space subject to this provision shall, on or before the date of commencement of a Tenancy, give the Tenant a written notice in a form prescribed by the City which must include the following information:

(1) The existence and scope of this Division 3 of Article XIX of Chapter 8 of the Santa Ana Municipal Code; and

(2) The Tenant's right to respond to any Fair Return or Capital Improvement Petition filed with the City by the Owner pursuant to this Division.

(b) As part of any notice to increase Rent, an Owner must include:

(1) Notice of the existence of this Division 3 of Article XIX of Chapter 8 of the Santa Ana Municipal Code; and

(2) The Tenant's right to respond to any Fair Return or Capital Improvement Petition filed with the City by the Owner pursuant to this Division, unless such Rent Increase is pursuant to an approved Fair Return Petition.

(3) No Rent Increase shall take effect until the requirements of this Division have been met.

(c) The Owner must give notices to the Tenant in the language that the Owner and Tenant used to negotiate the terms of the Tenancy (e.g., English, Spanish, Chinese, Tagalog, Vietnamese, and Korean) as well as English.

(d) Any notices or documents required to be provided from a Landlord to a Tenant by this Article or any other federal, state, or local law, including, but not limited to, notice of Rent Increase and notice of eviction, shall be provided to the City through the Rental Registry portal.

(Ord. No. NS-3027, § 3, 10-18-22; Ord. No. NS-3073, § 1, 11-5-24)