SPECIAL MEETING - RULES, ELECTIONS, AND INTERGOVERNMENTAL RELATIONS COMMITTEE. Wednesday, October 10, 2018

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1 Called by Committee Chair SPECIAL MEETING - RULES, ELECTIONS, AND INTERGOVERNMENTAL RELATIONS COMMITTEE Wednesday, October 10, 2018 JOHN FERRARO COUNCIL CHAMBER, ROOM 340, CITY HALL - 8:30 AM 200 NORTH SPRING STREET, LOS ANGELES, CA MEMBERS: COUNCILMEMBER HERB J. WESSON, JR., CHAIR COUNCILMEMBER JOSE HUIZAR COUNCILMEMBER MARQUEECE HARRIS-DAWSON (Richard Williams - Legislative Assistant - (213) or richard.williams@lacity.org) Click here for agenda packets Note: For information regarding the Committee and its operations, please contact the Committee Legislative Assistant at the phone number and/or address listed above. The Legislative Assistant may answer questions and provide materials and notice of matters scheduled before the City Council. Sign Language Interpreters, Communication Access Real-Time Transcription (CART), Assistive Listening Devices, or other auxiliary aids and/or services may be provided upon request. To ensure availability, you are advised to make your request at least 72 hours prior to the meeting/event you wish to attend. Due to difficulties in securing Sign Language Interpreters, five or more business days notice is strongly recommended. For additional information, please contact the Legislative Assistant listed above. ITEM NO. (1) S98 Resolution (Bonin - Harris-Dawson - Koretz), and Chief Legislative Analyst (CLA) report, relative to including in the City's State Legislative Program, support for Proposition 10 which would repeal the Costa-Hawkins Rental Housing Act to allow cities and counties to have more flexibility in governing the affordable housing needs specific to their communities. Community Impact Statement: Yes. For: Historic Highland Park Neighborhood Council Los Feliz Neighborhood Council Central Hollywood Neighborhood Council Wednesday - October 10, PAGE 1

2 Wilshire Center Koreatown Neighborhood Council Rampart Village Neighborhood Council Against: Granada Hills North Neighborhood Council ITEM NO. (2) S122 Resolution (Blumenfield - Buscaino - Bonin - Krekorian - Price), and CLA to report, relative to including in the City's State Legislative Program, opposition to Proposition 6 which would repeal SB 1, the Road Repair and Accountability Act of 2017, eliminating a vital source of funding necessary to rehabilitate, repair, and maintain local streets and roads, make critical lifesaving safety improvements, repair and replace aging bridges and culverts, reduce congestion and increase mobility options. Community Impact Statement: Yes. Against: Granada Hills North Neighborhood Council If you challenge this Committee's action(s) in court, you may be limited to raising only those issues you or someone else raised at the public hearing described in this notice, or in written correspondence delivered to the City Clerk at or prior to, the public hearing. Any written correspondence delivered to the City Clerk before the City Council's final action on a matter will become a part of the administrative record. Materials relative to items on this agenda can be obtained from the Office of the City Clerk's Council File Management System, at lacouncilfile.com by entering the Council File number listed immediately following the item number (e.g., ). Wednesday - October 10, PAGE 2

3 ITEM NO. 1 REPORT OF THE CHIEF LEGISLATIVE ANALYST DATE: September 11, 2018 TO: Honorable Members of the Rules, Elections & Intergovernmental Relations Committee FROM: Sharon M. Tso Chief Legislative Analyst Council File No: Assignment No: S SUBJECT: Resolution to Support Proposition 10 CLA RECOMMENDATION: Adopt Resolution (Bonin - Harris-Dawson) to include in the City s State Legislative Program, SUPPORT for Proposition 10 which would repeal the Costa-Hawkins Rental Housing Act to allow cities and counties to have more flexibility in governing the affordable housing needs specific to their communities. SUMMARY The Resolution (Wesson - Cedillo), introduced August 1, 2018, advises that Los Angeles is in the midst of a severe housing affordability crisis in which the median rent for a two bedroom apartment is unaffordable to a resident making the median household income. The Costa-Hawkins Rental Housing Act (Costa-Hawkins) was signed into law by Governor Pete Wilson in 1995 and limits the ability of California cities to implement rent control for single family homes, condominiums, and any residential rental units issued a certificate of occupancy after February Costa- Hawkins has prevented the City of Los Angeles from expanding its own rent control law to units constructed after The Resolution further advises that Costa-Hawkins prevents cities from implementing vacancy control which enables landlords to raise rental rates without restriction after a unit is vacated. Proposition 10 is an initiative on the November 6, 2018 statewide ballot known as the Affordable Housing Act, which would repeal the Costa-Hawkins Rental Housing Act. The repeal of Costa- Hawkins would provide cities and counties with the option to adopt rent and vacancy control ordinances. Proposition 10 would provide the tools necessary to local governments to make the greatest impact in solving the housing affordability crisis. The Resolution recommends that the City support Proposition 10 which would repeal the Costa- Hawkins Rental Housing Act to allow cities and counties to have more flexibility in governing the affordable housing needs specific to their communities. BACKGROUND Proposition 10, also known as the Affordable Housing Act, is an initiative placed on the November State ballot to repeal the Costa Hawkins Rental Housing Act (Costa-Hawkins). Wednesday - October 10, PAGE 3

4 Costa-Hawkins was signed into law in 1995, following the adoption of rent control laws throughout California in the 1970s and 1980s. It allows an owner of residential property to establish initial and all subsequent rental rates for a unit which: Has a certificate of occupancy issued after February 1, 1995; or * Was already exempt form rent control prior to February 1, 1995; or * Is a single-family home or condominium which tenancy began after January 1, Costa-Hawkins also allows an owner to establish the initial rental rate of a unit which has had the previous tenancy terminated by the owner or upon a change in terms of the tenancy. This law preempts local rent control laws and prevents the expansion of rent control to newly constructed rental units. If approved, Proposition 10 would repeal Costa-Hawkins and give cities and counties the option to enact or expand rent control laws, but would not require them to so. Proposition 10 would also codify a landlord s right to a fair rate of return, which is currently established by case law. Further, the repeal of Costa-Hawkins would allow for regulations on rental rate increases following the vacancy of a unit. According to the State s Legislative Analyst s Office (LAO), passage of Proposition 10 could affect local tax revenues. The precise effects, including whether the effect will be an increase or decrease in overall tax revenues, are largely unknown and will be dependent on local actions in response to the potential approval of Proposition 10. Rent control could potentially lower property values of both the properties which are brought under rent control and surrounding properties. Lower property values would result in lower property tax revenue, collection of which is based on property value. Establishing rent control policies could also allow for lower rental rates and therefore allow renters to purchase more taxable goods, potentially increasing sales tax revenue. According to the LAO, the enforcement of newly enacted rent control laws would likely result in an increase in administrative costs for local governments. The City of Los Angeles was one of the 14 cities to enact rent control ordinances prior to the passage of Costa-Hawkins. The Rent Stabilization Ordinance (RSO), adopted in 1978, places a restriction on rent by making it unlawful for a landlord to demand, accept, or retain more than the maximum adjusted rent pursuant to the RSO. The maximum adjusted rent as defined by the RSO is the highest legal monthly rental rate during April 1979 plus an allowable annual increase. The allowable annual increase, based on the Consider Price Index, is determined and provided by Housing and Community Investment Department. The RSO also provides for control of initial rental rates following the vacancy of a unit under certain conditions as outlined in the RSO. The passage of Proposition 10 would allow the City to expand or otherwise amend the Rent Stabilization Ordinance. Support for Proposition 10 is consistent with past City efforts to provide the expansion of the current stock of affordable housing and to allow communities to have flexibility in determining appropriate affordability requirements for housing, including support for actions to repeal Costa- Hawkins. Wednesday - October 10, PAGE 4

5 DEPARTMENTS NOTIFIED Housing and Community Investment Department of Los Angeles Andy Gala: Analyst V Attachments: 1. Resolution (Bonin - Harris Dawson) Wednesday - October 10, PAGE 5

6 RESOLUTION WHEREAS, any official position of the City of Los Angeles with respect to legislation, rules, regulations or policies proposed to or pending before a local, state or federal governmental body or agency must have first been adopted in the form of a Resolution by the City Council with the concurrence of the Mayor; and WHEREAS, like many other jurisdictions in California, Los Angeles is in the midst of a severe housing affordability crisis, where the current median rent for a two bedroom is $3,200 a month, while the median household income is only $51,538; and WHEREAS, the Costa-Hawkins Rental Housing Act signed into law by Governor Pete Wilson in 1995 places significant limits on the ability of cities in California to implement rent control for any single family home or condominium, and any apartment constructed after February 1995; and WHEREAS, Costa-Hawkins prohibits cities that established rent control laws prior to the Act s passage in 1995 from expanding rent control, and consequently, the City of Los Angeles cannot place rent control on apartments built after 1978; and WHEREAS, Costa-Hawkins also prohibits cities from implementing strict rent control, known as vacancy control,' which enables landlords to raise the rental price to any amount following a tenant vacating a unit; and WHEREAS, Proposition 10 is an initiative on the November 6, 2018 statewide ballot known as the Affordable Housing Act, which would repeal the Costa-Hawkins Rental Housing Act and enable a return to local control by allowing cities and counties to have more flexibility in governing the affordable housing needs specific to their communities; and WHEREAS, Proposition 10 would provide cities and counties with the option to adopt reasonable rent control and vacancy control ordinances, specifically tailored towards the unique housing needs of their local jurisdiction; and WHEREAS, local governments throughout the California have the greatest amount of influence in solving the housing affordability crisis, and Proposition 10 provides the tools necessary to make the greatest impact; NOW, THEREFORE, BE IT RESOLVED, with the concurrence of the Mayor, that by the adoption of this Resolution, the City of Los Angeles hereby includes in its State Legislative Program SUPPORT for Proposition 10, the Affordable Housing Act, which would, if approved, repeal the Costa-Hawkins Rental Housing Act to allow cities and counties to have more flexibility in governing the affordable housing needs specific to their communities. PRESENTED BY: MIKE BONIN Councilmember, 11th District MARQUEECE HARRIS-DAWSON Councilmember, 8th District SECONDED BY: Wednesday - October 10, PAGE 6

7 ITEM NO. 2 REPORT OF THE CHIEF LEGISLATIVE ANALYST DATE: TO: October 5, 2018 Honorable Members of the Rules, Elections, and Intergovernmental Relations Committee FROM: Sharon M. Tso Chief Legislative Analyst Council File No.: S122 Assignment No.: SUBJECT: Resolution (Blumenfield Bonin Buscaino - Krekorian - Price) to oppose Proposition 6 which would repeal SB 1, the Road Repair and Accountability Act of CLA RECOMMENDATION: APPROVE the attached Resolution to include in the City s State Legislative Program, OPPOSITION to Proposition 6 which would repeal SB 1, the Road Repair and Accountability Act of SUMMARY The Resolution (Blumenfield - Bonin - Buscaino - Krekorian - Price), introduced on September 18, 2018 states that in April 2017, Governor Brown signed Senate Bill 1 (SB 1), the Road Repair and Accountability Act, creating new revenues from both gasoline and diesel fuel sales and vehicle licenses. The California Constitution requires that the State utilize this revenue to increase its contribution to transportation funding and SB 1 guarantees funds to repair neighborhood streets and freeways and bridges across California, and directs funds to transit and congested trade and commute corridor improvements. The Resolution further states that the California Secretary of State has certified Proposition 6 for the November 6, 2018 ballot. If approved by a majority of voters, Proposition 6 will eliminate the revenue created under SB 1, reducing funding for highway and road maintenance and repairs and transit programs. Proposition 6 would also restrict the State Legislature s ability to address these issues in the future through revenue enhancements. If successful, Proposition 6 will eliminate a vital source of funding necessary to rehabilitate, repair, and maintain local streets and roads, make critical life-saving safety improvements, repair and replace aging bridges and culverts, reduce congestion and increase mobility options. The Resolution seeks opposition to Proposition 6. BACKGROUND On April 28, 2017, Governor Brown signed Senate Bill 1, the Road Repair and Accountability Act of 2017 (SB 1). SB 1 increased taxes on gasoline and diesel fuel, set fixed rates on a second gasoline excise tax and diesel excise tax, and increased vehicle registration fees. These increases will be phased in between January 1, 2018 and July 1, A recent analysis by the California Wednesday - October 10, PAGE 7

8 Legislative Analyst s Office states that at full implementation, SB 1 is expected to generate $5.1 billion annually. The California Constitution requires that the State utilize gas tax revenue for transportation projects and limits the Legislature s ability to divert these funds to other uses. SB 1 dedicates over $3.3 billion annually to state highways, local streets and roads, and bridges. SB 1 also addresses a demand for targeted transportation investments by allocating annual funding to four competitive grant programs: $300 million for the Trade Corridor Enhancement Program (TCEP) $250 million for the Solutions for Congested Corridors Program $200 million for the Local Partnership Program (formula and competitive grant) $ 100 million for the Active Transportation Program Through increased investment statewide, SB 1 will reduce maintenance backlogs, reduce traffic congestion, provide Californians with access to additional mobility options, and improve bicyclist and pedestrian safety. Counties and cities began receiving SB 1 funds in January 2018 and have identified more than 6,500 projects eligible for such funding. Proposition 6 is a ballot initiative which has been certified by the California Secretary of State for the November 2018 General Election. If approved, Proposition 6 will repeal SB 1 and will amend the California Constitution to require statewide voter approval to impose, increase or extend any tax... on the sale, storage, use or consumption of motor vehicle gasoline or diesel fuel, or on the privilege of a resident of California to operate on the public highways a vehicle, or trailer coach. In September 2018, the Public Policy Institute of California surveyed 964 likely voters on Proposition 6. Of those individual surveyed, 52 percent opposed Proposition 6, 39 percent supported Proposition 6 and 8 percent were undecided. A broad coalition, the Coalition to Protect Transportation Improvements, has formed in opposition to Proposition 6. The coalition consists of a diverse range of groups including infrastructure and transportation groups, public safety organizations, public health advocates, cities, counties, local transportation agencies, the California Chamber of Commerce, and business and labor organizations. In August 2018, the Los Angeles County Board of Supervisors voted to formally oppose Proposition 6. The City s Adopted Budget projects that the City will receive roughly $67M in SB 1 funds. Anticipated SB 1 receipts account for nearly 40 percent of the City s gas tax funded efforts toward street reconstruction, maintenance, and safety improvements in the Adopted Budget. The Adopted Budget allocates SB 1 funding to the Complete Street Program, concrete street work, acceleration of access requests received through the City s Sidewalk Repair Program, and various capital improvement projects. It is anticipated that if Proposition 6 is successfully, at least half of the projected revenues will not be available. The Department of Transportation (LADOT) reports that for fiscal year , 40 percent of the City s Transit and Intercity Rail Capital Program (T1RCP) competitive grant funding will be provided by SB 1 funds. SB 1 also provides the City with additional State Transit Assistance operations funding and State of Good Repair funding which will be utilized to purchase battery- -2- Wednesday - October 10, PAGE 8

9 electric paratransit buses. In total LADOT expects to receive approximately $15 million in SB 1 funding for those three transit programs in the current fiscal year. LADOT also indicates that eliminating SB 1 funding may also reduce the City s Active Transportation Program (ATP) funding. On average, LADOT receives roughly 10 percent of the available state funding earmarked for the ATP. In September, Los Angeles County Metropolitan Transportation Authority (Metro) staff reported that Metro s Short Range Financial Forecast anticipates $4.9 billion in grant receipts from SB 1 over the next decade. Staff reported that if SB 1 is repealed, Metro s delivery of 10 to 12 major capital projects may be delayed by 3 to 5 years. In response to efforts to repeal SB 1, the American Society of Civil Engineers (ASCE) released its 2018 Report Card for California s Infrastructure on October 3. The ASCE did so in an effort to inform voters in advance of the General Election. The scorecard rated the State s infrastructure as follows: bridges and transit were given a C- (mediocre, requires attention) and roads were given a D (poor, at risk). SB 1 provides funding to address the needs identified in the ASCE s report card. Further, a recent study released by the American Road & Transportation Builders Association concluded that over the next decade, SB 1 will generate over $29.2 billion in increased economic activity across Los Angeles County, create 90,161 jobs, and support the repair, repaving, and reconstruction of over 84,000 lane miles, including work on over 18,300 lane miles of urban interstate. CONCLUSION If approved, Proposition 6 will endanger local and statewide efforts to improve failing infrastructure and enhance transit options. Thus, the Council should include opposition to Proposition 6 in the City s State Legislative Program. Departments Notified Bureau of Engineering Bureau of Street Services Department of Transportation City Administrative Officer Jennifer Quintanilla Analyst Attachments: 1. Resolution SMT MF PS JMQ -3- Wednesday - October 10, PAGE 9

10 R E S O L U T I O N WHEREAS, any official position of the City of Los Angeles with respect to legislation, rules, regulations or policies proposed to or pending before a local, state or federal governmental body or agency must first have been adopted in the form of a Resolution by the City Council with the concurrence of the Mayor; and WHEREAS, on April 28, 2017, Governor Brown signed SB 1, the Road Repair and Accountability Act, creating new revenues from both gasoline and diesel fuel sales and vehicle licenses; and WHEREAS, these new revenues will be phased-in, generating an estimated $5.1 billion annually upon full implementation in 2020; and WHEREAS, the California Constitution requires that the State utilize this revenue to increase its contribution to transportation funding and SB 1 guarantees funds to repair neighborhood streets and freeways and bridges across California, and directs funds to transit and congested trade and commute corridor improvements; and WHEREAS, a recent study by the American Road & Transportation Builders Association concluded that over the next decade, SB 1 will generate over $29.2 billion in increased economic activity across Los Angeles County, create 90,161 jobs, and support the repair, repaving, and reconstruction of over 84,000 lane miles, including work on over 18,300 lane miles of urban interstate; and WHEREAS, the City of Los Angeles has submitted a list of over 40 projects to the California Transportation Commission, utilizing approximately $67 million in SB 1 funds including a series of unique Complete Streets projects which will repair streets and install safety measures; and WHEREAS, the California Secretary of State has certified Proposition 6 for the November 6, 2018 ballot which, if approved by a majority of voters, would eliminate the revenue created under SB 1, reduce funding for highway and road maintenance and repairs and transit programs, and restrict the State Legislature s ability to address these issues in the future through revenue enhancements; NOW, THEREFORE, BE IT RESOLVED, with the concurrence of the Mayor, that by the adoption of this Resolution, the City of.ms Angeles hereby includes in its Shite Legislative Program OPPOSITION to Proposition 6 which would repeal SB 1, the Road Repair and Accountability Act of 2017, eliminating a vital source of funding necessary to rehabilitate, repair, and maintain local streets and roads, make critical life-saving safety improvements, repair and replace aging bridges and culverts, reduce congestion and increase mobility options. PRESENTED BY: BOB BLUMENFIELD^ Counci lmemb?r5 Spi strict SECONDED BY: Nx. J- Iki jmq Wednesday - October 10, PAGE 10