Chapter 6.06
RESIDENTIAL RENT STABILIZATION
Sections:
6.06.010 Findings and purpose.
6.06.040 Establishment of base rent.
6.06.050 Standard annual rent adjustments.
6.06.060 Reasonable rate of return.
6.06.070 Limits to rent charges under subtenancy.
6.06.080 Fair return petition for rent increase.
6.06.130 Rent increase ineffective.
6.06.140 Residential rental registration.
6.06.160 Education and outreach.
6.06.010 Findings and purpose.
A. Findings. The city council finds and declares as follows:
1. The city has a substantial government interest in regulating annual rent increases and improving relationships between landlords and tenants in order to increase certainty, stability, and fairness within the residential rental market.
2. The city finds that this chapter is intended to be implemented in conjunction with the registration of residential rental units.
3. The ordinance codified in this chapter is being adopted pursuant to the state of California’s Costa-Hawkins Act and the city’s police power authority to protect the public health, safety, and welfare.
B. Purpose. The purpose of this chapter is to adopt regulations governing the annual maximum rent adjustment that a landlord may seek from a tenant of a rent-stabilized unit. (Ord. C-2024-05 §2 (Exh. A), 2024).
6.06.020 Rent stabilization.
A. Authority and Duties. The administrator or city council shall have the following authority and duties under this chapter:
1. Establish a base rent pursuant to this chapter.
2. Make adjustments in the rent increase and decreases in accordance with this chapter.
3. Set rents at fair and equitable levels in order to achieve the intent of this chapter.
4. Issue orders, rules and regulations, conduct hearings and charge fees as set forth below.
5. Make such studies, surveys and investigations, conduct such hearings, and obtain such information as is necessary to carry out required duties.
6. Report annually to the city council on the status of rental housing covered by this chapter. This shall include a summary of the numbers of notices served, the basis upon which they were served, the amount of the rent increases and the addresses for which they were served. A searchable database will be created so that service of notice may be determined as well as the summaries. A rent increase, termination, or change in terms of tenancy is not valid if not served on the administrator.
7. Administer and assign the right to administer oaths and affirmations and subpoena witnesses.
8. Establish rules and regulations for deducting penalties and settling civil claims.
9. Seek authorization from the city council to seek administrative remedies or injunctive and other civil relief under Section 6.06.170.
10. Charge and collect the rental stabilization fee, including penalties for late payments.
11. Make available on a contract basis legal assistance services for low-income residents of Half Moon Bay related to evictions and petitions, hearings and appeals.
12. Collect and/or receive copies of notices of termination of tenancy, rent increase, and changes in terms of tenancy.
13. Any other duties necessary to administer and enforce this chapter.
B. Rules and Regulations. The city council may issue such rules and regulations, including those which are contained in this chapter as will further the purposes of the chapter. The city council shall publicize its rules and regulations prior to promulgation on the city’s website.
C. Community Education. The administrator may publicize this chapter along with other housing programs contained in this title so that all residents of Half Moon Bay may have the opportunity to become informed about their legal rights and duties under this chapter. The administrator shall prepare a brochure which fully describes the legal rights and duties of landlords and tenants under this chapter. The brochure will be available to the public, and each tenant of a rental unit shall receive a copy of the brochure from their landlord. Landlords shall provide the brochure at the commencement of the tenancy and with each notice of rent increase. This brochure will be made available for download from the city’s website and/or other appropriate technology. Information about the rent stabilization ordinance may be made available in other languages as requested by the community.
D. Collection of Rental Stabilization Fee. Landlords shall pay the rental stabilization fee as established by resolution of the city council.
E. Reporting and Fee Payment Requirements.
1. No later than September 1, 2024, and each September 1st thereafter, all landlords shall file a copy of all rental increase notices, change of terms of tenancy and tenancy termination notices with the administrator. Landlords choosing not to increase rents for the next year shall file a written notice with the administrator. Such filing shall be concurrent with the filing of the notice with tenant(s). Proof of service with time and date of service of notice to tenant(s) shall be included with notice filed with the administrator in either circumstance.
2. If it is determined that a landlord has willfully and knowingly failed to properly report, as described above, any rental increase notices, change of terms of tenancy or tenancy termination, or pay the rental stabilization fee, the administrator may authorize the tenant of such a nonreporting or fee-paid unit to withhold all or a portion of the rent for the rental unit until such time as the rental stabilization fee is paid or notice filed. After a notice is properly filed or fee paid, the administrator shall determine what portion, if any, of the withheld rent is owed to the landlord for the period in which the notice was not properly filed or fee paid. Whether or not the administrator allows such withholding, no landlord who has failed to properly report or pay the fee shall at any time increase rents for a stabilized unit until such fee or notice is reported.
3. A landlord’s failure to pay the fee or timely file a copy of a notice before the filing of an unlawful detainer lawsuit is a complete defense to an unlawful detainer. (Ord. C-2024-05 §2 (Exh. A), 2024).
6.06.030 Applicability.
A. Applicability. Except as provided herein, the provisions of this chapter shall apply to all properties in Half Moon Bay that are hired, rented, or leased to a household within the meaning of California Civil Code Section 1940, which shall be referred to as stabilized unit(s), including properties that contain any of the following:
1. Dwelling units which contain a separate bathroom, kitchen, and living area in a multifamily or multipurpose dwelling;
2. Dwelling units in single room occupancy residential structures; or
3. Units in a structure that is being used for residential uses whether or not the residential use is a conforming use permitted under the municipal code.
B. Exemptions. The following residential rental units shall be exempt from the provisions of this chapter:
1. A rental unit exempt pursuant to the Costa-Hawkins Rental Housing Act (California Civil Code Sections 1954.50 through 1954.535), including but not limited to:
a. A unit that has a certificate of occupancy issued after February 1, 1995;
b. A unit that is alienable separate from the title to any other dwelling unit, including single-family residences, condominiums, and townhomes.
2. Any subtenancy or similar arrangement within an exempt residential rental unit.
3. Transient rental units in hotels, motels and inns, which are rented to guests for a period of fewer than thirty days. This exemption does not apply (a) to a tenant who has resided at the property for more than thirty continuous days, (b) a tenant who has entered into an agreement to lease a rental unit for 30 days or more, (c) where a landlord has violated California Civil Code Section 1940.1 with regard to the tenant, or (d) to a residential rental unit that is a registered or grandfathered short-term vacation rental, as defined in Chapter 18.02, with a certificate of occupancy issued prior to February 1, 1995.
4. Rental units in any hospital, convent, monastery, extended medical care facility, nonprofit home for the aged, or dormitory as defined in California Building Code Section 202 that is solely owned and operated by an accredited institution of higher education.
5. Rental units which a government unit, agency or authority fully owns, operates and manages. This exemption applies only if applicable federal or state law or administrative regulation specifically exempt such units from municipal rent stabilization.
6. Any residential rental unit located in a development where the dwelling units are subject to legally binding restrictions enforceable against and/or governing such units that limit the rent to no more than an affordable rent, as such term is defined in California Health and Safety Code Section 50053 and as subsequently amended. (Ord. C-2024-05 §2 (Exh. A), 2024).
6.06.040 Establishment of base rent.
Beginning on the effective date of the ordinance creating this chapter, no landlord shall charge rent for any stabilized unit in an amount greater than the rent in effect for that unit on the effective date except for increases expressly allowed under this chapter. The rent in effect on the effective date is the base rent. If there was no rent in effect on the effective date, the base rent shall be the rent that was charged prior to the effective date. For tenancies commencing after the adoption of this chapter, the base rent is the initial rental rate in effect on the date the tenancy commences. As used in this section, the term “initial rental rate” means only the amount of rent actually paid by the tenant for the initial term of the tenancy. The base rent is the reference point from which the maximum allowable rent shall be adjusted upward or downward in accordance with this chapter. (Ord. C-2024-05 §2 (Exh. A), 2024).
6.06.050 Standard annual rent adjustments.
A. Increases in rent on residential real property in the city of Half Moon Bay in excess of three percent, or eighty percent of the change in the consumer price index (May to May), whichever is less, and more than one rent increase in any twelve-month period, are prohibited, unless expressly exempt under the Costa- Hawkins Rental Housing Act codified in California Civil Code Section 1954.50 et seq. If the change in the consumer price index is negative, no rent increase is permitted. A violation of this section occurs upon the service of notice or demand for a prohibited increase in rent.
B. No later than August 1st each year, beginning with the year 2024, the city shall announce the allowable percentage increase in rent based on subsection A of this section, which shall be effective as of December 1st of that year.
C. No later than August 15th each year, the landlord shall post, in a conspicuous place on the residential rental real property, the percentage rent increase for the affected stabilized units. (Ord. C-2024-05 §2 (Exh. A), 2024).
6.06.060 Reasonable rate of return.
This chapter allows for an annual allowable rent adjustment of up to three percent, or eighty percent 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 rent and rent increases. (Ord. C-2024-05 §2 (Exh. A), 2024).
6.06.070 Limits to rent charges under subtenancy.
Where a stabilized unit is being rented and subsequently subleased either in whole or by room, the cumulative monthly rent charged may not exceed the authorized monthly rent of the stabilized unit. (Ord. C-2024-05 §2 (Exh. A), 2024).
6.06.080 Fair return petition for rent increase.
A. A landlord may submit a fair return petition to the administrator in accordance with the procedures set forth in this chapter requesting a rent increase in excess of that provided in this chapter in order to obtain a fair and reasonable return on the residential 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;
2. The rent lawfully charged for comparable residential 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 cost of planned or completed capital improvements to the residential rental unit (as distinguished from ordinary repair, replacement and maintenance) where such capital improvements were not identified and voluntarily deferred prior to establishment of rent stabilization or are necessary to bring the property into compliance or maintain compliance with applicable local code requirements affecting health and safety, and where such capital improvement costs are properly amortized over the life of the improvement;
5. The completion of any ordinary repair, replacement or maintenance work related to the residential rental unit, and the cost thereof, including materials, labor, construction interest, permit fees, and other items deemed appropriate;
6. Changes in property taxes or other taxes related to the residential rental unit;
7. In the event of subtenancy, changes in the rent paid by the landlord for the lease of the residential rental unit;
8. Changes in the utility charges for the rental unit paid by the landlord, and the extent, if any, of reimbursement from the tenants;
9. Changes in reasonable operating expenses;
10. Changes in net operating income;
11. The need for repairs caused by circumstances other than ordinary wear and tear;
12. The amount and quality of housing services provided by the landlord to the tenant(s);
13. Compliance with any existing rental agreement lawfully entered into between the landlord and tenant(s); and
14. Landlord’s substantial compliance with this title, including this chapter, as well as applicable housing, health and safety codes. (Ord. C-2024-05 §2 (Exh. A), 2024).
6.06.100 Tenant petition.
A. Effective July 1, 2025, a tenant may submit a petition to the administrator in accordance with the procedures set forth in this chapter on one 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 chapter by the landlord.
B. Filing Schedule for Tenant Petition. Where applicable, a tenant filing a tenant petition under this chapter shall do so within the following time limits:
1. Tenant receiving a notice of rent increase shall have thirty 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 days after tenant knew of the alleged failure to comply with the requirements of this chapter; and
3. For any other violation(s) of this chapter by the landlord, the tenant shall file a petition within one hundred and eighty 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 chapter 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 failed to comply substantially with this section or applicable housing, health and safety codes.
D. Restoration of Rent Decrease. Where a rent decrease has been ordered pursuant to this chapter 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. C-2024-05 §2 (Exh. A), 2024).
6.06.110 Petition process.
A landlord or a tenant may file petitions with the administrator, as provided in this chapter. 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 administrator shall promulgate regulations regarding procedures for petitions filed under this chapter. Petitions shall be governed by such regulations and by the provisions of this chapter. Petitions shall be available in the language that the owner and tenant used to negotiate the terms of the tenancy (e.g., Spanish, Chinese), as well as English.
A. Filing Petition. Upon the filing of a petition, the administrator shall notify the petitioner of the acceptance or denial of the petition based on the completeness of the submission. The 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 chapter.
B. Filing Fee. Fees for the filing of any petition shall be established by city council resolution.
C. Prior Petition. Notwithstanding any other provision of this chapter, 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 eighty days.
D. No landlord petition or upward adjustment of rent shall be authorized under this chapter if the landlord:
1. Has continued to fail to comply, after order of the administrator, with any provisions of this chapter and/or orders or regulations issued thereunder by the administrator; 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 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 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 administrator consistent with this chapter.
G. Time of Hearing. Each accepted petition shall be scheduled for a hearing by the hearing officer on a date not more than sixty calendar days from the date the administrator deems the petition submitted and complete. With agreement of the parties, the hearing officer may hold the hearing beyond the sixty calendar days. The administrator shall, no less than ten days prior, notify all parties as to the time, date, and place of the hearing. With consent of all parties, the hearing may be conducted virtually and recorded.
H. Consolidation. All landlord petitions pertaining to tenant(s) 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 administrator or hearing officer finds good cause not to consolidate such petitions.
I. 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.
J. 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 administrator. Evidence unduly repetitious, lacking credibility, or irrelevant evidence shall be excluded upon order by the hearing officer.
K. 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 information does not reflect the current condition of the residential 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.
L. 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.
M. Notice of Decision. The hearing officer shall make their determination on the merits of the petition and shall provide a written statement of decision, including findings upon which the determination is based within thirty calendar days. The hearing officer’s decision on a petition may be reasonably conditioned in any manner necessary to effectuate the purposes of this chapter.
N. 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.
O. Appeal. Any person aggrieved by the decisions of the hearing officer may appeal to the city council. An appeal to the city council shall be filed no later than ten calendar days after receipt of the notice of the decision of the hearing officer. On appeal, the city council shall affirm, reverse, or modify the decision of the hearing officer. Unless the city council elects to conduct a de novo hearing, city council review of the hearing officer’s decision shall be based on the hearing record without holding a new hearing. The city council 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.
P. Finality of Decision. The decision of the hearing officer shall be final decision if no timely appeal is made to the city council. The decision of the hearing officer shall not be stayed pending appeal; however, in the event that the city council on appeal reverses or modifies the decision of the hearing officer, the city council 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 city council. (Ord. C-2024-05 §2 (Exh. A), 2024).
6.06.120 Voluntary mediation.
A. Voluntary mediation services shall be provided by the city. Upon request, the administrator shall appoint a mediator and set a date for a mediation no later than thirty days after the acceptance of the subject petition, unless the administrator determines that additional time is required under the circumstances. The administrator shall notify the landlord and tenant(s) in writing of the date, time, and place of the mediation hearing at least ten days prior to the mediation. This notice shall be served either in person or through first class (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 nonadversarial 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 (“mediations agreement”) for the signature of the landlord and the tenant(s); provided, that in doing so the mediator confines the assistance to stating the settlement as determined by the parties. Such mediation 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 administrator to continue the petition review process detailed in this chapter.
F. All documents and results related to mediations and facilitations held pursuant to this section shall be kept confidential and shall be inadmissible as evidence in any subsequent administrative or judicial proceeding.
G. The mediator and/or administrator shall provide documentation and translation services in the language that the landlord and tenant used to negotiate the terms of the tenancy (e.g., Spanish and Chinese), as well as English. (Ord. C-2024-05 §2 (Exh. A), 2024).
6.06.130 Rent increase ineffective.
No rent increase shall be effective if the landlord:
A. Fails to substantially comply with all provisions of this chapter, including but not limited to the failure to provide notices as required; or
B. Fails to maintain the residential real property in compliance with California Civil Code Section 1941.1 et seq. and California Health and Safety Code Sections 17920.3 and 17920.10; or
C. Fails to make repairs ordered by the city or court of competent jurisdiction. (Ord. C-2024-05 §2 (Exh. A), 2024).
6.06.140 Residential rental registration.
No rent increase shall take effect for any residential rental unit that has not been registered by the landlord pursuant to Chapter 6.04. (Ord. C-2024-05 §2 (Exh. A), 2024).
6.06.150 Notice requirements.
A. A landlord of any residential real property 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 chapter; 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 chapter.
B. As part of any notice to increase rent, a landlord must include:
1. Notice of the existence of this chapter; 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 chapter.
3. No rent increase shall take effect until the requirements of this chapter have been met.
C. The landlord must give notices to the tenant in the language that the landlord and tenant used to negotiate the terms of the tenancy (e.g., Spanish or Chinese) as well as English.
D. Any notices or documents required to be provided from a landlord to a tenant by this chapter 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. C-2024-05 §2 (Exh. A), 2024).
6.06.160 Education and outreach.
The administrator shall have the authority to contract with community-based organizations to assist in the education and outreach related to this title and chapter. (Ord. C-2024-05 §2 (Exh. A), 2024).
6.06.170 Judicial review.
Any decision of the city council shall be final unless judicial review is sought in a court of competent jurisdiction within thirty days of the date of the decision. The decision shall take effect immediately unless provided otherwise in the decision, regardless of whether a party seeks judicial review. (Ord. C-2024-05 §2 (Exh. A), 2024).
6.06.180 Enforcement.
A. Any person violating a provision or failing to comply with any of the requirements of this chapter or Chapter 6.08 shall be deemed guilty of a misdemeanor or an infraction and may be subject to the penalties prescribed in Title 4.
B. In addition to an administrative remedy or penalties available to the city, in law or equity, the city may enforce the terms of this chapter through the administrative citation procedures provided in Chapter 4.16 (Administrative Enforcement).
C. The city attorney may bring a civil action to seek redress for any violation(s) under this chapter or Chapter 6.08 on behalf of the city. In any such relief, the city shall recover all civil penalties provided in Title 4 and any other relief the court deems proper.
D. Injunctive Relief. Any person who commits an act, proposes to commit an act, or engages in any pattern and practice that violates this chapter or Chapter 6.08, or the policies, procedures, regulations, rules, orders and decisions of the administrator, may be enjoined therefrom by any court of competent jurisdiction. An action for injunction under this section may be brought by any aggrieved person, including the city and people of the state of California. No administrative remedy need be exhausted prior to filing an action for injunctive relief pursuant to this section.
E. Affirmative Defense. A landlord’s failure to comply with any requirement of this chapter or Chapter 6.08 may be asserted as a complete affirmative defense in an unlawful detainer or any other action brought by the landlord to recover possession of the residential rental unit. Additionally, any attempt to recover possession of a residential rental unit in violation of this chapter or Chapter 6.08 shall render the landlord liable to the tenant for damages in a civil action for wrongful eviction. The prevailing party in an action for wrongful eviction shall recover costs and reasonable attorneys’ fees.
F. Nonexclusive. The remedies provided in this chapter are not exclusive, and nothing in this section shall preclude any person from seeking any other remedies, penalties or procedures provided by law, nor is exhaustion of remedies under this section a prerequisite to the assertion of any other such right. (Ord. C-2024-05 §2 (Exh. A), 2024).