Loading...
HomeMy WebLinkAbout4a. Rental Registry Study Session PresentationRental Housing Registry Study Session City Council February 24, 2026 1 Recommendation Receive a presentation and conduct a study session on a rental housing registry. Work Plan Item 2025-2027 Major City Goals – Housing and Neighborhood Livability Strategy 3: “Ensure housing is safe, healthy, and affordable, while facilitating stronger protections for renters” Work Plan Item: “Conduct a study session with the City Council on potential Rental Housing Registry.” Follow up item to October study session on Renter Protections Tonight’s recommendation is for Council to receive a presentation and conduct a study session on a rental housing registry. This study session is part of the Major City Goal Housing and Neighborhood Livability work program, and is a follow-up to October’s study session on renter protections. 2 Purpose of Study Session Summarize feedback from community regarding potential rental registry Provide Council and the community with the parameters of a potential future rental housing registry Discuss resources needed for establishment and maintenance of a rental registry Review information from other jurisdictions Present potential options for rental registry implementation Provide opportunity for public discussion on topic The purpose of this study session is to: Summarize feedback from community regarding potential rent registry Provide Council and the community with the parameters of a potential future rental housing registry Discuss resources needed for establishment and maintenance of a rental registry Review information from other jurisdictions Present potential options for rental registry implementation Provide opportunity for public discussion on topic 3 Public Engagement  First we’ll dive into the public engagement process conducted in the lead-up to tonight’s study session. 4 Public Engagement Staff conducted target outreach to the following stakeholders: SLO Tenants Union SLO Coastal Association of Realtors SLO Chamber of Commerce CDD Developers Roundtable Cal Poly Off-Campus Housing Program Cuesta College Basic Needs Center Quaglino Enterprises Private landlords of student and family housing Property management companies Cities and counties in California that have implemented rental registries In anticipation of this study session, staff also conducted targeted outreach to a variety of stakeholders who were generous in giving time to discuss the potential rent registry with staff, including the entities listed here. 5 Public Engagement Themes Wide ranging agreement that there is a need for more comprehensive data regarding rental units in the City Agreement that there are challenges of maintaining affordability and safety in rental housing Community groups representing tenants support mandatory, software based registry. The community groups gave wide-ranging feedback. While most groups agreed with the need for more comprehensive data regarding rental units in the City, as well as the challenges of maintaining affordability and safety in rental housing, there were varying opinions regarding the necessity and scope of a rental registry as a tool to address this need. Community groups representing tenants supported the creation of a comprehensive, software-based rental registry, with mandatory participation required for all rental properties. Under this approach, the registry would be updated yearly, with a fee charged to cover the operation and maintenance of a registry. The long-term objectives of the registry would be to identify every rental unit in the City, its ownership information, and collect accurate data on rental costs Citywide, as well as data on evictions, unit turnover, and safe housing issues. There would be a component for tenants to access and verify the information collected regarding a particular unit in the registry. 6 Public Engagement Themes - Concerns Privacy and security of information collected Accuracy of information collected from property owners Delays in collecting information due to communication barriers Potential for fees to be passed on to tenants Landlords withdrawing properties from the market Noncompliance from property owners, leading to an ineffective registry Lack of tangible benefits Possibility of registry leading to further regulations like rent control Groups representing property managers, realtors, and the business community questioned the need for, and efficacy of, a software-based rental registry with mandatory compliance. Some participants expressed a strong desire to utilize the City’s existing business license database, as well as data from larger property management firms, to identify and conduct enforcement against unlicensed properties. The following concerns about rental registries were identified: Privacy and security of information collected, especially if there is a public-facing component of the registry. Accuracy of information collected from property owners. Delays in collecting information due to communication barriers between property owners, managers, and tenants. Potential for rental registry fees to be passed on to tenants, thereby increasing housing costs. Landlords withdrawing properties from the market if required to register and provide data to the City, thereby decreasing City rental housing stock and availability. Noncompliance from property owners, leading to an ineffective registration rate of the rental registry. Lack of tangible benefits to landlords and/or tenants realized through a rental registry. The possibility of a rental registry leading to further regulations imposed upon rental properties, such as rent control. 7 Public Engagement Themes – Lessons Robust levels of engagement necessary Staff capacity building and training well ahead of implementation is critical Additional resources to implement program are significant Long roll-out process of a year or more Give community time to voluntarily provide information before enforcement Community workshops and “office hours” with staff Keep registry roll-out separate from implementation of other rental protection strategies to preserve resources and keep focus In discussion with other cities that have implemented a rental registry, staff received several process recommendations to ensure success of this tool should Council decide to move forward. These included the following:   Robust levels of community engagement are necessary – providing multiple opportunities for the community to provide feedback and understand the potential impacts and requirements of a rental registry. Staff capacity building and training well ahead of registry implementation is critical. The additional staffing resources required to implement the registry are a significant cost, and are discussed further in tonight’s presentation. A long roll-out process of the rental registry of a year or more to give the community ample time to voluntarily provide information, before higher levels of enforcement. Community workshops and “office hours” with staff to assist property owners with signing up for the registry. Keeping the rental registry roll-out sequenced separately from implementation of other rental protection strategies in order to preserve staffing resources and keep the community focused. 8 Registry Basics  Now we’ll move on to discussing the basic elements of a rent registry. 9 Rental Housing Statistics 59% of households in the City are renters 12,000-14,000 estimated rental units in the City 8,208 professionally managed units $3,700 per month average rent, per Zillow real-time data Over 55% of renters are cost-burdened First we’ll start with some key statistics regarding the City’s rental housing stock. One of the key findings of October’s study session was that the City can gather basic data on households and housing stock via existing data sets but has limited data on rental housing and renters in the community. A rental registry was identified as a potential solution to provide the City with this data.   59% of City households are renters. Based on this information, staff estimates that there are anywhere between 12-14,000 rental units in the City A community group comprised of the majority of property management companies in the City counted 8,208 professionally managed units. The City’s average rent is $3,700 per month, according to Zillow data. This is over 30 percent higher than the current state average. You’ll note this number is different from the number provided in the staff report, as it is a real-time number based on current market conditions, and has increased over the last month, likely due to more new rental listings hitting the market. Over 55% of renter households are cost burdened, meaning that they pay more than 30% of their income towards rent. 10 What is a Rental Registry? Databases maintained by localities containing information about rental properties and ownership Typically implemented with the assistance of third-party software Majority of cities use registry data to ensure compliance with local renter protections Registry can be tailored to meet Council’s specific housing goals Rental registries are databases maintained by localities that contain information about rental properties and ownership. Depending on the registry’s design, rental property owners may be required to provide their name and contact information; details about the number, location, and types of units they lease; up-to-date rent levels and occupancy statistics; eviction information; and/or other information as required by a municipality. The majority of rental registries that were studied by staff as part of this report were implemented with the assistance of specialized software from a third-party vendor. The different aspects of a rental registry and options for implementation are discussed further in tonight’s presentation.   The majority of municipalities surveyed by staff utilize rental registry data to ensure compliance with local renter protection regulations such as rent stabilization and tenant protection laws. Some jurisdictions utilize the rental registry tool to collect information on housing safety.   When weighing whether to establish a rental registry, it is helpful to consider the goals that the City Council has for housing in the community (such as stabilizing rents, improving substandard housing, establishing eviction protections, etc.). The data collected in a rental registry can be tailored towards these issues. Issues such as rent stabilization and eviction protections often require additional ordinances and regulations.   11 Typical Information Collected Established by local rules: Owner information Tenant information - frequency of turnover, eviction history Property characteristics – age, units, size, bedrooms Rent amount Lease language, or information about lease terms Property rules and policies (ex: pets, smoking) Fees not included in rent like utilities, parking, pet surcharge, application Code enforcement and permitting data Staff’s research found that over 35 jurisdictions in California have established rental registries. The information collected in each registry varies, depending on the complexity of the registry, whether the jurisdiction has other local renter protections, and what the desires of the community are. The information collected in a rental registry could include any of the following:   Owner information (owner name, address, etc.) Tenant information including frequency of tenant turnover, eviction history Property characteristics – age, number of units, square footage of units, number of bedrooms in each unit Rent amount Lease language, or information about specific lease terms Property rules and policies (ex: pets, smoking) Fees not included in rent such as utilities, parking, pet surcharge, application City code enforcement data, such as number of verified violations at a property, etc. City permitting data for each site or unit 12 Public Facing Information Most cities do not publish the information collected in the rental registry to the public. Some jurisdictions provide a searchable database of units where members of the public can view the following: Unit registration status Unit addresses Number of occupants Rent amount Most recent date of turnover Personal information of landlords/tenants not made public Most of the information collected as part of a rental registry is for internal use of the jurisdiction. Based on staff research, most cities do not publish the information collected in a rental registry to the public. Some jurisdictions, such as Fresno, Berkeley, and Los Angeles County, provide a searchable database of units where members of the public can view unit addresses, number of occupants, rent amount, and the most recent date of turnover. Other jurisdictions do not provide any public-facing data. Staff found that none of the jurisdictions with searchable databases shared personally identifiable information of landlords or tenants. 13 Here’s how Berkeley’s rental registry database appears to the public. When you enter in an address, you can see the unit numbers with their corresponding number of bedrooms and rent amounts. 14 Establishment and Implementation Most cities implement a rental registry through adoption of a local ordinance Ordinance includes requirements to register, fee structure, and penalties for noncompliance Per unit fee – ranges from $25 to $250 per unit annually Registry typically becomes self-supporting through fee revenue Most cities implement rental registries through adoption of a local ordinance, which provides a regulatory framework in their municipal code outlining the requirements, fee structure, as well as penalties for noncompliance. Many communities establish a fee for registration for each unit that must be registered. These fees help support the administration of the registry, typically covering the entirety of the software costs and the majority of staffing costs through the annual fee revenue, particularly after the program is well established and captures most of the city’s rental stock. The fees generally range from $25 to $250 per registered unit. 15 Establishment and Implementation Implementation can take at least three years before reaching full compliance Draft and adopt an ordinance – 6 months to 1 year Outreach and roll-out period – 1-2 years Enforcement period – 1-2 years Based upon staff research, the implementation of a mandatory registry can take at least three years to achieve the goal of having 100% of rental properties captured in the City’s registry. Here is a timeline of this process based on staff’s conversations with other cities that have adopted a mandatory rental registry. The drafting and adoption of an ordinance would take six months to a year. After adoption of the ordinance, there would be an outreach and roll-out period designed to register the majority of properties through repeated communication and offering reduced or no fees. There are significant staff resources required during this period in order to secure all properties in the registry and respond to inquiries from landlords and the community at large. Most cities surveyed by staff spent 1-2 years in this phase before the majority of properties were registered. Some cities did choose to waive the registry fee during this time, which would delay the realization of a revenue-neutral program. After the outreach period, enforcement against unregistered properties would begin. There is a high level of staff resources needed from the CDD Housing division, City Attorney, and Code Enforcement division during this phase to identify unregistered properties, conduct enforcement and move through the administrative citation process for properties that refuse to register. Most cities surveyed by staff reached an 80-90% compliance rate after the outreach and roll-out period and entered the enforcement phase after the first or second year to close the gap. This phase lasts anywhere from 1-2 years on average. 16 Software Cities typically use software solutions from established companies. Software provides the following: Identification of properties Website portal Ability to send mass communications Customer service (online and phone) Reports Map-based interface $10k-50k per year cost, covered by user fees Once the program is established, cities with rental registries typically use out-of-the-box software solutions from providers such as 3Di, HdL, Tolemi, Deckard, and others. These companies have specific software programs that are made for rental registries and can provide the following components of a rental registry: Identification of properties requiring registration through analysis of tax assessor data, existing City data, as well as online data from Zillow/Craigslist Website portal for property owners to enter information and pay fees associated with registration Ability to send mass email/mailing through the software to implement registry and/or provide updates to all landlords/tenants, etc. Customer service through phone, email, and chat to assist users Automatically generated, customizable reports covering the various data points collected and trends, such as average rent, ownership information, tenant turnover A Map-based interface showing all rental properties in the City and associated data to facilitate data analysis These software solutions cost between $10,000-$50,000 per year, inclusive of start-up costs and yearly subscription fees. Most cities surveyed by staff cover the costs of software entirely through fee revenue from the rental registry. 17 Information Collection and Enforcement Cities typically collect information on an annual basis Enforcement typically conducted through administrative citation process Fees for violations of municipal code and/or rental registry ordinance Conducted through code enforcement, city attorney Cities typically collect information on an annual basis to capture changes in rent and tenant turnover. In order to collect information, upon establishment of a registry, a jurisdiction must first identify properties that need to be registered. This can be accomplished through software-based analysis of data such as tax assessment rolls, the existing business license database, and other City data sources. Cities typically conduct enforcement against non-compliant properties who fail to register through the administrative citation process in the municipal code. If a mandatory rental registry is implemented through a local ordinance, failure to register a property would constitute a violation of the City’s municipal code. Upon receiving information regarding a potential violation from the rental registry software provider or through a complaint received from the public, the city’s code enforcement division would need to investigate and verify the violation and then provide notices of violation to the property owner with a corresponding fine. There is an allowance in the City’s code for the property owner to contest the violation and request an administrative hearing. Cities also may take legal action against the property owner to collect fees for violations of their municipal code and rent registry ordinances. This effort requires the coordination between the city’s code enforcement as well as city attorney’s office to collect information and move through the court process. 18 Registries In Other Cities Now we’ll move on and discuss a few different example cities that have implemented rental registries. 19 Culver City/Santa Ana Culver City Rent registry established in 2020 Rent control/rent stabilization $1.3 million in annual costs, $167 per unit annual fee Santa Ana Rent registry established in 2024 Rent stabilization/just cause eviction protections $1.6 million in annual costs, $100 per unit annual fee Culver City established a rental registry program in October of 2020, in tandem with permanent rent control and tenant protection regulations. The rent registry is managed by two full-time staff members from the Housing and Human Services Department. The rent registry, rent control, and tenant protection programs incur approximately $1.3 million in staffing and software costs annually. Revenue from the annual registration fee of of $167 per unit fully funds the costs of the program. Santa Ana established a Rent Stabilization and Just Cause Eviction Ordinance in November of 2024 that included a rental registry program. This program currently employs three full-time staff members from the Housing team, two full-time staff members from Code Enforcement, and two full-time staff members from the City Attorney’s Office. The program incurs approximately $1.6 million in staffing and software costs annually. Revenue from the annual registration fee of $100 per unit fully funds the costs of the program. 20 Monterey/Davis Monterey Rental Inventory Program established in 2023 No rent stabilization or eviction protections $236,000 in annual costs, $50 per unit annual fee Davis Rental Resources Program established in 2017 No rent stabilization or eviction protections $250,000 in annual costs, $105 per unit annual fee Monterey established a Rental Inventory Program in 2023 to provide more robust data to the City regarding their rental housing stock. This program does not include rent stabilization or eviction protection measures. The program is overseen by three full-time staff members from the four-person Housing team, each dedicating partial time to oversight of the program. The rent registry program has incurred approximately $236,000 in staffing and software costs annually. After two years of the program’s adoption, approximately 82% of properties are registered and compliant. The revenue from the $50 annual registration fee is currently covering over 90% of the staffing and software costs. Davis established a Rental Resources program in 2017, consisting of a mandatory rental registry for all single-family and multi-family rental units, as well as a mandatory inspection program for all rental properties with 1-4 units, with a mandatory move-in inspection requirement for larger multifamily properties with more than 5 units. The program utilizes one half-time staff member, with one supervising manager from the seven-person Social Services and Housing Department to operate the registry program. Additional Code Enforcement, Finance Department, and Planning Department support is used as needed. The Rental Resources program has incurred approximately $250,000 in direct staffing and software costs annually. The revenue from the $105 annual registration fee fully funds the staffing and software costs of the program. 21 Rental Registry Options Now we’ll discuss a few different options available for rental registry implementation. 22 Utilize Business License Program Business license program is administered by Finance Department $300k per year collected from residential rental businesses Minimum tax of $25 per owner annually 1 full-time staff member No current regulations or process to identify unlicensed rental properties 2,619 active licenses for rental properties The first potential option for implementing a rental registry is to utilize the City’s existing business license program to gather information about rental units. Currently, the business license program is administered by the City’s Finance Department. Under this program, businesses, including residential rentals, generating revenue in the City are required to obtain a business license and on an annual basis, remit a tax payment based on gross receipts earned in the previous calendar year. The City currently collects about $300,000 per year in business taxes from residential rental businesses, with the minimum tax being $25 per licensed operator per year. The business license program is administered primarily by one full-time staff member who is responsible for the intake of information from all business license applicants, with no current capacity or structure for identifying unlicensed rentals or collecting more significant housing data. During the annual business license renewal season, staff from other divisions within the department help to support the revenue management division as they manage the increased workload. Per the City’s latest active business license report, there are 2,619 active business licenses for residential rentals in the City (inclusive of both long-term rentals and homestays). Many businesses include multiple addresses/units under one license. Staff estimates that there may be 10-12,000 rental units not captured under an active business license. 23 Utilize Business License Program Additional regulations would be needed to provide a method for collecting additional information, and enforcement to identify noncompliant properties Additional staffing and software resources necessary Staffing levels necessary would be equivalent to that of a mandatory rental registry No guarantee of data insights that a mandatory registry would provide No additional revenue from fees This option would necessitate changes to the City’s existing business license and tax program (including adoption of local regulations to require operators to provide certain additional information when obtaining and/or renewing a Business License), updates to the business license database, and would require significant staff as well as consultant resources dedicated to identifying rental properties that are unlicensed and conducting outreach to those property owners informing them of their requirement to secure a business license. There would be difficulty in providing meaningful data beyond addresses from this database, such as unit size, information on rent trends, map-based insights, demographic information, or safe housing information. Additionally, properties removed from the rental market would not be accurately tracked, as some business licenses cover multiple properties and units, and there is not a regulatory requirement in place to notify the City when a unit is taken off the market. Additionally, without the additional revenue from an annual registration fee, the software and staffing Item costs may not be fully recovered by business license revenue alone. 24 Utilize Business License Program Overall Resource Need: High Software Costs: $10,000-$50,000 per year Staffing Need: 3.00 FTE ($300k-500k per year) Here’s information regarding the resource need to improve the business license program. This is a high resource need, with software costs of up to 50,000 per year. With regards to staffing, approximately 3 full-time equivalents would be necessary, with additional resources across the Finance Department, Housing Division, Code Enforcement, City Attorney, and Communications team necessary to implement this effort. 25 Voluntary Registry Software-based, with no ordinance requiring mandatory registration Low registration rate Low staffing needs If Council’s intent is to have a complete picture of the rental housing stock, this option will not achieve that goal Only 20% of properties end up registered after first year Moving on to our second implementation option, we have the voluntary rent registry. This option would employ a software provider to roll-out a rental registry, without a mandatory registration requirement implemented through City ordinance. The registration rate would likely be low. This option would have a much lower impact on staffing needs, as the software provider would handle all registration by volunteer properties without the need for staff to conduct outreach associated with a mandatory program, enforcement, or facilitate a large volume of registrations. Before pursuing this option, Council should consider the intent of establishing a registry. If the intent is to have a complete picture of the rental landscape, then a voluntary registry will likely not achieve this goal. Software providers have indicated that in cities with voluntary programs, after the first year only 20% of properties end up registered. 26 Voluntary Registry Overall Resource Need: Low Software Costs: $10,000-$50,000 per year Staffing Need: 0.5 FTE ($60k per year) Here’s information regarding the resource needs to implement a voluntary registry. This is a low resource need, with software costs of up to 50,000 per year. With regards to staffing, only one half of a full-time equivalent would be necessary in the Housing Division to manage software and the roll-out of the registry. 27 Mandatory Registry Rental registry ordinance would require all rental properties to register with the City Penalty structure for noncompliance Software-based program Now we’ll move on to the final option staff has for tonight – a mandatory rental registry. This option would implement a rental registry ordinance requiring all rental properties to register with the City, and employ the administrative citation process in the Municipal Code to penalize non-compliant properties and owners. This option would utilize off-the shelf rental registry software solutions from an established provider. If this option is pursued, staff recommends implementing an initial roll-out process of at least a year where enforcement would not occur in the interest of registering the maximum number of properties possible. The City could explore waiving or reducing the initial registration fee in order to incentivize participation. This would come at a significant cost to the City of approximately $200,000 per year in potential fee revenue that could cover the software and staffing costs of the registry program. Once the initial roll-out period is complete, enforcement and the collection of fees would begin to support the program’s operations. Staff found that most jurisdictions cover the cost of software entirely through fee revenue, along with a significant portion of the staff time spent on program administration. As I mentioned earlier, the City of Monterey is currently covering 90% of their rental registry program costs after 2 years of the program’s existence. There would also be a financial benefit to the City of recovering missing business license tax revenue through the rental registry. 28 Mandatory Registry Roll-out period of at least a year No enforcement Waived or reduced fees After roll-out period, fee revenue would support software/staffing costs Additional revenue possible from missing business license revenue If this option is pursued, staff recommends implementing an initial roll-out process of at least a year where enforcement would not occur in the interest of registering the maximum number of properties possible. The City could explore waiving or reducing the initial registration fee in order to incentivize participation. This would come at a significant cost to the City of approximately $200,000 per year in potential fee revenue that could cover the software and staffing costs of the registry program. Once the initial roll-out period is complete, enforcement and the collection of fees would begin to support the program’s operations. Staff found that most jurisdictions cover the cost of software entirely through fee revenue, along with a significant portion of the staff time spent on program administration. As I mentioned earlier, the City of Monterey is currently covering 90% of their rental registry program costs after 2 years of the program’s existence. There would also be a financial benefit to the City of recovering missing business license tax revenue through the rental registry. 29 Mandatory Registry Overall Resource Need: High Software Costs: $10,000-$50,000 per year Staffing Need: 3.00 FTE ($300k-500k per year) Highest costs in the first 1-2 years during roll-out period and enforcement Approximately 3 full-time equivalents would be necessary across the City’s Housing Division, City Attorney’s Office, as well as Code Enforcement Division in order to successfully implement, operate and manage the program. The highest costs will be incurred in the first several years due to the need to roll-out the program and conduct extensive outreach, education, and enforcement. After 1-2 years, the program could be self-supporting through revenue from annual registration fees. 30 Focus Questions & Additional Information Next I’ll hand it back to Director Tway to cover focus questions and additional information. 31 Next Steps Should Council wish to move forward Additional outreach needed Scope of work established to determine more accurate cost estimates Upcoming discussion on code enforcement priorities Proposal to incorporate into 2027-29 Financial Plan Budget Process  Note: The 2027-2029 Financial Plan will also include resources to update the Housing Element 32 Additional Information Current work plan does not include further work on renter protections/rental registry May Study Session on Code Enforcement/Safe Housing If moving forward now, existing work programs would need to be removed, shifted and/or reevaluated Some workplan items are state mandated and cannot be removed 33 Additional Information Non-mandated work program items:  1.a. Organize focus group to explore barriers to residential infill development 2.a. Conduct an educational forum and improve the implementation of Below Market Rate (BMR) best practices to market and streamline the purchase and rental process for BMR units  3.d. Create a strategic plan for the safe housing program 4.b. Conduct a study session with Council on Code Enforcement priorities related to safe/livable neighborhoods and receive feedback on priorities. 4.d. Create a project plan and standard operating procedures for Community Development enforcement of zoning code regulations pertaining to Greek houses.  34 Additional Information Other Housing Team work Processing housing entitlements Processing building permits Facilitating Below Market Rate housing program CDBG and Affordable Housing Fund management General Plan maintenance and reporting Collaboration with development community and responding to inquiries  35 Focus Questions What is the goal of establishing the rental registry – what is the registry meant to address? 36 Focus Questions Is there interest in moving forward with a registry? If so, what option warrants further study/consideration?  Is there additional data or analysis that would be beneficial to determine next steps? 37 Focus Questions If there is interest in moving forward, what is the timing? 38 Questions 39