New Legislation Aims to Limit “Intermediate Length” Rentals


Following recent controversy over furnished rental properties that skirt the short term rental regulations by requiring tenants to stay for at least 30 days, Supervisor Peskin introduced legislation last week aimed at reigning in such projects.

The ordinance would create a new “Intermediate Length Occupancy” under the Planning Code and would provide corresponding amendments to the Rent Ordinance. The legislation is available here.

Planning Code Changes – Intermediate Length Occupancy Units:

Under the Planning Code, Peskin’s legislation would define a new Intermediate Length Occupancy residential use “characteristic.” The classification covers dwelling units offered for an initial occupancy of more than 30 days but less than one year. Such units would be subject to a new Planning Code section, which would create a framework for permitting (and limiting) the units.

Projects that have not received a first building or site permit (as of the effective date of the new law), that would create at least 10 new dwelling units (i.e. those projects subject to the Inclusionary Affordable Housing requirements) would be eligible to establish Intermediate Length Occupancy units under the new rules—which would not apply to student housing, residential hotel units (subject to Admin. Code Chapter 41), or to projects with nine or fewer units. Units that are designated as affordable under the Inclusionary Affordable Housing Program, subject to the Rent Ordinance, or otherwise designated as below market rate units under state or federal law, are not eligible to be Intermediate Length Occupancy units.

For qualified projects, the Intermediate Length Occupancy units would be permitted with conditional use authorization in any district that otherwise allows residential use. Such approval would limit the Intermediate Length Occupancy units to no more than 20% of the project, and the units would need to be specifically identified as Intermediate Length Occupancy units. While the units are defined as having an initial tenancy of no more than one year, a designated Intermediate Length Occupancy unit could be offered for a term of more than one year without losing its Intermediate Length Occupancy status.

Like with Residential Hotels, owners of Intermediate Length Occupancy units would be required to file annual reports detailing the following:

  1. The location of the Intermediate Length Occupancy unit;
  2. The number of times the unit was occupied by a natural person for an initial stay for a duration of greater than 30 consecutive days but less than one year, including the duration of each of those stays;
  3. The average duration of each stay;
  4. The average vacancy between each stay; and
  5. The nature of the services, if any, that are provided to occupants.

Notably, the ordinance states that no more than 500 Intermediate Length Occupancy units may be permitted throughout the City.

 

Rent Ordinance Amendments:

Peskin’s related changes to the Rent Ordinance aim to strengthen tenant protections, prohibit fixed-term tenancies, and increase tenant awareness of Rent Ordinance protections.

For starters, the legislation provides that any lease provision that requires a tenant to vacate a rental unit at the end of a stated term, “shall be void as contrary to public policy.” Such that a landlord may not recover possession of a unit without just cause, except in the limited circumstances where the Rent Ordinance expressly authorizes a fixed lease term or eviction without just cause.

Additionally, the legislation prohibits the lease of rental units to corporate entities and use of a unit for a corporate entity’s own employees or licensees (i.e. a “Non-Tenant Use”). As of February 1, 2020, and subject to limited exceptions, rental units that are subject to the Rent Ordinance may not be used for a Non-Tenant Use. Agreements providing for such Non-Tenant Use would be considered void—and the occupants would be deemed tenants protected by the Rent Ordinance.

Further, beginning February 1, 2020, online listings for units subject to the Rent Ordinance must disclose that the unit is subject to the Rent Ordinance. The legislation gives the Rent Board the authority to monitor online listings and assess penalties of up to $100 a day for non-compliant listings (but no more than $1,000 total for a single listing).

The legislation also includes a civil suit provision—expressly granting authority to the City Attorney’s Office and to nonprofit tenants’ rights organizations to bring a civil action for any violation of these new Rent Ordinance regulations.

Authored by Reuben, Junius & Rose, LLP Attorney Chloe Angelis

The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient. Readers should consult with legal counsel before relying on any of the information contained herein. Reuben, Junius & Rose, LLP is a full service real estate law firm. We specialize in land use, development and entitlement law. We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision and condominium work.