The City of Santa Barbara recently passed amendments to renovation ordinance which will now include:

• Right-to-return rent caps after substantial remodels at 5% + CPI or 10% whichever is lower
• Obtaining a written opinion by a second contractor on if a tenant can stay in place during a renovation
• “Cool Off” period of 1 year after acquiring a property of 5+ rental units

What does this mean if you want to do a substantial remodel or demolition? If you are exempted from “just cause” then you don’t have anything additional you need to do. As a reminder, single family homes and condos are exempted as long as you don’t have more than 2 leases (i.e. bedrooms) on the property. If you are NOT exempt then you will need to offer a right-to-return (which already exists) with a rent cap of 5% + CPI or 10% whichever is lower. This number is based off of the existing rental lease agreement. If the tenant rejects the right-to-return, then the owner may charge market rent at the completion of the substantial remodel or demolition.

In addition, if you are NOT exempt, you will need to follow the current notification process and you will need to obtain a written opinion supported by a detailed explanation and signed under penalty of perjury from an independent construction expert (license classification A, B, or B-2). The opinion will need to state that the work cannot be reasonably accomplished in a safe manner with the tenant in place for at least 30 consecutive days. The contractor cannot be the owner, the contractor retained for the work, or otherwise financially interested in the work besides payment for the preparation of the report. The report must be filed with the building permit application.

If a building that has 5 or more units is sold and the new owner wishes to commence with a substantial remodel or demolition, they will need to wait one year from the acquisition to start any work. This does not mean the owner can’t work on obtaining the permits and getting the paperwork together. It means that any termination of tenancies cannot start until after the one-year cool-off period.

The City Council did direct staff to come back with some ideas of how to implement an appeals process. What this appeals process entails, we don’t know yet, but we will keep you updated once we have more information.

As a reminder, you can view an updated “South Coast Tenant Protections Quick Guide” here.