In the last week, Council Member Radina and I met with city staff and local advocates to craft the language for agenda item C-1, which is part of the July 6, 2021 Council agenda.
C-1 (21-1261) An Ordinance to Amend Section 8:530 of Chapter 105 (Housing: Entry to Show Premises and Time for Rental Agreements) of Title VIII (Building Regulations) of the Ann Arbor City Code
Last month, an early leasing ordinance was on a Council agenda and postponed to July 20th. This week’s proposal addresses the problem of early leasing, with more meaningful protections than the earlier (postponed) ordinance. When the language for C-1 was ready in time to add to this agenda, Council Member Radina and I were able to move it forward with the help of additional sponsorship from Council Member Disch. Council has now been talking about the early leasing issue for months— I am hopeful about it moving forward on Tuesday!
Near campus and downtown, tenants are regularly asked to commit to leases (and pay significant deposits) many months before they would ever live in a rental unit. Tenants currently renting in these areas are often asked to renew a lease before they have lived in the space for any meaningful length of time. Agenda item C-1 will make sure that tenants have more time to make these important decisions — they will not be committing deposits on leases so many months in advance. The new ordinance also grants landlords flexibility to not renew a lease, under all reasonable circumstances.
The current Ann Arbor Early Leasing ordinance prohibits a landlord from showing apartments to prospective tenants (or signing leases for the subsequent term) earlier than 70 days into a current lease. However, renters in some parts of the city tell us that the pressure to renew happens sooner than that – landlords often ask about lease renewals after only 50 or 60 days. Even strict compliance with the 70 day timeline means that tenants are renewing leases (and paying rental deposits) as long as ten months in advance of the next leasing term.
We have an extremely inequitable system in some parts of our local rental market. Committing deposits this far in advance grossly extends the timeline when tenants actually have TWO outstanding deposits: one for their current rental unit and one for their future rental unit. In some neighborhoods, the cost of an apartment is not just the deposit and the monthly rent— the cost of housing includes the additional burden of having a deposit held for nearly ten additional months in advance of the leasing terms. Our competitive housing market is hurting people of less means.
Changing this timeline, alone, would not address the problem facing tenants. City staff told me that compliance with the 70 day timeline was largely voluntary and they warned me that in extending the timeline, it would be difficult to measure compliance. City staff and advocates alike wondered: how would tenants report and prove a violation and what would be the consequence to landlords? Landlords told me that at least some of the pressure in our rental market is driven by tenants themselves: affluent tenants who can afford (and are eager to pay) deposits on the properties they desperately want.
Timelines, alone, are nearly impossible to enforce.
RIGHT TO RENEW
The “right to renew” creates the exact mechanism needed to enforce a timeline and protect tenants from too-early leasing. The pressure to lease comes from the threat of competing offers, the idea that others are eager to sign leases and others are willing (and can afford) to pay deposits early. The right to renew removes that pressure.
The ordinance in C-1 grants a tenant the “right to renew” a lease until 150 days (five months) before the end of the term. (On a year-long lease, this is approximately 210 days into the leasing period and the tenant would have lived in the space for seven months.) During that time frame, the landlord may not show the apartment to new prospective tenants. During that time, the tenant retains the right – and can assert the right – to renew the lease they currently hold.
The tenant is not guaranteed a lease renewal on the exact same terms. However, the landlord is required to offer terms for renewal that are substantially similar to what would be offered to a prospective tenant. In this way, a landlord can make changes or adjust the terms of leasing. More importantly: the tenant is protected from discriminatory or predatory terms.
The tenant’s right to renew a lease is not absolute. This week’s proposed ordinance includes important exceptions that acknowledge the landlord’s rights as a property owner. For example, the right to renew a lease does not exist when:
- a tenant fails to pay rent and fails to vacate
- a tenant is in violation of a material term of the lease
- the owner seeks to take possession of the property for their own benefit or for family members
- the owner has executed a letter of intent or purchase agreement to sell the property
- the owner plans (and has appropriate permits) to demolish the property
- the owner plans (and has appropriate permits) to renovate the property so that it cannot be occupied
- the owner would like to discontinue sharing the space in which the owner resides, or discontinue renting an accessory dwelling unit on an owner-occupied property
- there is ongoing criminal activity
- there is an action for eminent domain against the property
More than half of Ann Arbor residents are renters. The ordinance in C-1 includes protections that will benefit everyone who currently lives in rental housing as well as everyone who would like to rent housing in our City. Since the topic first appeared on an agenda last month, Council has received hundreds of emails on the topic of Early Leasing in Ann Arbor. Council has heard from tenants, former tenants, concerned residents, and Panhellenic organizations, expressing support for regulation of this pressured rental market. This is the right thing to do and I am excited to see it move forward!