Pasadena Rental Housing Board to Adopt Security Deposit Interest Rates and Regulations

The Pasadena Rental Housing Board is set to adopt new regulations on Wednesday, Sept. 27 regarding tenant security deposits and the interest rates for 2024, based on recommendations by Goldfarb Lipman Attorneys, general counsels to the Board. 

The regulations come as a result of Measure H, passed by voters in November 2022, imposing rent control and just cause eviction protections. Pasadena’s City Council certified the results of the election in December 2022, and the Charter amendment took effect later that month.

Under the Charter Amendment, landlords are required to pay interest annually on tenant security deposits held for at least one year. The interest rate is set by the Board every October and is applicable for the following calendar year. 

To determine the interest rate, the Board surveys interest rates paid on savings accounts by at least five banks insured by the Federal Deposit Insurance Corporation (FDIC) that have branches in Pasadena.

The attorneys’ memorandum showed that the interest rates at locally  surveyed banks ranged from 0.01% to 2.75%. As recommended, the regulations would require the Board to use the five highest interest rates obtained to set the interest rates on security deposits. Based on this, the interest rate for 2024 is expected to be 0.64%.

In addition to the interest rates, the regulations also establish the timing for landlords to pay tenants the accrued interest. Landlords would be required to pay the interest by January 31st of each year, beginning in 2025, according to the recommendation. Payment could be made either by check or as a rent credit. Landlords would also need to provide tenants with notice of the interest payment and how the interest amount was calculated.

If a tenant moves out before the end of the calendar year, the landlord would be required to pay the accrued interest on the security deposit within the 21-day timeframe mandated by state law, along with a notice of how the interest amount was calculated.

The Pasadena Rental Housing Board meeting begins at 6 p.m. and will be held at the Robinson Park Recreation Center Multipurpose Room, at 1081 N. Fair Oaks Ave.