California Passes Rent-Control Law Amid Homelessness Crisis
Critics say state needs more-aggressive action to ease high housing prices. California Passes Rent-Control Law Amid Homelessness Crisis
California will cap rent increases under a new law Gov. Gavin Newsom said he would sign Tuesday, the most significant piece of housing-related legislation in a year that also saw the shelving of a measure to relax zoning and spur more construction.
Mr. Newsom, a Democrat, said he would sign the bill into law at a ceremony in Oakland, Calif. The governor has said the rent caps and tenant protections are necessary to help people being squeezed out of their homes. The law limits annual rent increases at 5%, plus the rate of inflation, and adds some barriers for landlords seeking to evict people.
“They will provide California with important new tools to combat our state’s broader housing and affordability crisis,” Mr. Newsom said when the rent measure passed the legislature Sept. 11.
But advocates said the California legislature fell short of the action needed to seriously address the state’s rising housing costs and homelessness.
“Rent caps don’t solve the housing crisis,’” said Matthew Lewis, a spokesman for California YIMBY, which advocates for more housing and co-wrote high-profile statewide rezoning legislation known as Senate Bill 50 that was back-burnered until next year. “The root of the problem is a shortage of housing, and it is a severe, long-term shortage.”
SB 50 died this session after some cities vehemently opposed it, arguing the bill eroded local control. The bill’s backers said that without major zoning changes, California won’t be able to build the housing it needs to match its population growth.
“We didn’t see the kinds of game-changing policies out of this legislative session that are going to be necessary to significantly address the housing crisis,” said David A. Garcia, policy director for the UC Berkeley Terner Center for Housing Innovation, which researches housing policy.
More than half of California renters are considered burdened, paying more than 30% of income for housing, including utilities, according to estimates by the Joint Center for Housing Studies of Harvard University.
The statewide median home price hit a record high of $617,410 in August, according to the California Association of Realtors, reaching $627,690 in Los Angeles County and $1.6 million in San Francisco. That compares to a national median home price of $278,200, according to the National Association of Realtors.
With 129,972 people homeless in 2018, California is ranked No. 1 in the U.S., according to the U.S. Department of Housing and Urban Development.
During his campaign for governor, Mr. Newsom said he wanted to build 3.5 million units of housing in the state by 2025, an unheard-of pace in recent years. So far in 2019, California is on course to build just 120,302 new housing units, a 2% increase from the previous year, according to the California Building Industry Association.
The rent-cap law faced opposition from groups including the National Realtors Association, which said the measure discourages new rental housing. But opposition to the law was dropped by the California Apartment Association, which represents landlords, after Mr. Newsom negotiated key amendments to the bill with them in August.
The law could add momentum to a budding national rent-control movement after Oregon and New York passed their own caps earlier this year and U.S. Rep. Alexandria Ocasio-Cortez introduced federal legislation last month.
Mr. Newsom has made California’s affordable-housing crisis and a related homelessness problem top priorities for his administration. The governor in June signed a state budget directing $1.75 billion to spur new housing construction and about $1 billion aimed at helping cities and counties combat homelessness.
In January, he filed a first-of-its-kind lawsuit against the upscale coastal city of Huntington Beach, outside of Los Angeles, accusing it of blocking the construction of enough affordable places to live.
Advocates are also hoping he will sign a series of bills passed by the legislature that would make it easier for homeowners to build small units in their backyards, colloquially known as “granny flats.”
LEGISLATIVE COUNSEL’S DIGEST
AB 1482, Chiu. Tenant Protection Act of 2019: tenancy: rent caps.
Existing law specifies that a hiring of residential real property, for a term not specified by the parties, is deemed to be renewed at the end of the term implied by law unless one of the parties gives written notice to the other of that party’s intention to terminate. Existing law requires an owner of a residential dwelling to give notice at least 60 days prior to the proposed date of termination, or at least 30 days prior to the proposed date of termination if any tenant or resident has resided in the dwelling for less than one year, as specified. Existing law requires any notice given by an owner to be given in a prescribed manner, to contain certain information, and to be formatted, as specified.
This bill would, with certain exceptions, prohibit an owner, as defined, of residential real property from terminating a tenancy without just cause, as defined, which the bill would require to be stated in the written notice to terminate tenancy when the tenant has continuously and lawfully occupied the residential real property for 12 months, except as provided. The bill would require, for certain just cause terminations that are curable, that the owner give a notice of violation and an opportunity to cure the violation prior to issuing the notice of termination. The bill, if the violation is not cured within the time period set forth in the notice, would authorize a 3-day notice to quit without an opportunity to cure to be served to terminate the tenancy. The bill would require, for no-fault just cause terminations, as specified, that the owner, at the owner’s option, either assist certain tenants to relocate, regardless of the tenant’s income, by providing a direct payment of one month’s rent to the tenant, as specified, or waive in writing the payment of rent for the final month of the tenancy, prior to the rent becoming due.
The bill would require the actual amount of relocation assistance or rent waiver provided to a tenant that fails to vacate after the expiration of the notice to terminate the tenancy to be recoverable as damages in an action to recover possession. The bill would provide that if the owner does not provide relocation assistance, the notice of termination is void. The bill would except certain properties and circumstances from the application of its provisions. The bill would require an owner of residential property to provide prescribed notice to a tenant of the tenant’s rights under these provisions. The bill would not apply to residential real property subject to a local ordinance requiring just cause for termination adopted on or before September 1, 2019, or to residential real property subject to a local ordinance requiring just cause for termination adopted or amended after September 1, 2019, that is more protective than these provisions, as defined. The bill would void any waiver of the rights under these provisions. The bill would repeal these provisions as of January 1, 2030.
Existing law governs the hiring of residential dwelling units and requires a landlord to provide specified notice to tenants prior to an increase in rent. Existing law, the Costa-Hawkins Rental Housing Act, prescribes statewide limits on the application of local rent control with regard to certain properties. That act, among other things, authorizes an owner of residential real property to establish the initial and all subsequent rental rates for a dwelling or unit that meets specified criteria, subject to certain limitations.
This bill would, until January 1, 2030, prohibit an owner of residential real property from, over the course of any 12-month period, increasing the gross rental rate for a dwelling or unit more than 5% plus the percentage change in the cost of living, as defined, or 10%, whichever is lower, of the lowest gross rental rate charged for the immediately preceding 12 months, subject to specified conditions. The bill would prohibit an owner of a unit of residential real property from increasing the gross rental rate for the unit in more than 2 increments over a 12-month period, after the tenant remains in occupancy of the unit over a 12-month period. The bill would exempt certain properties from these provisions.
The bill would require the Legislative Analyst’s Office to submit a report, on or before January 1, 2030, to the Legislature regarding the effectiveness of these provisions. The bill would provide that these provisions apply to all rent increases occurring on or after March 15, 2019.
The bill would provide that in the event that an owner increased the rent by more than the amount specified above between March 15, 2019, and January 1, 2020, the applicable rent on January 1, 2020, shall be the rent as of March 15, 2019, plus the maximum permissible increase, and the owner shall not be liable to the tenant for any corresponding rent overpayment. The bill would authorize an owner who increased the rent by less than the amount specified above between March 15, 2019, and January 1, 2020, to increase the rent twice within 12 months of March 15, 2019, but not by more than the amount specified above. The bill would void any waiver of the rights under these provisions.
The Planning and Zoning Law requires the owner of an assisted housing development in which there will be an expiration of rental restrictions to, among other things, provide notice of the proposed change to each affected tenant household residing in the assisted housing development subject to specified procedures and requirements, and to also provide specified entities notice and an opportunity to submit an offer to purchase the development prior to the expiration of the rental restrictions.
This bill would authorize an owner of an assisted housing development, who demonstrates, under penalty of perjury, compliance with the provisions described above with regard to the expiration of rental restrictions, to establish the initial unassisted rental rate for units without regard to the cap on rent increases discussed above, but would require the owner to comply with the above cap on rent increases for subsequent rent increases in the development.
The bill would authorize an owner of a deed-restricted affordable housing unit or an affordable housing unit subject to a regulatory restriction contained in an agreement with a government agency limiting rental rates that is not within an assisted housing development to establish the initial rental rate for the unit upon the expiration of the restriction, but would require the owner to comply with the above cap on rent increases for subsequent rent increases for the unit.
The bill would repeal these provisions on January 1, 2030. The bill would void any waiver of the rights under these provisions. By requiring an owner of an assisted housing development to demonstrate compliance with specified provisions under penalty of perjury, this bill would expand the existing crime of perjury and thus would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: YES
The people of the State of California do enact as follows:
This act shall be known, and may be cited, as the Tenant Protection Act of 2019.
Section 1946.2 is added to the Civil Code, to read:
(a) Notwithstanding any other law, after a tenant has continuously and lawfully occupied a residential real property for 12 months, the owner of the residential real property shall not terminate the tenancy without just cause, which shall be stated in the written notice to terminate tenancy. If any additional adult tenants are added to the lease before an existing tenant has continuously and lawfully occupied the residential real property for 24 months, then this subdivision shall only apply if either of the following are satisfied:
(B) (i) The tenants have been provided written notice that the residential property is exempt from this section using the following statement:
“This property is not subject to the rent limits imposed by Section 1947.12 of the Civil Code and is not subject to the just cause requirements of Section 1946.2 of the Civil Code. This property meets the requirements of Sections 1947.12 (d)(5) and 1946.2 (e)(8) of the Civil Code and the owner is not any of the following: (1) a real estate investment trust, as defined by Section 856 of the Internal Revenue Code; (2) a corporation; or (3) a limited liability company in which at least one member is a corporation.”
“California law limits the amount your rent can be increased. See Section 1947.12 of the Civil Code for more information. California law also provides that after all of the tenants have continuously and lawfully occupied the property for 12 months or more or at least one of the tenants has continuously and lawfully occupied the property for 24 months or more, a landlord must provide a statement of cause in any notice to terminate a tenancy. See Section 1946.2 of the Civil Code for more information.”The provision of the notice shall be subject to Section 1632.
Section 1947.12 is added to the Civil Code, to read:
(a) (1) Subject to subdivision (b), an owner of residential real property shall not, over the course of any 12-month period, increase the gross rental rate for a dwelling or a unit more than 5 percent plus the percentage change in the cost of living, or 10 percent, whichever is lower, of the lowest gross rental rate charged for that dwelling or unit at any time during the 12 months prior to the effective date of the increase. In determining the lowest gross rental amount pursuant to this section, any rent discounts, incentives, concessions, or credits offered by the owner of such unit of residential real property and accepted by the tenant shall be excluded. The gross per-month rental rate and any owner-offered discounts, incentives, concessions, or credits shall be separately listed and identified in the lease or rental agreement or any amendments to an existing lease or rental agreement.
Section 1947.13 is added to the Civil Code, to read:
(a) Notwithstanding Section 1947.12, upon the expiration of rental restrictions, the following shall apply:
No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.
AB1482 Toolkit For Tenants
California’s New Tenant Protection Act Passed on October 13, 2019
Tenants Together created this AB 1482 Tenant Advocacy Toolkit to provide basic information on the new law, as well as some sample letters for tenants looking to enforce their rights under this new law.
Local Moratoriums Passed in 2019 (last updated 12/12/19)
(every ordinance is different please contact your city or local advocacy organizations for details)
2. Baldwin Park
3. Bell Gardens
6. City of Commerce
7. Daly City
9. El Monte
11. Grover Beach
12. Hermosa Beach
13. Imperial Beach
14. Inyo County (county unincorporated)
15. Los Angeles (city)
16. Long Beach
20. Menlo Park
22. Monterey County (unincorporated)
23. Morro Bay
24. Palo Alto
27. Rancho Cordova
28. Redwood City
29. Redondo Beach
31. San Carlos
32. San Gabriel
33. San Luis Obispo
34. San Mateo (city)
35. San Mateo County (unincorporated)
36. Santa Cruz (city)
37. Santa Cruz (county unincorporated)
39. South Pasadena
40. South San Francisco
41. South Gate