Capitol Update June 18, 2020

CALIFORNIA LOCAL RENT CONTROL INITIATIVE (2020) 

Rent Control Initiative Update
The ballot measure would allow local government to approve a rent control ordinance. It would be applicable except for:

This bill would replace the Costa-Hawkins Rental Housing Act which passed in 1995. The difference is that under Costa-Hawkins, landlords can increase prices to market rates when a tenant moves out (a policy known as vacancy decontrol). The proposed measure would require local governments that adopt rent control, to allow landlords to increase rental rates by 15% during the first three years following a vacancy.

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A “yes” vote supports this ballot initiative to allow local governments to enact rent control on housing that was first occupied over 15 years ago, with an exception for landlords who own no more than two homes with distinct titles or subdivided interests.

A “no” vote opposes this ballot initiative, thereby continuing to prohibit rent control on housing that was first occupied after February 1, 1995, and housing units with distinct titles, such as single-family homes.

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The Homeowners and Tenants United PAC is registered to support the ballot initiative. This committee, based on last reporting, has raised $4.74 million with 99.96% from AIDS Healthcare Foundation. They have reported spending $4.77 million to date.

The Californians for Responsible Housing and Californians for Affordable Housing PAC have raised
$6.19 million–one million coming from Essex Property Trust. To date $750,529 has been spent.

In researching for editorials in local papers, no editorial boards have shown support for the ballot measure.

The Orange County Register had an article by Michael Weinstein, President and CEO of AIDS Healthcare Foundation is making the argument for the proposition.  As noted, they have been the primary supporter of the initiative.

More opinions will be coming forth as the November election gets closer.

There is another interesting development in the ever-expanding reach of rent control in California.
As owners of single-family homes and condominiums, in a court case Owens vs City of Oakland Housing, the First District of the California Court of Appeal expanded the reach of local jurisdiction’s rent control laws to an owner of a single-family home – who also resided in that home – where there was a rental of rooms within the home to separate tenants. While the Costa-Hawkins Rental Housing Act (Prop.10) generally excludes single-family homes and condominiums from the imposition of local rent control laws, the court here held that the rental of rooms to separate tenants within an otherwise exempt home converts a single-unit dwelling into a multi-unit dwelling to potentially allow the imposition of a local jurisdictions rent control laws.

AB 1482 (2019)  

Governor Newsom signed this bill which controls rents by capping annual rent increases at 5% plus inflation for tenants. It also requires a landlord must have just cause, as defined by the law, to evict tenants that had occupied the rental for at least one year. This bill includes exemptions for housing built in the past fifteen years and some single-family homes and duplexes. This bill already establishes a state-wide rent control.

Another bill pending in the CA Legislature at this time, AB 828 prevents actions of foreclosure during the State emergency for the virus and establishes the process that a lender must take and when the action can be taken. In addition, it prohibits an eviction for residential tenants behind in rent from being evicted. There is a court process if the tenant appeals to the courts, that will require the property owner to reduce the rent by 25% for twelve months. The tenant must pay the adjusted rate plus 10% of the unpaid rent excluding late fees or court costs.

Interestingly, as of 2019, five states including California and Washington DC allowed some form of rent control on specific properties. In thirty-three states, state law preempted all forms of local rent control. Of the seventeen local ballot measures to expand rent control, seven were approved and ten defeated.

Any questions, please feel free to contact Elaine Freeman.

For more information click HERE.