This article covers some of the most damaging bills and ballot measures that are currently being considered that would absolutely wipe out a portion of the existing affordable housing stock, including one senate bill (SB567) that would impact ALL TYPES OF RENTAL UNITS. This one bill alone could be responsible for the withdrawal of THOUSANDS of rental units from the market. There’s also a ballot measure that would act as a “Death Star” for affordable housing.
It is crucial for owners and renters alike to be aware of what is coming down the pike. Will you invest a little time to oppose state and local legislation that undermines your property rights? It seems that the policymakers in our state and cties would rather control housing instead of helping to create more housing. Many of these politicians seem to hold the mistaken belief that owning an apartment building automatically translates into having surplus funds to support additional lower-income families by subsidizing housing through rent control and other regulations. What’s worse, powerful tenants-rights groups are stuffing more and more money into the pockets of state and local officials, incentivizing them to push even harder to take away your property rights.
The Senate Bill That Could Kill Affordable Housing
The Homeless Prevention Act (SB 567) would cause EVERY RENTAL UNIT in the state to fall under rent control. Again, every rental property in the entire state would be under rent control! This bill aims to “enhance” the existing 2019 Tenant Protection Act by significantly reducing the permissible rent increases under state law as defined by AB 1482. SB 567 has successfully passed through the Senate Judiciary Committee with a leadership majority and is now set to be reviewed by the State Assembly.
The bill suggests lowering the maximum rent increase from 10% to either 5% or the change in the Consumer Price Index, whichever is lower. Just think about it! If the lower of the two is zero inflation, that would mean that there is a ZERO percent allowable rent increase for the year. Additionally, the bill intends to reverse Costa-Hawkins by including single-family homes and condominiums, which are presently exempt from rent control measures under the protection of Costa-Hawkins.
If Passed, Tenant Protections Start Day One!
SB 567 would increase regulations on no-fault evictions from the beginning of the tenancy, rather than the required 12-month waiting period under the current legislation. With even less room to select a bad tenant, some owners will quit the business while others up the tenant qualification criteria to help them increase their chances of getting a good tenant.
$17,200 in Statutory Damages for Charging Too Much!
Under the Tenant Protection Act, a housing provider who demands or retains rent exceeding the maximum allowable increase may face civil action and be liable to the tenant, entailing statutory damages of $17,200, in addition to legal fees. Any miscalculation of rent would end up being extremely costly. Large property management companies will be able to make these calculations, but steep fines like this will permanently change the rental housing industry.
Prohibits Some Owner Move-Ins!
If landlord / tenant law was complicated enough, you would also need to be similarly situated to be able to even move into your own property. For more details about the meaning of “Similarly situated”, visit AOAUSA.COM, type in “SB 567” and you’ll find an article on our website that goes into greater detail on some of the other content in SB 567, including how SB 567 would make substantial remodel practically impossible.
What Can You Do to Stop SB 567?
Please tear out the one-page letter following this article and send it to your senator and the governor. They need to know how this will impact affordable housing and homelessness. One other significant way you can help oppose bad legislation is to be aware of the other bills that are making their way through the state legislature. Be aware of what is happening locally and engage with your local officials. Here’s a summary of the legislation that is working its way through Sacramento. At the bottom, you will find the ballot measure that is a total “Death Star” measure that would wipe out affordable housing.
AB 12 (Haney, D-San Francisco): Tenancy, Security Deposits. Would prohibit a landlord from receiving a security deposit for a rental agreement in an amount in excess of one month’s rent, irrespective of an applicant’s financial status, eviction history, or whether the unit is furnished or unfurnished. AB 12 passed the State Assembly and is awaiting a hearing in the Senate Judiciary Committee.
AB 309 (Lee, D-Milpitas): Social Housing. Would define “social housing” for purposes of the Zenovich-Moscone-Chacon Housing and Home Finance Act, and make findings and declarations relating to social housing and would state the intent of the Legislature is to further the Social Housing Act to address the shortage of affordable homes by developing housing for people of all income levels, prioritizing low-income households. AB 309 passed the Assembly and is awaiting a hearing in the Senate Housing, as well as the Governance and Finance Committees.
AB 1317 (Carillo, D-Los Angeles): Unbundled Parking. Would require the owner of residential real property that provides parking with a residential unit to unbundle parking from the price of rent (“unbundled parking” selling or leasing parking spaces separate from the lease of the residential use). AB 1317 passed the Assembly and is pending referral by Senate Rules.
SB 267 (Eggman, D-Stockton): Credit History of Persons Receiving Government Rent Subsidies. Would prohibit the use of a person’s credit history as part of the rental application process for a rental housing accommodation, without offering the applicant the option of providing alternative evidence of financial responsibility and ability to pay in instances in which there is a government rent subsidy. It would also require that the housing provider consider that alternative evidence, in lieu of the person’s credit history. SB 267 passed the Senate and is pending referral in the Assembly, likely to the Judiciary and Housing Committees.
SB 569 (Glazer, D-Orinda): Renters’ Tax Credit. Would require the Franchise Tax Board to recompute the renters’ tax credit for inflation. SB 569 passed the Senate and is pending in the Assembly.
Justice for Renters Act (State ballot initiative)
Although SB 466 was the latest attempt to chip away at Costa-Hawkins, a ballot initiative dubbed the “Justice for Renters Act”, headed to voters in 2024, would repeal Costa-Hawkins altogether. Michael Weinstein is intent on expanding local governments’ authority to impose rent control. His past two attempts, Prop. 21 and Prop. 10, failed, but Weinstein is tenacious and hopes that his third attempt will succeed. He may have good reason for optimism this time around because it calls for increased rent and eviction controls are spreading throughout California. What was once considered a fringe movement in primarily urban areas is now finding a more receptive audience in suburban areas not traditionally associated with tenant activism. For this reason, we must work extra hard to meet this gathering storm head-on.
[Editor’s Note: The information below was provided in July. To see current updates on these bills, visit https://leginfo.legislature.ca.gov.]
Some information provided by and reprinted with permission of the Small Property Owners of San Francisco Institute (SPOSFI) News.
Dear Senator and Assemblymember:
Please vote “NO” on SB 567! Because homelessness has increased since the enactment of AB 1482, an unbiased review of the impact of AB 1482 on the rental housing market would be wise before passing an even stronger measure. Survey renters that fall below median income. Ask them if they feel their rental situation is better or worse since AB 1482 was enacted (January 1st 2020). Identify and track key metrics to determine whether or not this type of policy is effective.
It must be noted that AB 1482 has done nothing to lower rents or create more affordable housing. On the contrary, increased rent controls and tenant protections have been a major driver behind the withdrawal of existing housing units from the market.
More Control or More Housing?
Harvard, Stanford, and the Rand studies all agree that property controls cause the loss of housing and jobs! It is common knowledge that rent controls produce the following undesirable effects:
- Forces renters out of their homes as apartments are converted to condominiums
- Also forces renters out of their homes as condos and single family homes are removed from the rental market
- Benefits the most stable and affluent renters (Ex: affluent renters in Santa Monica)
- Creates barriers for the more vulnerable renters to find suitable space
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- Hoarding of units by tenants reduces the efficient exchange of property
- Drives the cost of rents higher
- Stiffles new construction
- Rent control is a short-term fix for some renters that creates long-term problems for all
More Housing, More Efficiently
To solve the housing crisis, we need to create more housing. The number of all types of housing needs to increase, ADUs, single-family homes and multifamily. This can only be achieved by reducing the bureaucratic red tape involved in the permitting and building of new housing. The longer it takes, the more it costs to create housing.
Pathways to the American Dream
There are viable investment models that aim to help renters become homeowners, which is a crucial component of the American dream. Focus on creating pathways for people to achieve homeownership and make goals to see the number of homeowners increase and the number of renters decrease.
Respectfully,
(Your signature)