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Millions of Californian tenants are on the brink of benefiting from the country's strongest protections against rising rents and evictions. And the main advocacy group of California owners agrees with that.
State lawmakers on Wednesday adopted AB 1482, a proposed law from deputy David Chiu, of San Francisco, limiting the annual rent increase to 5%, plus the inflation rate. The bill also requires landlords to provide a "just cause" for the eviction of tenants and, in certain circumstances, to pay tenants for them to move.
Governor Gavin Newsom lobbied for the bill to be passed in recent weeks, saying the measure was needed to tackle the government's dual epidemic of gentrification and homelessness. Half of California renters – more than 3 million households – spend more than 30% of their income on rent, which meets the federal government's definition of "rent is heavy."
Here are five points to remember from the state's most recent tenant protection bill.
1) The new measure would limit the extreme rises in rents, but it is not a traditional rent control.
Although Chiu's bill imposes a ceiling, he has taken care to qualify the measure as "anti-rent gouging", as opposed to the usual rent control. Fifteen California cities impose some form of rent control on apartments, with rent increases permitted by law ranging from 1% to 4%. Chiu's bill also does nothing to prevent homeowners from increasing rents when a tenant leaves, a provision called "vacancy control" that is often associated with the operation of rent control several decades in cities like Santa Monica and Berkeley.
"Words count. This is not rent control. It's an anti-pension abuse bill, "said Assembly member Rob Bonta of D-Alameda, co-author of the bill.
A study conducted by Berkeley and UC on 10 gentrifying Californian communities found that over a five-year period, the average increase in annual rent exceeded about 10% once every three years. An analysis of real estate company Zillow, which works with data certainly incomplete, revealed that about 7% of California tenants would have benefited from the ceiling of Chiu in 2018. However, although a minority of California tenants will benefit real savings thanks to the new law, the people who benefit from it are probably low income and therefore more vulnerable to rent increases.
Some opponents of California law argue that the measure could backfire against them: homeowners can treat the rent ceiling less as a limit of what they may ask for, but as a reference for what they should request. Especially if they fear unexpected future costs or if they have to take a tenant to court for evictions.
"Big homeowners can incorporate that cost into their business because they have a lawyer in their place," said Sid Lakireddy, president of the California Rental Housing Association, a small-property rights group. "This is not the case for mom and pop (owners) across the state."
2) Although the rent ceiling has attracted attention, the protections of "just" expulsions are more controversial.
In most areas of California, landlords can evict a tenant without giving any explicit reason. Assuming Newsom signs the bill, landlords will have to list one of the many specific reasons they want to evict a tenant, such as selling drugs from an apartment or not paying for it. rent. Homeowners wishing to convert a unit into a condo or move a member of their family will have to pay more than one month's rent to the relocated tenant for relocation assistance.
Marcos Segura, a lawyer for the Central California Legal Services eviction board, says that when homeowners evict tenants without cause, this is often because tenants complain about deplorable living conditions.
"If you remove this option from homeowners, where they can serve eviction notices without a cause, in which case it would make all the difference in the world," Segura said.
In order to find a compromise with homeowners and developers, Chiu has exempted from its rent ceiling an increasingly popular strip of California rental housing: single-family homes. Single-family houses owned by investment companies would be subject to the new measure, but homes owned by "popular" owners, the vast majority of the single-family rental market, would be exempt.
Chiu's bill represents the largest expansion of tenant protection in California's recent history, relying on 8 million tenants, according to estimates from the legislator's office.
Most tenants live in cities that already have local controls but are not eligible. A national law adopted in 1995, known as the "Costa-Hawkins", prohibits cities from extending rent control to units built after 1995 and limits in some cities control to units built well before.
Chiu's bill would apply to all eligible rental housing built in California at least 15 years ago, which means that housing built as recently as 2005 would be subject to rent ceilings. While cities would still be banned from extending stricter rent limits on new properties, millions of new homes would be subject to a legal limit on rent increases.
3) The developers say that the measure should not hinder new construction and they do not oppose it. But no signature legislation on housing production will accompany the rent ceiling.
For people concerned about California's housing shortage in millions of homes, the most compelling argument against a rent cap was that developers still said it could hinder the construction of new housing.
While Californian apartment builders generally expect an annual increase in rents of 2 to 3% when they finance their projects, the flexibility needed to increase rents until the market can support persuades investors to devote money in the construction process often uncertain and long new housing.
Even before Newsom's public comment, the California Building Industry Association – the leading lobby group for California developers – has announced that it will not oppose the bill after it has exempted the rent cap from new construction. for 15 years.
"The exemption for new construction is essential because it is difficult to convince investors to invest in multi-family units over a 10-year period. It just does not have the effect, "said Dan Dunmoyer, group leader. "Fifteen is a balance between what is feasible to attract capital. Nothing less than just makes it more difficult to bring investors to California. "
In its public comments on strengthening the rent cap law, Newsom also publicly adopted SB 330, a proposal by Senator Nancy Skinner, D-Berkeley, that would limit many tools, according to developers, that cities use to prevent new housing.
According to Mr. Dunmoyer, Skinner's proposal is a step in the right direction, but he admits that it was not the big boost to housing production that the developers had hoped for, given the daring goal of Newsom of 3.5 million new homes by 2025.
"I'm not surprised (the rent cap bill was passed) because I'm a political analyst who looks at the dynamics – it's easier to regulate than to reform," said Dunmoyer.
4) This is a big win for Newsom.
Shortly after a decisive failure last November by an electoral initiative that would have allowed cities to extend rent control, Newsom (who very discreetly opposed it) said it wanted to negotiate an agreement between tenant groups and owners. In his inaugural speech on the state of the state in February, he called on lawmakers to send him a package of protections against tenants that he could sign this year.
Newsom's latest efforts to strengthen the bill by adding eviction restrictions and tightening the rent ceiling have reversed the opposition of major interest groups. While getting a compromise from the largest state-owned lobby, he had angered California's powerful estate agents' association, who thought the governor was breaking the deal with a less stringent version of the rent ceiling.
Realtors are a major source of fundraising for California Democrats. They have donated nearly $ 1.38 million in campaign funds to incumbent Democratic legislators and $ 2.5 million to the Democratic State party since 2017.
It remains to be seen how Newsom's intervention will affect future relations between real estate agents and the democratic leaders of states.
5) The big landlord lobby is in agreement – which could hurt prospects for controlling rents at the polls in 2020.
The California Apartment Association and its allies have spent more than $ 70 million on a state-wide rent control initiative in 2018, which they have defeated by nearly 20 points.
So, why give in now, less than a year from this decisive victory?
Michael Weinstein, president of the Los Angeles-based AIDS Healthcare Foundation, is collecting signatures for another state-wide rent control initiative for the November 2020 poll. Weinstein says Chiu n did not go far enough to protect his tenants.
Homeowners can now say that lawmakers have already taken steps to limit excessive rent increases and blatant foreclosure practices without endangering new developments.
"We will argue that the state has already talked about this topic, we will argue that it is a balance, we will say that everyone came to the table and finally found a ground for a temporary solution, "said California Apartment lobbyist Debra Carlton. Association.
CalMatters.org is a non-profit, non-partisan media company that explains California politics and politics.
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