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From the SFAA and CAA (SF Apartment & CA Apartment Association)
BTW this is all the work of that Commie David Chiu, who I detest.
Update on AB 1482-- The Statewide Rent Control Bill
On Monday, August 19, 2019 the California Senate Appropriations Committee moved AB 1482 to the suspense file unanimously with a 5-0 vote with two abstentions. When a bill is put on suspense, it has been set aside so that its financial impact on the state can be considered.
This Friday, August 30, the Senate Appropriations Committee will elect to either move AB 1482 to the Senate Floor for a vote or leave it on suspense for the rest of the year.
If the bill is not moved off of suspense on August 30, 2019 it will die for the year and will likely come back as a two-year bill in 2020.
As currently written, AB 1482 by San Francisco Assemblyman David Chiu would cap annual rent increases at 7% plus the consumer price index and would apply to nearly all of California’s rental housing stock, including apartments and many single-family homes built within the last ten years. Additionally, the bill would apply in jurisdictions where voters and local elected leaders have already rejected rent control policies. The bill would also not supersede current local rent control laws with lower rent caps, like in San Francisco. In addition to capping rents, AB 1482 would apply “just cause” eviction policies statewide and require relocation payments for no-fault evictions.
As of right now, to become law, AB 1482 must:
- move off the Suspense File on August 30, 2019
- Pass off the Senate Floor
- Pass a review of amendments in the Assembly
- Win the Governor’s approval
While the bill is on suspense, the California Apartment Association is actively working to amend the legislation, including in the following ways:
- A requirement that a tenant occupy the property for 24 months before the “just cause” and relocation provisions apply. At present, the bill would apply just cause at 12 months of tenancy.
- Housing that has been issued a certificate of occupancy within the previous 20 years is exempt from the provisions of the bill. At present, the bill would impose its rent cap 10 years after construction.
- The provisions within the bill will remain in effect until January 1, 2027. At present, the bill would sunset after three years.
- Make clear that the provisions within the bill occupy the field for the housing specified within the bill, meaning local governments cannot impose stricter regulations on housing affected by AB 1482.
- Clarify the vacancy decontrol provisions and provide clarifying language relating to just cause, rent and lease provisions.
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CAA amendments diminish most threatening impacts of AB 1482
September 6, 2019
A bill that would cap annual rent increases for much of California’s multifamily housing stock now includes significant amendments secured by the California Apartment Association.
The amendments to AB 1482, among other things, would prevent local governments from making the bill’s rent cap any more restrictive. Moreover, the revisions would improve the legislation’s vacancy decontrol and “just cause” for eviction provisions, while shielding new buildings from the cap for five additional years.
The changes follow weeks of around-the-clock negotiations with the office of Gov. Gavin Newsom and Senate Pro Tem Toni Atkins and were announced last week after the bill advanced from the Senate Appropriations Committee. To reach the governor’s desk, AB 1482 by Assemblyman David Chiu, D-San Francisco, still must win approval next week on the Senate Floor and then receive a green light of amendments in the Assembly.
WHERE THE BILL STANDS
To become law, AB 1482 still must:
- Pass off Senate floor
- Pass review of amendments in Assembly
- Win governor’s approval
Click for full-size image
For the most part, the bill’s cap on rent increases would apply to properties that are 15 years or older, contain two units or more, and are not already subject to local rent control ordinances. The legislation would exempt single-family homes, townhouses and condos, except when owned by corporations or Real Estate Investment Trusts. It also exempts duplexes and accessory units when the owner lives on site.
Housing exempted for 15 years: Thanks to a CAA amendment, housing would be exempt from the bill’s rent cap and “just cause” eviction provisions until they are 15 years old. The bill previously was set to exempt buildings for only 10 years. With the longer exemption, CAA has helped to mitigate the bill’s impact on future development of rental housing.
AB 1482 “occupies the field”: CAA ensured that AB 1482, which would cap annual rent increases at 5% plus CPI (currently, this would mean a maximum annual rent increase of approximately 8%), will “occupy the field,” meaning local governments would not be allowed to impose stricter rent caps on housing regulated by the legislation. Note, AB 1482 does not apply to housing regulated by local rent control ordinances and the Costa-Hawkins Rental Housing Act.
Vacancy decontrol strengthened: When a tenant moves out of a unit regulated by AB 1482, the owner would be allowed to adjust the new rent to market and then resume conforming to CPI plus 5%.
“ Just cause ” provisions improved: Under AB 1482, owners would still be able to evict tenants for:
- Nonpayment of rent
- Nuisance or criminal activity
- The owner moving themselves or family into a unit
- To renovate
- To go out of business altogether.
WHO’D BE AFFECTED
If ultimately signed into law, AB 1482 would apply its rent cap to properties that are:
- Are older than 15 years (Construction built before 2005)
- Contain at least two units (unless the owner lives at the property where there is a duplex or an accessory unit)
- Are not regulated by local rent control laws under the Costa-Hawkins Rental Housing Act.
The just-cause provisions would kick in after 12 months of the tenancy, however, if the renter takes a roommate within the first 24 months, the clock would reset. Just cause would then not apply until all renters in the unit have been in place for a full year or at least one tenant has continually occupied the unit for 24 months or more. The just-cause provisions would apply to all housing covered by AB 1482.
NEGOTIATIONS WERE PRAGMATIC
CAA began negotiating for its amendments only after it became obvious that AB 1482 has a good chance of passing out of the Legislature and winning the governor’s signature.
Prior to this development, CAA spent months adamantly opposing the legislation. In fact, a CAA-led coalition all but stopped the bill on the Assembly Floor this past May. It was only after the California Association of Realtors lifted its opposition that the bill carried on and gained momentum in the Senate.
WHO’D BE EXEMPTED
Exempted from the rent cap would be:
- Properties that are less than 15 years old.
- Properties regulated by local rent control laws under the Costa-Hawkins Rental Housing Act.
- Single-family homes, including condos, townhomes (anything separately alienable), unless owned by a REIT, corporation, or limited liability corporation in which at least one member is a corporation.)
- A duplex or a house with a granny unit, if the owner occupies one of the units.
- Housing that is subject to an agreement that provides subsidies for persons and families of very low, low, or moderate-income.
Through its negotiations, CAA sought to amend AB 1482 with practical components that would not decimate property values or upend the rental housing industry. Offering to drop its opposition was essential to CAA’s successful negotiations.
POSSIBLE BENEFITS OF PASSAGE
CAA’s position change on AB 1482 may remind some members of the association’s stance on Costa-Hawkins, the 1995 state law that limits the ability of local governments to enact extreme forms of rent control. Although controversial at the time, CAA’s support of Costa-Hawkins helped advance what’s become California’s most important landlord-protection law, safeguarding California from radical forms of rent control for a quarter century.
Although CAA does not support AB 1482, it’s worth noting that the legislation may bring indirect political benefits if ultimately signed into law. For example, with a statewide annually adjusted rent cap in place, tenant activists and progressive city councils and county boards may be less likely to seek their own rent control measures.
For that matter, with the Legislature having approved a cap on rent increases, Michael Weinstein, the proponent of last November’s Prop 10 state rent control initiative, would have little room to argue for another Proposition 10 2.0, which is targeted for the statewide ballot in 2020.
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Does 1482 prohibit cities to pass new rent control measures that’s more restrictive than 1482? This is very important. If no new city rent control measures are allowed, I can understand CAA’s compromise.
If not, we need to ask CAR to add an amendment to prohibit new local rent control measures.
Yes. 1482 as written as of 2019-9-5 prohibits cities from passing more restrictive laws on housing regulated by the legislation. However, AB1482 does not apply to housing ALREADY REGULATED by local RC ordinances and housing regulated by Costa-Hawkins (
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If this bill is not signed in next 9 months, I think we are safe as we are likely get into recessionary phase soon.
I do not want to be political or discuss why and when recession…etc, but yield curve never fails including this time.
Many will sell homes, move away real estate investments, including big corporations as the ROI may not be attractive, from rent control states like CA.
In my opinion, CA representatives are sitting at the branch cutting their tree root. They will realize the revenue drop when real estate in California is going down aftermath of impending recession.
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My thought too.
Already started since mid 2018.
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I do not want to make this controversial discussion, but just some true data from fact set.
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Earnings Growth: For Q3 2019, the estimated earnings decline for the S&P 500 is -3.6%. If -3.6% is the actual decline for the quarter, it will mark the first time the index has reported three straight quarters of year-over-year earnings declines since Q4 2015 through Q2 2016.
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Earnings Revisions: On June 30, the estimated earnings decline for Q3 2019 was -0.7%. All eleven sectors have lower growth rates today (compared to June 30) due to downward revisions to EPS estimates.
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Earnings Guidance: For Q3 2019, 80 S&P 500 companies have issued negative EPS guidance and 30 S&P 500 companies have issued positive EPS guidance.
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Valuation: The forward 12-month P/E ratio for the S&P 500 is 16.8. This P/E ratio is above the 5-year average (16.5) and above the 10-year average (14.8).
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Earnings Scorecard: For Q2 2019 (with 99.6% of the companies in the S&P 500 reporting actual results), 75% of S&P 500 companies have reported a positive EPS surprise and 56% of companies have reported a positive revenue surprise.
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What does this mean? Can a city such as Daly City have a new stricter RC over multi-family built before 1996?
It means if your housing unit is already regulated under Costa Hawkins, a city cannot pass stricter laws on it. Meaning since Costa Hawkins protects SFH/townhomes/condos, a city cannot pass stricter laws against them.
It also means that if a city does not have preexisting rules on MFH that are more strict than AB1482 (like SF does), then after the implementation of AB1482, a city cannot make new rules against that MFH that are stricter than AB1482.
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Does Costa-Hawkins have such a condition that it does not apply to these single-unit housing when owned by corporations or REITs so that the new bill can cover them?
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So it will now cause one month rent to move a tenant out with out cause. If I had to see a silver lining in this bill, I am glad that change survived
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see below
This is not correct, sorry. If the tenant is not at fault, then you must have a “no fault just cause” in addition to one months rent in order to move a tenant out.
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I applaud your approach, but I think AB1482 “slightly repeals” Costa Hawkins when these housing types are owned by corps/REITS.
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what is the definition of a “no fault just cause”?
Yah I am confused as well
here’s the relevant text:
so the most relevant one would be to do a remodel with permits
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