| CAA’s Legislative Briefing is an exclusive member benefit provided to keep you informed of legislation and other regulatory issues that could or will have a direct impact on California’s rental housing industry. |
| Two Anti-Landlord Bills Await a Vote on the Assembly FloorPay Rent as Late As you Want Legislation – AB 265 (Ammiano)Earlier in the year, we reported to you that Assembly Member Ammiano (D-San Francisco) had introduced legislation – AB 265 – that proposed to change California’s 3 Day Notice to Pay Rent or Quit law to a 14 Day Notice to Pay Rent or Quit. With this bill, tenants would have had until the middle of the month to pay the rent. As a result of extensive opposition from CAA members, Assembly Member Ammiano deleted these provisions from the bill. While his decision to not move forward with the 14 day provisions is a great victory for CAA members, he has now decided to include new language in the bill that still presents problems for the rental housing industry if signed into law.
The new provisions would allow a tenant to stay in the unit if they come up with the rent and the owner’s attorney’s fees, capped at $350, any time during the eviction process – even after months of delay in the courts.
Most property owners know that these types of court eviction delays can last an average of three to four months. On-line tenant delay services brag about delaying rent payments for as long as 14 months. This greatly increases the tenant’s bargaining power with respect to exacting a settlement from the landlord, which may, at the end of the day, involve the payment of less rent than is actually due in exchange for the tenant moving out. For the tenant who chooses to stay and is able to make the payment, the $350 cap is essentially a “pay as late as you want fee.”
The bottom line is that if something unexpectedly happens in a tenant’s life, such as loss of a job, rental property owners report that they do not proceed immediately to evict the tenant. Because of expensive court costs, property owners prefer to work with tenants to allow them to stay in the home. CAA will continue to oppose the legislation and will keep you posted on the votes on the Assembly Floor.
Sue Your Landlord Bill – AB 934 (Feuer)
Assembly Bill 934 (D-Feuer, Los Angeles), is legislation that would allow a tenant to sue a rental property owner based on the statements the owner makes in an unlawful detainer action. The bill is currently sitting on the Assembly Floor awaiting a vote. To date, CAA members have sent in over 1,500 letters of opposition, making it difficult for the bill to gain the necessary votes for passage.
CAA has successfully argued that AB 934 unfairly targets the rental housing industry, removing it from important legal protections. No other industry or group has been so unjustly targeted.
AB 934 would discourage property owners and managers (out of fear of being sued) from protecting their other residents and property by promptly serving notices to tenants who violate their leases, disturb or threaten other tenants, damage the property, or violate the law.
The fight to keep the bill from moving forward is certainly not over. Watch for updates and additional calls to action.
Legislation Allows Tenant to Post Anything They Want at the Property – SB 337 (Kehoe)
SB 337 requires a rental property owner to allow tenants to post any type of sign or banner at the rental property.
Because rental property owners have a legally imposed duty to ensure the peaceful and quiet enjoyment for all residents at the property, SB 337 interferes with their ability to fulfill this obligation. It denies property owners the ability to prevent the posting of signs and banners that are offensive to other residents and the surrounding community.
While the bill is intended to give to tenants freedom of expression, it takes from rental property owners their right to set standards for their property, hindering their ability to control visual blight and disputes between tenants.
California’s Supreme Court has ruled that California’s free speech clause only applies to private property if the property is freely open and accessible to the public. Private rental homes and apartment buildings are not. They have also ruled that the fundamental nature of our constitution is to govern the relationship between the people and their government, not to control the rights of the people vis-à-vis each other. CAA lobbyists will continue to work on your behalf to stop this legislation.
Split Roll Tax Proposal Back on Legislative Agenda
A new Split Roll tax proposal has surfaced in the form of a bill by Assemblyman Tom Ammiano (D-San Francisco). He has introduced AB 448 that would redefine change in ownership as it relates to publically-traded companies, LLCs, partnerships and joint ventures—including real estate companies and potentially any property held by a legal entity. It is more or less identical to legislation that the Assemblyman proposed last year, but that bill never received enough votes to get off the Assembly floor.
AB 448 proposes to enact a program to identify those commercial properties (including residential rental property) that undergo a change in ownership, and then reassess those properties at the current fair market value. In most cases that will dramatically increase property taxes on property owners and adversely impact small businesses that rent their shop space or own just a few residential rental units. Small businesses would be less able to absorb a sudden increase in rent due to reassessment and would likely move away leaving vacant store fronts. Rental property owners would be likely to pass on the increased cost of taxes to residents, and if they did so, many renters would simply move leaving vacant units. The impact to rental property owners in rent controlled communities would be even more profound.
Since its passage by voters in 1978, California’s Proposition 13 has kept property tax rates low by limiting growth to 1 percent of the property’s initial assessed value and allowing the assessed value to increase by a maximum of 2 percent per year until the property is sold.
Specifically, AB 448 does several things to dismantle Proposition 13 protections:
• The bill redefines change in ownership, so that reassessment of property occurs at fair market value when, cumulatively, 100% of ownership interests transfer in a rolling three year period.
• Even if no ownership change has taken place it would still force companies and rental property owners to prove that there was no sale of the property. This requirement puts a huge administrative burden on companies and on county tax assessors.
• AB 448 increases the penalties for failure to file a change in ownership statement from 10% to 20% of the taxes applicable to the new base year value.
In the midst of a down state economy and more than a 15 billion dollar budget crisis yet to be solved, businesses – including rental property owners and managers – in California are once again being targeted for billions in higher taxes.
CAA, along with a large coalition of business groups, is working to defeat the bill which will be heard in committee on May 16.
Are Local Inclusionary Zoning Laws Illegal? California Legislation Intends to Make Clear They are Not
SB 184 is legislation that intends to clarify a city and county’s continued ability to impose, as a condition of development, inclusionary housing requirements. Over 170 jurisdictions in California have some form of inclusionary zoning law, and some local laws have been in place for more than 20 years. Those local laws require a housing developer to make a percentage of their new units – usually 10 to 15 percent – available for low-income tenants or homeowners.
In 2009, a case cited as Palmer vs. City of Los Angeles brought into question all local jurisdictions’ ability to continue these types of local laws. The court ruled that the City of Los Angeles’ ordinance conflicted with the State’s Costa-Hawkins Rental Housing Act, a state law sponsored by CAA that passed in 1995, which prohibits rent control on newly constructed units, among other things.
CAA’s Legislative Steering Committee – with input from the organization’s developer members who have constructed housing under local inclusionary housing programs since the passage of Costa-Hawkins – are analyzing SB 184 and the impacts its passage or non-passage will have on their ability to develop housing in California. The sponsors of the bill argue that SB 184 simply adds clarity to the law and allows inclusionary zoning laws to continue as they have since the passage of Costa-Hawkins 11 years ago.
Opponents claim that the Palmer court decision solidifies the intent of the Costa-Hawkins Rental Housing Act. They argue that a property owner should not be required to set aside a percentage of new units for low-income tenants. At this point, although early in the process, lawmakers have sided with cities and counties, agreeing that they should have the ability to continue their programs. They see inclusionary housing programs, redevelopment programs, and other similar affordable housing programs as necessary and appropriate for their local communities. We will keep you posted on the work of CAA’s Legislative Steering Committee and their work on this bill.
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