New bill would restrict landlords’ ability to exit rental housing business

For the third consecutive year, bills have surfaced to modify California’s Ellis Act, the 1985 law that protects a property owner’s right to leave the rental housing business, an important safety valve for property owners in rent controlled jurisdictions.

One of the proposals, AB 982, would expand the number of tenants who are entitled to receive a year’s notice from the landlord before the landlord closes the building as allowed under the Ellis Act.

At this point, tenants who have lived in the building for at least one year and who are at least 62 years of age or are disabled are entitled to a year’s notice from the landlord before the building is closed. Other tenants are entitled to a 120-day notice.

This bill, authored by Assemblyman Richard Bloom, D-Santa Monica, would extend the one-year notice requirement to all tenants of one year or more, regardless of age or disability.

Another bill addressing the Ellis Act, AB 423, would exempt residential hotels in Oakland from the Ellis Act, prohibiting them from closing their buildings. Already exempted are San Francisco, Los Angeles and San Diego. This bill was authored by Assemblyman Rob Bonta, D-Oakland.

Efforts to weaken the Ellis Act in the state Legislature are nothing new. In 2015 and 2016, Sen. Mark Leno, D-San Francisco, proposed bills that would have forced many rental property owners in San Francisco to wait at least five years before removing their units from the market under the Ellis Act, even if losing money month after month. Leno’s bills failed both years.

Before the Ellis Act, rent-controlled cities — Santa Monica in particular — were forcing landlords to stay in business, even if they were losing money or experiencing other hardships.

Besides trying to change the Ellis Act, Assemblymen Bloom and Bonta are among four lawmakers who’ve authored legislation to repeal the Costa-Hawkins Rental Housing Act. The other authors of this proposal, AB 1506, include Assemblyman David Chiu, D-San Francisco, and Sen. Ben Allen, D-Santa Monica, who is listed as a co-author.

Costa-Hawkins prevents rent control from applying to single-family homes and multifamily housing built after 1995. It also requires vacancy decontrol, meaning that once rent controlled apartment voluntarily changes hands, rents can return to market rate.

Another bill related to Costa-Hawkins – and from Bloom – is AB 1505, which would allow a local government to mandate that a percentage of new development be affordable to low-income individuals and families. It proposes to overturn the Appellate Court decision in Palmer vs. City of Los Angeles. The court ruled that Los Angeles’ multifamily rental inclusionary-zoning ordinance violated Costa-Hawkins, which prohibits rental price controls on new multifamily construction.

AB 1505 mirrors a bill introduced last year that CAA successfully opposed.

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