Rent control in California

Studies consistently demonstrate that price controls cripple the commodity they regulate. This appraisal holds true in the California communities that enforce price ceilings on rents.

When rent control is in place, developers have fewer incentives to build apartments, exacerbating housing shortfalls. Likewise, owners of rent controlled units have scant motivation to maintain their units, let alone make upgrades. Even as communities fall into disrepair, prices across the market rise because new housing isn’t getting built.

Meanwhile, rent controlled frequently aren’t occupied by the people they are intended to help. Often, middle-  to high-income professionals secure rent controlled units, and once they’re in place, remain entrenched for years, if not decades.

Lower-income workers and their families are relegated to higher-priced housing, far from jobs and schools.

Inglewood council approves rent control ordinance

Despite opposition from the California Apartment Association, the Inglewood City Council on Tuesday unanimously approved a permanent rent control ordinance, capping rental increases for most affected apartments at 5% per year.

Council members had been expected to vote on an 8% cap, however, they agreed to lower that limit amid pressure from tenant activists at the meeting. An 8% increase will still be allowed under certain circumstances, such as after long periods of keeping rents below 80% of the median price. Rents would again be capped at 5% after reaching market rates. Owners making improvements costing $10,000 or more also would qualify for 8% rent increases.

Under state law, the rent cap will apply to multifamily housing built before 1995.

The council also approved a so-called “just cause” eviction policy that will apply after two years of tenancy. Such policies require owners to prove “cause” in court or before a political body every time they need to remove a problem resident. To terminate at tenancy without cause, a landlord will have to pay relocation fees equal to three months’ rent. The council previously considered relocation fees equal to nine months’ rent but lowered the figure.

CAA’s opposition to the ordinance was wide-reaching and included an email campaign by members.

The council will need to approve the ordinance once more, with a second reading, to formalize adoption of the policies. The city’s current moratorium on rent increases over 5% is expected to be extended at next week’s meeting and be in place until the permanent measure takes effect.

After defeat of AB 1506, tenant groups turn to initiative to overturn Costa-Hawkins

Tenant operatives are now attempting to repeal the Costa-Hawkins Rental Housing Act through a statewide ballot measure targeted for the November 2018 election.

Signature gathering to qualify the initiative began after the state attorney general issued a title and summary for the measure, which you can find here.

Qualifying the ballot measure for the fall became the focus of tenant groups in January after CAA and its allies defeated AB 1506, a bill that would have overturned Costa-Hawkins and brought extreme forms of rent control back to California.

The bill fell just one vote shy of advancing to the Assembly floor, leaving tenant activists and their allies more determined than ever to overturn California’s most important landlord-protection law.

The California Apartment Association has created a campaign committee called Californians for Responsible Housing and is assembling a game plan to defeat the initiative. Within 30 to 45 days, CAA will begin securing assistance from rental property owners throughout the state. Stay tuned for more information and instructions on how you can help.

If you haven’t already, be sure to bookmark, your resource for news and information on preserving California’s most important landlord-protection law.

CAA, allies derail AB 1506, the bill to repeal Costa-Hawkins

The California Apartment Association and its allies today derailed AB 1506, a bill to repeal the Costa-Hawkins Rental Housing Act and bring radical rent control back to California.

This morning, following lead testimony from the California Apartment Association, FPI Management and the California Association of REALTORS, AB 1506 failed passage in the Assembly Housing and Community Development Committee, all but closing the door on the bill for the balance of the legislative session.

Over 400 rental property owners came to the microphone and indicated their opposition to the measure, outnumbering the tenant advocates, who totaled nearly 300.

Following hours of testimony, AB 1506 lacked the needed votes to be passed out of the committee. The failure of the committee to vote the bill out today likely stops the bill from advancing to the Senate by the Jan. 30 legislative deadline.

Stopping AB 1506 — and protecting Costa-Hawkins — was a top priority for CAA. For more than 20 years, the Costa-Hawkins Act has prohibited local governments from applying rent control to units built after 1995, as well as single-family homes, individually owned condominiums and townhouses. Costa-Hawkins also requires all rent control ordinances to allow a rental property owner to set the rent at market rate once a tenant moves out and a new tenant moves in, a policy known as vacancy decontrol.

CAA has argued that repealing Costa-Hawkins would discourage investment in the existing rental housing stock and create a significant disincentive for the construction of new rental housing, worsening the state’s ongoing housing crisis.

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Ballot initiative filed to repeal Costa-Hawkins, California’s rent control limitation law

A statewide ballot initiative filed Monday, Oct. 23, seeks to repeal the Costa-Hawkins Rental Housing Act, landmark legislation that protects property owners and renters from radical, local rent control measures.

For over 20 years, the Costa-Hawkins Act has prohibited local governments from regulating the price of rents on rental units built after 1995. Costa-Hawkins also prohibits a local government from regulating rents on single-family homes, individually owned condominiums and townhouses.

Moreover, the act also requires all rent control ordinances to allow a rental property owner to set the rent at market rate once a new tenant moves out and a new tenant moves in, a policy known as vacancy decontrol.

“If local rent control ordinances are allowed to regulate rents on new construction and single-family homes, new private investment into rental housing will come to a screeching halt,” said Tom Bannon, chief executive officer of the California Apartment Association. “Without private investment in the development and construction of new rental housing, California’s economic expansion will be in jeopardy.

Bannon continued: “California is already facing a critical housing shortage. Should Costa Hawkins be repealed, the housing situation will go from a serious problem to a catastrophic problem. Furthermore, recent housing legislation passed by the California Legislature and signed by the governor to address California’s housing shortage will all have been for naught.”

Supporters of the repeal measure include a national community organizing group, an eviction-protection group and a no-growth advocate who attempted to pass a ballot measure in the City of Los Angeles earlier this year. That measure – Measure S – which ultimately failed passage, would have placed a moratorium on most apartment construction in Los Angeles for a period of two years.

The proponents of the measure to repeal Costa-Hawkins can begin circulating the petition to qualify the initiative for the November 2018 statewide ballot in approximately 60 days, following review by the state attorney general and the Legislative Analyst’s Office. To qualify the measure for the ballot, supporters must gather 366,000 valid signatures no later than June 28, 2018.

The Association, which opposes all forms of rent control, will fight this measure should it ultimately qualify.