California Passes Statewide Rent Control
By Joaquin Romero, freelance journalist from UC Riverside.
Last week, the California State Senate passed a landmark statewide rent control bill aimed at improving the security of millions of tenants in the state. AB 1482, called the Tenant Protection Act of 2019, will cap yearly rent increases to about 5 percent and tighten restrictions on eviction. Governor Gavin Newsom is expected to sign the bill, which would make California one of only two states to be entirely rent-controlled.
“In the midst of the most intense housing crisis in California history, we must take decisive action to stem the tide of displacement and homelessness,” said the bill’s author, Assemblymember David Chiu, after the State Senate approved the bill.
“Keeping renters in their homes is crucial to addressing our housing crisis. Thank you to my colleagues in the Senate for approving this bill to protect millions of renters from large rent increases and unfair evictions.” said Chiu.
Governor Newsom had previously held negotiations on AB 1482, which ensured some key changes to the bill, including lowering the percentage of the rent cap from 7 percent to 5 plus the Consumer Price Index value for the state. Additionally, the discussions led to a substantial extension to the amount of time the regulation would be in place. When the State Senate first approved AB 1482, it was set to expire after only three years. Now the law will be in effect for 10.
AB 1482 is supported by several prominent tenants’ groups, as well as the California Business Roundtable and the Silicon Valley Leadership Group.
The Leadership Group had this to say on the bill: “[we are] deeply committed to advocating and supporting policies that reduce the rental burden on our region's workforce. We recognize the need for production of new, high quality homes, but also note that it is vital we protect residents now. AB 1482 would provide the necessary protections to ease the housing crisis and prevent displacement for the large portion of rent-burdened California tenants."
The bill naturally saw plenty of resistance from landlords associations. The California Association of Realtors in particular opposed the bill throughout its time in the legislature, and they encouraged their lawmakers to vote the bill down after the negotiations with the Governor did not go in their favor.
“The California Association of Realtors is disappointed by the passage of Assembly Bill 1482, which moves California toward statewide rent control” the association said in a statement after the bill cleared the Senate.
“Throughout the debate, [the California Association of Realtors] advocated for a balanced solution that protected renters and respected the rights of property owners. While several of our recommendations were included in AB 1482, including the exemption of single-family homes and condominiums, the final bill did not do enough to increase the supply of affordable rental housing.”
The CAR also expressed their displeasure that the California Business Roundtable and the California Apartment Association decided to support the bill, even going as far as to say that the Apartment Association acted “contrary to the interest of their members” by withdrawing their opposition.
The League of California Cities was also asked for comment, but they declined, saying they did not have an official position on the legislation.
Currently, Oregon is the only other state to have full, statewide rent control. Three states, New York, New Jersey, and Maryland, all have rent control in some areas, and several others have an option for local rent control. When it is signed, California’s will be the most wide-reaching piece of rent control legislation in the nation.
That kind of scope is needed, according to Assemblymember Chiu.
“Tenants have been hit especially hard by California’s housing crisis,” says a statement on the bill from Chiu’s office.
“Skyrocketing rents and an increase in evictions have led to mass displacement and a severe homelessness crisis. Over 80 percent of California’s 17 million renters do not have access to stable and affordable housing. Over half of California renters are rent-burdened, meaning they spend over 30 percent of their income on rent, and one-third of renters spend over 50 percent of their income on rent. 160,000 families appear in eviction court annually,” the statement continues.
Several city municipalities in California already have rent control measures on the books, including San Francisco, Los Angeles, and recently, Sacramento. However, AB 1482 would differentiate itself by applying to buildings constructed after 1995. This would effectively nullify an exemption long included in California’s Costa-Hawkins Act, the piece of legislation that originally put restrictions on rent control.
But the impact of AB 1482 will be even greater than that. As a paper published from the Terner Center at the University of California, Berkeley explains, AB 1482 will have a significant effect even with existing rent regulations in place.
“We find that if passed in its current form, AB 1482 would extend price protections to millions of households, primarily by reaching renters in communities that do not already have rent control and tenants in single-family home,” the paper reads, going on to explain that a rent cap like this would likely provide protection to an estimated 4.6 million California renters.
This coverage would help to combat the widespread rent increases being felt across the state. The paper indicates that areas of California with traditionally more competitive housing markets, like Long Beach and Chula Vista, have been seeing median rent increases of around 8 percent. However, communities that normally have lower rents, like West Fresno, West Sacramento and South Stockton, have also been seeing significant increases of around 9 percent. Even more surprising, the city of Vallejo, which the paper describes as “a more affordable city within the Bay Area,” has seen a staggering rent increase of 18 percent. As a result, the paper concludes that AB 1482 would be of real use in places other than the large metropolitan centers and coastal markets most frequently associated with skyrocketing rents.
The findings of the Terner Center’s report suggest that a statewide rent cap could be an important step in ensuring renter protections.
“While a rent cap alone will not solve the housing crisis, our analysis suggests that if such a policy were passed at the state level, it could help to protect tenants from unsustainable rent increases, at least in the short term.''