A common occurrence during a momentous legislative season is when one or more pieces of legislation stand out, capturing a sufficient amount of the public’s attention, while other lesser significant pieces of legislation garner far less attention or often go unnoticed. I’m reminded of the passing of AB-1482, the Tenant Protection Act of 2019, effective on January 1, 2020.
While most trade publications at the time focused on a bill that would set annual rent caps for subject properties across the state, what went unnoticed was a series of bills, including AB-68, AB-670, and SB-13, which lifted restrictive measures on the construction of accessory dwelling units (ADU), in turn supporting an affordable housing option in a tight rental housing market.
Another bill, AB-329, which requires landlords to recognize the Section 8 voucher as a form of income when screening applications was passed shortly before the passing of AB-1482.
It is no surprise that a global pandemic and over two years of state and local moratoriums, restricting the property rights of rental property owners, has recaptured the focus of the entire real estate industry since California Governor Newsom declared a state of emergency on March 4, 2020.
While we were focused on state and local moratoriums, rent rates increased steadily across the nation, homelessness rates in Los Angeles County saw an uptick, and tenant groups took the initiative to pressure municipalities to consider additional tenant protections, even after state protections had expired, and especially after the phasing out of the Los Angeles County moratorium on December 31, 2022.
The following outlines cities that have or will possibly adopt long-term local rent control policies as well as additional tenant protections beyond that currently offered by California’s statewide rent control law:
Effective August 1, 2022, Pomona’s Urgency Ordinance
This covers all Pomona tenant households except units with:
- a certificate of occupancy after February 1, 1995,
- single-family homes containing just one unit,
- condominiums, and
- government-subsidized units, including Section 8.
Rent Increases: rent for subject units may be increased no more than four percent (4%) or the change in the Consumer Price Index, whichever is less. Landlords may only increase rent once in a twelve-month period on subject units. Landlords are not limited in setting the initial rents. Pomona Urgency Ordinance No. 4320 § 2(a)
Terminations: most terminations on subject units are limited to an at-fault basis, such as non-payment of rent, material breaches of the rental agreement, and waste or nuisance. No-fault reasons for termination include owner occupancy, substantial renovation, and demolishing the rental unit. Relocation fees for no-fault terminations shall equal two times the tenant’s current rent plus $1000.
Approved on August 22, 2022, Bell Gardens introduced its Rent Stabilization and Tenant Eviction Protections Ordinance which establishes annual rent increase limits and specific tenant protections. The ordinance was approved on September 12, 2022, and became effective on October 12, 2022.
Additionally, owners of subject units will be required to register their properties with the city’s rent registry and disclose information about the property owner, rent rates, tenant information, and changes in tenancy.
Rent Increases: Sets annual rent increase at fifty percent (50%) of the change in the Consumer Price Index (CPI), or four percent (4%), whichever is less.
Rent Freeze Extension: Instituted on September 26, 2022, a rent freeze prohibiting rent increase on multi-family properties was phased out on October 12, prior to the effective date of the Rent Stabilization Ordinance
Terminations: “just cause” is required for both at-fault and no-fault evictions. No-fault terminations, such as owner occupancy, requires a relocation payment total of three (3) times the renter’s monthly rent at the time the notice was served. Qualified households, including renters 62 years old or older and/or disabled, will receive an additional relocation fee of one month’s rent.
Rent Adjustment Petition: Rental property owners currently charging rent below market value to the extent that owner claims they are not receiving a fair and reasonable return on their investment can petition the city’s rent control board to apply for a rent increase above the local rent cap.
What some trade organizations argue would create $6 million annually in government expenditures, Measure H has qualified for Pasadena’s November ballot. In accordance with the Costa Hawkins Rental Housing Act, single-family homes and properties built after 1995 are exempt from Measure H.
Rent Increase: Under Measure H rent increases are limited to 75% of the annual inflation rate, roughly 2-3% annually. Furthermore, landlords can petition for an additional increase above the local rent cap, or likewise, if tenants can prove a reduction of service, they too can petition for a one-time rent decrease.
Terminations: Evictions are limited to “just cause” reasons, such as at-fault evictions, including non-payment of rent or a material breach of the rental agreement. No-fault reasons for termination include removing the unit from the rental market, owner occupancy, or substantial renovation. Relocation payments for no-fault terminations can range from one to eight (8) thousand dollars, with a portion of the relocation given to the tenant within 15-days.
Rent Registry: Not unlike the City of Bell Gardens, Pasadena will also require subject units to register their units with the city’s online rental registry platform.
Long Beach and Looking Forward
While Long Beach does not have a local rent control ordinance, it has modified its guidelines for no-fault terminations on the basis of substantial renovation. In addition, there are talks within the City of Long Beach about adding additional restrictions to the city’s vacation rental ordinance.
In short, while many landlords have longed to put the recent pandemic behind us, the factors used to validate the creation of additional tenant protections have only worsened since the opening up of the economy earlier this year.
Whether it’s rising rent rates, increased operating costs, or greater competition among tenants for affordable housing, these factors can only encourage further rental housing regulation, and usually results in a further restriction of property owner rights.
It is important that as an industry we make our presence known going into 2023. This includes showing up at city council meetings, writing to our elected officials, and equally important: the coordinated efforts of multiple apartment associations, realtor groups, and industry stakeholders.