SACRAMENTO — In a dramatic victory for tenant advocates, the California Assembly narrowly passed a statewide rent-cap proposal on Wednesday night amid mounting pressure for lawmakers to protect renters from the steepest of increases in a hot rental market.
If the bill clears the Senate, California could become the second state in the nation this year to limit annual rent hikes, covering millions of properties not covered by local rent control rules.
In a final appeal to his colleagues, the bill’s author, Assemblyman David Chiu, said the bill would protect the most vulnerable residents who are a rent-hike away from eviction. “They are our neighbors,” he said. “They are our co-workers. They are our brothers and sisters. They are our grandparents.”
Assembly Bill 1482, which passed 43-28, would apply to most properties not covered by local rent control ordinances — including rented single-family homes and condos in cities with rent control. It was amended last week to exempt properties that are less than 10 years old, and — because of an 11th-hour handshake deal with a powerful trade group — it will undergo more key changes in the Senate.
The proposal would prohibit landlords from raising the rent each year by more than 7 percent plus the annual increase in the cost of living. A previous version of the bill set the cap at 5 percent plus inflation. In other concessions made to secure the deal, Chiu agreed to exempt property owners with no more than 10 single-family homes. He also set the law to expire in 2023.
Modeled after rent-gouging bans put into effect after natural disasters, the idea was cited last year by UC Berkeley’s Terner Center for Housing Innovation as a middle-ground approach during a polarizing debate over stricter rent controls.
Oregon this year became the first state to pass such a law, setting its cap at 7 percent plus the rate of inflation.
“It’s a very moderate measure that will guard against some of the more egregious practices that we’re seeing,” said Assemblywoman Buffy Wicks, D-Oakland, before the vote.
A recent statewide poll conducted by EMC research in late March and early April found that two-thirds of California voters and 72 percent of Bay Area voters supported a rent cap of 5 percent plus an annual cost-of-living increase. The survey also found broad support statewide among likely voters for what are known as “just cause” eviction protections — requiring landlords to cite a reason for evicting a tenant, such as breaking the law or failing to pay rent — and relocation assistance for tenants.
Also pending is a related bill, Assembly Bill 1481, from Tim Grayson, D-Concord, and Rob Bonta, D-Oakland, which would extend such eviction protections and relocation assistance to tenants. Last year, a similar “just cause” bill carried by Bonta failed by a wide margin.
Renters’ advocates argue that such tenant protections are critical for a rent cap to work. Otherwise, they say, landlords could simply get around the rent-hike limits by evicting their old tenants and finding new ones. In California, there is no limit on how much a landlord can charge a new tenant.
AB 1481 was not called up for a vote on Wednesday.
The powerful trade groups representing landlords, developers and realtors — the California Apartment Association and the California Association of Realtors — generally fight new regulations for landlords. Earlier this month, the apartment association took credit for slaying a now-defunct proposal by Wicks to create a statewide rental registry for apartment buildings, an idea the group characterized as onerous and costly, raising privacy concerns.
The apartment association remains opposed to both tenant bills, arguing that they will stymie needed housing development. The realtors’ association withdrew its opposition late Wednesday after reaching a deal with the bill’s authors.
Some lawmakers spoke against the bill, saying they felt it was not the answer to the housing crisis. “This is rent control,” said Assemblywoman Melissa Melendez, R-Lake Elsinore. “I don’t care how you say it. I don’t care how you spin it.”
Another closely watched housing bill was stopped in its tracks this month. Senate Bill 50, from Sen. Scott Wiener, D-San Francisco, took aim at the state’s chronic housing shortage by proposing to eliminate single-family zoning in neighborhoods near public transit and close to jobs. The bill — which enjoyed broad support but was fiercely opposed by many cities — stalled in the Senate Appropriations Committee when Sen. Anthony Portantino, a Southern California Democrat heading the committee, used his powers to block it from moving to the Senate floor for a vote.
Still at play is a Senate proposal to create a new funding stream for affordable housing through a new partnership between the state and local governments. Senate Bill 5, from Jim Beall, D-San Jose, Mike McGuire, D-Healdsburg, and Portantino sailed out of the state Senate on Wednesday with a 31-4 vote. If fully funded, the program — which would allow cities to use certain tax revenues for state-approved projects — would create an estimated 86,000 new and restored affordable homes by 2030.
Some 1.5 million of the lowest-income families in California lack access to rental housing they can afford, according to state estimates.