State rent-gouging bill advances, but still no action on tighter rent control

A bill aimed at protecting California tenants from “egregious” rent hikes cleared a key hurdle in the state Legislature today, less than 24 hours after pro-tenant groups learned their latest try to expand tighter rent controls throughout California is flailing in the Capitol.

The anti-rent-gouging bill, modeled after a first-in-the-nation statewide law enacted earlier this year in Oregon, would cap the amount that landlords could raise the rent year-over-year at 5% plus inflation. Authored by Assemblyman David Chiu, Democrat from San Francisco, Assembly Bill 1482 passed its first committee vote today on a 6-1 margin, marking a rare early victory for tenant groups who have struggled to get state lawmaker support in recent years.

“This is a bill to provide certainty to 15 million California renters that they will not receive an exorbitant rent increase while allowing property owners to make a fair return on their investment,” said Chiu, in a Capitol hearing room overflowing with tenants and landlords.

After adjusting for inflation, statewide median rents have increased nearly 25 percent since 2000, according to data from the California Department of Housing and  Community Development. That number masks some of the soaring rent increases found in cities like San Francisco and Los Angeles, which consistently top the list of the most unaffordable rental markets in the country.

Many had traveled to the Capitol to voice their support or opposition to a more controversial piece of legislation yearned for by tenant advocates for decades. That bill  would have allowed cities to expand rent control to single family homes and properties built after 1995. Current law prohibits cities from doing so, effectively exempting thousands of units from rent control even in places with local rent control laws like San Francisco and Los Angeles.

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Assembly Bill 36 was scheduled to be voted on today, as part of a renter protection package organized by a group of progressive lawmakers. But late last night the bill’s author, Assemblyman Richard Bloom, Democrat from Santa Monica, withdrew it before it could be voted on.

“Pulling” a bill before a vote usually indicates it would not have received enough lawmaker support to advance. Bloom could not be reached for comment.

The withdrawal represents yet another setback for rent control advocates. A similar bill last year failed to make it out of its first committee hearing, and a statewide rent control initiative failed by an overwhelming margin last November.

“The millions of dollars being spent every year by the corporate landlord lobby to influence the state Legislature is difficult to combat, and we see that over and over again,” said Amy Schur, campaign director for the Alliance of Californians for Community Empowerment, a leading tenants-rights organization.

The backers of the failed initiative are planning another rent control ballot measure in 2020. Gov. Gavin Newsom has asked lawmakers to send him a rent stabilization package he can sign, but his office would not comment on the fate of Bloom’s bill.

“I am grateful that members of the Assembly voted today to continue moving forward on one piece of the housing affordability solution—creating a renter protection package,” Newsom said in a statement after the rent-gouging bill passed. “I look forward to continuing this important conversation as proposals move through the legislative process.”

Tenant rights activists staged a sit-in at Newsom’s capitol office late last night demanding more state action. Newsom’s chief of staff pledged to the activists that the governor was doing all he could to move a renter protection package along in the Legislature.

While not rent control in the traditional sense, the anti-rent-gouging bill would limit the prices landlords can charge on wide swaths of California’s housing stock currently  exempted from rent control, such as single family homes.

Researchers at the UC Berkeley Terner Center for Housing Innovation recently estimated how many California rentals not currently covered by rent control could be covered by a gouging cap if freed from the constraints of the current law, known as Costa Hawkins for the two lawmakers who successfully pushed it in 1995. The conclusion: an additional 4.9 million units—a huge chunk of the state’s rental stock. Nearly 40 percent would be single-family homes.

Opponents of the measure say capping how much landlords can increase rent will only deter new construction or pull rental units from  the market, exacerbating California’s housing shortage.

Debra Carlton,  spokeswoman for  the landlords’ lobby in Sacramento, said her organization’s objection to the bill was more about the precedent it would set for stricter rent control legislation than the anti-gouging cap itself.  “Our concern isn’t so much about this current bill, but the temptation to lower the standard in the future,” said Carlton.

Several Democratic lawmakers who voted for the rent-gouging measure stressed they’d like to see the legislation changed to be more flexible for landlords, and possibly exempt newer construction from rent caps.

The bill will face several other votes before it becomes law, and could be incorporated in a broader suite of housing legislation that also tries to spur supply.

“This should never be about stifling production,” said Todd Gloria, Democrat from San Diego, who voted for the rent-gouging cap and is the only legislator CALmatters could identify who is not a homeowner.  But he added that lawmakers can’t wait for new housing supply to translate to cheaper rents.

“There is short-term pain that so many of us feel that the Legislature needs to take action on,” he said.

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