California Capitol Watch: Introduction and Proposed Housing Bills

By Eric Gelber

This is the first of periodic articles (tentatively titled California Capitol Watch) I intend to write for the Vanguard that will focus on the California Legislature. The articles will primarily spotlight pending bills that may be of local interest or that address subjects that are likely to be of interest to Vanguard readers (e.g., homelessness, mental health services, affordable housing, criminal justice reform).

Each two-year session, thousands of bills are introduced in the Legislature, most of which are not enacted. In the recently completed 2019-2021 session, for example, there were 4,848 bills introduced, of which 1,242 passed out of the Legislature and were signed by the Governor.

The final bill count is lower than usual in part because the second year of the last session was atypical and interrupted due to the pandemic. Nonetheless, of course, the bills discussed here will be a tiny sampling, even on a specific subject matter. From time to time the articles may also discuss other legislative activities, such as informational or oversight hearings. My intent is to provide neutral summaries and analyses of bills, including, as available, arguments made by both proponents and opponents.

While a small number of bills for the current two-year session have already been introduced, starting in early December, most bills aren’t introduced until close to the bill introduction deadline. Except for urgency bills, which may be introduced at any time, this year’s deadline is February 19th, after which policy committee hearings will begin in earnest. Until then, I intend to discuss a few of the bills that were enacted and took effect on January 1st.

I hope these articles will be of interest and lead to further discussion of important issues. I am always open to suggestions on bills or topics to cover, and welcome questions on legislative process and procedures.

Until this year’s bills are ripe for analysis I’ll begin by sampling a few of last session’s significant bills, starting today with a couple of housing bills. The first bill (Assembly Bill (AB) 1482) has been addressed previously by the Vanguard. But it is appropriate to revisit now that it’s in effect. And it’s a bill that directly impacts a significant number of Davis residents. I included the second bill (Senate Bill (SB) 1120) even though it didn’t pass because the author has stated her intent to re-introduce the bill in the current session:

AB 1482 (Chiu): Tenancy: rent caps. The author’s intent for this bill was to prevent “rent gouging.” The enacted bill places an upper limit on annual rent increases of 5% plus inflation. It applies to all rent increases occurring on or after March 15, 2019. It also requires that a landlord have a just cause, as defined, in order to evict tenants who have occupied the premises for a year. These provisions don’t apply to, among other things, housing built in the past 15 years, deed restricted affordable housing, housing subject to local rent control that restricts increases to lower amounts, duplexes in which the owner occupies one of the units, or single family residences unless they’re owned by a real estate trust or corporation. If just cause for the eviction is not the fault of the tenant (e.g., the owner or close family member intends to occupy the property) the new law provides for relocation assistance to the displaced tenant, essentially in an amount equal to one month’s rent. The law has a sunset date, meaning it becomes ineffective as of January 1, 2030.

Opponents of the bill (comprised largely of local municipalities, property owners, realtors’ associations, and developers) argued that limiting rent increases means developers and property owners will be less willing to spend on constructing or upgrading housing if their potential return on investment is diminished. As a result, opponents argued, limiting rent increases is the wrong response to California’s housing affordability crisis. Proponents countered that existing state law places no limitations on rent increases and yet the state still faces an extreme shortage in housing supply. Even if unrestricted rent facilitates housing construction, they argued, it takes years to bring new housing online. In the meantime, people are being displaced from their homes. Some opposed the bill because it didn’t go far enough, asserting that, while it addresses the drastic spiking issue, it fails to correct the far more ubiquitous problem of landlords who raise rents beyond getting a fair return on their investment. The bill creates a new floor for landlords, these opponents argue, who will now have the state’s permission to increase rents by 8-10% every year. These landlords will continue to price more and more low-income tenants out of their homes.

The enacted bill was something of a compromise. In response to the concerns about discouraging new construction, the new law exempts new construction (buildings up to 15 years old). The limitations in the bill were drafted to be far less restrictive than the types of rent control implemented in cities such as Oakland, Santa Monica, and San Francisco. Instead, the new law permits significant annual increases but outlaws major rent spikes of over 10%. In addition, anticipating that there will actually be promised expansions in the housing supply, the enacted bill sunsets after 10 years.

SB 1120 (Atkins et al.): Residential uses: duplexes. According to the author, the purpose of this bill was to promote small-scale neighborhood residential development by streamlining the process for a homeowner to create a duplex or subdivide an existing lot in all residential areas. The bill would have allowed duplexes to be built in many single-family zones, even if local officials and residents have said they don’t want them, and it would have allowed for the creation of smaller parcels than local governments would allow on their own. The bill arguably would have built off existing prior successful housing policies, such as the Accessory Dwelling (ADU) law, which led to a 63% increase in ADU permit requests statewide in the first two years alone. It was further argued that the bill respected the priorities of local governments in local land use decisions in that such applications must meet a specific list of qualifications that ensure protection of local zoning and design standards, historic districts, environmental quality, and existing tenants vulnerable to displacement.

Proponents of the bill also noted that our structure of single-family zoning has historically been used to reinforce segregation by effectively keeping people of color out of affluent, white neighborhoods. Opponents were concerned that the bill would eliminate single-family zoning and noted that the bill has no affordable housing requirement despite an egregious increase in density.

SB 1120 passed in both the Senate and then the Assembly; but, on the final day of the session, it needed one last vote in the Senate on minor amendments that had been made in the Assembly. The Assembly vote on the bill didn’t happen until 11:56 p.m. at which point it was rushed back to the Senate. However, the clock literally ran out as the Senate didn’t have time to vote on the amendments before the constitutionally mandated midnight deadline to vote and send legislation to the Governor. This apparent SNAFU received considerable media attention when, as the clocked ticked toward midnight, and the bill was three votes short of a needed majority, Speaker Anthony Rendon denied a request from Assembly Member Buffy Wicks, a strong supporter of the bill, to vote from her Oakland home by proxy as a COVID-19 accommodation, arguing she was at risk because she had recently given birth by C-section. She raced to the Assembly floor with her infant under a blanket. She was the recipient of considerable empathic reactions; Speaker Rendon received significant scorn and later publicly apologized. More on the last minute failure to pass SB 1120: https://www.nytimes.com/2020/09/03/us/politics/buffy-wicks-baby-california-assembly.html

Eric Gelber, now retired, is a 1980 graduate of UC Davis School of Law (King Hall). He has nearly four decades of experience monitoring, analyzing, and crafting legislation through positions as a disability rights attorney, Chief Consultant with the Assembly Human Services Committee, and Legislative Director of the California Department of Developmental Services.


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23 Comments

  1. Ron Oertel

    State legislators are looking backward, to what the state “used to be” (not so long ago). As such, these types of proposals are becoming irrelevant.

    This same phenomenon (below) is occurring in Los Angeles. There are TONS of videos from millenials discussing why they’re leaving California (Los Angeles, in particular).

    This really stood out:

    Topeka, Kansas, started Choose Topeka, which will reimburse new workers $10,000 for the first year of rent or $15,000 if they buy a home. Tulsa, Oklahoma, will pay you $10,000 to move there.

    A program in Savannah, Georgia, will reimburse remote workers $2,000 for the move there, and the city has created various social activities to introduce the newcomers to one another and to locals.

    (Check out the photo of Savannah, by the way.  Kind of reminds me of the trees in Sacramento.  Just don’t park under that tree branch.)

    Austin in particular seems to be a primary draw for those leaving the state.

    https://www.sfgate.com/business/article/They-Can-t-Leave-the-Bay-Area-Fast-Enough-15876405.php

      1. Ron Oertel

        I do think that what’s occurring is great for those relatively early in their careers, and that they have finally realized that they’re not getting their money’s worth in much of California anymore. I’ve been kind of surprised that it didn’t happen earlier.

         

      2. Alan Miller

        I do not agree with RO’s take on overall housing issues, but a mass exodus from California certainly has it appeal for rejoicing.  Less traffic, less people, lower rents, less crowded beaches, cleaner air.  Keep heading east, O U-Haul vans.

      3. Richard_McCann

        The single biggest factor in driving folks away from California is high housing prices. (One of those interviewed in the article Ron cites wasn’t even aware that the state he was in had no income tax.) So how do we reduce the price of housing? By building more. That’s the only possible solution. Remember Father Guido Sarducci’s Five Minute University:

        https://www.youtube.com/watch?v=kO8x8eoU3L4

        1. Ron Oertel

          “That’s the only possible solution”.

          And yet, the drop in housing prices (particularly rentals in San Francisco and Los Angeles) has nothing to do with “increasing supply”.

          Love the Father Sarducci clip, though.  (Which was really more about the lack of value of college degrees.)

        2. Alan Miller

          And yet, the drop in housing prices (particularly rentals in San Francisco and Los Angeles) has nothing to do with “increasing supply”

          ??? – the drop in rental prices is due to increasing supply of rentals, exactly as you would expect.  The number of rentals available in some Bay Area markets has increased by an order of magnitude over last year.  Many of those who left California or the Bay Area have done so while retaining their properties (probably for the flexibility to return).

        3. Alan Miller

          The “increase in supply” is primarily due to a “drop in demand” – not from more construction.

          No, it’s in increase in supply of rentals available.  That doesn’t mean they were built, it means they became available.

        4. Ron Oertel

          I believe we’re saying the same thing.  But my comment went further, in discussing “cause”.

          And some of it appears to be permanent.

          Supply increases as demand decreases, until an equilibrium in price is reached again. The point at which supply/demand meet.

          Demand is decreasing in the Bay Area and Los Angeles. Folks are comparing what they can get there, vs. other locations.

          And if there’s no demand, you end up with situations like Detroit (or Bodie) – regardless of “supply”.

  2. Jean Jackman

    Great that there will be Eric Gelber’s CA Capitol Watch, however, I hope he adds environment/climate to areas of interest at California Legislature as well as healthcare.

    1. David Greenwald

      Hi Jean – When we spoke about his plans, I think his plan was to cover it broadly and I can almost guarantee he will cover environmental and climate issues. Thanks.

  3. Alan Miller

    The enacted bill places an upper limit on annual rent increases of 5% plus inflation.

    This must have been passed pre-Covid-19, when everyone assumed rents would go up forever.  With rents dropping wildly in urban areas such SF Bay Area while home prices stay steady or rise slightly, the taxes on the property (very high if not protected by Prop. 13) go up but the rent drops 20-25%, then the landlord may have a cash flow problem.  If the market recovers, the base price is now too low, and it will take 4-5 years to reach market rate again.

    These landlords will continue to price more and more low-income tenants out of their homes.

    A particular landlord is not responsible for overall housing prices.  A landlord getting sc#ewed by circumstances will not solve the issues as a whole, only some relief for that one tenant.  The problem with all of this is it doesn’t address the problem and doesn’t spread the burden, but crushes a few unlucky landlords via circumstances.  All this will do is discourage investment in housing as the risk will be deemed too high by many.  That will lead to a lower quality of landlord.

    1. Keith Olsen

       the rent drops 20-25%, then the landlord may have a cash flow problem.  If the market recovers, the base price is now too low, and it will take 4-5 years to reach market rate again.

      Great point, maybe there should also be a law that rent can’t drop more than 5% in a pandemic?  JK

      1. Ron Oertel

        When the vacancy rate exceeds 5%, would they then be required to tear buildings down?  🙂

        Seems “reasonable”, if state and local government is going to decide what the vacancy rate should be.

        1. Ron Oertel

          I doubt you’ll ever find out from this blog (e.g., right now). Regardless, you probably wouldn’t see a lot of apartment buildings on the outskirts of town – even without Measure D.

          And Measure D most recently resulted in helping keep “demand” in check (e.g., DISC). Not sure why you gloss that over.

          Here’s apparently what’s occurring in San Francisco:

          The vacancy rate was 4.9% in March, then climbed each month until hitting a peak of 11.7% in August and September. In October, the rate was still high but decreased to 10.3%. Compare that to 2019, when the vacancy rate was much more steady throughout the year, hovering from 3.8% to 4.4%

          https://abc7news.com/san-francisco-housing-market-coronavirus-california-real-estate-affordable/6341378/#:~:text=We%20know%20that%20from%20San,cities%20like%20Seattle%20and%20Boston.

          I’d still like to know how many aren’t paying rent (or very little rent) as a result of the eviction moratorium – locally, statewide, etc.

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