As the city of Half Moon Bay considers adopting its own tenant protection measures, California is close to enacting a statewide “rent cap” bill by passing Assembly Bill 1482.
The legislation, authored by Assemblymember David Chiu of San Francisco, would regulate how much rent can increase ever year, limiting it to 5 percent plus the local rate of inflation so long as that total doesn’t surpass 10 percent. If signed, the measure would take effect Jan. 1, 2020, and expire in 2030.
Gov. Gavin Newsom’s deadline to sign the bill is Oct. 13.
“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 Chiu in a prepared statement. “Keeping renters in their homes is crucial to addressing our housing crisis.”
The legislation, meant to curb price gouging by landlords, would apply to apartments in jurisdictions that do not already have a local rent control law and that are at least 15 years old. Rent restrictions would be applied to most apartments and other multi-family buildings, along with some single-family homes. Condos and single-family homes would be exempt unless owned by a corporation or real estate investment trust. Duplexes where the owner lives in one of the units would also be exempt.
AB 1482 would not override local rent control laws. However, it would cover units that are not already covered by those laws. East Palo Alto is the only city in San Mateo County with its own local rent control policy.
The bill would also bypass the Costa-Hawkins Rental Housing Act of 1995 and allow for rent regulations statewide.
The law could extend price protections to an estimated 8 million tenants, according to published news reports.
In Half Moon Bay, there are 4,716 housing units, according to the latest California Department of Finance population and housing estimate.
That means there are about 1,462 rental units in the city, according to the latest U.S. Census American Community Survey, which estimates 31 percent of households here are renters. However, it’s unclear how each of the rental units would qualify under the new law.
AB 1482 would cap rent increases by giving tenants “just cause” protections. They prohibit a landlord from evicting a tenant without showing a reason for the eviction. However, protections would only be in effect after a tenant has lived in a unit for more than 12 months and would be limited to those rental units also subject to the limit on rent increases.
Directing attorney with the Legal Aid Society of San Mateo County Shirley Gibson said she predicts the biggest shift under implementation of the new law would be the need for “just cause” evictions.
“Day to day, what we see tenants coping with the most in the county is ‘no cause’ evictions,” Gibson said. She explained that over the last several years about 47 percent of evictions in San Mateo County gave no cause.
Gibson offered two scenarios following passage of AB 1482.
“We’re either going to see a diminishing of evictions or the more likely scenario is those evictions that are happening are for a reason and the reasons will now have to be articulated,” Gibson said.
As lawmakers wait for the governor to sign the bill, stakeholders and local leaders have mixed opinions.
Judy Taylor, a state director of the California Association of Realtors and a Half Moon Bay real estate agent, said she has three concerns about AB 1482.
“This is limiting the return for the people who are providing the housing. There is no study that shows rent control works, and there is no universe where tenant protections and massive investments in multiunit housing can coexist.”
Taylor anticipates the bill will be signed, and now it is just a matter of understanding the legislation and its ramifications.
In Half Moon Bay, Taylor estimates the legislation will impact some people, but not many. “People expecting this to be some overnight rental nirvana, it’s not going to happen,” Taylor said.
“Right now, we’re just trying to figure out the nuts and bolts and how we (referring to the real estate community) are going to survive,” she said.
While Taylor does not believe rent control is a viable solution, she does think landlord mediation services are worthwhile. She said she finds it “ironic” the city is advocating for tenant protections when previous leaders “said no to many housing projects.”
Half Moon Bay City Council announced in January that one of its priorities for the year is addressing affordable housing. Meanwhile, Community Development Director Jill Ekas said the city needs more time to study AB 1482 and think through how it will work relative to other policies City Council is working toward.
“It will affect options for these measures, and staff is working through the details of the relationships between the new state law and the specific needs of the local community,” Ekas said.
Councilwoman Deborah Penrose said she understands some landlords are living without retirement benefits and find it hard to keep up-to-date with repairs. “But there does need to be a cap placed on how much of an annual increase folks can be expected to pay,” she said.
In the next month, City Council is expected to weigh in on its own draft ordinance on certain tenant protections, including requiring landlords to give minimum lease terms, offer a 90-day notice before evictions and tenant-landlord meditation services.
“Along with the lack of housing, exorbitant rent costs when housing is available only increases the number of homeless and the crowded and often inhumane conditions in rental housing,” Penrose said. She also blamed high rent for the exodus of people from Half Moon Bay.
“I believe AB 1482 is a step toward a better path. It is not the solution, but offers some security,” Penrose said.
Here’s how it works
If a person is living in Half Moon Bay and paying the average rent of $3,100 per month, and San Mateo County metropolitan area’s inflation rate is 2.7 percent, a landlord could raise rent as much as 7.7 percent. That’s a monthly increase of about $239.