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California Senate approves bill to cap rent increases

Posted: 5:07 PM, Sep 10, 2019
Updated: 2019-09-10 20:07:00-04
California initiative could pave the way for rent control

SACRAMENTO, Calif. (AP) — California lawmakers on Tuesday moved to cap annual rent increases statewide for most tenants as a limited housing supply in the country's most populous state continues to drive up the cost of living while pushing more people to the streets.

The California Senate voted 25-10 to cap rent increases at 5% each year plus inflation for the next decade while banning landlords from evicting tenants without just cause. Democratic Gov. Gavin Newsom says he will sign the bill into law, but first it must survive a final vote in the state Assembly where the California Association of Realtors is pushing to defeat it. Lawmakers must act by Friday.

California's largest cities, including Los Angeles, Oakland and San Francisco, have some form of rent control, but a state law passed in 1995 has restricted new rent control laws since that year. In most places, landlords can raise rents at any time and for any reason, as long as they give advance notice.

In Pomona, about 30 miles (48 kilometers) east of Los Angeles, Yesenia Miranda Meza says her rent has jumped 20% in the past two years. Monday, she marched with other tenants through the halls of the state Capitol chanting: "Once I've paid my rent, all my money's spent."

"I'm a rent increase away from eviction, and that's with me having two jobs," she said "So if this (bill) doesn't go through and I get another rent increase, I really don't know what I'm going to do. I'm either going to be homeless or I'll have to cram into a room with a whole bunch of other people."

Opponents have likened the proposal to rent control — a more restrictive set of limitations on landlords. California voters overwhelmingly rejected in a statewide ballot initiative to overturn the 1995 law last year.

California Association of Realtors President Jared Martin said the group's 200,000 members strongly oppose the bill because it will "reduce the supply and quality of rental housing." It's an argument echoed by Republican Sen. Jeff Stone, who said developers would have no reason to build new housing if they can't make money off their investment.

"We'll see even a greater housing crisis because of the low supply of housing," Stone said. "Either this will force our constituents to join a 60,000 homeless population that we see in the LA area, or they will simply just move to another state."

But supporters say the bill includes lots safeguards to prevent that from happening. The rent caps don't apply to new construction built within the last 15 years — a provision that prompted the California Building Industry Association to drop its opposition.

Plus, the caps don't apply to single family homes, except those owned by corporations or real estate investment trusts. And duplexes where the owner lives in one of the units are also exempt.

"We all desperately want to build more housing. It was a very important aspect of this bill," Democratic Assemblyman David Chiu said.

But even some Democrats who voted for the bill on Tuesday signaled they didn't like it, a sign the bill is not guaranteed to pass. Sen. Steve Glazer, a Democrat representing a district in the San Francisco Bay area, cited a 2018 study by Sanford University showing landlords under rent control are more likely to nudge tenants out by spending less on maintenance.

"Any time you reduce rate of return on an investment, you make that investment less attractive, and this is true even if new investment is exempted for 15 years as this bill does," he said.

But Carolyn Wilson, a 71-year-old Sacramento resident, said she needs help now. She said her rent has increased about $100 each year and her landlord just gave her a 60-day notice to move out for on reason.

"All I do is get up on the computer looking for some place to go," she said. "With my income, I can't afford anything."