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  • State Government
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'Agreement' Reached At California Capitol On Proposal To Cap Rent Hikes

  •  Ben Adler 
  •  Chris Nichols 
Friday, August 30, 2019 | Sacramento, CA | Permalink
AP Photo/Rich Pedroncelli

This photo shows a "For Rent" sign outside an apartment building in Sacramento, Calif.

AP Photo/Rich Pedroncelli

California would limit annual rent increases to 5 percent on top of inflation — with a maximum of 10 percent — under a rent cap deal announced Friday night by Gov. Gavin Newsom and Democratic legislative leaders.

Under the agreement, landlords could raise rents 5 percent plus the cost of inflation during any 12-month period, as calculated under a set of regional consumer price indexes. Landlords would also need to show “just cause” in order to evict tenants after their first year — a key provision contained in a separate bill that stalled earlier this year.

The agreement involves “a series of amendments” to AB 1482 by Asm. David Chiu (D-San Francisco) that would “create strong renter protections,” according to a statement issued by Newsom, Assembly Speaker Anthony Rendon (D-Lakewood), Senate President pro Tem Toni Atkins (D-San Diego) and Chiu.

“The bill will protect millions of renters from rent-gouging and evictions and build on the Legislature’s work this year to address our broader housing crisis,” the statement reads.

Tenant, landlord and business groups have been quietly negotiating for weeks with the governor’s office and Senate Majority Leader Bob Hertzberg (D-Van Nuys). 

Business and landlord groups — including the California Business Roundtable and California Apartment Association — have said they need stability and certainty so they can obtain financing to build new construction.

But it’s not yet clear if the agreement has enough votes to pass the Senate and Assembly.

The agreement contains several exemptions, including a rolling 15-year break for new construction. That means apartments constructed in the future would not fall under the rent cap until 15 years after they’re built. 

Landlords who rent a small number of single-family homes would also be exempt. But the rent cap would apply to those with a large portfolio of single-family home rentals, such as real estate trusts, corporations and limited liability companies.

The agreement would take effect on January 1, 2020, and expire after 10 years. 

The agreement, if enacted, would be the first major change to California rental policy since the 1995 Costa-Hawkins Rental Housing Act, which banned local governments from imposing rent control on units built after that year.

But the amendments would render the bill effectively silent on Costa-Hawkins. The deal would leave existing city rent control ordinances on pre-1995 units in place. And because Costa-Hawkins remains on the books, local governments would still be prohibited from imposing rent control, which is stricter than rent caps, on post-1995 apartments.

Last November, California voters rejected Proposition 10, a ballot measure that would have repealed the law and given cities and counties the authority to expand rent control.

The measure was defeated 59 percent to 40 percent after landlords and many economists argued rent control creates the perverse, unintended consequence of making rental housing scarcer and increasing rents for all but a select few.

Proposition 10’s proponent, Michael Weinstein, has also been working on a similar initiative for the November 2020 ballot.

The deal comes as the state continues to grapple with an affordable housing crisis, which has included large and often unpredictable rent increases for tenants across the state in recent years. 

The share of income renters pay has been steadily increasing for decades. From 1960 to 2013, the percentage of family income needed for rent in California nearly doubled from about 20 percent to 37 percent, according to the Legislative Analyst’s Office. The cost was even higher for young renters, age 18 to 30, who paid 44 percent of their income.

    More about housing

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    California Senate Sends Rent Cap Deal To Assembly, Where Its Fate Is Less Certain

    Tuesday, September 10, 2019
    A rent cap deal between tenant advocates, business groups and the California Apartment Association has passed the state Senate on a party-line vote. But it’s not yet clear if it has the votes to pass the Assembly.
  • AP Photo/Rich Pedroncelli

    Sacramento Passes New Rent Control Rules, Limits Increases At 10 Percent

    Tuesday, August 13, 2019
    City Council voted on Tuesday to approve a rent control compromise negotiated between officials and proponents of a ballot measure pushing for stronger tenant protections.
  • Rich Pedroncelli / AP Photo

    Rent Control Could Change Dramatically As Millions Of Dollars Pour Into Proposition 10 Debate

    Tuesday, September 4, 2018
    The potential expansion of rent control under the measure has spurred debate over whether it’s the right answer to the state’s ever-climbing rents.
  • crazbabe21 / Flickr

    Five Things A Californian Should Know About Rent Control

    Sunday, January 7, 2018
    What should your average Californian know about a rent control debate poised to gobble up so much political oxygen? Here are five key points.

 housing

Ben Adler

Capitol Bureau Chief

Capitol Bureau Chief Ben Adler first became a public radio listener in the car on his way to preschool – though not necessarily by choice. Now, he leads Capital Public Radio’s state Capitol coverage, which airs on NPR stations across California.  Read Full Bio 

 @adlerben Email Ben Adler

Chris Nichols

PolitiFact California Reporter

For the past dozen years, Chris Nichols has worked as a government and politics reporter at newspapers across California.  Read Full Bio 

 @christhejourno Email Chris Nichols

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