Rent cap bill would limit rent hikes for millions of California households, report says

Despite recent changes that limit the impact of a controversial
state rent cap bill, researchers say the proposed law still would
cover millions of California households now without rent control
— including in Bay Area neighborhoods.

Assembly Bill 1482, which would restrict rent increases on
certain properties to an average of just under 10 percent a year
and
prevent landlords from evicting tenants with no cause
, is set
for its first state Senate vote Tuesday. The bill, which has
received fierce opposition from landlord interest groups, could
impact as many as 4.6 million homes throughout the state that
aren’t already under rent control, according to a recent study by
UC Berkeley’s Terner Center for Housing Innovation. The report
illustrates the sweeping potential reach of a bill advocates hope
will help tenants struggling to pay rent as the state grapples with
a massive affordable housing shortage.

“From the perspective of the number of new units and renters
covered, I think the impact could be pretty substantial,” said
David Garcia, policy director for the Terner Center.

That impact largely would be felt in cities that have no rent
control policies, such as Palo Alto, Alameda and Concord. In cities
that already have rent control, the bill would extend protections
to households that had been exempt under state law — including
some single-family homes and apartments built after 1995 (or later
in some cities) but not within the past 10 years.

The bill’s author, Assemblyman David Chiu, D-San Francisco,
put several limits on AB 1482 in the hopes of making it more
palatable to the opposition. Only rental units that are 10 years
old or older would be covered, the bill would sunset after three
years and landlords who own 10 or fewer single-family homes would
be exempt. That last provision not only greatly reduces the impact
the bill would have on single-family homes, but it also makes that
impact hard to quantify, the Terner Center researchers wrote.
Almost 2 million of the estimated 4.6 million California homes that
will be covered by the rent cap are single-family homes, but there
is no way to reliably estimate how many of those single-family
homes are owned by landlords with more than 10 properties,
according to the report.

The California Apartment Association, which opposes AB 1482,
seized on that limitation in its criticism of the Terner
report.

“Over and over, the authors of the Terner Center report
announce the limitations of their data,” spokesman Joshua Howard
wrote in an emailed statement. “That makes it difficult for us to
trust the conclusions in the report.”

In the Fruitvale and West Oakland neighborhoods of Oakland —
both historically low-income neighborhoods that are rapidly
gentrifying — the bill could bring rent-hike protections to 9,381
apartments and 6,827 single-family homes not currently covered by
rent control, but would leave 3,056 homes exempt, according to the
Terner Center report. Oakland’s existing rent control rules apply
only to apartments built before 1983. Already 35,462 homes are
covered by rent control in those neighborhoods, according to the
report.

In San Francisco’s Mission district, 10,984 apartments that
currently don’t have rent control would be covered by the new
rent cap, as well as 2,258 single-family homes. Another 7,859 homes
would be exempt, and 35,343 homes already have rent control,
according to the report. San Francisco’s existing rent control
rules apply only to apartments built after 1979.

The researchers did not break out data for any South Bay or
Peninsula cities.

Opponents of AB 1482 say rent control will make the state’s
housing crisis worse, further reducing the housing supply by making
it less attractive for investors to develop rental housing.

“California lawmakers should look to offer meaningful tools
for housing preservation, such as property tax incentives to
housing providers who invest in older units and commit to make them
affordable,” Howard wrote.

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Between 2014 and 2017, median rents for buildings not covered by
rent control in San Francisco’s Mission neighborhood increased
more than 18 percent per year, the Terner Center researchers 
reported. Still, the majority of aggregate rent increases across
the 10 California communities the researchers studied did not
exceed the proposed rent cap.

AB 1482 is scheduled for a hearing before the Senate Judiciary
Committee on Tuesday afternoon, after narrowly passing its Assembly
floor vote in May.

Source: FS – All – Real Estate News 1
Rent cap bill would limit rent hikes for millions of California households, report says