After working their way through the state Legislature for several months, two bills sponsored by the California Apartment Association now face their most significant hurdle yet: advancing from the Assembly Appropriations Committee.
The bills, which together would help landlords recover rent lost to the pandemic and clarify how rent restrictions apply during states of emergency, have already passed out of the state Senate and have won approval in a series of Assembly policy committees.
Now that the state Legislature has returned from summer recess, the fate of the proposals rests with Appropriations, a spending-focused body where bills are put on the suspense file if associated costs of the bill is at or over $150,000.
CAA is urging members of the Appropriations Committee to give its sponsored bills a fair shake and keep them moving toward Gov. Newsom’s desk.
One of the proposals, SB 1133 by Sen. Bob Archuleta, D-Pico Rivera, would help landlords comply with California’s anti-price-gouging law, Penal Code Section 396, which is triggered during states of emergency.
The proposal would clarify elements of this law, which makes it illegal to increase the price of many consumer goods and services, including that of rental housing, by more than 10% above pre-emergency levels when the president, governor, or local officials declare a state of emergency.
Although states of emergency are designed to expire after 30 days, both California and local governments often extend declarations multiple times, sometimes for years, without making it easy to track. This causes confusion for landlords attempting to determine whether a local, state or federal emergency declaration applies to their property.
To remedy this issue, SB 1133 would require California’s Office of Emergency Services to post on its website all emergency proclamations by the governor and California local governments to ensure better compliance of the emergency orders.
SB 1133 also would address the overly broad application of Penal Code Section 396. At present, all states of emergency, regardless of their type, trigger the 10% price cap on nearly all consumer goods and services.
For example, an emergency declaration prompted by a heat wave or citrus tree disease — which have no impact on the housing market — may still prompt a cap on rent increases for the life of the declaration.
Under SB 1133, if an emergency declaration lasts for more than a year, the corresponding rent cap may only continue if it can be justified as relevant to rental housing. To carry on the cap, the declaration must explain why the underlying emergency has — or is likely to cause — abnormal disruptions in the rental housing market.
The CAA-sponsored bill, SB 847 by Sen. Melissa Hurtado, D-Sanger, would provide state dollars to rental owners who’ve gone without rent and whose tenants either would not cooperate in the COVID-19 Emergency Rental Assistance Program (ERAP) application process or didn’t qualify for the assistance.
Under California’s COVID-19 eviction moratorium, tenants who failed to pay their rent were protected from eviction if they claimed a pandemic-related financial hardship. Many landlords have since learned that their nonpaying tenants continued to work or otherwise earn an income during the pandemic and don’t qualify for rental aid.
Should SB 847 become law, landlords will need to provide evidence that they applied for help through ERAP and did not receive funding, or that they obtained a civil money judgement against the tenant before June 1, 2022. Initial funding will be prioritized for small landlords. Owners who accept dollars must agree not to evict their tenant unless they list a reason, such as nonpayment of rent or failure to abide by the rental contract – for a specified period.