Why Didn’t the Landlord Lobby Fight California’s New Statewide Rent Control Law?

The California Apartment Association is anticipating ”indirect political benefits” from the tenant protections

Last week, Gavin Newsom signed one of the strongest tenant protection laws in the country. The Tenant Protection Act of 2019, written by Assemblyman David Chiu (D-San Francisco), is the biggest reform of the state’s rental-housing industry in decades. More than 2 million tenants statewide who are uncovered by local rent control laws will see a cap placed on the annual increase their landlords may impose.

At a public signing on Tuesday, Newsom said, “Cost of living…is the issue that defines more issues than any other issue in this state.”

The law, also known as AB 1482, will not cancel existing rent control laws in cities like Los Angeles, which apply to buildings built before 1978. It will, however, cap rent increases at 5 percent plus inflation for any building in L.A. built after 1978 that is at least 15 years old. This will affect not only apartment dwellers but also thousands of tenants renting single-family homes from real estate investment trusts backed by private equity firms like Blackstone Group.

Perhaps it’s surprising, then, that the most powerful landlord lobby in Sacramento didn’t oppose the law.

The California Apartment Association, the nation’s largest statewide advocate for the rental housing industry, which opposes rent control, took a neutral position on AB 1482. CAA has described the new California law as a “moderate” form of tenant protection and even compared it to the Costa-Hawkins Rental Housing Act, the 1995 state law that limits the ability of local governments to enact far-reaching rent control. (CCA helped lead an $80 million campaign to defend Costa-Hawkins from repeal via state ballot measure last year.)

Though an adamant opponent of earlier versions of AB 1482, CAA now anticipates the law will bring it “indirect political benefits” with proponents of tighter rent control. “For example,” reads a members-only post from last month on the CAA website, “with a statewide annually adjusted rent cap in place, tenant activists and progressive city councils and county boards may be less likely to seek their own rent control measures.”

Of course, talk of indirect benefits might also be a way for CAA spin a loss on 1482 into some kind of masterstroke in a game of four-dimensional chess. But it’s a possibility that has tenant activists concerned. “That’s our fear,” says Larry Gross, executive director of the Coalition for Economic Survival, a tenants’ rights organization in L.A. “There were some areas up north where they were pushing for stronger rent controls and this undermined their efforts.”

The post on the CAA website continues: “[W]ith the Legislature having approved a cap on rent increases, Michael Weinstein, the proponent of last November’s Prop 10 state rent control initiative, would have little room to argue for another Proposition 10 2.0, which is targeted for the statewide ballot in 2020.”

Debra Carlton, senior vice president of public affairs for the CAA, describes the new state law as a compromise that targets “egregious” rent hikes with rent caps that are in line with the market . “We’re not happy to live with it, but we can live with it,” she says.

“Our concern is the state legislature as a whole will think their job is done when it’s far from done as far as passing meaningful tenant protections for the people of California.” —Larry Gross

Larry Gross, executive director of the Coalition for Economic Survival, a tenants’ rights organization in L.A., calls setting the rent caps at 5 percent plus inflation “incredibly generous to landlords.”

“That’s why CAA didn’t contest it,” Gross says. “Because those increases are far beyond what a landlord would need.”

Had the rent caps gone into effect for this year, they would have limited rent hikes to 8.3 percent. (Tenants covered under L.A.’s rent control law of 1978 are looking at a 4 percent rent increase this year.)

As for the so-called indirect political benefits of the law, Carlton says: “It certainly gives those city council members that may be on the margins the ability to say, ‘Look, we’re moving on. We’ve already got statewide protections in place.’”

CAA was among the landlord groups in Sacramento that previously argued that by restricting landlords’ ability to raise rents, AB 1482 was diminishing incentives to address the shortage of available homes. But when an allied group, the California Association of Realtors, lifted its opposition unexpectedly, the CAA changed course and set about working to amend to the legislation. At that point, Carlton says, “We were willing to come to the table and [negotiate tenant protections] for a temporary period of time.” The law goes into effect in January and will last ten years, expiring in 2030.

The law was framed as an anti-gouging measure targeting the egregious of rent hikes that make headlines for driving working people from their homes.

Local governments can still impose rent control on pre-1995 housing under the Costa-Hawkins Act. For instance, L.A. County passed a new rent control measure for the unincorporated communities earlier this year. So did Inglewood. But they can’t pass their own “anti-gouging” measures, with caps lower than the state law’s, for homes built after 1995 that are at least 15 years old.

“This is one small step in the right direction,” Gross says of the law. “Our concern is the state legislature as a whole will think their job is done when it’s far from done as far as passing meaningful tenant protections for the people of California.”

The day after AB 1482 was signed, Governor Newsom signed 18 bills intended to boost housing production.

RELATED: California’s Legislature Just Passed a Statewide Rent-Control Bill

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