A piece of legislation aimed to boost protections for California’s many renters narrowly passed through the Assembly at the end of May. Assembly Bill 1482, authored by Assemblymember David Chiu, now needs to make it through the Senate and past Governor Newsom’s desk before it becomes law. Some amendments to the bill were made in order for it to clear the first hurdle.
The bill had originally set a cap on annual rent increases at 5 percent plus inflation, but was changed to 7 percent plus inflation, and now exempts landlords with 10 or fewer single family homes. The legislation also has an expiration of 2023 with a renewal option, and would not apply to new housing. However, an accompanying bill, AB 1481, which would have required just causes (such as the failure to pay rent) for evictions, was voted down by the Assembly.
“We have to look at putting caps on what rents landlords can charge — the year-over-year increases are not sustainable,” said Kevin Zwick, CEO of Housing Trust Silicon Valley (HTSV). “I’m happy to see this legislation move forward. Compromises were made to get this passed through the Assembly. I would expect that it does get through the Senate and is signed by the Governor. Newsom has said that he supports this bill.”
HTSV and similar agencies that focus on affordable housing creation assert that the way out of the housing crisis is known as the “Three P’s”: housing production, housing preservation and protection for renters.
“We don’t get out of the housing crisis if we don’t provide, preserve and protect,” Zwick stated. For Zwick, this rent cap legislation is just a first step of many that need to be taken, which include strengthening eviction protections and legislation enacted at both the state and local levels.
The City of Santa Clara does not currently any have rental regulations other than the restrictions on affordable housing. The City declined to comment on AB 1482 at this time. Only a few Bay Area cities, most notably San Francisco and including San Jose, Mountain View and East Palo Alto currently have ordinances protecting tenants.
According to data from Zumper, one-bedroom rents in Santa Clara now average $3,047, which is an 8.7 percent increase from last month. A recently released report from the National Low Income Housing Coalition, Out of Reach 2019, examines the gap between wages and the cost of housing by location. The report shows that seven out of the top 10 most expensive counties in the U. S. to rent are in the Bay Area including Santa Clara County. The other three on top 10 list are San Diego County, Honolulu County and Orange County.
“I think without AB 1482 we’re going to continue to see year-over-year rent increases of 10, 11, 12 percent,” Zwick offered. “Some cities are producing luxury housing but no one is producing enough moderate income housing or housing for those with low or very low incomes. So there’s always more demand than supply.”
Zwick explained that the Bay Area’s housing crisis affects everyone because when people are displaced from their homes due to steep rent hikes or lack of just cause eviction protections, many end up moving outside the region and spending hours commuting each day to work. This strains the local economy and exacerbates traffic congestion, air pollution.
Emily Hislop, a Senior Case Manager in the dispute resolutions division for Project Sentinel, thinks that AB 1482 has the potential to have a positive impact on Silicon Valley renters, including those in Santa Clara that lacks its own protections. Project Sentinel works to create equity in housing and conducts mediation between landlords and tenants, among other functions in several California counties.
Hislop said that especially over the last three years, she’s seen many instances of huge increases in rent in Silicon Valley — upwards of 25 percent at times. A large number of calls to Project Sentinel are about such rate hikes she said.
“We provide counseling to both tenants and landlords, so we’re interested in there being a balance between the two parties,” she said. “This [AB 1482] could have a big impact on renters, however without legislation like AB 1481, tenants will still be at a very imbalanced place.”
Hislop explained that in places where just cause legislation exists, landlords can retaliate against renters who file complaints about the condition of properties for example, by raising rents beyond what is affordable to the tenant, thereby forcing them to move out. For this reason, rental caps and just cause legislation work in tandem to provide renters with broader security.
AB 1482 still gives landlords leeway to increase rents to cover their own costs such as property maintenance and taxes. However, the legislation does stop rental price gouging, which was a looming issue following the devastating 2018 wildfires in Northern California, where thousands lost their homes. Following the wildfires, the state enacted emergency anti-gouging legislation, which covered housing, prohibiting increases by more than 10 percent of the pre-disaster rates.
The impact from the fires spread beyond the towns and counties that burned, as many who were displaced sought housing in other parts of Northern California including the Bay Area, ramping up housing demand even further.
Though some realtor groups have fought hard against bills like AB 1482, renter protections are more commonplace in many densely populated parts of Europe. This month, in response to fast-paced gentrification, the City of Berlin decided to freeze rents for five years, following a seven-percent increase in rents during the first quarter of 2019 in that city.
Interestingly, Hislop and colleagues have received a number of calls from Bay Area residents who hail from Germany and other parts of Europe. These residents reportedly have particular difficulty in wrapping their heads around the fact that most of Silicon Valley lacks protections for renters and even struggle to translate the concept of just cause eviction into their native tongue.
“They’re shocked that there are no rent limits and that you can be evicted for no reason,” commented Hislop. “Europeans tend to come at problems from a more social policy standpoint rather than a free market one.”