Sacramento Report — Mid-Year State Legislative Update

Mid-Year State Legislative Update

By ron kingston

Last month, several bills in the legislature died. AAOC was opposed to many of the landlord-tenant bills. Some of the bills that were opposed sought to ratchet down on just cause for eviction, establish a statewide rent registry program that would have required rental housing providers to report rent levels, evictions, reasons for evictions, and information about each rental household, and make it totally impractical to purchase rental housing with the intent of improving it, and “Ellis-ing” (is this a word?) a building if a new owner wanted to wait for several years following acquisition.

There were other bills that AAOC continued to oppose that passed out of their “house of origin” and over to the other chamber for action.

This article will feature one extremely problematic and costly bill. It will also focus on a success story regarding a bill for which the AAOC was opposed until the author of the bill committed to amend it to address the association’s primary concern.

First, the problematic and costly bill. SB 1335 (Eggman) proposes to prohibit the use of any form of a person’s credit history as part of application and screening process for a residential unit if the applicant provides alternatives of financial responsibility in instances where there is any form of government subsidy. The bill was approved by the Democratic majority in the Senate and is now awaiting a hearing in the Assembly Housing and Community Development Committee.

Why does AAOC continue to oppose SB 1335?

• The use of credit reports by ALL creditors serves a legitimate purpose.

Creditors review overall debt load and the performance to repay debt.

If the theory behind SB 1335 is to supplant the lawful and purposeful use of credit reports, it should apply to all creditors. • Credit reports demonstrate how a person manages debt and the level risk that an owner can lawfully apply. • Our credit reporting and discrimination laws highly favor and protect consumers. They are not predatory.

Our discrimination laws are among, if not the best in the nation. Our credit reporting statutes assure that consumers have every right to access, dispute, and correct inaccurate

credit reports. • Allowing an applicant to provide alternatives of financial responsibility leaves too much to the imagination and therefore leads to litigation. • The bill does not identify lawful and sustainable alternative financial sources. Nor does the bill require the financial alternatives to perform and pay all the tenant’s debt in the event of default.

• In the event of the “alternative” financial source’s failure to perform, the bill poses a substantial legal conundrum: can the owner/manager seek an eviction due to the nonpayment of rent? • The California legislature has made substantial progress over the past few years: – Section 8 rent vouchers are considered lawful; – Tenants can bundle their income to lawfully qualify for rentals; – Guarantors that can pay during the entire duration of tenancy are fully recognized, defined, and accepted; – Our discrimination laws protecting tenants have vastly improved; and – The Newsom Administration has identified billions of dollars

to help tenants meet their rental debt obligations.

AAOC believes that the focus of the Legislature should be on helping tenants meet their existing rental debt obligations.

Should SB 1335 become law, selection of tenants who are financially challenged will suffer. Most of the applicants will not be able to demonstrate or show that they have a financial backer.

Today, thousands of owners do rent to those who have experienced a temporary inability to meet debt obligation. The unfortunate result of this bill will be to adversely affect rental of residential rental property.

Second, the bill that AAOC succeeded in having amended. AB 1738 (Boerner-Horvath), which proposed the mandatory retrofit in all multifamily parking lots for the installation of electrical vehicle charging stations, was approved by the Democratic majority in the Assembly and is now pending before the Senate Housing Committee. From the time of its introduction, AAOC was opposed to AB 1738. We are pleased to report that the association secured key amendments and, as a result, the requirement will not apply to multifamily properties unless a building permit is required to improve an existing parking lot, which rarely happens! Here is a summation of AAOC’s arguments that helped the author of the bill decide to amend it to address our specific concerns.

The bill would have:

• Adversely affected housing affordability. • Lay at issue, the need to mandate a costly building retrofit where there are few rental households that will use the charging stations. • Begged the question of how the initial and ongoing costs will be financed and maintained and paid for. • Ignored the necessity for the legislature to define: the affect in rent controlled properties, the involvement of the electrical utility companies’ data that will show where and when the EV stations can be used.

• Ignored a social justice argument that the bill is not tied to state and federal financial incentives to pay for the mandate.

• Disregard alternative fuel sources that are not reliant on electricity.

Next month we will feature other bills of key importance to association members. Stay tuned.

Ron Kingston is President of California Strategic Advisors and Legislative Advocate for the Apartment Association of Orange County. For questions regarding this article, please call AAOC at (714) 245-9500.