AFFORDABLE HOUSING, RENTAL ASSISTANCE SURFACE AS KEY ISSUES

CID bills moving through session address rental restrictions and short-term rentals.

By Jennifer Wada, Esq.

The Legislature continues to do its work but in a much more truncated fashion. After losing months of session, they’ve had to do their business in a very condensed timeframe. Even with a significant downsizing of bills, hearings are being held every day, including weekends, and lasting hours on end. Witness testimony is being taken over the phone and, in some cases, even legislators are remote or proxy voting.

One of the most pressing issues at the end of this session is the battle over affordable housing and rental assistance – issues made even more pronounced by the pandemic. Warning of a potential “homelessness Armageddon,” if the current eviction moratorium isn’t extended and loopholes in the law aren’t plugged, lawmakers are struggling to pass an affordable housing package before the end of session. This package focuses on eviction protections and financial assistance for affordable housing providers, but also considers ways to prevent another foreclosure crisis. Some of the bills included in this package are:

SB 1410 (Caballero and Bradford) would provide tax credits to property owners as compensation for not evicting tenants who do not pay their full rent during the COVID-19 state of emergency. It would also require these tenants to repay the state for this deferred unpaid rent, unless they qualify for incomebased exemptions at the time of repayment.

AB 1436 (Chiu) would protect tenants unable to pay their rent due to COVID-19 from evictions, as well as homeowners struggling to make their mortgages from foreclosure. After failing passage in the Assembly, the contents of AB 2501 (written about in the last update) have been amended into this bill and would require a mortgage servicer, mortgagee, trustee, beneficiary or authorized agent from continuing any judicial or nonjudicial foreclosure action, recording a notice of default or taking any action to evict a person following a foreclosure during the COVID-19 emergency and 180 days thereafter.

SB 1079 (Skinner) would forbid a foreclosure trustee from bundling properties for sale at a foreclosure auction, instead requiring that each property be bid on separately. The only exception to this restriction is if the deed of trust or mortgage requires otherwise. According to the author, the point of this bill is to prevent corporate takeovers of housing that are devastating for low- and moderate-income families. She also states that when these investors then cash out, many corporations leave homes vacant and in disrepair. The bill is intended to provide safeguards against another foreclosure crisis as many people are falling behind on mortgage payments due to the COVID-19 induced recession. As for CID-specific legislation, one bill that is still moving through the legislative session is AB 3182 (Ting). This bill would restrict an association’s ability to impose rental restrictions of more than 25% of the separate interests in the CID. It clarifies that ADUs and JADUs are not counted toward this cap. This bill originally prohibited any rental restriction and CACM worked alongside CAI to eliminate this outright prohibition. Despite the 25% cap, the bill does authorize an HOA to adopt a higher percentage of rental restrictions in order to help buyers qualify for loans insured by the FHA or guaranteed by the Department of Veterans Affairs, the Federal Mortgage Association, or the Federal Home Mortgage Loan Corporation. It also allows a higher percentage to facilitate loan financing or to facilitate the acquisition and maintenance of insurance and industryrecognized HOA rates. AB 3182 does have an important silver lining: it specifically authorizes CIDs to prohibit short-term rentals of 30 days or less. In the Senate Housing committee, the Chair recommended an amendment that would clarify that any longer terms in governing documents would be deemed at 30 days in order to avoid associations feeling like they needed to amend their governing documents. This amendment is not in the bill yet but is in the process of being drafted.

Speaking of short-term rentals, SB 1049 (Glazer) would increase fines that cities are allowed to impose on short-term rental hosts who violate local property laws. It would authorize imposition of fines up to $5,000 for a violation of a short-term ordinance. The author states that their recent proliferation during the pandemic has allowed bad actors to use these rentals for large parties and a short term rental can quickly become the site of underage drinking, brawls, noise complaints, coronavirus spread and, in some instances, violence.

AB 3040 (Chiu) is a bill that would authorize cities and counties to receive a specified credit towards meeting their regional housing needs allocation for moderate- and above moderate-income housing if they identify sites in the housing element that contain a single family dwelling but can be rezoned to allow four units per parcel. The bill was just recently amended with language that deems void and unenforceable any CID CC&R or provision in a governing document that effectively prohibits or unreasonably restricts the construction or use of up to four primary dwelling units on a lot zoned for at least four dwelling units. It does allow reasonable restrictions on the dwelling units. The author states that this follows upon last year’s AB 670 that prohibited CIDs from banning construction of ADUs and JADUs.

CACM has also been working on the California Law Revision Commission’s study of Emergency Measures in CIDs. The original impetus for this study was to enable associations to use video or teleconferencing, as opposed to in-person meetings, in emergency situations. CACM advocated for the CLRC to pursue this study and the Commission recently approved such a study. Once the CLRC completes its work, its recommendations will ultimately lead to legislation for likely introduction next year. In addition to the video/teleconferencing issue, CACM has requested that additional measures be included for study: 1) use of electronic voting in emergency situations and 2) halting automatic architectural approvals in emergency situations. This study is just getting underway and we will continue to provide comments and advocate for measures that will help the management industry more efficiently do its work.

The legislative session is set to end on August 31 and the governor has 30 days to sign or veto legislation. But because so many bills stalled this year, legislators and stakeholders will surely be working through the fall to get ready for reintroductions. Legislators are also asking the governor to call a special session in the fall to work on bills that didn’t make it in the regular session. This is still to be determined. The industry should take a deeper look at bills that we know will be back: AB 2227 (Irwin: AB 2912 Cleanup/CID funds: insurance), Senate Bill 969 (Wieckowski – SB 323/Elections Cleanup) and Senate Bill 981 (Archuleta – Electronic Notice Delivery and Websites). Whether it is in a special session or in the 2021 session, we will be ready to address the backlogged bills that were casualties of this COVID year.

Jennifer Wada, Esq., is an attorney, CACM’s legislative advocate and principal of Wada Government Relations in Sacramento.