Nation's Most Populous State Weighs Bills on Tenant Guarantees, Landlord Assistance
By Lou Hirsh CoStar News August 21, 2020 | 9:03 AM California lawmakers are racing against a deadline to create legislation to ban residential evictions and give support to landlords to let tenants stay in place, actions in the most-populous state that could influence policies in other statehouses across the country. A bill that would extend statewide residential eviction moratoriums is heading for a potential vote next week in the California Senate as a ban on evictions is scheduled to expire on Sept. 1. Other legislative decisions being closely watched include the expiration of federal unemployment assistance to individuals and paycheck-protection assistance to business owners aimed at minimizing further job layoffs.
The negotiations are being watched by the commercial real estate industry across the state. Aaron Bove, senior vice president of investments in the San Diego office of brokerage Marcus & Millichap, said the legislative decisions could affect California multifamily fundamentals.
“Things could be delicate over the next few weeks,” Bove said in an interview. “There are issues over whether those renters will have jobs to go back to.”
Adding to the timeline pressure, under California legislative deadlines, bills must be passed by both chambers by Aug. 31, coinciding with the start of the Legislature’s annual recess, in order for them to be considered by the governor to become law this year. The governor then has until Sept. 30 to sign bills into law for the current year.
The stakes are particularly high for a state that federal government figures show has the most homeless residents in the United States. Eviction protections and landlord assistance are important in the state’s inland markets that were already seeing signs of an economic slowdown before the pandemic.
Proponents of new legislation say it is needed to avert a wave of evictions and a worsening of California’s already critical problems with housing affordability as well as homelessness. Opponents of moratoriums, and supporters of landlord aid, contend that property owners cannot indefinitely support tenants without imperiling their own financial stability as the pandemic wears on.
The state Senate Appropriations Committee voted 5-2 on Thursday to send to the Senate floor a measure known as state Assembly Bill 1436, which was passed earlier this year by the Assembly and would extend the state moratorium for at least another 90 days beyond the pending expiration. The moratorium was originally ordered in March by Gov. Gavin Gavin Newsom among other emergency responses to the pandemic.
A few hours after that vote, the Appropriations Committee chairman decided to send the measure back first to the Senate Rules Committee before it goes to the full floor. A spokeswoman for Assemblymember David Chiu, a San Francisco Democrat and a sponsor of the bill, said it’s not uncommon for big bills to be referred to the Rules Committee if subject matter is under negotiations, and there is still sufficient time for the bill to go to the Senate floor next week for a vote, which has not yet been scheduled.
“California is facing a tsunami of evictions and foreclosures if we do not act,” said Chiu, responding to Thursday’s initial Senate committee action. “This bill is a balanced approach to ensure we avoid mass displacement and increased homelessness during the pandemic.”
Bove said the overall atmosphere of pandemic uncertainty has already spurred an increase in multifamily investment-related queries to his office, including current owners looking to sell California properties to invest in other states and other investors looking to take parked cash off the sidelines to invest in California properties while financing rates and property pricing remain in a holding pattern.
The proposals are attracting attention from investors, and "there have been concerns about legislation, but so far it hasn’t been a deterrent for people interested in investing in California,” Bove said.
The landlord compensation bill, known as Senate Bill 1410, which provides tax credits and other types of relief to property owners, was given the designation “hold in committee” by the Assembly Appropriations Committee chairman Thursday without a vote, meaning the bill in its current form is essentially dead for the current session, said a spokesman for the committee.
A spokesman for state Sen. Anna Caballero, a Democrat from Salinas who sponsored the bill, said the senator’s office is evaluating its options and there could still be behind-the-scenes negotiations next week to get some type of landlord-related aid passed before Aug. 31.
The bill, which passed earlier this year in the Senate, had received conditional support from groups including the California Apartment Association, which represents landlords, but that group had also called for adjustments to the bill.
“SB 1410 is the only legislation that offers both tenant protections and financial assistance to landlords,” the association said this month in response to the bill’s earlier passage by the Assembly Judicial Committee. “While the legislation is promising, CAA has concerns about the time frame in which landlords would get tax credits.”
The association added that “CAA is working with the authors to create helpful amendments for the bill. As written, the bill would not provide the first tax credit for a number of years.”
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