BY TIM HAUSERMAN
The housing crisis rears its ugly head in many different forms across California, and most housing groups agree that the solution must be a combination of statewide and local action and regulation.
Gov. Gavin Newsom recently signed Assembly Bill 1482, also known as the Tenant Protection Act. It’s a statewide measure to put a cap on how much a long-term tenant’s rent can increase per year. The now-law also increases the steps necessary for property owners to evict tenants, including sometimes providing compensation to evicted tenants. What will be the impact of this law on the long-term rental market in the Truckee/Tahoe region? First, here are the key provisions of the law:
The law limits the amount a landlord can increase rent to 5% per year plus the Consumer Price Index. (The CPI is an estimate of the rate of inflation; last year’s CPI in California
was around 3%, so in a similar year the total rental increase could be as much as 8%.) There is a lot of fine print, and the devil is in the details as the law only applies to multi-family dwellings built more than 15 years ago and single-family homes that are owned by corporations.
The second main focus of the bill is to require landlords to have “just cause” when evicting a tenant. Just cause includes breaking the terms of the lease by failing to pay rent, damaging the property, etc. If there is no just cause, the landlord has to pay the tenant relocation assistance equivalent to one month’s rent. In a multiple tenant situation, common around Tahoe, the law says that for a landlord to evict, everyone living on the property must have lived in the house for at least one year or one tenant must have lived in the property for at least two years.
“Within our region, the law will not have a huge impact,” Truckee planning manager Jenna Gatto said. The primary reason is that 84% of the homes in Truckee (with similar numbers throughout the rest of the Tahoe region) are single-family homes, and the vast majority of those are individually owned.
There is little variation to the story in Placer County. “Because AB 1482 has exemptions that would eliminate application to most of our region’s older single-family housing stock,
it will not affect a vast majority of households here,” said Shawna Purvines, principal planner for the county’s community development/ resource agency. “The county will continue monitoring this and other new legislation to ensure our codes and practices are consistent with state law and effectively address the housing shortage in the North Lake
Gatto considers the legislation reasonable. “There have been some bad actors in some communities, you hear of those stories, and the result was this law,” she told Moonshine Ink.
While tenant rights advocates see the law as a positive step to limit some egregious rent increases, “the California Association of Realtors opposed it,” said John Falk, legislative analyst for the Tahoe Sierra Board of Realtors. “We see it as an impediment to creating and
maintaining rental housing across the state. Tenant rights are already supreme in California [and] this will lead to a number of unintended consequences. It will make property less available and do very little to keep rents low, and will make more people take their properties off the rental market.”
The San Francisco Chronicle reported on another potential unintended consequence for tenants: Kenneth Rosen, chair of the Fisher Center for Real Estate and Urban Economics at UC Berkeley’s Haas School of Business, explained in the article that “the rent cap will become a floor for many landlords, who will raise prices by the maximum amount allowed each year, which is far higher than annual rent increases recently.” The article elicited a
number of comments online from landlords who said they hadn’t increased rents in years, but guessed they would have to start.
Since the law was just passed, no one is sure exactly how it will be administered. Falk thinks it could be administered by the California Housing and Community Development Agency, or a new government agency created specifically for this. Enforcement could also be done via civil action, or small claims court, though Falk maintains that this would clog an already busy court system. “It’s also fair to assume that the state will try to punt
administration to the local governments,” he said.
Main Image Caption: RENTAL STOCK: As the housing crisis begets many proposed solutions for the large renting populace in Tahoe/Truckee, state regulations play a prominent role. Cosveta/bigstockphoto.com