Good news for new home and condo owners! 

Earlier this week, the California State Senate killed SB 184 (Leno), a bill that would have, if passed:

• Permitted local governments to enact and enforce residential rent control on newly constructed units in the name of “inclusionary housing;” and

• Prohibited property owners from suing a city or county for violating the longstanding Costa-Hawkins Act (1995), a law that prohibits cities and counties from adopting rent control on newly constructed housing.

The San Francisco Association of REALTORS® aggressively opposed the bill and, before it was considered, lobbied every moderate Democrat and Republican in the Senate.

SB 184 would have made serious inroads for rent control statewide by allowing local governments to ensure that a percentage of all new developments include homes permanently affordable to low-income households. The bill would have “clarified” the Costa-Hawkins Act by establishing by legislative edict that it does not apply to locally-enacted inclusionary zoning programs.

Background

Over the past 30 years, local governments have exempted newly constructed rental housing from rent control laws; yet, many of those same governments adopted and enforced conflicting inclusionary housing laws (laws that impose rent control on 10 to 30 percent of the newly constructed rental housing).

The California legislature assured that new rental housing would not be subject to rent control in 1995 through the Costa Hawkins Act.

The reasons the San Francisco Association of REALTORS® opposed the bill:

• There is no confusion about the intent and verbiage of the Costa-Hawkins Act: Civil Code Section 1954.52 (a): “Notwithstanding any other provision of law, an owner of residential real property may establish the initial and all subsequent rental rates for a dwelling… (If) a certificate of occupancy (was) issued after February 1, 1995.”

• The Costa-Hawkins Act states only one reason for new housing to be subject to rent control: “where the owner has otherwise agreed by contract with a public entity in consideration for a direct financial contribution.” The California State legislature’s exemption was expressly stated and comprehensive. It must remain that way to provide for an important incentive to construct rental housing.

• The Costa-Hawkins Act allows a landlord to reset the rental rate upon a new tenancy and local government inclusionary housing requirements prohibit a landlord from doing so.

• Prohibiting legal challenges against a city or county for a violation of law that protects new rental housing from mandatory price control is unconstitutional.

Curbed SF – San Francisco’s full of cramped and leaky studio apartments, six-bedroom flats occupied by twelve messy roommates, slumlords and rent control shenanigans, to name a few. What our rental market doesn’t lack is dramatic horror stories. If you’ve got a good (and by “good” we mean “horrible”) renter woes story, Curbed wants you. Next week will be Curbed’s first-ever Renters Week, wherein we shift some focus from buying to… read more…

Note: What these two lawmakers don’t realize is that they are still pandering to the renters like they did in San Francisco. Unfortunately, it is to the detriment of the people who PROVIDE the housing! Ammiano will make it harder for landlords to evict deadbeat tenants and Leno will make it unattractive for builders to start new construction on rental property because it will be subject to the same burdensome rent control laws that have hurt real estate in San Francisco for years! So they ask, “Is Sacramento the New San Francisco?”

• Assembly Member Tom Ammiano’s AB 265 Would Create 14-day Notice to Quit
• Senator Mark Leno’s SB 184 Would Eviscerate Costa-Hawkins

(SFAR Note: To increase the presence of the San Francisco’s REALTOR® and the real property owner community at the State Capitol, the San Francisco Association recently retained the services of a well-known Sacramento-based legislative advocate who specializes in landlord-tenant law. The advocate’s name is Ron Kingston. Ron is a former senior lobbyist for the California Association of REALTORS®.

Printed below are two letters Ron has delivered recently on bills under consideration by the State legislature that would significantly affect the rights of owners of rental real property.

One regards Senator Mark Leno’s SB 184 which would authorize the legislative body of any city or county to adopt ordinances to establish, as a condition of development, inclusionary housing requirements.

The other regards Assembly Member Tom Ammiano’s AB 265 which would increase the period of time a defaulting tenant has to pay rent or quit from three to 14 days.)
Assembly Member Tom Ammiano’s AB 265
Dear Assembly Member ________:

On April 26, 2011, the Assembly Judiciary Committee is scheduled to hear AB 265. The San Francisco Association of REALTORS® is OPPOSED to the measure. We respectfully request a NO vote.

The bill requires a court to grant a tenant a right to remain in the rental unit or a right to regain possession of the rental unit if the tenant pays back rent due and nominal legal costs up to and including “lock-out.”

Our reasons to OPPOSE the measure include:
• Rent that is commonly due on the first of each month becomes moot because tenants will be permitted to pay rent much later should AB 265 become law.
• Proponents offer little reason to eliminate existing law requiring proof of hardship for delaying rent payments or reinstating a tenancy. They simple argue, that tenants need more time—a lot more time—to pay monthly rent.
• Today, courts may permit a tenant to remain in a rental unit ONLY in the event of hardship. This bill permits a tenant to, for any reason, remain in possession upon paying the delinquent rent and a small portion of the landlord’s legal costs. Other out-of-pocket costs for damages, lost rent, etc. would be lost.
• Tenants who proffer insufficient rent payments or those who are habitually late in the payment of rent are the most likely to take advantage of a “new” law that would permit them to, without cause, pay until “lock-out.” This is not fair to responsible tenants and landlords.
• Tenants could avail themselves of the “new” law on repetitive occasions, thus making it extremely expensive and frustrating for landlords. There would be no finality.
• The bill would increase the number and cost of unlawful detainer actions. Landlords will be forced to unjustly pay legal and court costs in every eviction action.
• Tenants would never have to file an answer to an unlawful detainer complaint, never appear in court, never pay reasonable attorneys fees, processing fees, and more and then, at the last moment, pay past due rent. Costs to landlords would skyrocket.
• Landlords would not ever know the status of a lawsuit until the bitter end. Landlords would not be able to enter into contract with a NEW TENANT in a timely manner because he or she would not know the status of the current unit.
• Late payment of rent will never result in an “adverse credit report.” No other creditor is prohibited from reporting late payments to a credit bureau.
• The bill mandates that landlords are to accept delinquent rent that may be paid months following the rent due date.
We respectfully urge you to vote NO on AB 265.
Senator Mark Leno’s SB 184 Would Eviscerate Costa-Hawkins
Dear Senator ___________:

On May 3, 2011 the Senate Transportation and Housing Committee is scheduled to hear SB 184. The San Francisco Association of REALTORS® is strongly OPPOSED to the measure and urges your NO vote.

The bill would assure that every local government could enact and enforce residential rent control on newly constructed units and prohibit property owners from pursuing lawful judicial remedies against a city or county for violating the law, including the long-standing Costa Hawkins Act.

Without exception local government rent control ordinances exempt newly constructed rental housing.

State and local legislators alike have consistently understood, embraced, and advocated for exempting new rental construction from rent control.

In fact, the legislature assured Californians that new rental housing would not be subject to rent control in 1995 through the Costa Hawkins Act.

For more than 30 years local government’s rent control laws have exempted newly constructed rental housing yet, many of those same governments adapted and enforced conflicting inclusionary zoning laws (laws that impose rent control on 10-30 percent of the newly constructed housing for no less than 30-years or require the property owner to pay mandatory in-lieu fees to that government of well over $100,000 per unit).

Among our reasons to OPPOSE the bill:
• Proponents argue the bill “simply” authorizes local government inclusionary zoning laws (a law, commonly referred to as rent control on newly constructed housing). Inclusionary zoning conflicts with:
• The Costa-Hawkins Act (Statutes of 1995) that established statewide new construction exemption for rental housing.
• The long-standing guarantee of local and state elected officials that newly constructed housing would always be exempt.
• Palmer/Sixth Street Properties, L.P. et al., v City of Los Angeles that held, without equivocation, that the City of Los Angeles inclusionary zoning ordinance is preempted by the Costa Hawkins Act.
• This bill is NOT A PERMISSIVE MEASURE, it is a bill that would stop any lawful challenge against a city or county. Mr. Palmer successfully litigated against the City of Los Angeles. Others should be given the right to litigate.
• There is NO CONFUSION about the intent and verbiage of the Costa-Hawkins Act: Civil Code Section 1954.52 (a) Notwithstanding any other provision of law, an owner of residential real property may establish the initial and all subsequent rental rates for a dwelling…. (If) a certificate of occupancy (was) issued after February 1, 1995. The Legislature did enact a bill that did occupy the field on newly constructed rental housing rental rates.
For the Legislature to set aside the Costa-Hawkins Act, it:
• Will take away an important incentive for developers to construct rental housing; and
• Will seriously damage the construction industry.
• Will assure litigation since inclusionary housing (rent control requirements) ordinances and the Costa-Hawkins Act are in conflict with one another.
• Will preempt the Costa-Hawkins Act, without amending that area of law.
• Will destroy the notion long acknowledged by the State legislature that the State should occupy the field in certain and defined areas relating to rental housing. This is not a local control issue. If it were, planning and zoning laws, landlord and tenant law, and most every State statute would not be necessary.
The Costa-Hawkins Act and inclusionary zoning are in direct conflict with each other. If newly constructed rental housing is to remain exempt from rent control, the bill should be rejected by the Legislature.

We respectfully urge you to vote NO on SB 184.

Note: As if landlords don’t already have enough problems renting in San Francisco with high “pay off” rates to get tenants to move as well as other property rights tragedies. Now former supervisor now Assemblyman Tom Ammiano wants to extend the 3 day pay rent or quit to 14 days. Do property owners really think their representatives have their best interests at heart? Here we have a perfect example of taxation without representation with property owners living out of town or voting district of the politicians who propose this unconscionable legislation.

Ammiano Pushes for “14-Day Notice to Quit”

 SFAR - Assembly Member Tom Ammiano has introduced legislation (AB 265) that would increase the period of time a defaulting tenant has to pay rent or quit from three to 14 days. The relevant section of the legislation reads as follows:

“A tenant of real property…is guilty of unlawful detainer: …when he or she continues in possession…without the permission of his or her landlord…after default in the payment of rent…and 14 days’ notice, in writing, requiring its payment….”

The Assembly Judiciary Committee is scheduled to hear AB 265 on March 15, 2011. The San Francisco Association of REALTORS® is OPPOSED to the measure.

REALTORS® who are either involved in the rental housing industry or concerned about this attempt to further diminish the rights of landlords are encouraged to contact Assembly Member Tom Ammiano to register their objection to the introduction of AB 265. Some of the arguments that may be advanced are the following:

• The legislation will undermine a landlord’s ability to obtain a timely and lawful eviction of a tenant who does not pay rent. Landlords should not be compelled by legislative edict to provide free housing to tenants defaulting on the payment of rent.
   The legislation will have unintended consequences on tenant applicants by inducing landlords to
  • Decide on much tighter credit requirements for every tenant applicant.
  • Collect the highest security deposits the law allows.

The telephone number for Assembly Member Ammiano’s district office is (415) 557-3013. To send an e-mail message to him, click on “CONTACT US” at http://democrats.assembly.ca.gov/members/a13/.

From San Francisco Association of Realtors – Effective March 1, 2011 through February 29, 2012, the allowable annual increase amount is 0.5%. In accordance with Rules and Regulations Section 1.12, this amount is based on 60% of the percentage increase in the Consumer Price Index (CPI) for All Urban Consumers in the San Francisco-Oakland-San Jose region for the 12-month period ending October 31, which was 0.9% as posted in November 2010 by the Bureau of Labor Statistics.

To calculate the dollar amount of the 0.5% annual rent increase, multiply the tenant’s base rent by .005. For example, if the tenant’s base rent is $1,250.00, the annual increase would be calculated as follows: $1,250.00 x .005 = $6.25. The tenant’s new base rent would be $1,256.25 ($1,250.00 + $6.25 = $1,256.25).

The Rent Board also has announced the interest rate payable on security deposits for the 3/1/11 – 2/29/12 period—0.4%.

From the San Francisco Association of Realtors:

The proposed ordinance introduced by Supervisor Avalos last year to extend just cause eviction protections to newly constructed units has been modified and, in modified form, approved by the Board of Supervisors and signed into law by the mayor. The new ordinance goes into effect on April 24.

The new law adds a new section, 37.9D, to the city’s “Residential Rent Stabilization and Arbitration Ordinance.” The new section extends just cause eviction requirements and protections to tenants in units that are not now subject to eviction controls (e.g., most residential rental units with a certificate of occupancy issued after June 13, 1979) when those units are subject to foreclosure. The section also provides for particular notice of rights to tenants in possession of a rental unit at the time of foreclosure, and that failure to provide the notice can be an affirmative defense in unlawful detainer proceedings.

To view a copy of the new ordinance, click on the following link: http://www.sfbos.org/ftp/uploadedfiles/bdsupvrs/bosagendas/materials/bag030210_100039.pdf

The San Francisco Board of Supervisors has passed and the mayor has signed into law legislation that prohibits owner move-in evictions during the school year where a child under the age of 18 resides in the unit with a tenant who has a custodial or family relationship with that child, and the tenant has resided in the unit for at least 12 months or more.

There are, however, exceptions. The law will not apply where there is only one rental unit owned by the landlord in the building, or where the owner who will move into the unit pursuant to Section 37.9(a)(8) eviction has a custodial or family relationship with a child under the age of 18 who will reside in the unit with the owner.

Supervisor Mar’s legislation was offered against a background of 75+ other amendments to the Rent Ordinance approved by the Board of Supervisors since the imposition of rent control in San Francisco in 1979. While a few of those amendments were aimed at curbing abusive practices on the part of both landlords and tenants, most were intended to expand the rights of tenants and give them additional legal grounds to sue landlords—thereby making the ownership of rental real property in San Francisco an ever more risky and expensive proposition.

In the estimation of the Association, Supervisor Mar’s legislation fell into the latter category which is why the Association opposed it.

The Mar ordinance becomes effective on March 14, 2010.

The San Francisco Residential Rent Stabilization and Arbitration Board has announced that the annual allowable rent increase for the March 1, 2010 to February 28, 2011 period is .1 percent. The interest rate payable on tenant security deposits for the same period is .9 percent. For further information, visit the Rent Board’s web site at www.sfgov.org/site/rentboard_index.asp.

- SFAR

Honorable Mayor Newsom,

Please do not support the Avalos Amendment.  It is another issue that will in the long run hurt San Francisco.  Property owners pay property taxes and the taxes (on newly sold properties) are based on their value.  This amendment will not only hurt the owners and eventually new tenants but also the City. It will reduce the value of these properties and therefore bring in less revenue to the City.  Free market systems can adjust for changing times.  A regulated market cannot make those adjustments and will therefore, over time, put undue pressure on the tenants who must pay higher rents to subsidize the rent controlled units.  We must encourage new housing in SF— not impede it.

These are some other reasons the amendment is not fair:

• They will impede an owner’s ability to move into a rental unit in structures for which a certificate of occupancy was issued after June 13, 1979—a problem no owner had reason to believe would ever exist when a decision was made to buy and rent.
• They will discourage owners from renting units in post-1979 structures because of problems likely to be experienced recovering possession.
• They will discourage the construction of residential structures that can be rented.

The Avalos amendments provide no verifiable evidence—only hearsay from biased tenant activists and others—that evictions without cause have become a problem in structures for which a certificate of occupancy was issued after June 13, 1979.

Thank you for your consideration.

Janis Stone
DRE00517072

This is outrageous. As more and more landlords go out of business and rental units dry up, this law could cause a housing shortage. DEFEAT IT! – Mick Orton, Marketing Director, SFResidence.com

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Although the original Residential Rent Stabilization Ordinance specifically exempted from rent control all buildings with a certificate of occupancy issued after the ordinance took effect (June 13, 1979), recently elected Supervisor John Avalos is now proposing an amendment to the ordinance designed to bring these units under the just cause eviction provision of the Rent Control Ordinance. The proposal additionally extends the residential rental unit fee (currently $29.00 per apartment unit) to these units.

The Avalos amendments would be given effect by removing the following two provisions from the section of the Rent Ordinance that establishes exclusions from just cause eviction protections and payment of the residential rental unit fee:

•  “Rental units located in a structure for which a certificate of occupancy was first issued after the effective date of this ordinance; and
   
• “Rental units otherwise subject to [the Rent Ordinance], to the extent such dwelling units are exempt from rent increase limitations under the Costa Hawkins Rental Housing Act.”

The Costa-Hawkins Act basically provides that: (1) housing constructed after 1995 must be exempt from local rent controls, (2) single-family homes and other units like condominiums that are separate from the title to any other dwelling units must be exempt from local rent controls, and (3) rental property owners must have the ability to establish their own rental rates when dwelling units change tenancy. So, the Avalos amendments will not bring post-1979 units under the ordinances price controls.

But the amendments, according to some, will impede an owner’s ability to move back into a condominium unit in a post-1979 project, a problem many owners never believed they would be facing.

The Avalos amendments will be the subject of a public hearing to be conducted by the Land Use and Economic Development Committee of the San Francisco Board of Supervisors on Monday, November 2 at 1 p.m. in Room 263 at City Hall.

If the amendments are to have any chance of being defeated, REALTORS® and other interested parties will need to deluge the members of the committee with telephone calls and e-mail messages opposing the amendments before the public hearing on Monday. In addition, a massive crowd will need to show up at City Hall on Monday to speak in opposition to the amendments at the public hearing.

These are the supervisors (and include the mayor) REALTORS® and other interested parties should call or send e-mail messages to before 1 p.m. on Monday to express opposition to the amendments:

District 3
David Chiu—Board President
(415) 554-7450
Fax: (415) 554-7454
David.Chiu@sfgov.org

District 10
Sophie Maxwell
(415) 554-7670
Fax: (415) 554-7674
Sophie.Maxwell@sfgov.org

District 1
Eric Mar
(415) 554-7410
Fax: (415) 554-7415
Eric.L.Mar@sfgov.org

Mayor Gavin Newsom
(415) 554-6141
Fax: (415) 554-6160
gavin.newsom@sfgov.org