Repeal Costa-Hawkins? Assembly Bill 1506 seeks to kill this bedrock California property rights law

In February 17, 2017, Assembly Members Chiu, Bonta, and Bloom introduced AB 1506, an effort to repeal the Costa-Hawkins Rental Housing Act—a state law that places strict limits on a city’s ability to impose rent control on housing. Prior to Costa-Hawkins, rent control ordinances had long been held to be a valid exercise of a city’s “police power”—the ability to regulate the health and safety of their residents—and five California cities (Berkeley, Santa Monica, Cotati, East Palo Alto, and West Hollywood) had “strict” rent control ordinances, imposing what is known as “vacancy control” on empty units even after a tenant voluntarily vacated. In 1995, State Assembly Member Hawkins introduced AB 1164 (with State Senate Member Costa as a co-author), advancing what they saw as a “moderate approach to overturn extreme vacancy control ordinances [that] unduly and unfairly interfere with the free market.”

Costa-Hawkins achieves several forms of decontrol on local price ceiling regulations. It prohibits rent control on new construction and on single-family homes and condos (subject to certain conditions and limitations). It also prevents vacancy control by prohibiting cities from setting prices on vacant units and by allowing landlords to impose market-rate increases on subsequent occupants, once the last “original occupant” has vacated.

While Costa-Hawkins seeks a middle ground between inflexible price controls, on the one hand, and “rent-gouging” and displacement on the other, some lawmakers have expressed concern about the consequences of vacancy decontrol in tough situations. (For instance, Supervisor Jane Kim has proposed a “compassion clause” to protect the surviving spouses/partners of recently deceased, rent-controlled original occupants.) However, Costa-Hawkins has now been on the books for over two decades, and a sudden repeal would wash away the existing case law and local regulation that navigate between these competing interests.

As with the recent proposed legislation by Assembly Members Chiu and Bloom to amend the Ellis Act (AB 982), the purpose of AB 1506 is unclear. Costa-Hawkins expressly allows cities to impose limits on evictions. Local real estate blogs, like SocketSite.com, have recently reported that rental rates in San Francisco are dipping back down to 2014 levels. So, rather than ward off climbing prices, this kind of gesture would merely seem to further cement protections for incumbent tenants, as compared to anyone else in the market for a rental unit. It may also have unintended consequences, where landlords rush to invoke the Ellis Act, which allows its own form of vacancy decontrol if a property goes back onto the rental market.

Help defeat AB 1506
AB 1506 will remain in print for 30 days (until March 21, 2017) before it goes to committee. In the meantime, you can help build political pressure by expressing your opposition to this legislation directly—make the four calls suggested in the Call to Action. (Information listed below)

CALL TO ACTION

Say “No” To AB 1506!!
AB 1506 must be defeated. Please phone both offices of
our two California State AssemblyMembers David Chiu and
Phil Ting. Each office tallies the number of calls on any bill,
so calling both will have the greatest impact.

  • Assembly member David Chiu
    Sacramento: (916) 319-2017
    San Francisco: (415) 557-3013
  • Assembly member Phil Ting
    Sacramento: (916) 319-2019
    San Francisco: (415) 557-2312

Also, please consider traveling with us to Sacramento in the
next few weeks to show up in numbers at the Assembly’s
Housing Committee hearing on AB 1506.We’ll let you know
when we have a definite hearing date.

The membership of SPOSFI has been instrumental in protecting the rights of small property owners in the past. In 2014 and again in 2015, Senator Leno introduced successive efforts to stifle San Francisco property owners’ use of the Ellis Act (in SB 1439 and SB 364, respectively). Members voiced their opposition (and even got on buses to Sacramento) to apply the necessary political pressure to preserve property rights. A repeal of Costa-Hawkins would take away the ability of property owners to decide the price at which they will enter the market (or to continue renting to a stranger), giving those rights to tenants and city bureaucrats instead.

Via https://www.smallprop.org/

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