2004 LEGISLATIVE KICKOFF

With the Superbowl behind us, the California legislature has kicked off their legislative bowl. With the unprecedented change in the Governor’s mansion, we are seeing a more subdued legislative agenda. While the last few years have put landlords on their heels trying to stop anti-landlord legislation, the addition of Schwartzenneggar has caused more restraint from the tenant organizations.

This year the number one issue will be workers compensation reform. There is a total of 21 bills regarding workers compensation. Twenty of those bills actually want to improve the situation.

One bill by Senator John Burton from San Francisco attempts to undue the reforms passed last year and in fact proposes to reverse any of the other twenty bills that may reform workers compensation this year. This is just John Burton acting out like a spoiled child because he doesn’t like Gov. Schwartzenneggar’s proposed 11.3 billion cost cutting workers compensation insurance reform proposal.

Senate Bill 4X3 by Poochigian, a Republican from Fresno has proposed the most comprehensive workers compensation reform. SB4X3 has more than 60 proposed changes. The bill provides that for an injury to be compensable, it has to be certified by a physician based on objective medical findings. Additionally, a specific work related injury case must show that the injury contributed at least 10 percent when compared to all causes of injury.

The California Apartment Association has teamed up with the California Employers Coalition, which includes such groups as the California Restaurant Association, the California Manufacturers and Technology Association, the California Chamber, the Cal Retailers Association and the California Grocers Association. Since every business is affected by exorbitant workers compensation costs, this might be the time for affected businesses to come together and bring about meaningful change to a malfunctioning program.

Last year, SB90 was passed which requires landlords to provide tenants receipts when they use a tenant security deposit for services or repairs or cleaning to the rental unit. That law went into effect January 1, 2004. This will be an extra burden for most landlords and will impact the way we do business.

In the past, when a tenant broke a shower door, for example, I would merely note it in his computer ledger and when the tenant moved out I would back charge him for the repair. Now, however, with the new law in effect, I will have to keep a hard copy of the receipt in the tenant’s file in order to properly back charge the tenant when he moves out.

CAA and Senator Torlakson have agreed to actively collect information on the negative impacts of SB90 on the housing industry. At a recent CAA conference I suggested that we do a quality survey of outgoing tenants to see if they feel they benefit from all the extra paperwork they will be required to review. Additionally, I think we should find out if the tenants feel they benefit from the pre-move out walk-through. I think that tenants will feel that this is more of a burden than a benefit. Perhaps with objective findings we can sway Sacramento to ease the administrative burdens of these two laws.

Under SB 115 (Torlakson), a landlord may not demand or require cash as the exclusive form of payment of rent or security deposit. As originally drafted a landlord will be required to accept a money order from a tenant for full and ‘partial’ payment of security deposit. CAA lobbyists objected to the language of the bill as it related to the term ‘partial payment’ because it would require a landlord to accept ‘partial payment’ during an Unlawful Detainer action. If you accepted ‘partial payment’ you would have to re-serve a three day notice to pay Rent or Quit. However, Senator Torlakson has agreed to amend the language about partial payment so as not to block Unlawful Detainers. Please note that a tenant can stop payment on money orders and cashier’s checks.

CAA has decided to commission a study of Bay Area rent controlled communities to determine the negative impacts that Rent Control has on the economy and business in those communities and the entire state. The study will focus on the lowest annual rent increases allowed by cities. For once, Santa Monica is not the absolute lowest. Last year, Santa Monica allowed a 3 percent increase while Berkeley and West Hollywood allowed only 1-1.5 percent. CAA hopes that when they are armed with the objective data, they can sponsor legislation in 2005 and 2006 in an attempt to dismantle rent control state wide. I will keep you posted.

On the other side of the table, the tenant organizations have proposed a relatively modest legislative agenda. They want to amend state law so that all rents can be mailed by tenants and will be considered paid and ‘received’ on the date of mailing even when an owner accepts rent in person. Existing law considers a tenant’s rent ‘received’ on the day of mailing when the owner accepts rent only by mail.

There were three prior bills, each of which had a “sunset clause”
included. Now the tenant organizations want to remove all three sunset clauses so that the laws would become permanent. One law, SB1089, signed by the governor in 1999, prohibits rental property owners from discriminating against the tenant based on the tenant’s source of income. This law also requires owners to allow roommates to combine their income in order to meet the owner’s income standard if the owner allows married couples to combine their income.

The tenant groups also want to remove the sunset clause from law, which requires 60-day notice of any rent increase in excess of 10%.

Additionally, they want to remove the sunset clause from the 60-day notice of termination law, which was signed by the ex-governor Davis in 2002. This would effect us when we give a tenant notice for owner occupancy.

It is important for landlords across the state to remain diligent in preventing tenant organizations from chipping away our rights.