UGLY IN SACRAMENTO

The political winds that are blowing in Sacramento these days can only be described as ugly and hostile. With the Assembly, the Senate and Governor’s office all controlled by liberal Democrats, what else can we expect? It is a far cry from the environment in 1995 when we passed the Costa-Hawkins bill. The Republicans seemed to understand what it takes to operate a business and rental housing. But of course, all of the legislators who voted for Costa-Hawkins are all gone. They have all been termed out, with a few exceptions such as Sheila Kuehl, who of course never voted in favor of Costa-Hawkins.

There is a plethora of bills aimed at rental housing and we are at the wrong end of the gun. I will highlight some of the bills that are coming down and you will get an idea of the “flavor” in Sacramento.

AB196 (Leno) prohibits discrimination in housing based upon an individual’s gender.

AB647 (Nuñez) will increase the penalties against slumlords and any owner that has written notice from an enforcement agency about the condition of the property. Originally this bill provided for criminal penalties if you demanded rent while there were outstanding building code violations. However, landlords have been able to amend it so that it only increases the penalty from $1,000 to $2,000.

AB1034 (Mullin) increases penalties for owners of substandard housing.

AB1059 (Lieber) originally provided for penalties in the event you annoy your tenant. Annoying your tenant could have taken the form of asking politely for your rent payment that is 15 days late. However, the bill has been modified to take out the word ‘annoyance’ and the language has been amended to require overt harassment before penalties are imposed.

AB1217 (Leno) this bill mostly affects San Francisco property owners with respect to Ellis. It would prohibit owners of residential hotels from evicting all the tenants under Ellis and converting the building to another use. While this bill probably does not impact us directly in Santa Monica, anything that is an attack on our right to utilize Ellis is something to watch.

AB1256 (Koretz) basically guts the original bill of the Costa-Hawkins Vacancy Decontrol Bill. It would allow local jurisdictions, i.e., SM Rent Control Board to regulate rents on all buildings over 25 years old. The good news is that the bill has been put on hold and is now a “two-year bill”. This means that the bill could come back on the floor next year. Please stay tuned....

SB90 (Torlakson) would require owners to give copies of the receipts to a tenant when you are refunding their security deposit. Owners are trying to amend the bill to allow for the owners to provide reasonable estimates as to the cost of labor and materials.

SB69 (Oller) gives property owners the opportunity to correct alleged violations prior to a disability access lawsuit. Owners are obviously in favor of this bill.

SB178 (Cedillo) allows governments to control rents on new or rehabilitated units. This bill is really just an end run around Costa Hawkins and is something for us to watch. The good news is that it was passed over on the floor. However, it may come back next year.

SB345 (Kuehl) is probably the bill that effects us the most. As originally proposed, this bill effects owner occupancy evictions, such that if an owner moves out, the next rent must be controlled for at least 5 years. Apparently, Sheila Kuehl heard an isolated “story” about an owner who evicted a tenant, moved in for short duration and then raised the rents. However, it is very difficult in Santa Monica to do this because an owner is liable for penalties in the event an owner moves out within 12 months. Additionally, the rents must be re-controlled for another 6 months, so it takes at least 18 months to 2 years to get a unit to market value.

The second part of Kuehl’s bill proposes to seal eviction court records for 60 days following the date that a final judgment is rendered in favor of the property owner. Thus, the credit reporting agencies and UD Registry would be unable to report the Unlawful Detainer for 60 days. This would give a bad tenant an opportunity to move into your building without you knowing their history as a drug dealer, etc.

I recently met with Senator Kuehl in her office. I was soon joined in that meeting by CAA representatives, including Debra Carlton and Tom Bannon. I explained to Sheila the pitfalls of having the Unlawful Detainer records sealed and how that would allow bad tenants to move into another building and disrupt existing tenants. She appeared amenable to amending that portion of the bill. Now under her currently proposed bill, if a tenant wins the Unlawful Detainer, the records are sealed for 60 days. That is a reasonable comprise on that section of her bill.

The third part of Kuehl’s bill requires the property owner to attach to the Unlawful Detainer, a copy of the rental agreement or lease and all addendums and provide proof of any rent board registration. This is exceptionally burdensome because as you know the rental agreements have become 10 or more pages and it will require a lot more copies. Additionally, it will probably be a trap for any owner who files his or her own Unlawful Detainers.

The fourth section of Kuehl’s bill proposes to allow a tenant to regain possession of their unit up to and including the Unlawful Detainer trial date providing they pay their rent in full. Under existing law, the court has the option to allow the tenant to pay their rent in full if the tenant will suffer extreme hardship. This bill also places a cap on attorney fees that an owner may seek against a tenant. If you have ever filed an Unlawful Detainer in Santa Monica, you know that attorney fees generated due to the nastiness of some tenant attorneys can exceed $10,000. This part of the bill is merely an attempt to protect the tenant who has been caught violating the terms of the lease, and whose attorney will do anything to try and obstruct a landlord from lawfully obtaining possession of their unit.

AB466 (Escutia) prohibits confidential settlement agreements. This, of course, is sponsored the California Consumer Attorneys, so that they can discover for how much you have settled your mold case and then go talk to the neighboring tenants in order to bring a similar suit.

As you can tell by the summary of the legislation for 2003, most of the bills are aimed at making ownership of property more difficult by tying your hands and placing more paperwork burdens upon your head.

Over 400 people attended the recent California Apartment Association Legislative Conference. I met with four different legislators, including McClintock, Murry, and Levine. Additionally I made an impromptu stop at Sheila Kuehl’s office. She agreed to see me even though I did not have an appointment. Soon after our meeting began, a group from the California Apartment Association including Debra Carlton and Tom Bannon joined us. It was a pleasant meeting even though we stated that for the record that we strongly disagreed with all the provisions of SB345.