Mr. Leno's Bill SB 184

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Written by Ron Kingston | 06 June 2011

Can you imagine, state legislators support SB 184 (Leno) that would:

  • Permit local governments to enact and enforce residential rent control on newly constructed units in the name of "inclusionary housing;" and
  • Prohibit property owners from suing a city or county for violating the longstanding Costa-Hawkins Act, a law that prohibits cities and counties adopting rent control on newly constructed housing?

Some of those legislators have informed us that they also oppose imposing rent control on newly constructed housing.

Does this make any sense to you? Most of us just shake our heads in disbelief!

Let's take a look at why we are opposed to Mr. Leno's bill SB 184. Some background may be helpful to understand our position.

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

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

Our reasons to oppose the bill:

  • Proponents argue the bill "simply" authorizes local government inclusionary housing laws (a law, commonly referred to as rent control on newly constructed housing). Inclusionary housing conflicts with:
    • The Costa-Hawkins Act (Statutes of 1995) that established a 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.
    • Stopping legal challenges against a city or county for a violation of law that protects new rental housing from mandatory price control.
  • Rent control allows a landlord to reset the rental rate upon a new tenancy and local government inclusionary housing requirements prohibit a landlord from doing so.
  • 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.
  • 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 Legislature's preemption was expressly stated and comprehensive. It must remain that way to provide for an important incentive to construct rental housing.

The bill is on the Senate floor, and we are devoting a great deal of time to stop the bill from becoming law. It's unfortunate that not all apartment associations are opposed to this egregious measure, however.