SACRAMENTO REPORT
By Greg McConnell, Legislative Advocate

THE 60-DAY NOTICE - ONE OF 2005'S HOT ISSUES

This year, John Burton of San Francisco introduced SB 1145 which sought to extend the life of several sections of law that were due to expire over the next two years. One major provision concerned the requirement to provide 60 day's notice for termination of tenancy. That law expires December 2005 and Mr. Burton wanted to make the provision permanent.

We were able to convince Senator Burton to remove the termination provision from the bill. Once that was done, we were neutral on the remaining portions of SB 1145 and it was passed and signed into law by the Governor.

Over the past several weeks, we have been investigating legislative plans for next year. We have discovered that Senator Sheila Kuehl (Santa Monica) plans to introduce legislation next year that would revisit this section of law and try to make the 60-day termination permanent before it expires in December 2005.

This comes as no surprise. There seems to be no end to attempts to regulate the relationship between owners and tenants, whether the regulation is necessary, counterproductive, or not.

History of the 60-Day Notice

A little history may help with understanding the 60-day notice debate. Sheila Kuehl first proposed the extended notice provision in 2000 in SB 985. Originally, she wanted a 90-day notice, but that was eventually whittled down to 60 days.

The sponsor of SB 985, the Western Center on Law and Poverty, argued that a very tight rental housing market made it very difficult, if not impossible, to find suitable replacement housing with only 30 days notice. As a result, WCLP claimed that many tenants were forced to pay higher rents than they could really afford. Others, they claimed, had to compromise their living standards, crowding into a smaller home or moving in with relatives. In the worst case, some families allegedly became homeless when they could not find affordable, replacement shelter after their funds were exhausted living in local motels.

WCLP argued that vacancy rates were at record lows, less than 1% in many parts of the state. In contrast, a 5% vacancy rate is considered normal. With the two fastest growing populations of homeless people in California being seniors and families with children, WCLP said that SB 985 was a necessary response to a very real and urgent problem.

We did not buy their arguments, but we were confronted with a volatile political climate. Back then, progressives were firmly in control of the key housing committees and strongly supportive of tenants. We had a Governor who we were convinced would sign aggressive regulatory legislation to appease the liberal wing of the legislature. Adding gasoline to this fiery mix, a Sacramento housing provider summarily terminated the tenancies of hundreds of Sacramento area tenants. With these major obstacles, we chose to "live to fight another day."

We successfully argued that the 60-day notice should be limited to a trial period of five years so we could determine the effect of the longer notice on housing and to allow the markets to adjust to see if the longer notice period would continue to be necessary. That was probably one of the smarter decisions we have made over the years.

We'll be Ready in 2005

When the 60-day notice is reintroduced in on the 2005 session, we will have considerably more ammunition than we had in the past. Certainly, the political climate is nowhere near as threatening as it was previously. In the legislature, we have witnessed the emergence of a stronger moderate caucus that understands that regulatory provisions that make it difficult to operate rental housing hurt the state's economic recovery. The equation is simple. The state cannot grow business without housing and housing won't grow in a hostile regulatory climate.

More important, perhaps, is the fact that the Governor has made it clear that he will not support regulation that prevents growth of the economy. His many vetoes of bills hostile to business have set the record straight that this is a business friendly Governor.

The last, but certainly not least important key ingredient, is the fact that the markets are much different today than they were when the extended notice was first considered. Vacancy rates are up in many areas significantly higher than the 5% level that WCLP called a healthy rate in 2000. Rent levels are trending down in some cites and are growing at a very limited rate in others. As a consequence, tenants have many more housing options than they did in 2000 and the argument that tenants cannot find suitable replacement housing in today's market just won't fly.

You Can Help

We still need more ammunition. It is not enough merely to say that a change in law is unnecessary. We need to show that the 60-day notice is bad law and injurious to owners and tenants.

The Association wants owners to report on their experiences with 60-day notices so we can document the effect of the extended notice. Specifically, we are asking all of our readers to contact the Association with their stories about dealing with difficult tenants who have been given sanctuary by being able to remain in their rental units for long periods of time. We are asking owners to tell us how the longer notice period has affected properties that they are trying to sell to owner occupants. We would like to know if the 60-day notice period has increased the number of terminations under the three-day notice to quit for material breach of the rental agreement.

Please let us hear from you right away. The Association has good ammunition to use against the 60-day notice. Nevertheless, your input will make the effort even more likely to succeed.

Greg McConnell heads The McConnell Group, a California Advocacy and Consulting firm. The McConnell Group represents and advises apartment associations, property management companies, and individual owners throughout California.
For more information please visit www.themcconnellgroup.com.
( This article is copyrighted and cannot be republished without the consent of the author.)
1 (California Association of Realtors puts that number at 75% of the population)