SCRHA Legislative Update - July 10, 2020

COVID-19 Local Regulatory Update

• In addition to the City of San Diego, the cities of Chula Vista and Escondido have also extended their respective eviction moratoriums. Please refer to the Eviction Moratorium chart found on the SCRHA COVID Resources page. 
• Beginning July 6, Santee residents who face a hardship may apply for funds via the City’s Rental Assistance Program. Click here for more information.
• The County of San Diego recently launched the Small Business Stimulus Grant Program. Click here for more details.

State Legislative Update

State Assembly Schedule Delayed Due to Outbreak

The State Assembly was scheduled to return to work on July 13, however, five people who work in the state Assembly have tested positive for the coronavirus. Speaker of the Assembly Rendon indicated that the Assembly will remain on recess until further notice. The state Senate remains scheduled to return to work on Monday, July 13.

Bill Update

The Legislature just finished passing a budget that, depending on the tax receipts from the July 15 tax deadline, may not be the last one we see this year. Along with the budget, the Senate and Assembly met their house of origin deadline and passed their respective bills out of their own houses (Bills must be passed through the house where they originated, or they are considered dead for the year).

SB 1190 (Durazo)

Extends existing provisions of law authorizing a tenant to terminate a tenancy when the tenant or a household member is a victim of domestic violence, sexual assault, stalking, human trafficking, or elder and dependent adult abuse to also include a crime that caused bodily injury or death, the exhibition, drawing, brandishing, or use of a firearm or other deadly weapon or instrument, or that included the use of force or threat of force against the victim, and expands these provisions to apply if an immediate family member of the tenant is a victim of an eligible crime. This bill also authorizes a city attorney, district attorney, or county counsel to bring suit to enjoin and remedy violations of the Tenant Protection Act of 2019 (AB 1482, Chiu, Chapter 597, Statutes of 2019; hereafter the Act), and authorizes the legislative body of a local government to designate a local agency to investigate and enforce violations of the Act, as provided.

The SCRHA opposes this bill and, thanks to the work of SCRHA, the bill no longer includes fines of up to $20,000 for violations of AB 1482, the state’s rent cap and eviction-control law. With the penalty provisions included, Senator Durazo was unable to get the votes necessary to move the bill off the Senate floor. Only after agreeing to remove the fine provisions did SB 1190 secure passage. The bill will be amended in the Assembly.

AB 1436 (Chiu)

Possibly one of the more egregious bills introduced this year; it is a rent cancellation bill in the guise of rent assistance. The bill would force landlords to defer rents for possibly years on end for tenants who’ve been unable — or unwilling — to pay for housing during the COVID-19 pandemic.

We understand that tenants who have been truly affected by the COVID-19 virus need protections. In fact, they have already been granted extensive protections under federal law, state executive orders, judicial rules, and local laws, not to mention the countless number of owners who have deferred and reduced rent to help their tenants without a legal requirement to do so. AB 1436, however, is a one-sided, unreasonable, and unconstitutional proposal that will devastate the rental housing industry - It is not a fair and balanced approach for rental property owners and tenants in these unprecedented times. The bill does not provide for, nor is it tied to, any funding to help tenants and landlords with the unpaid rent.

Because AB 1436 is linked to state and local emergency proclamations, there is no definitive time that an owner – residential or commercial – can expect to receive any unpaid rent. Historically, both the state and local governments have gone years without lifting their declared states of emergency. Under Government Code Section 8629, an emergency proclamation does not end until terminated by the Governor, and it is typically years before those proclamations are terminated. This is evidenced by Governor Newsom’s December 29, 2019, Proclamation terminating States of Emergency that ended more than 60 emergency proclamations, some dating back to 2011.

With no rent payments to cover the mortgage and other expenses at the property, including employee salaries, there is no question that rental property owners will lose their single-family rentals and multifamily buildings to foreclosure. In many cases, the rent payments are an owner’s only source of income. In fact, this bill does not allow for the collection of unpaid rent that happens during the declared state of emergency until 15-months after the end of the declared emergency.

SB 1410 (Caballero/Bradford)

Establishes the initial framework for a tax credit program for rental property owners who have experienced a rent loss that accrued during the state of emergency declared by the Governor related to COVID-19. 

Some of the amendments that are imperative for this bill include, but are not limited to, the following:

• The language suggests that entering the agreement is optional, but the bill also seems to suggest that offering this agreement is mandatory if the owner wants to have the power to terminate the tenancy of those tenants who have created problems at the property. Tenants who are destroying the property or who are disturbing other tenants may not rise to the level of a “public health and safety threat” as indicated in the bill. The bill needs to be specifically clarified that it is voluntary and terminating tenancy is not predicated on participation.
• The agreement should only be available for tenants who can provide documentation showing a financial impact from COVID-19.
• If the tenant rejects the agreement, SB 1410 requires the landlord to obtain a signed acknowledgement of receipt from the tenant. It seems likely the tenant would refuse to sign that too; in which case the landlord does not get the benefit of the SB 1410 tax credit and would also be prohibited from terminating the tenancies of those tenants who refuse to cooperate.
• The tax credit cannot be applied until the taxable year beginning on or after January 1, 2024. Waiting that long will not be an option for many small property owners. And even if there is a market for selling the tax credits, the 2 percent increase is certainly not realistic.

These are but a few of the bill we are continuing to work on before the session ends on August 31.