Assembly Panel OKs Measure Weakening Local Rent Controls

A bill that could weaken some local rent controls--such as Santa Monica’s--has been approved by the Assembly Housing and Community Development Committee in what was the first major skirmish between landlords and tenants in the Legislature this year.

The measure, introduced by Assemblyman Jim Costa (D-Fresno), was passed on a 6-3 vote on Monday and sent to the Assembly floor. It would allow landlords and owners of mobile home parks to raise rents without limit when vacancies occur and would exempt single-family and new home construction from rent controls.

A similar proposal cleared the Assembly last year but stalled in the Senate, where President Pro Tem David A. Roberti (D-Los Angeles) has sided with pro-rent control forces.

This year, however, landlords, developers and real estate groups are also waging their fight to weaken local rent controls on several other fronts.

In recent weeks, the groups have urged lawmakers to amend a number of housing appropriation bills to ban cities with rent controls from receiving millions of dollars in state housing funds.

Though they have been unsuccessful, they hope they will be able to influence Gov. George Deukmejian, a rent control foe, if the bills reach his desk.

Real estate groups and developers also have begun pushing for a proposal to overturn a state Supreme Court decision that upheld a key part of Santa Monica’s ordinance that bars landlords from getting out of the rental business by demolishing their apartments.

A hearing on the measure, carried by Sen. Jim Ellis (R-San Diego), was scheduled for the Senate Judiciary Committee on Tuesday but was postponed for two weeks.

Joe Pasqualini, lobbyist for a tenant group called California Housing Action and Information Network, said the landlords’ vigorous lobbying this year may make it “more difficult” to defeat the Costa measure.

Other opponents of the Costa bill--including the cities of Santa Monica and West Hollywood, the California Teamsters Public Affairs Council and the League of California Cities--have organized their own lobbying campaign.

Many were in the standing-room-only crowd of 300 at Monday’s hearing on the Costa bill.

Besides real estate agents, the bill is backed by the state Department of Housing and Community Development, California Apartment Assn. and the California Building Industry Assn.

About 60 cities in the state have some form of rent control. Most, including Los Angeles, allow rents to increase between vacancies.

Costa’s bill would prohibit rent controls on new units or single-family homes--which are already excluded under most local ordinances.

Key Provision

The bill’s chief feature--known as vacancy decontrol--would allow landlords to raise rents without limit between vacancies as long as the previous tenant was not evicted.

Only a handful of cities, including Santa Monica and Berkeley, prohibit increases between vacancies. The West Hollywood City Council is considering a provision that would limit increases between vacancies to one 10% increase in a two-year period.

Vacancy decontrol “separates reasonable rent control ordinances from what I refer to as radical rent control ordinances,” Costa said at the hearing. He said that in rent control cities such as Santa Monica “landlords oftentimes face hostile rent boards more interested in securing tenants’ votes . . . than allowing landlords an adequate enough return (on their investments).”

“Even in non-rent control areas, though, we find that lenders and investors often refuse to finance new rental construction because they fear that future rent control would potentially harm their investment,” Costa said.

He stressed that his intent was not to abolish rent controls but to establish the first statewide rent-control standards for cities.

Critics argued that Costa’s measure would diminish the ability of cities to deal with their own housing problems.

Assemblyman Gray Davis (D-Los Angeles), chairman of the Housing Committee, summed up this view, saying, “I’m for local control, and there’s nothing more local than a roof over your head.”

Santa Monica City Councilman Jim Conn agreed, telling the committee, “This bill will remove rent control from local control.”

Conn went on to say that “the idea that housing construction in other parts of California is affected by what goes on in Berkeley or Santa Monica is entirely fallacious.”

Assemblyman Tom Bates (D-Oakland), whose district includes Berkeley, sided with the critics of the measure.

“What we’re talking about is an incredible grab by (a) certain amount of landlords to enhance their own wallets and to enhance their own profits at the expense of people who have lived in (their) dwellings,” Bates said.

He attempted to amend Costa’s measure so that it would affect only new housing construction, but his effort failed.

Costa’s measure was approved with Assemblymen Davis, Bates and Gerald Eaves (D-Rialto) voting against it.

Exclusions Sought

In addition to supporting the Costa bill, the California Housing Council Inc., representing major developers and builders, and the California Assn. of Realtors have in recent weeks asked that cities with rent controls be excluded from receiving state housing funds.

Ronald M. Kingston, lobbyist for the real estate group, said Tuesday he has told members of the Senate Housing and Urban Affairs Committee that his group opposed a measure to appropriate $56.5 million for various housing programs, including $20 million for a statewide rental housing construction program.

The bill, carried by Sen. Leroy Greene (D-Sacramento), was approved by the committee on a 4-1 vote on Tuesday and sent to the Appropriations Committee.

Kingston was undeterred, adding that by seeking amendments to appropriations bills, his group is sending a signal to cities and counties with rent control that they “are only looking at one side of the economic equation” and not doing enough to allow construction of new housing.

However, one legislative housing consultant said that if the effort is successful it would deprive the cities with the worst housing problems, such as Los Angeles, of state funds.

Those backing amendments to the appropriations bills say they are asking for the funds to be withheld from rent-control cities precisely as a way of reaching a comprehensive solution to the shortage of rental housing.

In Response to Call

Steve Carlson, the Housing Council’s executive director, said his group, with the help of investment bankers, is trying to find a way to finance low-income housing. He said it was in response to a call by Roberti that developers and the state make a commitment to build new apartments for low- and moderate-income groups.

The third part of the assault on rent controls is the measure introduced by Ellis at the request of real estate agents.

The purpose of the bill is to preempt local ordinances, such as Santa Monica’s, which prohibit landlords from removing rental units from the marketplace.

Last October the Supreme Court by a 5-2 vote ruled that the provision did not violate Santa Monica landlord Jerome J. Nash’s constitutional property rights.

In addition to real estate agents, the Ellis bill is backed by the California Chamber of Commerce, Western Mobilehome Assn. and California Mortgage Bankers Assn. They argue that property owners should have the right to conduct their own affairs and cease renting units without restrictions when they no longer want to be landlords.

Opponents, including the League of California Cities and the City of Santa Monica, assert the same “local-control” argument as they have on the Costa bill. They contend that local communities should be able to retain the right to enact local ordinances to deal with local needs.