Newsom and top California lawmakers strike a deal to cap rent increases

Millions of Californians would receive new protections against large rent increases under an agreement announced late Friday by Gov. Gavin Newsom and legislative leaders.

The deal, which needs the approval of the Legislature in the next two weeks, would cap rent increases statewide at 5% plus inflation per year for the next decade, according to Newsom’s office. The legislation, Assembly Bill 1482, would also include a provision to prevent some evictions without landlords first providing a reason.

“We are pleased to announce we have come to an agreement on a series of amendments to AB 1482 that would create strong renter protections,” said a statement from Newsom, Senate leader Toni Atkins (D-San Diego), Assembly Speaker Anthony Rendon (D-Lakewood) and bill author Assemblyman David Chiu (D-San Francisco). “The bill will protect millions of renters from rent-gouging and evictions and build on the Legislature’s work this year to address our broader housing crisis.”

The agreement represents a dramatic shift in the debate over whether tenants would see any new limits on rent increases this year, and represents a political risk for Newsom as he backs a highly visible bill not assured of passage.

Prior to Friday’s announcement, the California Assn. of Realtors, which holds significant sway at the Capitol, had agreed not to oppose a weaker version of the legislation that would have capped rents at a higher percentage for a shorter time. The new bill in many ways reverts to an earlier version fiercely opposed by the Realtor group. The organization said after the deal was announced that it would lobby lawmakers to vote against the bill.

The bill, Californian Assn. of Realtors President Jared Martin said in a statement, “will not incentivize production of rental housing or help more people find an affordable place to live. It discourages new rental housing, which is why CAR, representing more than 200,000 real estate agents and brokers across California, strongly opposes it.”

Three weeks ago, Newsom told reporters he wanted stricter caps than what was in the bill and he and his advisers then intensified efforts to negotiate, the governor’s office said. Previously, the California Apartment Assn., which represents landlords in the state, had opposed the bill. Friday’s deal includes an agreement by the organization to no longer do so.

“We applaud the governor for temporarily finding a solution for tenants,” said Deb Carlton, the association’s senior vice president. “Now we must get serious about moving forward on production, which is the only way we address our housing crisis.”

The proposed rent caps, which have yet to be incorporated into the bill, would not apply to properties built in the last 15 years, nor would they apply to single-family home rentals unless they were owned by large corporations.

The bill would not affect apartments already under rent control, such as those in Los Angeles and San Francisco, but they would extend caps to apartments in those cities not covered by the existing local measures. The bill’s anti-eviction protections, which would limit evictions to lease violations or require relocation assistance, would kick in after a tenant has lived in an apartment for a year.

Newsom’s striking of a rent cap deal comes less than a year after California voters decisively rejected a ballot measure that would have led to the expansion of local rent control policies statewide, which would have likely resulted in tighter restrictions in some cities than those now offered by AB 1482.

Newsom opposed last year’s ballot initiative, but after taking office in January said he would sign a package of rent stabilization bills if the Legislature passed them. The Los Angeles-based AIDS Healthcare Foundation, which financed last year’s rent control initiative, is currently collecting signatures to place a similar measure on the Nov. 2020 ballot.

Michael Weinstein, the foundation’s president, has said he’d pull the initiative if legislators agree to strong renter protections. But Weinstein has criticized AB 1482 as too weak since it was first introduced. In an interview Friday, Weinstein said the revised version of the bill was an improvement, but remained committed to his own measure because the cap was still too high.

“It’s a benefit that more people will be covered by some form of [rent] control, but it won’t stop the homeless crisis which is being caused by people losing their homes or being evicted,” Weinstein said. “It won’t advantage working people and people on fixed incomes who need affordable housing.”

Despite the backing of the governor and legislative leadership, AB 1482 still faces an uncertain path to clear both houses of the Legislature, which must occur by Sept. 13. Most major tenant legislation has already been defeated this year, and AB 1482 only advanced out of the Assembly in the spring when Chiu agreed to weaken it at the Realtors’ behest.

Tenant organizations that were initially behind the legislation said they supported the deal announced Friday. But they noted the measure’s ultimate approval wasn’t assured.

“We appreciate the leadership of Gov. Newsom,” said Christina Livingston, executive director of the Alliance of Californians for Community Empowerment. “There is still work to be done to pass this legislation and give tenants the protection that they need.”