SACRAMENTO, Calif. (CN) — With a statewide moratorium on eviction and foreclosure cases set to expire Tuesday, the California Legislature passed an eleventh-hour tenant protection bill lawmakers hope will avert a crisis as they press for more economic relief from the federal government.
Assembly Bill 3088 — which Governor Gavin Newsom signed into law late Monday — is the product of feverish negotiations between Newsom, legislators, and landlord groups critical of an earlier measure by Assembly member David Chiu, D-San Francisco, that they said would encourage tenants to withhold rent without proof of financial hardship resulting from the Covid-19 pandemic.
That bill is off the table, along with a Senate proposal more favorable to larger landlords that doles out sellable tax credits to cover rent losses while suspending evictions for tenants who have worked out agreements to repay rent in installments.
Having moved off the Senate floor by a vote of 33-2 Monday afternoon, AB 3088 made it over its last legislative hurdle by a within two hours of the midnight deadline.
The compromise measure staves off evictions through Jan. 31, 2021, as long as tenants pay 25% of their rent from Sept. 1 onward. Landlords will not be able to evict tenants for unpaid rent from March through August 2020, though they can sue tenants in small claims court for the debt starting March 1, 2021.
Tenants will have to swear to pandemic-related financial distress under penalty of perjury, and “high-income” renters making at least 130% of a county’s median income will have to submit actual proof they lost their job or income.
While AB 3088 does not immunize landlords from foreclosures or force banks to offer mortgage forbearance, it extends protections embodied in the California Homeowner Bill of Rights to owners of properties with four units or less.
The California Apartment Association, a lobbying group representing landlords, hailed AB 3088 as a ‘more sensible approach” to Chiu’s AB 1436.
“We’ve been working around the clock with lawmakers and the governor’s office to make sure the legislation is fair and balanced,” Debra Carlton, the group’s executive vice president of state public affairs said in a statement Friday after the bill’s unveiling. “Our goal has been to provide both help for tenants who are truly affected by Covid-19, as well as compensation for landlords, especially mom and pop owners, at risk of foreclosure after several months without rent payments.”
Landlords will also be able to evict problem tenants, which was a major sticking point for Carlton’s group. In an interview this month, she noted, “We’ve had cases just not move forward where a tenant threatened to behead a landlord, where tenants were throwing huge parties and inviting tons of other people. There are tenants who are using their units as Airbnb and not paying the landlord.”
The new law, dubbed the Tenant, Homeowner, and Small Landlord Relief and Stabilization Act of 2020, preempts tenant-protection ordinances passed by cities throughout California. Though the bill grandfathers in municipal ordinances already enacted, it does not allow cities to extend them after they expire.
Lawmakers have called it an imperfect and temporary fix as thousands of California renters find themselves falling behind on rent. The UCLA Lewis Center for Regional Policy Studies and the USC Lusk Center for Real Estate released a report Friday forecasting a desperate situation in Los Angeles County, where some 40,000 households — about 2% of renters — have not paid rent in three months.
“This bill is far from perfect,” Chiu said Monday evening. “Many tenant protections I fought for in AB 1436 are not in this bill, but we must put in temporary protections to get us through the next five months.”
He called it “the least we can do,” just before it cleared the Assembly floor by a 56-8 vote.
Negotiations came down to the wire as emergency rules suspending eviction and foreclosure proceedings sunset on Sept. 1.
In urging colleagues for an “aye” vote on the Senate floor Monday, Senator Anna Caballero, a Democrat representing Salinas and the Central Valley, echoed Chiu’s characterization of the bill as a stop-gap measure.
“AB 3088 is a temporary solution. If we all had a crystal ball we’d know when the Covid pandemic is going to end, what’s going to happen to the economy, when people are going to get back to work,” she said. “None of that is possible at this time.” She said once the bill is signed by Newsom, a working group will convene to “look at ways to direct future federal and state money to tenants, landlords, and homeowners.”
Co-author Senator Steven Bradford, a Democrat from Los Angeles said, “This measure is simply a six-month bridge for both tenants and landlords. This bill is no end all, be all to the crisis. It will keep tenants and landlords viable and afloat for the next six months.”
Republican Senator Andreas Borgeas from Fresno said he has serious concerns about the bill’s overall lack of “legal teeth” in helping landlords deal with creditors.
“There’s probably going to be contract, private property, and federal preemption issues. This thing is fraught with problems,” he said.
He reluctantly voted for the bill with the admonition that eviction relief not be extended and that fellow lawmakers create a tax credit for landlords.
“This ends in January. It cannot go beyond that,” Borgeas said. “I know there are those who want this to go beyond the pandemic or until everyone is economically back on their feet but that isn’t sustainable.”