Existing law establishes the Department of Housing and Community Development and requires, among other things, that it update and provide a revision of the California Statewide Housing Plan to the Legislature every 4 years, as provided.

This bill, no later than January 1, 2021, would require the department to develop and publish on its Internet Web site, and to annually update, a guide to all state laws pertaining to landlords and the landlord-tenant relationship. The bill would also require the department to survey each city in this state to determine which cities, if any, provide resources or programs to inform landlords of their legal rights and obligations and to post on its Internet Web site a list of those cities which, in the judgment of the department, have the most robust resources and programs.

Existing law requires the department to administer, among other housing programs, the California Emergency Solutions and Housing Program. Under that program, the department allocates grants to administrative entities, as defined, to be used for specified eligible activities, including rental assistance and housing relocation and stabilization services to ensure housing affordability to people experiencing homelessness or at risk of homelessness.

This bill would appropriate an unspecified sum from the General Fund to the department, to be used to provide statewide competitive grants for rental assistance under the California Emergency Solutions and Housing Program, as provided. The bill would also establish the Homelessness Prevention and Legal Aid Fund and require moneys in the fund to be used, upon appropriation, to provide legal aid to tenants facing eviction or displacement in the form of competitive grants awarded by the department, as provided.

Date of Hearing: June 25, 2019

ASSEMBLY COMMITTEE ON JUDICIARY

Mark Stone, Chair

SBPCA Bill Id:SB 18

Author:(Skinner) – As Amended Ver:May 21, 2019

PROPOSED CONSENT

SENATE VOTE: 38-0

SUBJECT: Keep Californians Housed Act

KEY ISSUE: SHOULD THE SUNSET DATE BE LIFTED ON A REQUIREMENT THAT REQUIRES A TENANT TO RECEIVE AT LEAST 90 DAYS’ WRITTEN NOTICE THAT THEIR TENANCY IS BEING TERMINATED AFTER A LANDLORD LOSES OWNERSHIP OF RESIDENTIAL RENTAL PROPERTY IN A FORECLOSURE SALE?

SYNOPSIS

This non-controversial author-sponsored bill would eliminate the sunset on a statute that gives all tenants who reside in a residential rental property which is sold at foreclosure sale at least 90 days’ notice that they must terminate their tenancies.

Federal law, in the form of the PTFA, is nearly as protective of tenants whose landlords are foreclosed on as is California Code of Civil Procedure Section 1161b, which is set to sunset at the end of 2019. However, there is a subtle difference between the two laws. If this bill were not enacted, tenants in some situations would be entitled to 30 days’, rather than 90 days’, notice to terminate their tenancies. Therefore, without this bill certain groups of tenants would receive only 30 days’ notice that they must terminate their tenancies. The bill has no opposition on file.

SUMMARY: Removes the sunset on a state law which provides that residential tenants, whose landlord loses ownership of their rental property as a result of a foreclosure sale, must be given at least 90 days’ notice before their tenancy can be terminated. Specifically, this bill:

1. Makes the following legislative findings and declarations:
   1. “California is experiencing a rental housing crisis. According to analysis by the National Low Income Housing Coalition, California has only 22 affordable and available rental homes for every 100 extremely low income households.”
   2. “Due in part to lack of supply, California cities have some of the highest rents in the nation. San Francisco’s rent is the most expensive in the country, averaging $3,300 per month for a one-bedroom unit, and San Jose, Oakland, Los Angeles, and Anaheim are all in the top 10 for highest rents in the nation.”
   3. “About 29 percent of California renters spend more than one-half of their income on rent, which can make it difficult for families to afford basic items like food, clothing, transportation, and health care. In 2015, more than 4 in 10 households had housing costs that exceeded 30 percent of household income.”
   4. “The housing crisis harms families across California and has resulted in higher levels of homelessness or displacement of previously housed individuals and families. One-quarter of the nation’s homeless population, and half of the nation’s unsheltered homeless, now live in California.”
2. Deletes the December 31, 2019 sunset on certain protections for residential tenants whose landlord loses ownership of their rental property as a result of a foreclosure sale.

EXISTING STATE LAW:

1. Provides, through December 31, 2019, the following protections for residential tenants whose landlord loses ownership of their rental property as the result of a foreclosure sale:
   1. Tenants or subtenants with periodic rental agreements, such as month-to-month tenancies, must be given at least a 90-day written notice to terminate their tenancies. (Code of Civil Procedure Section 1161b (a).)
   2. Tenants or subtenants with fixed-term leases which were signed before the foreclosure sale may complete the terms of their leases. (Code of Civil Procedure Section 1161b (b.).)
   3. The lease protections in 1) b) do not apply, and the tenants or subtenants are entitled to only a 90-day written notice to terminate their tenancies, if any of the following is true:
      1. The purchaser of the foreclosed-on property will occupy the property as the purchaser’s principal residence;
      2. The tenant or subtenant is the borrower who was foreclosed on, or that borrower’s child, spouse, or parent;
      3. The lease was not the result of an arms’ length transaction; or
      4. The lease requires the payment of substantially less than the fair market rent for the property, unless the property’s rent is being reduced by a local, state, or federal subsidy. (Code of Civil Procedure Section 1161b (b) (1)-(4).)
   4. Places the burden of proving c i) – c iv) on the purchaser of the foreclosed-on property. (Code of Civil Procedure Section 1161b (c).)
   5. Clarifies that the provisions of any local just cause eviction ordinances supersede the provisions of a) – c). (Code of Civil Procedure Section 1161b (e).)

EXISTING FEDERAL LAW:

1. Defines, under federal law, a tenancy or lease to be “bona fide” only if:
   1. The borrower who was foreclosed on, or that borrower’s child, spouse, or parent, was not a tenant;
   2. The tenancy or lease was the result of an arms-length transaction; and
   3. The tenancy or lease requires the tenant to pay rent that is not substantially less than fair market rent for the property, unless the property’s rent is reduced by a local, state, or federal subsidy. (12 U.S.C. Section 5220 note.)
2. Requires, under federal law, that if a residential real property is foreclosed on, that the successor-in-interest may only evict tenants from the property if the following requirements are met:
   1. If the tenants are renting the property under a bona fide lease entered into before title to the property transferred, those tenants may complete the term of their lease;
   2. If the conditions in 2) a) are satisfied, but the successor-in-interest will occupy the property as their primary residence, those tenants are entitled to a 90-day notice to terminate their tenancy; and
   3. If the tenants are renting the property under a bona fide periodic tenancy, such as a month-to-month rental, those tenants are entitled to a 90-day notice to terminate the tenancy. (Ibid.)
3. Provides that state or local law can provide longer time periods or additional protections beyond what is set out in 2). (Ibid.)

FISCAL EFFECT: As currently in print this bill is keyed non-fiscal.

COMMENTS: Eliminates the sunset on a provision that guarantees all tenants whose landlord is foreclosed on at least 90 days’ notice before they must vacate the rental property.

Background. For much of the 20th Century, California law provided that if a landlord defaulted on a loan secured by residential real property and was foreclosed on, the person who purchased that real property at foreclosure sale had the power to evict both the landlord and any tenants living there by serving them with a written three-day notice to quit the premises. This three-day notice was eventually extended to a 30-day notice. (Civil Code Section 1161a.)

Despite the increase to 30 days’ notice, this procedure was cruel to tenants, who likely had no knowledge of their landlord’s financial affairs not being in order, prior to being told they would have to vacate their homes.

The cruelty of this procedure was brought into sharp relief by the mass foreclosures of the Great Recession. Per the New York Times, “[T]housands of American families are losing their homes without ever missing a payment. They are renters in houses whose owners default on their mortgages—a large but little noticed class of casualties.” (Leland, As Owners Feel Mortgage Pain, So Do Renters, N.Y. Times (Nov. 18, 2007), available at https://www.nytimes.com/2007/11/18/us/18renters.html.) California tenants were particularly hard-hit by their landlords’ foreclosures, as our state had one of the highest foreclosure rates in the country. According to one study, at least 37 percent of homes in foreclosures were rentals and more than 200,000 California renters were directly affected by home foreclosures in 2009 alone. (Tenants Together, 2010 Report: California Renters in the Foreclosure Crisis (May 2010), available at http://www.tenantstogether.org/2010-report-california-renters-foreclosure-crisis.)

In an attempt to give tenants at least some relief, the Legislature enacted SB 1137 (Perata, Corbett, Machado, Chap. 69, Stats. 2008), an urgency measure which required purchasers of foreclosed-on properties to give tenants at least 60 days’ written notice to quit the premises. As originally enacted, SB 1137 established a January 1, 2013 sunset on these provisions.

The following year, President Obama signed into law the Protecting Tenants at Foreclosure Act (PTFA) which required purchasers of foreclosed-on properties to give most tenants at least 90 days’ notice to quite the premises. The PTFA eventually expired under its own terms on December 31, 2014.

As the foreclosure crisis continued, and with the sunsets of both the federal PTFA and SB 1137 looming, the Legislature enacted AB 2610 (Skinner, Chap. 562, Stats. 2012). This bill extended the notice period to tenants in foreclosed-on properties from 60 days to 90 days, and added provisions to cover residential leases that were similar to those in the PTFA. The provisions enacted by AB 2610 are scheduled to sunset at the end of 2019.

In the meantime, the federal PTFA was revived and made permanent as part of a bank deregulation bill (S. 2155) signed into law by President Trump on May 24, 2018.

Justification for the bill. According to the author:

Renters are usually the last to know of foreclosure, and many renters, including families with children, could end up homeless due to foreclosure evictions if notices are not given. SB 18 will continue an existing law to help Californians who reside in foreclosed properties by making the required 90-day foreclosure notice to quit permanent

If this bill does not pass, what would happen to tenants whose landlord are foreclosed on? Federal law, in the form of the PTFA, is nearly as protective of tenants whose landlords are foreclosed on as is California Code of Civil Procedure Section 1161b, which is set to sunset at the end of 2019. However, there is a subtle difference between the two laws. If SB 18 is not enacted, tenants in one of the following situations would be entitled to 30 days’, rather than 90 days’, notice to terminate their tenancies:

1. If the purchaser of foreclosed-on rental property intends to occupy the property as their principal residence;
2. If the tenant is the borrower who was foreclosed on, or that borrower’s child, spouse, or parent;
3. If the tenancy or lease was not the result of an arms’ length transaction (that is, there was collusion between the parties); or
4. The lease requires the payment of substantially less the fair market rent for the property, unless the property’s rent is reduced or subsidized by a local, state, or federal subsidy.

In other words, in California, all tenants caught up in a foreclosure situation are given at least 90 days’ notice before they are evicted, while the federal law leaves some tenants—those in the four situations outlined above—with less time to remain in the foreclosed-on property. By enacting SB 18, the Legislature can continue to give all tenants whose landlords are foreclosed on more time to find new housing than they would have under federal law.

REGISTERED SUPPORT / OPPOSITION:

Support

Alameda County Board of Supervisors

Building Industry Association of the Bay Area
California Apartment Association

California Community Builders
California YIMBY

Chan Zuckerberg Initiative
City of Alameda

City of Anaheim

City of Bakersfield

City of Long Beach

City of Los Angeles

City of Oakland

City of Riverside

City of Sacramento

City of San Diego

City of San Francisco

City of San Jose

City of Santa Ana

City of Stockton

City of West Hollywood

Facebook, Inc.

Hamilton Families
Los Angeles Homeless Services Authority

North Bay Leadership Council

Non-Profit Housing Association of Northern California

Regional Asthma Management and Prevention (RAMP)
Santa Monica Rent Control Board
Silicon Valley Community Foundation

Silicon Valley @ Home

San Francisco Bay Area Planning and Urban Research Association (SPUR)

TMG Partners

Working Partnerships USA

Opposition

None on file

Analysis Prepared by: Jith Meganathan / JUD. / (916) 319-2334

Date of Hearing: June 19, 2019

ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT

David Chiu, Chair

SBPCA Bill Id:SB 18

Author:(Skinner) – As Amended Ver:May 21, 2019

SENATE VOTE: 38-0

SUBJECT: Keep Californians Housed Act

SUMMARY: Deletes the sunset date on the requirement to provide a tenant 90 days’ written notice in the case of a foreclosure.

EXISTING LAW: Through December 31, 2019, the following protections for residential tenants when the landlord loses ownership of the rented property as a result of foreclosure:

1. A tenant with a month-to-month lease or other periodic tenancy at the time of the foreclosure sale shall be given 90 days’ notice prior to termination of the tenancy; and
2. A tenant with a fixed-term lease at the time of the foreclosure sale shall have the right to remain in possession for the duration of the lease and under the same terms and conditions, except that the fixed-term lease may be terminated after 90 days’ notice if:
   1. the new owner of the property will occupy the housing unit as a primary residence;
   2. the tenant is the borrower that was foreclosed on, or the borrower’s child, spouse, or parent;
   3. the fixed-term lease was not the result of an arms-length transaction; or
   4. the rent for the fixed-term lease is substantially below fair market and it is not that way on account of an applicable law or subsidy.

(Code of Civil Procedures Section 1161b)

FISCAL EFFECT: None. This bill is keyed non-fiscal by the Legislative Counsel.

COMMENTS:

Purpose of the Bill: According to the author, “Renters are usually the last to know of foreclosure, and many renters, including families with children, could end up homeless due to foreclosure evictions if notices are not given. SB 18 will continue an existing law to help Californians who reside in foreclosed properties by making the required 90-day foreclosure notice to quit permanent.”

Background: The collapse of the housing bubble in 2007 that led to the Great Recession of 2007-2009 also resulted in record-breaking numbers of foreclosures, peaking nationally at almost three million in 2011. By 2018, foreclosures had decreased by over 75 percent since their peak, but still exceeded 60,000 in California.

Leases and Foreclosures: When a landlord loses a rental property to foreclosure, the tenants are involuntary and sometime unwitting victims of the situation as well. Prior to 2012, a foreclosure sale in California effectively nullified all contracts associated with the foreclosed property, including any lease agreement. As a result, tenants caught up in a foreclosure frequently found themselves evicted on short notice.

In 2012, as part of its “Homeowners Bill of Rights” responding to the foreclosure crisis, California enacted new protections for tenants in foreclosure situations (AB 2610, Skinner, Chapter 562, Statutes of 2012). Specifically, such tenants received the right to at least 90 days’ notice about termination of their tenancy in all situations, and, in the case of tenants with fixed-term leases, the new law prevented the new, post-foreclosure owner of the property from kicking the tenants out prior to the expiration of the pre-existing lease term. Per AB 2610, these protections are set to sunset on January 1, 2020. This bill makes them permanent.

There is a federal counterpart to California’s protections for tenants caught up in a foreclosure and it was recently made permanent. (12 U.S.C. 5220 note.) Like the state law, the federal law provides tenants with fixed-term leases the chance to remain for the duration of their lease, regardless of an intervening foreclosure. As in the case of California’s law, under the federal law, tenants with month-to-month or other periodic leases still get at least 90 days’ notice before they can be forced to vacate. There is a subtle difference between the two laws, however. The federal law applies only to “bona fide” leases, meaning, in simplified terms, that they were negotiated without conflicts of interest, are not between family members, and not priced dramatically below the fair market rental value for similar properties in the area. In California, this requirement only applies to fixed-terms leases. In other words, in California, all tenants caught up in a foreclosure situation are given at least 90 days’ notice before they have to leave, while the federal law leaves some tenants unprotected.

Related Legislation:

AB 2610 (Skinner), Chapter 562, Statutes of 2012: Required, through December 31, 2019, a residential, post-foreclosure landlord to give any bona fide tenants, as defined, who were living at the property at the time of the foreclosure, at least 90 days’ notice before termination of a periodic lease (most commonly a month-to-month lease) and at least the remaining time on a fixed term lease (most commonly a one-year lease).

SB 1137 (Perata), Chapter 69, Statutes of 2008: required a residential, post-foreclosure landlord to give any tenants living at the property at the time of the foreclosure at least 60 days’ notice before terminating the tenancy.

Double-referred: This bill was also referred to the Assembly Committee on Judiciary where it will be heard should it pass out of this committee.

REGISTERED SUPPORT / OPPOSITION:

Support

Alameda County Board of Supervisors
California Apartment Association

California Community Builders
California YIMBY

Chan Zuckerberg Initiative
City of Alameda

City of Anaheim

City of Bakersfield

City of Long Beach

City of Los Angeles

City of Oakland

City of Riverside

City of Sacramento

City of San Diego

City of San Francisco

City of San José

City of Santa Ana

City of Stockton

Facebook

Hamilton Families
Los Angeles Homeless Services Authority

North Bay Leadership Council

Non-Profit Housing Association of Northern California

Regional Asthma Management and Prevention
Santa Monica Rent Control Board
Silicon Valley Community Foundation

TMG Partners

Working Partnerships, USA

Opposition

None on file.

Analysis Prepared by: Steve Wertheim / H. & C.D. / (916) 319-2085

 THIRD READING  

Bill No: SB 18

Author: Skinner (D), et al.

Amended: 5/21/19

Vote: 21

SENATE HOUSING COMMITTEE: 8-0, 4/2/19

AYES: Wiener, Caballero, Durazo, McGuire, Roth, Skinner, Umberg, Wieckowski

NO VOTE RECORDED: Morrell, Bates, Moorlach

SENATE JUDICIARY COMMITTEE: 7-2, 4/23/19

AYES: Jackson, Allen, Caballero, Monning, Stern, Umberg, Wieckowski

NOES: Borgeas, Jones

SENATE APPROPRIATIONS COMMITTEE: 4-2, 5/16/19

AYES: Portantino, Bradford, Hill, Wieckowski

NOES: Bates, Jones

SUBJECT: Keep Californians Housed Act

SOURCE: Author

DIGEST:

This bill deletes the sunset on the requirement of 90 days’ written notice to a renter in the case of a foreclosure.

ANALYSIS: Existing law provides, through December 31, 2019, the following protections for residential tenants when the landlord loses ownership of the rented property as a result of foreclosure:

1. A tenant with a month-to-month lease or other periodic tenancy at the time of the foreclosure sale shall be given 90 days’ notice prior to termination of the tenancy; and
2. A tenant with a fixed-term lease at the time of the foreclosure sale shall have the right to remain in possession for the duration of the lease and under the same terms and conditions, except that the fixed-term lease may be terminated after 90 days’ notice if:
   1. the new owner of the property will occupy the housing unit as a primary residence;
   2. the tenant is the borrower that was foreclosed on, or the borrower’s child, spouse, or parent;
   3. the fixed-term lease was not the result of an arms-length transaction; or
   4. the rent for the fixed-term lease is substantially below fair market and it is not that way on account of an applicable law or subsidy.

This bill deletes the December 31, 2019 sunset on the existing law provision requiring 90 days written notice to an affected renter in the case of a foreclosure.

Background

When a landlord loses a rental property to foreclosure, the tenants are involuntary and sometime unwitting victims of the situation as well. Prior to 2012, a foreclosure sale in California effectively nullified all contracts associated with the foreclosed property, including any lease agreement. As a result, tenants caught up in a foreclosure frequently found themselves evicted on short notice.

In 2012, as part of its “Homeowners Bill of Rights” responding to the foreclosure crisis, California enacted new protections for tenants in foreclosure situations. (AB 2610, Skinner, Chapter 562, Statutes of 2012). Specifically, such tenants received the right to at least 90 days’ notice about termination of their tenancy in all situations, and, in the case of tenants with fixed-term leases, the new law prevented the new, post-foreclosure owner of the property from kicking the tenants out prior to the expiration of the pre-existing lease term. These protections are set to sunset on January 1, 2020. This bill makes them permanent.

There is a federal counterpart to California’s protections for tenants caught up in a foreclosure and it was recently made permanent. (12 U.S.C. 5220 note.) Like the state law, the federal law provides tenants with fixed-term leases the chance to remain for the duration of their lease, regardless of an intervening foreclosure. As in the case of California’s law, under the federal law, tenants with month-to-month or other periodic leases still get at least 90 days’ notice before they can be forced to vacate. There is a subtle difference between the two laws, however. The federal law applies only to “bona fide” leases, meaning, in simplified terms, that they were negotiated without conflicts of interest, are not between family members, and not priced dramatically below the fair market rental value for similar properties in the area. In California, this requirement only applies to fixed-terms leases. In other words, in California, all tenants caught up in a foreclosure situation are given at least 90 days’ notice before they have to leave, while the federal law leaves some tenants unprotected.

Comments

1. Purpose of the bill. The author states that renters are usually the last to know of foreclosure, and many renters, including families with children, could end up homeless due to foreclosure evictions if notices are not given.  This bill will continue an existing law to help Californians who reside in foreclosed properties by making the required 90-day foreclosure notice to quit, permanent.
2. Appropriations amendments. The prior version of this bill also required the Department of Consumer Affairs (DCA) to develop and publish a landlord-tenant guide and provided an unspecified amount to the California Emergency Solutions and Housing Program (CESH) for rental assistance and legal aid to tenants. Author’s amendments in the Senate Appropriations Committee deleted the DCA provisions, and committee amendments removed the CESH provisions.

Related/Prior Legislation

AB 2610 (Skinner, Chapter 562, Statutes of 2012) required a residential, post-foreclosure landlord to give any bona fide tenants, as defined, who were living at the property at the time of the foreclosure, at least 90 days’ notice before termination of a periodic lease (most commonly a month-to-month lease) and at least the remaining time on a fixed term lease (most commonly a one-year lease).

SB 1137 (Perata, Chapter 69, Statutes of 2008) required a residential, post-foreclosure landlord to give any tenants living at the property at the time of the foreclosure at least 60 days’ notice before terminating the tenancy.

FISCAL EFFECT: Appropriation: No Fiscal Com.: No Local: No

According to the Senate Appropriations Committee, no state costs.

SUPPORT: (Verified 5/21/19)

Alliance of Californians for Community Empowerment

American Federation of State, County and Municipal Employees, AFL-CIO

American Planning Association, California Chapter

Anti-Eviction Mapping Project-Los Angeles

Basta, Inc.

Bay Area Legal Aid

Ben Tzedek Legal Services

Big City Mayors

Building Industry Association of the Bay Area

California Alliance for Retired Americans

California Community Builders

California Rural Legal Assistance Foundation

California Rural Legal Assistance, Inc.

California Teamsters Public Affairs Council

California YIMBY

Central California Legal Services

City of Alameda

City of Berkeley

City of East Palo Alto

City of Emeryville

City of Oakland

City of Santa Monica

City of West Hollywood

Community Legal Services in East Palo Alto

County of Los Angeles

Disability Rights Education and Defense Fund

EAH Housing

East Bay Community Law Center

East Bay for Everyone

East Bay Housing Organizations

Eden Housing

Emerald Fund

Enterprise Community Partners, Inc.

Facebook, Inc.

Habitat for Humanity East Bay/Silicon Valley

Hamilton Families

Housing Equality & Advocacy Resource Team

Housing Rights Center

Inner City Law Center 

Inquilinos Unidos (United Tenants)

Justice and Diversity Center of the Bar Association of San Francisco

LA Forward

Larkin Street Youth Services

Law Foundation of Silicon Valley

Legal Aid Foundation of Los Angeles

Legal Aid of Marin

Los Angeles Alliance for a New Economy

Los Angeles Community Action Network

National Housing Law Project 

Neighborhood Legal Services of Los Angeles County

Non-Profit Housing Association of Northern California

Northeast Local, Los Angeles Tenants Union

Oakland Chamber of Commerce

Pico California

Public Counsel

Related California

San Francisco Foundation

Silicon Valley at Home

Silicon Valley Community Foundation

South Bay YIMBY

SPUR

TMG Partners

Unite Here, Local 19

Venice Community Housing Corporation

Western Center on Law & Poverty, Inc.

Working Partnerships USA

OPPOSITION: (Verified 5/21/19)

California Apartment Association
Valley Industry and Commerce Association

ARGUMENTS IN SUPPORT: Proponents state that this bill will help stop homelessness before it starts by expanding state funding for pre-eviction interventions, rental assistance, and legal aid in order to help residents stay in their homes. Most landlords are represented by attorneys, but about 90% of tenants are forced to defend their cases without access to legal assistance. This bill also repeals the expiration of protections for tenants in foreclosed homes; these protections have been critical to buffering low-income communities and communities of color from the impacts of foreclosure.

ARGUMENTS IN OPPOSITION: The opposition arguments refer to the provisions that have been removed from this bill.

Prepared by: Erin Riches / HOUSING / (916) 651-4124

5/22/19 9:59:20

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2019 - 2020 Regular Session

SB 18 (Skinner) - Keep Californians Housed Act

Bill Summary:

SB 18 would delete the December 31, 2019 sunset on provisions that provide protections for tenants in possession of a property at the time that the property is sold in foreclosure, as specified.

The bill would also require the Department of Consumer Affairs (DCA) to publish a landlord-tenant law guide on its website by January 1, 2021, and provide an unspecified amount of funding to the Department of Housing and Community Development (HCD) for competitive grants awarded under the California Emergency Solutions and Housing (CESH) Program for rental assistance and legal aid to tenants, as specified.

*********** ANALYSIS ADDENDUM – SUSPENSE FILE ***********

The following information is revised to reflect amendments

adopted by the committee on May 16, 2019

Fiscal Impact:

No state costs.

Author Amendments:

• Strike out Section 3 of the bill, which would have required DCA to publish and regularly update a landlord-tenant law guide on its website.
• Add a co-author.

Committee Amendments:

• Strike out Section 5 of the bill, which would have provided an unspecified amount of funding to HCD for competitive grants awarded under the CESH Program for rental assistance and legal aid to tenants, as specified.

-- END --

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2019 - 2020 Regular Session

SB 18 (Skinner) - Keep Californians Housed Act

Bill Summary:

SB 18 would require the Department of Consumer Affairs (DCA) to publish a landlord-tenant law guide on its website by January 1, 2021, and provide an unspecified amount of funding to the Department of Housing and Community Development (HCD) for competitive grants awarded under the California Emergency Solutions and Housing (CESH) Program for rental assistance and legal aid to tenants, as specified.

Fiscal Impact:

• Cost pressures in the tens of millions to provide grant funding for rental assistance, mediation, and legal aid under the CESH Program. (General Fund)
  
• HCD estimates costs of approximately $1.3 million annually for 7.25 PY of staff to revise the program, complete contract management, make new awards to nonprofits and local governments, and monitor compliance. Staff notes that this estimate is subject to uncertainty, and actual costs and staffing needs would depend upon the amount appropriated to the program. (General Fund)
  
• One-time DCA costs of approximately $138,000 in staff time, and $7,500 in IT costs, to create, publish, and maintain a guide to state laws on landlord-tenant relationships on its website. Ongoing costs to update the guide biennially would be minor and absorbable. (General Fund)

Background:

Existing law, SB 850 (Budget and Fiscal Review Committee), Chap. 48/2018, established the CESH Program, which is administered by HCD to provide grant funds to eligible administrative entities (local agencies or nonprofits designated by a Continuum of Care) to assist persons who are experiencing or are at risk of homelessness. Grant funding may be used for the following purposes:

• Housing relocation and stabilization services, including rental assistance.
• Operating subsidies for permanent housing.
• Flexible housing subsidy funds for local programs that establish or support the provision of rental subsidies in permanent housing to assist homeless individuals and families.
• Operating support for emergency housing interventions, including navigation centers, street outreach services, and shelter diversion.
• Systems support for activities necessary to maintain a comprehensive homelessness services and housing delivery system.

The 2018-19 Budget Act provided one-time funding for the program, and HCD has issued two notices of funding availability for $53 million and $29 million, respectively.

Existing law, through December 31, 2019, requires that a tenant of a rental housing unit under a month-to-month lease at the time that the property is sold in foreclosure be given 90 days’ written notice prior to termination of the tenancy. These provisions also require that a tenant with a fixed-term lease at the time of the foreclosure sale shall have the right to remain in possession of the unit for the duration of the lease under the same terms and conditions, except that the lease may be terminated after 90 days’ written notice under specified conditions.

Existing law establishes DCA, whose mission is to “protect California consumers by providing a safe and fair marketplace through oversight, enforcement, and licensure of professions.” DCA oversees nearly 40 licensing and regulatory entities in various professions and occupations. Existing law requires the Director of DCA to provide for the establishment of a comprehensive library of books, documents, studies, and other materials relating to consumers and consumer problems. In 2012, DCA published California Tenants: A Guide to Residential Tenants’ and Landlords’ Rights and Responsbilities which serves as a resource to both landlords and tenants for avoiding and navigating disputes.

Proposed Law:

SB 18 would do the following:

• Eliminate the December 31, 2019 sunset on provisions that provide protections for tenants in possession of a property at the time that the property is sold in foreclosure, as specified.
• Require DCA to publish on its website an updated guide to all state laws pertaining to landlords and the landlord-tenant relationship by January 1, 2021, and biennially thereafter. CDA must include a template for cities and counties to add information on local ordinances regulating the landlord-tenant relationship, and make the guide and template available to cities and counties, as specified.
• Make an unspecified amount of funding available, upon appropriation by the Legislature to HCD for competitive grants to administrative entities through the CESH Program, and specify that these funds must supplement, and not supplant other funding provided under the program. Grant funds may be used for the following purposes:
  • Rental assistance, including back rent, prospective rent, or move-out or move-in costs to ensure housing affordability, as specified.
  • Mediation between landlords and tenants facing termination of tenancy or eviction.
  • Legal assistance for tenants provided through subcontract to a qualified legal aid agency, as specified.
    
• Specify that no more than 10% of grant funds may be used for administrative costs.

Related Legislation:

SB 850 (Budget and Fiscal Review Committee), Chap. 48/2018, created the CESH Program and dedicated 50% of first year revenues generated by specified fees in the Building Homes and Jobs Act Trust Fund for five-year grants to assist persons who are homeless or at risk of homelessness.

Staff Comments:

The Governor’s May Revision for the 2019-20 Budget proposes $1 billion in state support to prevent and mitigate homelessness as follows:

• $650 million to local governments for homeless emergency aid.
• $120 million for expanded Whole Person Care pilots, as specified.
• $150 million for strategies to address the shortage of mental health professionals in the public mental health system.
• $25 million for Supplemental Security Income advocacy.
• $40 million for student rapid rehousing in state University systems.
• $20 million in legal for eviction prevention.

Staff notes that the bill does not specify the amount of funding that would be available for the CESH Program, upon appropriation by the Legislature. Staff assumes that resources of over $50 million would be necessary to provide adequate grant funding.

-- END --

SENATE JUDICIARY COMMITTEE

Senator Hannah-Beth Jackson, Chair

2019-2020 Regular Session

Bill No: SB 18 (Author:Skinner)

Version: April 11, 2019

Hearing Date: April 23, 2019

Fiscal: Yes

Urgency: No

Consultant: TSG

SUBJECT

Keep Californians Housed Act

DIGEST

This bill proposes a combination of measures intended to help California tenants navigate the housing crisis. In broad strokes, the bill: (1) requires the regular publication of a landlord-tenant legal guide; (2) makes permanent the existing state law protections for tenants whose landlord goes into foreclosure; and (3) provides an unspecified amount of funding for rental assistance and legal aid to tenants.

EXECUTIVE SUMMARY

California’s housing crisis has hit tenants hard. With other bills to pay as well, many tenants can scarcely afford the rent, and average rental prices continue to rise faster than average incomes. Evictions are routine across the state. Homelessness is increasingly pervasive. This bill seeks to alleviate some of the challenges that California tenants face through three separate components. First, the bill aims to increase awareness about the rights and obligations associated with rental housing by directing the state Department of Consumer Affairs (DCA) to publish an updated guide to landlord-tenant law and make it available on its website. Second, the bill makes permanent the protections that the Homeowner Bill of Rights created for tenants whose landlords go into foreclosure. Finally, the bill directs the Housing and Community Development Department (HCD) to administer grants for rental assistance and legal aid services to California tenants. The rental assistance would include help with paying back rent, prospective rent, and move-in and move-out costs. The legal aid services would include representation in eviction proceedings, mediation, pre-eviction legal help, and community legal education.

The bill is author-sponsored. It is supported by affordable housing advocates, legal aid providers, and anti-poverty groups. Opposition is from some landlords. The bill passed out of the Senate Housing Committee by a vote of 8-0.

PROPOSED CHANGES TO THE LAW

Existing federal law:

1. Provides the following protections for residential tenants with a bona fide lease, as defined, when their landlord loses ownership of the rented property as a result of foreclosure:
2. a tenant with a month-to-month lease or other periodic tenancy at the time of the foreclosure sale shall be given 90 days’ notice prior to termination of the tenancy; and
3. a tenant with a fixed-term lease at the time of the foreclosure sale shall have the right to remain in possession for the duration of the lease and under the same terms and conditions, except that the fixed-term lease may be terminated after 90 days’ notice if the new owner of the property will occupy the housing unit as a primary residence (12 U.S.C. 5220note.)

Existing state law:

1. Establishes the DCA, whose mission is to “protect California consumers by providing a safe and fair marketplace through oversight, enforcement, and licensure of professions.” DCA oversees nearly 40 licensing and regulatory entities in various professions and occupations.
2. Provides, through December 31, 2019, the following protections for residential tenants when the landlord loses ownership of the rented property as a result of foreclosure:
3. a tenant with a month-to-month lease or other periodic tenancy at the time of the foreclosure sale shall be given 90 days’ notice prior to termination of the tenancy; and
4. a tenant with a fixed-term lease at the time of the foreclosure sale shall have the right to remain in possession for the duration of the lease and under the same terms and conditions, except that the fixed-term lease may be terminated after 90 days’ notice if:
5. the new owner of the property will occupy the housing unit as a primary residence;
6. the tenant is the borrower that was foreclosed on, or the borrower’s child, spouse, or parent;
7. the fixed-term lease was not the result of an arms-length transaction; or
8. the rent for the fixed-term lease is substantially below fair market and it is not that way on account of an applicable law or subsidy. (Code Civ. Proc. § 1161b.)
9. Establishes the California Emergency Solutions and Housing Program (CESH) under (HCD), which funds a variety of activities to help individuals experiencing or at risk of homelessness. Specifically, CESH funds may be used for:
10. housing relocation and stabilization services, including rental assistance;
11. operating subsidies for permanent housing;
12. flexible housing subsidy funds;
13. operating support for emergency housing interventions; and
14. systems support for homelessness services and housing delivery systems.

4) Creates the Sargent Shriver Civil Counsel Act, which funds pilot projects that are partnerships between the courts and legal aid agencies to provide legal counsel and other services to low-income litigants in civil proceedings involving critical issues affecting basic human needs, such as evictions. (Gov. Code § 68650 et seq.)

This bill:

1. Makes a series of Legislative findings and declarations describing California’s current rental housing crisis and its negative impacts on California residents.
2. Requires DCA, by January 1, 2021, and biannually thereafter, to publish on its website an updated guide to all state laws pertaining to landlords and the landlord-tenant relationship. Requires this guide to include a template for cities and counties to add information on local landlord-tenant ordinances.
3. Requires DCA to survey all cities to determine which, if any, provide resources or programs to inform landlords of their legal rights and obligations. Requires DCA to post on its website a list of cities that, in DCA’s judgment, have the most robust resources and programs
4. Makes permanent the existing protections for tenants in possession of rental housing at the time of a foreclosure sale.
5. Provides an unspecified amount, upon appropriation by the Legislature, to HCD for competitive grants to administrative entities under CESH. These funds shall supplement, and not supplant, other CESH funds. Authorizes the following uses for these funds:
   1. rental assistance, including back rent, prospective rent, or move-out or move-in costs. Rental assistance shall not exceed 48 months per household, and rent payments shall not exceed two times the current US Department of Housing and Urban Development’s fair market rent for the local area; and
   2. legal aid, including representation in eviction proceedings, mediation between landlords and tenants, pre-eviction legal services, and legal education and awareness for communities.
6. Requires an administrative entity receiving these funds to spend no more than 10 percent of the allocation for administrative costs. Allows an administrative entity to share any funds available for administrative costs with a sub-recipient.

COMMENTS

1. Brief statistical overview of the housing crisis as it relates to tenants

According to HCD, over half of California tenants are rent burdened, meaning that they pay more than 30 percent of their monthly earnings in rent, and almost 29 percent of the state’s tenants are severely rent burdened, meaning that they spend more than 50 percent of their monthly income on rent.^[1] While the number of foreclosures in California has returned to “normal” after spiking during the Great Recession, tenants remain vulnerable to housing instability when the dwelling they rent suddenly changes hands due to foreclosure.^[2] High rates of foreclosure could easily return with another downturn in the economy. Meanwhile, approximately 165,000 tenants face eviction in California courts each year^[3] and there has been a sharp uptick in homelessness in the state in recent years.^[4] In short, though renting a home has always involved some burden and risk of being uprooted, the environment facing California’s tenants has rarely been as tough as it is today.

2. The three components of this bill

This bill seeks to provide at least some relief to California tenants in three distinct ways. First, it proposes to provide greater awareness of the legal rights and obligations associated with landlord-tenant relationships. Second, it would make permanent the existing protections for tenants caught up in a landlord’s foreclosure. Third, it would make an unspecified quantity of money available to HCD to be spent on rental assistance and legal aid services of tenants. Each of these elements of the bill is addressed in turn, below:

• 1. DCA legal guide for landlords and tenants

The bill calls for DCA to publish an updated guide to landlord-tenant laws on its website by January 1, 2021. DCA has published such a guide in the past.^[5] It hones in on the topics that are most relevant to landlords and tenants. It goes beyond delivering the legal formalities and provides handy, practical tips for avoiding and navigating frequent landlord-tenant disputes. Finally, it is written in an approachable style, devoid of legalese, while still giving footnoted citations to the relevant statutes and case law, so that it is useful to lawyer and layperson alike.

Nothing in the law obliges DCA to produce this guide, however, and it was last updated in 2012. Landlord-tenant law changes regularly, and the particular problems that most frequently crop up in landlord-tenant relationships vary over time. By mandating that DCA continue to produce the guide and update it every two years, this bill would ensure that this resource remains readily available and relevant into the future.

The bill also calls for DCA to “survey each city in this state” to determine which ones have resources and programs for landlords. DCA would then publish a list of the cities with the most robust resources and programs for landlords. The Committee may wish to inquire about the policy rationale behind publication of such a list. Perhaps it would prompt cities to compete with one another to provide more resources and programs to landlords. The likelihood of such competition seems tenuous, however.

• 1. Permanent protections for tenants caught in foreclosure scenarios

When a landlord loses a rental property to foreclosure, the tenants are involuntary and sometime unwitting victims of the situation as well. Prior to 2012, a foreclosure sale in California effectively nullified all contracts associated with the foreclosed property, including any lease agreement. As a result, tenants caught up in a foreclosure frequently found themselves evicted on short notice.

In 2012, as part of its “Homeowners Bill of Rights” responding to the foreclosure crisis, California enacted new protections for tenants in foreclosure situations. (AB 2610, Skinner, Ch. 562, Stats. 2012). Specifically, such tenants received the right to at least 90 days’ notice about termination of their tenancy in all situations, and, in the case of tenants with fixed-term leases, the new law prevented the new, post-foreclosure owner of the property from kicking the tenants out prior to the expiration of the pre-existing lease term. These protections are set to sunset on January 1, 2020. This bill would make them permanent.

There is a federal counterpart to California’s protections for tenants caught up in a foreclosure and it was recently made permanent. (12 U.S.C. 5220note.) Like the state law, the federal law provides tenants with fixed-term leases the chance to remain for the duration of their lease, regardless of an intervening foreclosure. As in the case of California’s law, under the federal law, tenants with month-to-month or other periodic leases still get at least 90 days’ notice before they can be forced to vacate. There is a subtle difference between the two laws, however. The federal law applies only to “bona fide” leases, meaning, in simplified terms, that they were negotiated without conflicts of interest, are not between family members, and not priced dramatically below the fair market rental value for similar properties in the area. In California, this requirement only applies to fixed-terms leases. In other words, in California, all tenants caught up in a foreclosure situation are given at least 90 days’ notice before they have to leave, while the federal law leaves some tenants unprotected.

• 1. Funding for rental assistance and legal aid services

Of the three components of the bill, this aspect is the least detailed at this stage. It proposes expenditures on rental assistance and legal aid services for tenants. The concept is premised on the idea that it is not just more humane, but also more fiscally responsible to invest in intervention before people become homeless, rather than wait and spend money dealing with the consequences of homelessness. Even setting aside the personal misery involved, government expenses for public health, sanitation, and emergency services associated with homelessness can add up quickly.

Beyond this basic concept, however, the bill says very little at this stage about what exactly the rental assistance and legal aid services would entail. In particular, the bill leaves blank the dollar amount that would be put towards these programs if the bill were enacted.

Three other aspects of the bill will need fleshing out as well. First, with regard to rental assistance, the bill indicates that help with back rent, prospective rent, and move-in and move-out costs will be available and that they will be distributed through the state’s network of Continuum of Care agencies, which are the entities charged with coordinating local homelessness assistance and prevention efforts. Other details are left unspecified. Who would be eligible for the rental assistance? Since the intention behind the bill is to keep Californians housed, presumably eligibility for the rental assistance should be limited to those who are currently homeless and those who are at imminent risk of becoming homeless. What might constitute “move-in and move-out costs?” Presumably things like security deposits would be included, but it is unclear whether the cost of renting a moving truck would be covered, for example. Could a landlord accept back rent from the program and then immediately terminate the tenancy anyway? The intent behind the bill suggests otherwise, but such a scenario remains possible as the bill is currently written.

Second, with regard to the legal services that would be provided under the bill, there is some detail, but it is limited. Legal representation in eviction proceedings would be included, as would mediation, pre-eviction legal help, and community legal education. Left unanswered is who would eligible to receive the services. Just low-income individuals? Or all income levels? Would landlords be eligible for legal assistance? To evict people? Relatedly, what organizations would provide the legal assistance? The most obvious answer is that existing, non-profit legal aid agencies would fill this role, but how would the agencies be selected? A nuance to this question is whether undocumented clients would be served. Some legal aid agencies in California accept funding from the federal Legal Services Corporation. Those that do cannot serve undocumented clients, except in narrow circumstances.

Finally, there is the question of coordination between the rental assistance and the legal aid services. Will the two programs operate independently? That would maximize flexibility, but could result in missed opportunities. Eviction defense attorneys have a much better chance of reaching settlements that keep tenants in their homes, for instance, if the deal involves the offer of some rental assistance money that helps to defray any balance due. Eviction cases move quickly, however, so disbursal of rental assistance would have to happen quickly, too, or it would not be very effective.

3. Proposed amendments

In order to address the issues set forth in the Comments, above, the author proposes to incorporate amendments into the bill that would:

• remove the requirement for DCA to survey cities about their programs for landlords; and
• provide additional details about the rental assistance and legal aid programs under the bill.

The specific amendments are as follows:

Amendment 1

On page 3, on line 29, strike out “(2)” and insert:

(b)

Amendment 2

On page 3, strike out lines 36 to 39, inclusive

Amendment 3

On page 4, strike out lines 1 and 2:

Amendment 4

On page 5, in line 8, strike out “homelessness and” and insert:

homelessness. The department shall also

Amendment 5

On page 5, in line 17, strike out “costs.” and insert:

costs to ensure housing affordability to people experiencing homelessness or at risk of homelessness. Nothing in this paragraph shall be construed to require an eviction lawsuit to be filed before a household may receive rental assistance.

Amendment 6

On page 5, in line 18, strike out “shall not exceed 48 months for each assisted”, strike out lines 19 to 24, inclusive and insert:

shall comply with the following:

(A) it shall not exceed 6 months for each assisted household in absence of good cause justifying a longer period, but in no event shall the period of assistance exceed 48 months;

(B) any rent payments shall not exceed two times the current HUD fair market rent for the local area, as determined pursuant to Part 888 of Title 24 of the Code of Federal Regulations;

(C) move out or move-in costs shall include, but are not limited to:

(i) rental of moving equipment;

(ii) payment of security deposits; or

(iii) payment of deposits or fees to establish utility services.

(2) mediation between landlords and tenants facing termination of tenancy or eviction;

(3) Legal assistance provided through subcontract to a qualified legal aid agency, as defined by subdivision (a) of Section 6213 of the Business and Professions Code, as follows, for tenants whose household income falls at or below 200 percent of the federal poverty level:

(A) pre-eviction legal services, community legal education, and representation in eviction proceedings. In awarding subcontracts pursuant to this paragraph, the administrative entity shall give preference to qualified legal aid agencies that serve clients regardless of immigration or citizenship status.

Amendment 7

On page 5, in line 26, strike out “that” and insert:

that:

(1)

Amendment 8

On page 5, in line 27, strike out “assistance.” and insert:

assistance; and

(2) it will ensure the immediate disbursal of rental assistance through the qualified legal aid agency for purposes of executing or carrying out the terms of settlement agreements that will keep the tenant housed.

4. Arguments in support of the bill

According to the author:

Skyrocketing rents and stagnant wages have severely squeezed many households, leaving over a quarter of California renters to spend more than half of their income on rent alone.

The unaffordability of modest rental homes has resulted in a wave of homelessness among the working poor of California, with thousands of individuals and families facing first time homelessness. Once evicted, the cycle of homelessness can be difficult and expensive to break. Losing one’s home can set off a chain reaction leading to job loss, negative health impacts and more, which make it even harder to secure new housing.

State and local governments can save a significant amount of money currently spent on homelessness, and save thousands of families from the trauma of homelessness, by simply intervening early – through emergency rental assistance and legal aid – to help people stay in their homes.

In support, the mayors of California’s thirteen largest cities write:

Evidence shows that a modest upstream investment for someone experiencing a housing crisis, on average less than $3000 per recipient and sometimes only a few hundred dollars, can keep someone housed and be a much more cost-effective intervention than providing the shelter and services to re-establish stability once they have been forced onto the streets. Once evicted or unable to pay rent to sustain tenancy, the cycle of homelessness can be difficult and expensive to break. Losing one’s home can set off a tragic chain reaction leading to job loss, family separation, negative health and other impacts, which make it even harder to secure new housing and regain economic and personal stability.

In further support of the bill, Neighborhood Legal Services of Los Angeles writes:

Evidence from early efforts to implement a right to counsel in eviction cases bears […] out […] such interventions not only keep people in their homes but also deter eviction filings in the first place. […] No one should face such consequences rendered through such a complex system without legal help. The time has come for the state legislature to extend the right to counsel to Californians facing involuntary removal from their home.

5. Arguments in opposition to the bill

In opposition to the bill unless amended, a coalition of four regional rental housing associations writes:

The bill offers valuable assistance to rental property tenants in increased education and financial support. Much of the bill would greatly advance the interests of rental property owners and their tenants. However, the bill would also provide free legal representation for tenants facing eviction, which, in most instances, would be for failure to pay rent. This provision would exacerbate the losses suffered by rental property owners when rental units fail to produce income for extended periods, thereby creating a disincentive to own rental property and, concomitantly, making the crisis in affordable housing even worse.

SUPPORT

Alliance of Californians for Community Empowerment

American Federation of State, County and Municipal Employees, AFL-CIO

American Planning Association, California Chapter

Anti-Eviction Mapping Project-Los Angeles

Rusty Bailey, Mayor, City of Riverside

BASTA, Inc.

Bay Area Legal Aid

Bet Tzedek Legal Services

London Breed, Mayor, City of San Francisco

Building Industry Association of the Bay Area

California Alliance for Retired Americans

California Community Builders

California Rural Legal Assistance Foundation

California Rural Legal Assistance, Inc.

California Teamsters Public Affairs Council

California YIMBY

Central California Legal Services

Community Legal Services in East Palo Alto

Disability Rights Education and Defense Fund

East Bay Community Law Center

East Bay for Everyone

Eden Housing

City of Emeryville

Enterprise Community Partners

Facebook, Inc.

Kevin Falconer, Mayor, City of San Diego

Eric Garcetti, Mayor, City of Los Angeles

Robert Garcia, Mayor, City of Long Beach

Karen Goh, Mayor, City of Bakersfield

Habitat for Humanity East Bay/Silicon Valley

Housing Equality & Advocacy Resource Team

Inner City Law Center

Justice and Diversity Center of the Bar Association of San Francisco

Larkin Street Youth Services

Law Foundation of Silicon Valley

Legal Aid Association of California

Legal Aid Foundation of Los Angeles

Legal Aid of Marin

Sam Liccardo, Mayor, City of San Jose

LA Forward

Los Angeles Community Action Network

Los Angeles County Board of Supervisors

Los Angeles Tenants Union

National Housing Law Project

Neighborhood Legal Services of Los Angeles County

Non-Profit Housing Association of Northern California

Oakland Chamber of Commerce

PICO California

Miguel Pulido, Mayor, City of Santa Ana

Related California

City of Santa Monica

San Francisco Bay Area Planning and Urban Research Association

The San Francisco Foundation

Libby Schaaf, Mayor, City of Oakland

Harry Sidhu, Mayor, City of Anaheim

Silicon Valley At Home

South Bay YIMBY

Darrell Steinberg, Mayor, City of Sacramento

Strategic Action for Just Economy

TMG Partners

Michael Tubbs, Mayor, City of Stockton

UNITE HERE! Local 19

Venice Community Housing Corporation

City of West Hollywood

Western Center on Law & Poverty, Inc.

Working Partnership USA

OPPOSITION

Affordable Housing Management Association, Pacific Northwest

Apartment Association, California Southern Cities

Apartment Association of Orange County

California Apartment Association

East Bay Rental Housing Association

Southern California Rental Housing Association

Valley Industry and Commerce Association

RELATED LEGISLATION

Pending Legislation:

SB 329 (Mitchell, 2019) amends the Fair Employment and Housing Act to define source of income to mean verifiable income paid directly to a tenant, or paid to a housing owner or landlord on behalf of a tenant, including federal, state, or local public assistance and housing subsidies, to clarify that housing vouchers are included within the prohibition on discrimination based on source of income. SB 329 is currently pending consideration before the Senate Judiciary Committee.

AB 330 (Gabriel, 2019) provides for additional funding for civil legal aid services, including representation in housing matters, by raising specified fees for court filings and enabling the Judicial Council to receive private donations for this purpose. AB 330 is currently pending consideration before the Assembly Appropriations Committee.

AB 1481 (Bonta, 2019) prohibits a landlord from terminating a month-to-month lease or other periodic tenancy without a just cause stated in the written notice to terminate, with specified exceptions. AB 1481 is currently pending consideration on the Assembly Floor.

AB 1482 (Chiu, 2019) prohibits an owner of residential real property from increasing the rental rate for that property in an amount that is greater than an unspecified percent more than the rental rate in effect for the immediately preceding year, plus inflation. AB 1482 is currently pending consideration before the Assembly Appropriations Committee.

Prior Legislation:

SB 860 (Committee on Budget and Fiscal Review, Ch. 48, Stats. 2018) established CESH and appropriated a portion of first-revenues to it from the Building Homes and Jobs Trust Fund.

SB 818 (Beall, Ch. 404, Stats. 2018) removed the sunset provisions from the protections for homeowners in foreclosure proceedings known as the Homeowners Bill of Rights.

SB 2 (Atkins, Ch. 364, Stats. 2017) established the Building Homes and Jobs Act and imposes a $75 fee on real estate transaction documents, excluding commercial and residential real estate sales, to provide funding for affordable housing.

AB 590 (Feuer, Ch. 457, Stats. 2009) enacted the Sargent Shriver Civil Counsel Act, which created a series of pilot programs providing legal representation for low-income parties in specified civil matters, including eviction proceedings.

PRIOR VOTES:

Senate Housing Committee (Ayes 8, Noes 0)

**************

1. California's Housing Future: Challenges and Opportunities, Final Statewide Housing Assessment 2025 (Feb. 2018) California Housing and Community Development Department http://www.hcd.ca.gov/policy-research/plans-reports/docs/SHA_MainDoc_2_15_Final.pdf (as of Apr. 7, 2019) at p. 27. ↑

2. Pradhan, The Foreclosure Rate Is Now Back to Pre-Crisis Levels (Jul. 25, 2018) Core Logic https://www.corelogic.com/blog/2018/07/the-foreclosure-rate-is-now-back-to-pre-crisis-levels.aspx (as of Apr. 7, 2019). ↑

3. Inglis and Preston. California Evictions are Fast and Frequent (May 2018) Tenants Together http://www.tenantstogether.org/sites/tenantstogether.org/files/CA_Evictions_are_Fast_and_Frequent.pdf (as of Apr. 7, 2019) at p. 2. ↑

4. Cuellar Mejia and Hsieh, A Snapshot of Homelessness in California (Feb. 19, 2019) Public Policy Institute of California https://www.ppic.org/blog/a-snapshot-of-homelessness-in-california/ (as of Apr. 7, 2019). ↑

5. California Tenants: A Guide to Residential Tenants’ and Landlords’ Rights and Responsibilities (July 2012) California Department of Consumer Affairs http://www.hcd.ca.gov/manufactured-mobile-home/mobile-home-ombudsman/docs/Tenant-Landlord.pdf (as of Apr. 7, 2019). ↑

SENATE COMMITTEE ON HOUSING

Senator Scott Wiener, Chair

2019 - 2020 Regular

Bill No: SB 18 Hearing Date: 4/2/2019

SUBJECT: Keep Californians Housed Act

DIGEST: This bill requires the Department of Consumer Affairs (DCA) to develop and publish a landlord-tenant guide, as specified; deletes the sunset on the requirement of 90 days’ written notice to a renter in the case of a foreclosure; and provides an unspecified amount to the California Emergency Solutions and Housing Program for rental assistance and legal aid to tenants, as specified.

ANALYSIS:

Existing law:

1. Establishes the California Emergency Solutions and Housing Program (CESH) under the Department of Housing and Community Development (HCD), which funds a variety of activities to help individuals experiencing or at risk of homelessness. Specifically, CESH funds may be used for:
   1. Housing relocation and stabilization services, including rental assistance.
   2. Operating subsidies for permanent housing.
   3. Flexible housing subsidy funds.
   4. Operating support for emergency housing interventions.
   5. Systems support for homelessness services and housing delivery systems.
2. Establishes the Department of Consumer Affairs (DCA), whose mission is to “protect California consumers by providing a safe and fair marketplace through oversight, enforcement, and licensure of professions.” DCA oversees nearly 40 licensing and regulatory entities in various professions and occupations.

This bill:

1. Requires DCA, by January 1, 2021 and biannually thereafter, to develop and publish on its website an updated guide to all state laws pertaining to landlords and the landlord-tenant relationship. Requires this guide to include a template for cities and counties to add information on local landlord-tenant ordinances.
2. Requires DCA to survey all cities to determine which, if any, provide resources or programs to inform landlords of their legal rights and obligations. Requires DCA to post on its website a list of cities that, in DCA’s judgment, have the most robust resources and programs
3. Deletes the December 31, 2019 sunset on the existing law provision requiring 90 days written notice to an affected renter in the case of a foreclosure.
4. Provides an unspecified amount, upon appropriation by the Legislature, to HCD for competitive grants to administrative entities under CESH. These funds shall supplement, and not supplant, other CESH funds. Authorizes the following activities for these funds:
   1. Rental assistance, including back rent, prospective rent, or move-out or move-in costs. Rental assistance shall not exceed 48 months per household, and rent payments shall not exceed two times the current US Department of Housing and Urban Development’s fair market rent for the local area.
   2. Legal aid, including representation in eviction proceedings, mediation between landlords and tenants, pre-eviction legal services, and legal education and awareness for communities.
5. Requires an administrative entity receiving these funds to spend no more than 10% of the allocation for administrative costs. Allows an administrative entity to share any funds available for administrative costs with a sub-recipient.

COMMENTS

1. Purpose of the bill. The author states that skyrocketing rents and stagnant wages have severely squeezed many households, leaving over a quarter of California renters to spend more than half their income on rent alone. The unaffordability of modest rental homes has resulted in a wave of homelessness among the working poor of California, with thousands of individuals and families facing first-time homelessness. Once evicted, the cycle of homelessness can be difficult to break. Losing one’s home can set off a chain reaction leading to job loss, negative health impacts and more, which make it even harder to secure new housing. State and local governments can save a significant amount of money currently spent on homelessness, and save thousands of families from the trauma of homelessness, by simply intervening early – through emergency rental assistance and legal aid – to help people stay in their homes.
2. Building on local programs. The author notes that the city of Oakland has successfully implemented “Keep Oakland Housed,” a program that provides residents with legal representation, financial assistance, and supportive services to help them remain in their homes. Three non-profit entities – Bay Area Community Services, Catholic Charities of the East Bay, and East Bay Community Law Center to negotiate with landlords to prevent evictions, provide emergency financial assistance, and offer wrap-around services. The program is funded by private donors and receives fundraising and staff support from the city. It is available to Oakland residents with a household income at or below 50% of the area median income, with priority given to extremely low-income households. The program provides legal representation to tenants with an active eviction lawsuit.

In addition, the author notes that with the passage of Proposition F last June, San Francisco became the first city in California to provide a legal “right to counsel” for tenants facing eviction. Proposition F set aside $5.8 million over two years to help ensure that tenants have access to legal representation if they are facing an eviction lawsuit. The state has no fund for legal aid programs.

1. CESH. CESH was created last year (SB 850, Committee on Budget and Fiscal Review, Chapter 48, Statutes of 2018); the 2018-19 budget directed a portion of first-year revenues from the Building Homes and Jobs Act Trust Fund (SB 2, Atkins, Chapter 364, Statutes of 2017) to CESH. CESH provides funds to eligible administrative entities (designated by a Continuum of Care) in the form of five-year grants for various activities to assist individuals who are experiencing or who are at risk of homelessness. Administrative entities that receive funds must submit annual reports to HCD on their activities.
2. Landlord-tenant guide. Although the original version of this bill required HCD to develop a landlord-tenant guide, the author has since amended it to instead require DCA to develop the guide and publish it on the DCA website. DCA has previously developed a landlord-tenant guide (most recently revised in 2012), which is available on the HCD website. Moving forward, the author may wish to consider requiring the guide to also be published on the HCD website.
3. Administrative set-aside. Although CESH limits administrative costs to 5% of an administrative entity’s allocation, this bill includes a 10% administrative set-aside. Moving forward, the author may wish to consider reducing this to 5%, in line with most other HCD programs.
4. Opposition concerns. The Valley Industry and Commerce Association (VICA) states that while Keep Oakland Housed is funded by private funds, this bill inappropriately provides General Fund monies and goes beyond that program. VICA states that this bill will add barriers to evicting difficult tenants, harming neighboring tenants who have the right to peacefully enjoy their home.
5. Double referral. This bill has also been referred to the Judiciary Committee.

Related Legislation:

SB 860 (Committee on Budget and Fiscal Review, Chapter 48, Statutes of 2018) — established CESH and appropriated a portion of first-revenues to it from the Building Homes and Jobs Trust Fund.

SB 2 (Atkins, Chapter 364, Statutes of 2017) — established the Building Homes and Jobs Act and imposes a $75 fee on real estate transaction documents, excluding commercial and residential real estate sales, to provide funding for affordable housing.

AB 590 (Feuer, Chapter 457, Statutes of 2009) — enacted the Sargent Shriver Civil Counsel Act, which, among other things, requires legal aid to be provided for low-income parties in civil matters, including eviction proceedings.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

POSITIONS: (Communicated to the committee before noon on Wednesday,

March 27, 2019.)

SUPPORT:

American Federation Of State, County And Municipal Employees, AFL-CIO
Anti-Eviction Mapping Project-Los Angeles
Basta, Inc.
Bay Area Legal Aid
Ben Tzedek Legal Services
Building Industry Association Of The Bay Area
California Alliance For Retired Americans
California Community Builders
California Rural Legal Assistance Foundation
California Rural Legal Assistance Inc.
California YIMBY
Community Legal Services In East Palo Alto
Disability Rights Education And Defense Fund
East Bay Community Law Center
Eden Housing
Facebook, Inc.
Habitat For Humanity East Bay/Silicon Valley
Justice And Diversity Center Of The Bar Association Of San Francisco
Legal Aid Of Marin
National Housing Law Project 
Neighborhood Legal Services Of Los Angeles County
Non-Profit Housing Association Of Northern California
Pico California
Santa Monica; City Of
Silicon Valley At Home
TMG Partners
West Hollywood; City Of
Western Center On Law & Poverty, Inc.

OPPOSITION:

California Apartment Association

Valley Industry and Commerce Association

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