Ten months after California voters rejected a rent control ballot initiative by more than 2.3 million votes – 59 percent to 41 percent – the state is on the brink of enacting a rent control measure approved by the Legislature and backed by Gov. Gavin Newsom.

Proposition 10 failed last year after two political action committees backed by apartment owners, real estate agents and others in the rental business paid for tens of millions of dollars in TV ads that depicted the measure as being a threat to seniors – a tactic that was effective but criticized as manipulative. This view that they didn’t lose a fair fight is one reason that Prop. 10’s main backer – the AIDS Healthcare Foundation – and other advocates plan a 2020 ballot measure on rent control.

This belief that rent control was a political winner despite Prop. 10’s result was also on display in Sacramento with Assembly Bill 1482. Assemblyman David Chiu, D-San Francisco, and other Democrats barely acknowledged Republican complaints that the bill amounted to an end run around the will of voters. Instead, they said Californians demanded relief from soaring rent.

Newsom opposed concessions made by bill author

But Chiu was worried enough about winning support for AB1482 that he weakened some of its provisions to get business groups to remain neutral on the bill. This led to an unusual scenario over the last month in which a high-profile, controversial measure actually was strengthened – not weakened – as final votes neared. That came after Newsom and his staff told Chiu he shouldn’t have compromised.

The Assembly passed AB1482 on the strength of 48 Democratic vote. It was opposed by a bipartisan group of 26 members. It passed the Senate 25-10 on a close to party-line vote.

The version that reached Newsom’s desk this week limits most annual rent increases to 5 percent plus inflation, with the law sunsetting in 2029. It doesn’t supersede local rent control laws in place in Los Angeles and about 20 other cities in the Golden State, with many in the Bay Area. Apartments built within the last 15 years are not covered. Nor are rented-out single-family homes – with the exception of those owned by investment groups or corporations. 

The passage of the rent control measure comes amid evidence that despite three years of new laws meant to ease the housing crisis, homebuilding in the state is actually declining in 2019. Capitol watchers said now at least lawmakers who backed it can tell their constituents they got something big done on housing.

Will California again be a national trendsetter?

But the steady advance of AB1482 was also treated as a national story by the New York Times and many other major news outlets because of California’s long history as a national trendsetter.

Cea Weaver, campaign coordinator of Housing Justice for All, told the Times that the bill’s likely enactment could be a game-changer. “Any victory helps to build a groundswell,” Weaver said. “There is a younger generation of people who see themselves as permanent renters, and they’re demanding that our public policy catches up to that economic reality.”

California became the second state after Oregon to adopt statewide rent control. Chiu’s bill was modeled on one that Oregon lawmakers enacted in February.

Many economists believe rent control ends up being counterproductive because it discourages construction and adequate maintenance, among other problems.

In 1992, when the American Economic Association surveyed its members on the topic, 93 percent agreed that “a ceiling on rents reduces the quality and quantity of housing.”

Opponents of rent control and new restrictions on how landlords treat tenants succeeded in either weakening or blocking bills that needed to advance last week to have a chance of being enacted this legislative session.

Coming seven months after voters decisively rejected Proposition 10, a statewide rent control measure, the setbacks were a fresh reminder of the limited political clout of renters – even in a state where millions of residents’ complaints about the cost of housing are a constant of life.

Assembly Bill 1482, by Assemblyman David Chiu, D-San Francisco, was the focus of the most wrangling. Inspired by a similar law newly adopted in Oregon, the original bill would have limited annual rent increases to 5 percent plus the federally reported increase in California’s consumer price index. It had a 2030 sunset clause.

But after intense opposition by the California Association of Realtors and other business groups who said it would discourage housing construction in a state with a huge housing shortage, Chiu agreed to concessions that were so significant that most critics took a neutral stand on his bill, starting with Realtors.

It now limits rent increases to 7 percent plus consumer price index inflation and sunsets in 2023. It also doesn’t apply to housing projects built in the last 10 years or to landlords renting 10 or fewer units.

The bill doesn’t apply to housing units in areas where local rent-control laws are in place and puts no limit on how much rent can be increased after a tenant moves out.

But even with Chiu’s concessions, AB 1482 still only got the votes of 43 of 80 Assembly members. Chiu’s fellow Democrats made up the big majority of the 31 no votes. Even with reduced business opposition, the bill may not make it through the state Senate.

Tenant protection bill fails without getting committee vote

Yet it still fared much better than Assembly Bill 1481, by Assembly members Tim Grayson, D-Concord, and Rob Bonta, D-Alameda, which would have set up a “just cause” bureaucratic process that most landlords would have to follow to evict tenants for reasons other than failure to pay rent, property damage or repeated violations of rules. The process would have required landlords to provide a written reason for the eviction, then give renters an opportunity to correct problems that were cited.

“If landlords wanted to move into the property, intend to remodel it or were seeking eviction for other circumstances that were not tenants’ fault, property owners would in most cases have had to provide relocation assistance,” a Los Angeles Times analysis noted.

AB 1481 never even come up for a committee vote, reflecting a lack of enthusiasm for the bill by the Assembly’s Democratic leaders.

In a statement issued by Grayson, he praised the Assembly for passing the rent-control measure, but said “rent-gouging protections are not enough when tenants can still be evicted without cause or due process.”

AB 1482 did include one notable tenant protection. It says landlords of properties covered by the bill cannot seek evictions solely because they want to raise rent by more than the measure allows.

Meanwhile, an aide to Gov. Gavin Newsom said he was pleased by the measure’s passage. Newsom called for lawmakers to enact some form of rent control in a February speech and again in April.

2018 rental data suggest bill will have limited effect

But rental statistics for 2018 compiled by the RENTCafé website suggest AB 1482 won’t necessarily have a substantial effect on landlords. According to the state Department of Finance, California had a 3.7 percent increase in its consumer price index in 2018. (Federal figures for the Golden State were not available.) That means under Chiu’s bill, landlords probably could have raised rates by about 10.7 percent in homes covered by AB 1482.

But according to RENTCafé data, that’s much less than the average rent increase seen in the California cities with the highest percentage hikes in 2018 – Los Angeles (6.6 percent), Fresno (5.7 percent), Riverside (5.6 percent) and Long Beach (5.5 percent).

By far the most buzz is going to Assembly Bill 1842 by Assemblyman David Chiu, D-San Francisco, that is being framed as much different than Proposition 10, which lost by 18 percentage points in November. Chiu says his bill would prevent “rent gouging.”

Instead of the hard caps on rent increases seen in many local rent control ordinances adopted by California cities before 1995, Chiu’s measure would ban landlords from increasing rents each year by more than an as-yet-undetermined percentage more than inflation.

Oregon recently became the first state in the nation to adopt an “anti-gouging” rent law. The measure limits annual rent increases to inflation plus 7 percent for existing tenants in buildings that are at least 15 years old. Rents can go up by more than that when apartments are vacated, but the law contains additional protections meant to prevent landlords from seeking to evict tenants with solid records of timely rent payments solely so they can raise the rent.

UC Berkeley researchers concluded that if a similar law passed in California, 4.9 million homes, condos and apartments would be covered.

Some landlord and business groups didn’t oppose the bill as it moved through the Oregon Legislature – seeing it as preferable to the harder, smaller caps that some state lawmakers and activist groups preferred and that polls suggest are popular.

But stronger and more consistent opposition to Chiu’s bill looms in California. “We need to encourage new housing, not create policies that stifle its creation,” Tom Bannon, CEO of the California Apartment Association, told the Bay Area News Group. He said any state law capping rent increases would be counterproductive and ineffective at remedying the housing crisis.

Gov. Gavin Newsom has not taken a public stand on Chiu’s bill. Last month, however, he told lawmakers at his State of the State address, “Get me a good package on rent stability this year and I will sign it.”

Assemblyman Richard Bloom, D-Santa Monica, has also once again introduced a bill including more traditional rent control provisions. Assembly Bill 36 would allow local governments to mandate rent control on apartments and single-family homes as soon as they were 10 years old. Landlords with only a few units would not be covered.

Assemblyman Rob Bonta, D-Oakland, has also once again introduced a bill meant to make it significantly more difficult to evict tenants. Assembly Bill 1481 would set a statewide “Just Cause for Evictions” standard. Most cities already have such policies.

The least controversial measure affecting renters was proposed by Assemblywoman Buffy Wicks, D-Oakland. Assembly Bill 724 would set up a state housing information clearinghouse that would list all available units, their monthly rents, how long units were vacant and how many tenants are evicted. Landlords would be required to submit this information on a timely basis.

Wicks thinks this would lead to more informed decisions on housing by the Legislature and the Newsom administration.

Photo Credit: Wikimedia Commons

The California Legislature’s determination to lessen the amount of sugary drinks consumed by state residents may never have been greater than now – at least if the metric used is the number of bills introduced. This session, five will be taken up, and more may be on the way.

For the third time, Assemblyman Richard Bloom, D-Santa Monica, has introduce a measure that would tax soda and other beverages sweetened with sugar.

The first two times, Bloom’s measure didn’t get out of committee after it faced intense, well-funded opposition from the American Beverage Association.

But Bloom told his hometown paper, the Santa Monica Daily Press, that the tax was urgently needed to nudge people to stop consuming so many unhealthy drinks.

“Everyone would acknowledge that health care costs are skyrocketing,” he said. “Diabetes and obesity are ongoing health-care crises and we need to get serious about prevention.”

Revenue from the tax – which has not been established yet but which was 2 cents per ounce in Bloom’s previous bills – would pay for programs meant to reduce diabetes and obesity. Bloom said 9 percent of state residents are diabetic and nearly half are at risk of developing diabetes.

Measure would ban Big Gulp-size sodas

Bloom’s bill will have plenty of similar company this year.

Assemblyman David Chiu, D-San Francisco, proposes a ban on soda servings of larger than 16 ounces in seal-able cups sold at restaurants and grocery stores. A similar ban in New York City was thrown out by New York state courts – but not for a reason that has relevance in California. Judges repeatedly held that the New York City’s health board overstepped its powers in imposing the ban and should have deferred to the New York state Legislature.

Assemblywoman Buffy Wicks, D-Oakland, hopes to end the common practice of displaying sodas near the checkout stands of food, convenience and other retail stores.

Sen. Bill Monning, D-Carmel, is for the fourth time proposing that sugary drinks sold in California have labels warning of their health risks. Monning said if tobacco products’ health risks are made plain with warning labels, so should the risks of soda.

Assemblyman Rob Bonta, D-Alameda, is touting a bill intended to prevent beverage companies from offering stores special deals with lower prices for sugary drinks.

Studies split on effect of Berkeley soda tax

Soda foes got good news on Feb. 21 when the American Journal of Public Health published a study saying that soda consumption plunged 52 percent in Berkeley in the first three years after the city adopted a soda tax. 

But other research into Berkeley’s soda tax is far less encouraging, according to University of Southern California professor Michael Thom. He told the Santa Monica newspaper there was no evidence that residents reduced their caloric or sugar consumption and asserted there is little, if any, proof that soda taxes have a positive effect on human health.

A Harvard Business Review study based on an analysis of millions of transactions at California stores by Duke University professors Bryan Bollinger and Steven Sexton was also skeptical of claims of success in Berkeley. Published in January 2018, it noted that since most residents worked outside of Berkeley, they could readily buy cheaper soda elsewhere. The study also pointed to a factor not mentioned in any recent newspaper coverage of soda taxes:

“We found that much of the cost of the tax is not being passed along to consumers,” Bollinger and Sexton wrote. “Fewer than half of supermarkets changed the price of soda in response to the tax, and prices at chain drug stores did not change at all.”

Spurred by recent mass shootings, the legislation, introduced by Assemblyman Rob Bonta, D-Alameda, and co-authored by Assemblyman David Chiu, D-San Francisco, would allow residents to “voluntarily add their name to the California Do Not Sell List for firearms.”

“A lot of the political opposition to efforts California has taken to address gun violence is around government telling people what they can and cannot do,” Bonta told the SacBee. “This is different. This is an individual saying, ‘I want to do this. I’m choosing to do this.’ We think it will save lives.”

Of the roughly 38,000 gun deaths in the U.S. in 2016, about two-thirds were suicides. In California alone, there were nearly 1,600 suicides with guns in 2016.

While a controversial topic, the issue of guns and suicide are inextricably linked. Research suggests that suicide attempts are an impulsive act, and firearms offer a disproportionately lethal means.

The bill is not without its opponents, such as the National Rifle Association, with some expressing concern that the law could be abused.

To join the list, a person would provide the names and contact information for five people. These contacts would be informed if the person attempted to buy a firearm. Additionally, while those on the list may not be able to legally purchase a firearm, they would not be liable for “any criminal or civil penalty for purchasing, receiving or possessing a firearm.” Those who knowingly sell firearms to Californians on the list, however, would be subject to penalties.

The law would require the state to regularly add people on the list to the FBI’s National Instant Criminal Background Check System.

People on the list would need to wait a year before removing themselves; however, to remove themselves earlier, they could provide testimony from a medical professional that they are not a risk to themselves or others. The state would “expunge records related to the person’s inclusion in, and removal, from, the Do Not Sell List.”

“The voter coalitions that elect moderates in San Francisco are Chinese voters, white homeowners, older renters, and the 10 Republicans left in town, combined with unions that represent building trades, police officers and firefighters,” political consultant Jim Ross told the San Francisco Chronicle the day after Lee’s death. Progressives dominate every other category of voters, especially young tech workers and social justice activists.

While many other names have been mentioned, here are the most prominent likely or declared candidates in the June 5 special election to serve out the last year and a half of moderate Lee’s term:

– Acting Mayor London Breed, part of the moderate faction on the city-county Board of Supervisors who shares Lee’s view that dealing with homelessness is the city’s most important issue. Breed, pictured, is the first African-American woman to serve as mayor. There is a possibility that supervisors will name an interim mayor rather than give Breed months to use her authority as both mayor and supervisor to build support for her expected mayoral bid. This could be supported by moderate as well as progressive supervisors in a city full of ambitious politicians.

– Supervisor Jane Kim, part of the progressive wing, filed paperwork to run for mayor on Wednesday. Kim lost a state Senate bid to moderate Supervisor Scott Weiner last year. She has won national and international attention for her proposed state “robot tax” assessing fees on companies whose use of robots or algorithms has led to the loss of jobs. The money from the fees would be used for worker retraining and other programs meant to minimize the impact of losing jobs to technology.

– State Sen. Mark Leno announced in May that he would run for mayor in 2019 after Lee was termed out. Now he’s running in the June special election, touting his “progressive vision for our city, grounded in a commitment to affordability and civil rights.” A former Assembly member and supervisor, he’s won a reputation as an energetic policy wonk with interest in a wide range of issues, from gender and transgender rights to prison and criminal justice reform to the environment.

– Former San Francisco Supervisor Angela Alioto, daughter of former Mayor Joseph Alioto, has taken out papers to run. An attorney specializing in discrimination cases, she cited homelessness as a key issue and said it was crucial to build a coalition with tech firms to address the issue and larger housing concerns. She has deep ties to moderates both through family ties and years in the city’s political trenches.

– Assemblyman David Chiu, a former supervisor, faces perhaps the toughest decision of any candidate. If the moderate runs in the June mayoral special election, he can’t seek re-election to the Assembly in November – meaning he’d be giving up the safest of legislative seats with more than eight years until he would face term limits. But Chiu is poised to inherit support from the Chinese American community that was so valuable to Mayor Lee, and he has high name recognition and fundraising clout.

Willie Brown still a crucial behind-the-scenes player

Even at 83, former Mayor and former Assembly Speaker Willie Brown remains a key player in San Francisco’s political intrigue. After Mayor Gavin Newsom was elected lieutenant governor in 2010, Brown helped arrange the appointment of Lee – then the city’s chief administrative officer – as interim mayor and gave Lee crucial help in winning a full term in 2011 after Lee broke a promise to progressives to not seek the office.

San Francisco progressives fear that moderate Brown will try to execute the same maneuver with Breed, who is considered one of his proteges.

Assembly Bill 357 affects California food and retail businesses with at least 10 stores and 500 employees that change or cancel a worker’s scheduled shift or require an employee to be “on call” to work. Those businesses must provide the following extra compensation for changed schedules:

• One hour of pay at the employee’s regular hourly rate if less than seven days’ notice but at least 24 hours’ notice is given to the employee.
• Two hours of pay for each shift of four hours or less if less than 24 hours’ notice is given.
• Four hours of pay for each shift of more than four hours if less than 24 hours’ notice is given.

When those businesses require an employee to be available to work but the employee is not called in to work, it must provide two hours of pay for a shift of four hours or less and four hours of pay for shifts of more than four hours.

In addition, AB357 prohibits these businesses from firing or discriminating against employees because they receive CalFresh food assistance or either receive CalWORKS cash aid or are a parent, guardian or grandparent of children who receive CalWORKs cash aid. The bill also allows employees to leave work for eight hours twice a year without pay to attend appointments at a county human services agency.

The Chamber of Commerce argues that the bill “dramatically increases the cost of doing business for a broadly defined ‘food and general retail establishment’ in California by exposing employers to significant penalties and litigation for accommodating employee and business scheduling demands, creating a new protected classification for employees, and a new leave of absence for employees.”

The Chamber has labeled it a job killer because it:

• “Creates significant penalties against employers for schedule changes, which will limit flexibility.
• “Discourages employers from offering additional work to part-time employees.
• “Creates new leave of absence for employees.
• “Creates a new, protected classification of employees.
• “Subjects employers to multiple threats of extensive litigation.”

CalChamber Policy Advocate Jennifer Barrera told the committee on April 22 that a similar ordinance is due to go into effect in San Francisco in July. “Why don’t we let that work out first in San Francisco before we impose this on a statewide mandate in California and to counties and cities that are not reflective of San Francisco?” she said.

Also speaking against the bill was Angie Manetti, representing the California Retailers’ Association.

“We believe this bill seeks to mandate a rigid, one-size-fits-all scheduling model for food and retail establishments,” she said. “Retail by nature is dynamic and highly competitive. As such, retailers are constantly undertaking the challenge of balancing the needs of employees, responding to customer demands, all while enhancing our customer experiences.

“AB357 fails to contemplate these unique needs. The bill instead creates a significant administrative burden for retail employers and doesn’t take into consideration the rapidly changing business environment of retail establishments.

“The reality is that retailers and employers need a predictive schedule in place just as much as our employees do. We do this to the best of our ability and provide as much flexibility that we can. Stores must consider, number one, employee scheduling requests. There’s also sales forecasts that are considered, store productivity, workload, in-store events, merchandise deliveries and customer traffic patterns. Additionally, at any given time those factors can change due to unexpected scenarios.”

Manetti agreed with Barrera that the state should wait to see how San Francisco’s scheduling regulations work out. But the bill’s author, Assemblyman David Chiu, D-San Francisco, who also authored the San Francisco legislation, responded that there has been significant interest from legislators around the state in implementing it statewide.

“We are not talking about a job killer policy,” Chiu said. “In fact, we know the minimum wage, health care, sick leave – those were also called job killer policies. I would suggest there’s a lot about this policy that helps people to maintain and to take on second jobs or third jobs, to actually be job creating.

“Major employers like Costco, like Starbucks, like Wal-Mart … understand it’s good for business. When you are an employee and you have a predictability in scheduling, you are a more productive employee, you’re a happier employee, and you do better and you want to work hard.”

Chiu said there more than three million low-wage food and retail workers in California. Eighty percent of them have unstable schedules, he said, and 40 percent receive a week or less notice on their upcoming schedule.

A co-author of the bill, Assemblywoman Shirley Weber, D-San Diego, said that one out of five California children live in poverty, and their mothers have to work two or three part-time jobs to make ends meet.

“We see [reliable scheduling] as being critical in how we reverse California poverty levels,” she said. “California has the highest poverty rate in the nation. They need security to say ‘this is when you work.’ It’s not unreasonable to ask employers to give some sense of predictability on how their schedule is going to be and how they manage their lives.”

Two grocery workers, one of whom has two college degrees, also testified in support of the bill. They said not having a predictable schedule makes it difficult to attend college on off days.

Unlike most so-called “job killer” bills, AB357 did not break down strictly along party lines. One Democrat, Assemblyman Evan Low, D-Campbell, voted against it. Although he agrees with Chiu that it’s not a job killer, he said he’s concerned that it will have an impact on businesses in his Silicon Valley district.

The committee approved the bill, 4-3. It will next be considered by the Assembly Appropriations Committee.

While surveys of business executives still rank California as one of the worst places to do business, the record on job creation has been bright in the Golden State over the last year.

The U.S. Bureau of Labor Statistics reported California led the nation over a 12-month period ending Jan. 31, creating 498,000 jobs. Part of the credit for this, according to the California Chamber of Commerce, is the Chamber’s annual effort to rally against bills that would hinder job creation and hurt the economy.

The effort is called the “job killer” campaign. It alerts legislators, the governor and citizens about bills that increase taxes and regulation on businesses, hindering jobs creation.

For example, from the current list, Assembly Bill 357 is by Assemblyman David Chiu of San Francisco. According to the bill, it’s needed because, “Unpredictable scheduling practices and last-minute work schedule changes cause workers who are already struggling with low wages to live in a constant state of insecurity about when they will work or how much they will earn on any given day.”

But according to the Chamber, among other things, AB357 “imposes an unfair, one-size fits all, two-week notice scheduling mandate on any entity that performs retail sales activity, and penalizes the employer with ‘additional pay’ for making changes to the schedule with less than two weeks notice.”

It is worth considering how the positive job creation news would have fared without the CalChamber’s annual job-killer campaign. Over the past four years, the Chamber marked 129 bills as job killers. Only 8 of these measures have been signed into law. If many of the defeated bills passed, would California’s job-creation number be so strong?

According to the Bureau of Labor Statistics, California created 100,000 more jobs than the runner-up job creator, Texas, to which California is often compared as an economic rival. However, as Sacramento Bee columnist Dan Walters pointed out, the job gain in Texas was a 3.5 percent increase. In more populous California, the job increase represents a 3.2 percent gain. “A tie,” Walters declared.

High unemployment

California’s unemployment at 6.7 percent is still one of the highest in the nation. The national rate is 5.5 percent. More jobs are needed to help get many Californians out of poverty, with California leading the nation in that category.

Job creation in California has been uneven. Twenty counties still have double-digit unemployment, while the hot job creation Bay Area counties have unemployment as low as 4 percent.

The Chamber’s goal is to keep business costs low to improve the economy statewide.

“Jobs in California’s high tech and health care sectors and along the coast are fueling our economy and this is good news, however, when one third of Californians are on Medi-Cal we need to enhance our efforts to improve the overall job picture,” said California Chamber of Commerce president Allan Zaremberg.

Critics contend the bills are needed to help the work environment. Steve Smith, a spokesman for the California Labor Federation, charged of CalChamber’s 2014 list, “By placing measures to give workers earned sick days and combat wage theft on their hit list, the Chamber, once again, has shown how tone-deaf it is to the needs of most California families.”