Rent-Reduction Bill a Vast Abuse of Power

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Rent-Reduction Bill a Vast Abuse of Power

Assembly Bill 828 the “Gut and Re-Write” Former Human Trafficking Bill, Is Bad News

By Steven Greenhut, California Columnist

We’ve all accepted the need for some unusual public-policy measures to deal with coronavirus, but we should always look askance at proposals that are unnecessary, counterproductive and abusive of our rights.  Sadly, some legislators seem to be using the crisis to push the types of far-reaching legislation that could never get approved during normal times.

Assemblyman Phil Ting, D-San Francisco, recently introduced the most striking example of this phenomenon. Assembly Bill 828 purports to protect tenants during an emergency but poses a grave threat to property owners and established contracts – and could obliterate California’s already tight rental market even after the crisis passes.

For starters, the bill would establish an unreasonably high bar before a landlord evicts a tenant. It would also halt the foreclosure of any residential rental property for 15 days after any emergency orders are lifted. That provision is supposed to help landlords, but the bill will push more owners to the brink, as they lose their income and still must pay their mortgages, taxes, and expenses.

The bill would empower the courts to summarily reduce rents by 25 percent, regardless of whether the tenant suffered an economic hardship. In fact, it would allow the courts to entirely rewrite existing rental contracts, by reducing rents and providing long repayment plans after determining “that the tenant’s inability to stay current on the rent is the result of increased costs in household necessities or decreased household earnings.”

The bill would also make it unwieldy to get rid of nuisance tenants. The legislation allows landlords to file an action against tenants who cause problems but doesn’t require tenants to answer the complaint. That instructs the court to proceed as if the tenant has denied all claims, thus dragging out the process – and increasing the likelihood of a jury trial that delays evictions by many months.

Property owners could lose their income stream for long periods of time and would, at least temporarily, forfeit their only tool to remove tenants. It would incentivize tenants to stop paying rent and clog up courts with these cases. Owners with 10 or more units would be presumed not to suffer a hardship by the bill, while owners with fewer units would have to demonstrate a hardship to the courts to collect agreed-upon rents.

The legislation would make it hugely expensive, burdensome, and time-consuming for property owners to collect any unpaid rent, regardless of the particular situation facing their tenants. If the bill passes, we can expect constitutional challenges given its contract and “takings” ramifications.  “We must remember that owners are already facing the following: a statewide halt on evictions of all types; a state of emergency that caps rents; local measures that freeze rents and provide extended deferrals of unpaid rent; and state and local laws that, in some cases for years, have limited rent increases to less than inflation,” according to a California Apartment Association opposition letter.

Rental housing is a business. Rents are high because there is not enough of it available. AB 828 – and Senate Bill 939, which applies similar provisions to commercial properties – could bankrupt some owners and force others out of the business and thus reduce the available stock.  Legislators cannot help tenants by destroying the incomes of those who provide much-needed rental housing.

Steven Greenhut is the California columnist and formerly was vice president of journalism at the Franklin Center for Government and Public Integrity, where he managed a team of 35 investigative reporters and editors who covered state capitols across the country. He founded CalWatchdog in 2009, which provided Sacramento-based investigative news coverage and he writes regularly for publications including Reason, Human Events, Bloomberg and City Journal. He was senior editorial writer and columnist at the Orange County Register from 1998 to 2009. This editorial was first published by the Orange County Register and has been reprinted with permission of its author.  The opinions expressed herein do not necessarily reflect the opinions of the Apartment Association of Greater Los Angeles. (However, the opinions expressed do reflect the opinions of AAGLA’s Executive Director!)