BILL ANALYSIS
SENATE JUDICIARY COMMITTEE
Adam B. Schiff, Chairman
1999-2000 Regular Session
SB 1745 S
Senator Burton B
As Amended April 26, 2000
Hearing Date: May 2, 2000 1
Civil Code 7
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SUBJECT
Landlord/Tenant Law: Notice of Rent Increase
DESCRIPTION
When the tenant is given less than 60 days notice of a rent
increase, this bill, until January 1, 2006, would give that
tenant an extra 30 days at the old rent level if the tenant
elects to instead terminate the tenancy and so notifies the
landlord.
BACKGROUND
According to the California Housing Law Project, as of
beginning in 1997, there are 11,182,882 housing units in
California. Of those units, 5,773,943 are owner occupied,
and 4,607,263 units are renter occupied. The remainder,
3.8 percent, are vacant and are either being held out for
sale or for rent.
The booming economy has lead to higher rents and lower
vacancy rates. Comment 2 details recent new reports on
the shifts.
The author is discussing a possible compromise proposal
with the landlord groups. (See Comment 3.) There is no
formal opposition to SB 1745 at this time.
CHANGES TO EXISTING LAW
Existing law generally requires 30-days notice for a change
(more)
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in the terms of a month-to-month tenancy.
This bill would, until January 1, 2006, provide for the
following: If a tenant receives less than 60-days notice
of a rent increase, the tenant may elect to terminate the
tenancy prior to the effective date of the proposed rate
increase. In that event, the termination would be
effective on the 30th date after the date of the proposed
rent increase and the rent would be the same for that
30-day period. If the tenant holds over and does not
vacate by the termination date, the rent increase would be
effective retroactively to the date set forth in the rent
increase notice.
The bill would exempt from its provisions certain dwellings
subsidized for the benefit of low-income tenants and
specified rental units subject to local rent controls.
COMMENT
1. Stated need for additional notice of proposed rent
increase
Proponents contend that 30 days notice is too short a
notice period, particularly when the tenant cannot
afford the increase and must find a new home. The
problem is particularly acute in the San Francisco Bay
Area where rents have risen dramatically as the economy
has improved. (See next comment.)
Western Center on Law and Poverty, sponsor of SB 1745,
asserts that low-income tenants, who are already paying
50-80% of their income for housing, need more time than
30 days to find replacement housing that is more
affordable, or to find more hours to work or more
roommates to absorb the additional cost, when they
receive a rent increase.
Western Center asserts that vacancy rates, already at
historic lows, are even lower at the more affordable end
of the scale. Renters can no longer find new units in 30
days. Subsidized housing is no answer -- waiting lists
exceed 10,000 families in most metro counties in the
state. The waiting time for a chance to get a voucher,
which may or may not result in finding housing, is 10
years in Santa Clara County, 8-10 years in San Mateo
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County, and 3-6 years in Monterey County, for example.
(See, San Jose Mercury News, April 23, 2000.)
In support of the bill, the sponsor cites several
examples reported in the news of where extraordinarly
high rent increases have caused extreme hardship or
forced a family to simply move out:
A San Diego family lived in a $550-a-month,
two-bedroom apartment until the rent was increased to
$700; they could not afford the rent hike on the
father's minimum-wage pay. He moved his family to
Nashville, Tenn., where a friend told him that rents
were cheap. "We tried to find a place for 30 days,"
the father said, as he lugged mattresses and other
furniture into a moving truck. "We're refugees. We
don't know the people who can help us." (San Diego
Union Tribune, December 20, 1999.)
A 30-year old man in Pleasant Hill moved to a more
modest house after the rent was increased from
$1,850/mo. to $2,100/mo. The new tenants pay $2,400.
(Contra Costa Times, March 16, 2000.) The same
article reports of a 75-year old Concord woman's rent
being increased from $750/month to $995/month in 2
years.
A 38-year old executive secretary was forced to find a
roommate for her 2-bedroom Alameda apartment after the
rent went from $850 to $975 last fall. (Contra Costa
Times, March 16, 2000.)
An 86-year old asthmatic was paying $535/month for a
1-bedroom apartment in Hollister. The rent was
increased to $1,200/month. (San Jose Mercury News,
March 21, 2000.)
A Walnut Creek tenant saw her rent increase from $665
to $740 to $1,040, all within one year. (Contra Costa
Times, April 16, 2000.)
Proponents assert that an extended 60-day notice will at
least give tenants more time to find new housing or to
adjust their expenses to meet the new rental obligation.
For low and fixed income tenants, Western Center
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contends, the extra time will also help those who live on
tight budgets with no elasticity. "It would seem that
landlords - aware of their expenses and budgets - would
not be harmed by providing tenants with more advance
notice."
2. Booming economy has led to higher rents and lower vacancy
rates
Recent newspaper accounts provide examples of the recent
splurge in rent increases, as well as the diminishing
vacancy rates.
The following articles detail the rent increases:
- 30% for Oakland studios, 15-20% for 1- and 2-bedrooms
(San Francisco Examiner, September 27, 1999).
- 18% in Alameda-Contra Costa Counties (Contra Costa
Times, April 16, 2000).
- 16% to 30% in the San Fernando Valley in 1999 (Los
Angeles Times, December 7, 1999).
- 20% in Berkeley in 1999 (San Francisco Examiner, Sept.
27, 1999).
- 12 % in Glendale (Los Angeles Times, February 12,
2000).
- 7.9 % in Los Angeles in 1999 (Los Angeles Times,
November 16, 1999).
- 7% in Orange County (Los Angeles Times, April 13,
2000).
- 5% in Sacramento (Marcus & Millichap 1999 Report).
Average rents are, according to press reports:
- $ 1,960/mo. in San Francisco (San Francisco Examiner,
August 15, 1999).
- $ 1,700/mo. in Santa Clara County (NewYork Times,
January 20, 2000).
- $ 1,184/mo. in Sonoma (Santa Rosa Press Democrat, April
17, 2000).
- $ 1,100/mo. in Ventura County (Ventura County Star,
April 20, 2000).
- $1, 100/mo. in Orange County (Los Angeles Times, April
13, 2000).
- Over $1,000/mo. in Los Angeles, (Los Angeles Times,
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November 16, 1999).
In comparison, a person working 40 hours a week, for
$6.00 a hour, earns $240.00 before federal, state, social
security and local taxes, or $1,040.00 a month before
such taxes. A person earning $8.00 an hour earns $320.00
a week or $1,387.00 a month before taxes. At minimum,
8.85% will be deducted for Social Security and State
Disability Insurance taxes. Federal and state
withholding will reduce the net even more. (Minimum wage
is $5.75/hour.)
Vacancy rates, according to press reports, are:
- At an all-time low in Oakland (San Francisco Examiner,
Sept. 27, 1999).
- At an all-time low in Davis (Woodland Daily Democrat,
December 30, 1999).
- 1/3rd of 1% in Oceanside (San Diego Union-Tribune,
August 25, 1999).
- 0.8% in Escondido (San Diego Union-Tribune, January 20,
2000).
- Less than 1% in Simi Valley (Ventura County Star,
February 17, 2000).
- 1% in Foster City (San Jose Mercury News, March 7,
2000).
- 2.8% in Santa Clara County (Orange County Register,
February 15, 2000).
- 3.1% overall in Orange County, less than 2% in many
cities (Orange County Register, January 15, 2000).
3. Position of landlord groups
Most of the major landlord groups, such as the California
Housing Council and the California Apartment Association,
are "neutral" on the bill. The California Association of
Realtors (CAR), however, has expressed concerns about the
workings of the proposal and has floated an idea to
require a longer notice whenever the landlord is seeking
a rent increase of 10% or more within a year. As an
offsetting benefit to landlords, CAR would like to modify
the service provisions to allow service of the notice by
mail or personal service.
The sponsor is reportedly "favorably disposed" to a
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proposal using certified mail or personal service but
wishes to move the measure along while the detailed
language is worked out.
4. Similar to SB 682 of 1997
This bill is identical to SB 682 (Sher), which was passed
by the Legislature but was vetoed by the then-Governor
Wilson. The veto message stated a concern that the bill
would "erode the venerable notion of the month-to-month
tenancy." It also stated Wilson's belief that there was
no evidence of a need for the bill since "[m]ost
landlords will accommodate a tenant who wishes to vacate
rather than engage in a costly eviction proceeding
Support: Housing Authorities of the City of Santa Barbara
and the Counties of Kings and San Joaquin; Housing
Departments of the Cities of Concord, Long Beach,
San Francisco (Mission), and Modesto; Housing
Development Corporations of Burbank and Marin
City; Fair Housing Councils of Marin, San Diego,
and Riverside Counties and Oakland; Sacramento
Housing and Redevelopment Agency; City of Salinas
Planning Department; California Rural Legal
Assistance Foundation; California Labor
Federation, AFL-CIO; California Legislative
Council for Older Americans; Congress of
California Seniors; Mid-Peninsula Housing
Coalition, Redwood City; Metropolitan Area
Advisory Committee, National City; Los Angeles
Housing Law Project; Southern California
Association of Non-Profit Housing; Enterprise
Foundation, Los Angeles; Corporation for
Supportive Housing, Oakland; Friends Committee on
Legislation; Council of Churches of Santa Clara
County; Affordable Homes, Avila Beach; Foundation
for Quality Housing Opportunities, North
Hollywood; California Community Reinvestment
Committee, Glendale; West Hollywood Community
Housing Corporation; SAMCO, San Jose; Shelter for
the Homeless, Midway City; Sacramento Neighborhood
Housing Services; Affordable Housing Foundation,
San Francisco; New Directions, Inc., Los Angeles;
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Community Economics, Oakland; Thai Community
Development Center, Los Angeles; Archdiocese of
Los Angeles Peace and Justice Commission; Los
Angeles Council of Society of St. Vincent de Paul;
Los Angeles Housing Partnership, Inc.; Los Angeles
Community Design Center; People's Self-Help
Housing Corporation, San Luis Obispo; Sacramento
Mutual Housing Association; Lake County Alliance
for the Mentally Ill; East LA Community
Corporation (ELACC); Los Angeles County Mental
Health Association; Nevada County Housing and
Community Services, Grass Valley; Venice Community
Housing Corporation; Sonoma County Mobilehome
Owners Association; Saint Joseph Health System,
Orange; Skid Row Housing Trust, Los Angeles;
Homes for Life Foundation, Los Angeles; Public Law
Center, Santa Ana; Vision Los Angeles; Council of
Community Housing Organizations, San Francisco;
Orange County Community Housing Corporation, Santa
Ana; Marin Continuum of Housing and Services, San
Rafael; Rural Communities Housing Corporation,
Ukiah; Santa Rosa Planning for Elders in the
Central City; San Leandro Shelter for Women and
Children; Agora Group, Goleta; H&L Properties,
Long Beach; Rural Community Assistance
Corporation, Sacramento; Santa Monica Commission
on Older Americans; Inquilinos Unidos, Los
Angeles; West Contra Costa Conservation League, El
Cerrito; Sober Living Network, Santa Monica; Santa
Barbara County Legal Aid Foundation; Eden Housing,
Inc., Hayward; Resources for Community
Development, Berkeley; Shelter Partnership, Inc.,
Los Angeles; Local Initiatives Support
Corporation, San Francisco; Interpersonal
Developmental Facilitators, Inc., Pasadena; LINC
Housing, Long Beach; Penny Lane, North Hills;
Family Assistance Program, Los Angeles; East Palo
Alto Council of Tenants; Common Ground
Communities, Nevada City; Sentinel Neighborhood
Housing Services of Orange County; Bakersfield
Homeless Center; Coachella Valley Housing
Coalition, Indio; Charter House HomeOwnership
Program; San Franciscans for Reasonable Growth;
California Affordable Housing Law Project,
Oakland; Low-Income Housing Fund, Los Angeles;
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Asian Law Alliance, San Jose; Community Housing
Opportunities Corporation, Davis; Napa Valley
Community Housing; Community Resource Associates,
Clayton; Shelter, Inc., Concord; Chicano
Federation of San Diego County; Sacramento Loaves
and Fishes; Emergency Housing Consortium, San
Jose; Berkeley Gray Panthers; Santa Monica Rent
Control Board; Sisters of the Holy Names
California Province, Los Gatos; Conference of
Social Justice Coordinators of So. California, Los
Angeles; Sisters of St Joseph, Los Angeles; Sonoma
County Housing Advocacy Group; Palo Alto First
Presbyterian Church Society Committee; Urban
Futures, Orange; Filipino American Service Group,
Inc., Los Angeles; St. Francis Center, Los
Angeles; Protection and Advocacy; St. Mary's
Center, Oakland; Mercy Charities Housing
California, Orange; WNC, Inc., Costa Mesa; Union
City Seniors Association
Opposition: None Known
HISTORY
Source: Western Center on Law and Poverty
Related Pending Legislation: None Known
Prior Legislation: SB 682 (Sher) of 1996 - Vetoed
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