Bill to cap rent increases in California advances

The California Assembly voted Wednesday to cap rent increases for many tenants as America's most populous state faces a housing crunch.

The bill, which now goes to the state Senate, would prohibit landlords from raising rent by more than 7% plus inflation over the course of a year. The proposed cap would be in effect for three years.

But as the proposal's passage came down to last-minute political wrangling and persistent opposition from the California Association of Realtors, the bill's backers agreed to a series of changes to win over critics.

The measure, Assembly Bill 1482, originally called for a 5% cap on rent. The bill's backers agreed to raise that cap and let it expire in 2023 instead of 2030. The cap will not apply to landlords leasing fewer than 10 single-family homes or to newer properties built in the last decade.

The bill's author, Democratic Assemblyman David Chiu, argued the measure would protect tenants from big rent increases while still allowing property owners to get a fair return on investment.

"We're saying we're in a housing emergency. And we're saying while we're in this emergency, we're going to impose a reasonable cap to prevent rent-gouging," Chiu, of San Francisco, told reporters after the bill narrowly passed in an early evening vote.

Opponents, however, countered that such steps would discourage investment in rental housing.

"This is a disincentive for people to build and what we need is to build," said Republican Assemblywoman Melissa Melendez, of Lake Elsinore, California.

Some Democratic lawmakers also expressed concern about changes to the bill, suggesting that rent increases allowed under the proposed cap would still price out many residents.

A legislative analysis focusing on one area without rent control found that a 5% cap would be higher than the median rent increase in recent years.

The opposition and the concessions it forced as the Assembly faced a rapidly approaching deadline this week to pass the bill underscored what a pitched battle that backers of housing legislation have been fighting in California.

Rising rents and property values are a pressing issue in a state where the cost of living is already high, with more than 9 million renters in California. The increase in the cost of housing in California has outstripped that of every other part of the country, according to a legislative analysis.

But California residents voted down a ballot measure last year that would have allowed cities to expand rent control.

And bigger Democratic majorities at the Legislature after last year's election do not necessarily seem to have cleared the way to imposing new rules on landlords. Instead, housing legislation got tangled in a web of sometimes disparate interest groups during this year's legislative session.

A powerful committee in the state Senate quashed a closely watched bill that would have overridden local zoning rules to allow for the construction of more housing around public transit in some areas.

That left the cap on rent increases as perhaps the last big housing bill still standing this session.

The state's new Democratic governor, Gavin Newsom, urged lawmakers in his State of the State Address to pass tenant protections.

The cap on rent increases faced opposition from the influential California Association of Realtors until Wednesday evening. A spokesman said the group would not oppose the bill with the changes Chiu outlined.

The state Assembly has yet to pass a bill that advocates for tenant's rights argue must go alongside legislation capping rent increases. That proposal, Assembly Bill 1481, would prohibit landlords in many circumstances from evicting tenants without a valid reason. The California Association of Realtors also dropped opposition to that bill following negotiations on changing the legislation.

Oregon's Legislature passed a law this year capping rent increases at 7% plus inflation while also setting rules limiting when a landlord could evict a tenant.

Gloria Cortez, who protested in the Assembly gallery on Wednesday calling for a vote on the two bills, said the state needs both measures.

The Pomona resident has been living in a hotel with her family after they were evicted from an apartment she said had mold and pest problems.

Cortez argued tenants need protections against evictions as well as rising rents.

"I feel like they're really protecting the landlords," she said of lawmakers before Wednesday's vote.

The Associated Press contributed to this story.