News

A little-noticed new law could upend a key argument against rent control

SB 330 requires developers to replace all rent-controlled units they demolish, offer old tenants equally affordable new units

Since rent control took effect three years ago, more than 300 older apartments in Mountain View have been marked for demolition. This trend has strengthened a leading argument against rent control: by restricting prices, it's encouraging landlords to exit the apartment business, which is forcing out the tenants least able to afford new housing.

But a little-noticed state mandate that takes effect this month may completely upend that scenario for Mountain View. In recent days, housing advocates and city officials have suddenly become very interested in SB 330, a housing bill by state Sen. Nancy Skinner that would essentially force landlords and developers to preserve rent-controlled apartments.

The bill, dubbed the Housing Crisis Act of 2019, was just one among hundreds of bills in last year's legislative session that tried to address California's severe housing shortage. In general, Skinner's bill gained far less attention than other hot-button legislation like SB 50 or AB 1482, which mandated statewide rent caps. While those bills faced intense opposition, SB 330 passed under the radar, receiving support in both legislative houses and was signed into law by Gov. Gavin Newsom.

To anyone glancing at SB 330, its language focuses mainly on easing development standards by prohibiting cities from using a wide variety of tricks to curb growth, such as imposing housing moratoriums, population caps, lower-density zoning or endless permit requirements.

But for Mountain View, the most consequential section of SB 330 was buried deep in the bill. The new law also prohibits cities from approving new housing developments that would raze rent-controlled or affordable housing -- that is, unless an equal number of new units are rebuilt for tenants at the same price.

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For tenant advocates, that requirement looks like a game-changer that could swiftly lead apartment owners to reconsider tearing down older units. Even in cases where apartments are being redeveloped into for-sale housing, developers will still be required to build new housing for all former tenants. Any displaced tenants must be given first rights to new housing units at the same price, said Nazanin Salehi, staff attorney with the Community Legal Services of East Palo Alto. These protections took effect at the start of January.

For the last few weeks, Salehi said, she has been collaborating with a statewide working group of attorneys and policy experts who are analyzing the implementation of SB 330. She admitted many tenant advocates like herself hadn't noticed the law's implications until very recently.

"I don't think a lot of people were paying attention to SB 330, but this is really fantastic," she said. "What this state legislation is saying is that this type of housing is so valuable that we need to make sure we're preserving it. And this makes the argument for weakening rent control weak, if not moot."

Over the course of the last year, the Mountain View City Council reluctantly signed off on a series of redevelopment projects that razed rent-controlled apartments in order to build for-sale rowhouses. Each of those projects brought out a desperate crowd of tenants who begged the city to find some way to save their homes, but council members said they couldn't reject projects that met the city's development criteria.

For months, city officials had pledged to take a variety of actions to halt this trend, such as a "no net loss" policy to prohibit new developments that reduce the overall number of housing units. The City Council considered these actions at an October study session, but no formal policy changes have been brought back yet.

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Exactly what SB 330 and its one-for-one replacement of rent-controlled units means for Mountain View remains uncertain. City planning officials say they are aware of the law, and they have been bringing it to the attention of any developers who submit new plans, but they could not specify any individual projects that would be affected.

"We're taking a look at what all this means," said Aarti Shrivastava, city planning director. "All we know right now is what this law says generally. How it applies specifically is going to depend on what status each project is at."

Under the language of SB 330, the one-for-one requirement doesn't affect projects deemed "complete" prior to Jan. 1. To her understanding, Shrivastava said a development is complete if the city has received all information on it, but it still might be waiting for approvals or entitlements. In general, the SB 330 requirements will only apply to newer projects, and the city is still reviewing how this would apply to individual development proposals that are under review.

Still, the new development requirements for rent-controlled apartments are being celebrated by tenants who were living under the specter of being displaced. Dinnie McLaughlin, who has lived for 17 years at a Whitney Drive apartment complex, said she and other tenants were trying to figure out if the new law would curtail plans submitted back in June to redevelop their homes into condominiums. At this point, she said she is "cautiously optimistic."

"We're still waiting to see if that's the case. And if it is, then this is a major blessing," she said. "I'm going to hold off on my excitement for now until I know what's going on, but it looks like a positive sign."

The new SB 330 law could also play a significant role in how voters respond in March to Measure D, which was drafted by city officials to soften the Mountain View's rent control law. Up to this point, proponents on the City Council have argued that the stringent rent control restrictions that voters approved in 2016 has been leading landlords to redevelop their properties, taking rental units off the market.

As SB 330 was moving through the state Legislature last year, the bill was actively opposed by the League of California Cities, which viewed it as a threat to local control. However, the legislation did receive support from lobbyists and advocates for developers. Those interest groups saw the tenant protections as a sacrifice worth making if the law created a boost to housing production, said Michael Lane, deputy director at the housing advocacy group SV@Home.

"The idea here is to disincentivize a business model that displaces residents. Just because it's a hot market, we shouldn't be demolishing affordable units," he said. "Developers and their trade associations thought it was fair trade-off because they saw this law as creating more certainty."

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A little-noticed new law could upend a key argument against rent control

SB 330 requires developers to replace all rent-controlled units they demolish, offer old tenants equally affordable new units

by / Mountain View Voice

Uploaded: Fri, Jan 10, 2020, 12:30 pm

Since rent control took effect three years ago, more than 300 older apartments in Mountain View have been marked for demolition. This trend has strengthened a leading argument against rent control: by restricting prices, it's encouraging landlords to exit the apartment business, which is forcing out the tenants least able to afford new housing.

But a little-noticed state mandate that takes effect this month may completely upend that scenario for Mountain View. In recent days, housing advocates and city officials have suddenly become very interested in SB 330, a housing bill by state Sen. Nancy Skinner that would essentially force landlords and developers to preserve rent-controlled apartments.

The bill, dubbed the Housing Crisis Act of 2019, was just one among hundreds of bills in last year's legislative session that tried to address California's severe housing shortage. In general, Skinner's bill gained far less attention than other hot-button legislation like SB 50 or AB 1482, which mandated statewide rent caps. While those bills faced intense opposition, SB 330 passed under the radar, receiving support in both legislative houses and was signed into law by Gov. Gavin Newsom.

To anyone glancing at SB 330, its language focuses mainly on easing development standards by prohibiting cities from using a wide variety of tricks to curb growth, such as imposing housing moratoriums, population caps, lower-density zoning or endless permit requirements.

But for Mountain View, the most consequential section of SB 330 was buried deep in the bill. The new law also prohibits cities from approving new housing developments that would raze rent-controlled or affordable housing -- that is, unless an equal number of new units are rebuilt for tenants at the same price.

For tenant advocates, that requirement looks like a game-changer that could swiftly lead apartment owners to reconsider tearing down older units. Even in cases where apartments are being redeveloped into for-sale housing, developers will still be required to build new housing for all former tenants. Any displaced tenants must be given first rights to new housing units at the same price, said Nazanin Salehi, staff attorney with the Community Legal Services of East Palo Alto. These protections took effect at the start of January.

For the last few weeks, Salehi said, she has been collaborating with a statewide working group of attorneys and policy experts who are analyzing the implementation of SB 330. She admitted many tenant advocates like herself hadn't noticed the law's implications until very recently.

"I don't think a lot of people were paying attention to SB 330, but this is really fantastic," she said. "What this state legislation is saying is that this type of housing is so valuable that we need to make sure we're preserving it. And this makes the argument for weakening rent control weak, if not moot."

Over the course of the last year, the Mountain View City Council reluctantly signed off on a series of redevelopment projects that razed rent-controlled apartments in order to build for-sale rowhouses. Each of those projects brought out a desperate crowd of tenants who begged the city to find some way to save their homes, but council members said they couldn't reject projects that met the city's development criteria.

For months, city officials had pledged to take a variety of actions to halt this trend, such as a "no net loss" policy to prohibit new developments that reduce the overall number of housing units. The City Council considered these actions at an October study session, but no formal policy changes have been brought back yet.

Exactly what SB 330 and its one-for-one replacement of rent-controlled units means for Mountain View remains uncertain. City planning officials say they are aware of the law, and they have been bringing it to the attention of any developers who submit new plans, but they could not specify any individual projects that would be affected.

"We're taking a look at what all this means," said Aarti Shrivastava, city planning director. "All we know right now is what this law says generally. How it applies specifically is going to depend on what status each project is at."

Under the language of SB 330, the one-for-one requirement doesn't affect projects deemed "complete" prior to Jan. 1. To her understanding, Shrivastava said a development is complete if the city has received all information on it, but it still might be waiting for approvals or entitlements. In general, the SB 330 requirements will only apply to newer projects, and the city is still reviewing how this would apply to individual development proposals that are under review.

Still, the new development requirements for rent-controlled apartments are being celebrated by tenants who were living under the specter of being displaced. Dinnie McLaughlin, who has lived for 17 years at a Whitney Drive apartment complex, said she and other tenants were trying to figure out if the new law would curtail plans submitted back in June to redevelop their homes into condominiums. At this point, she said she is "cautiously optimistic."

"We're still waiting to see if that's the case. And if it is, then this is a major blessing," she said. "I'm going to hold off on my excitement for now until I know what's going on, but it looks like a positive sign."

The new SB 330 law could also play a significant role in how voters respond in March to Measure D, which was drafted by city officials to soften the Mountain View's rent control law. Up to this point, proponents on the City Council have argued that the stringent rent control restrictions that voters approved in 2016 has been leading landlords to redevelop their properties, taking rental units off the market.

As SB 330 was moving through the state Legislature last year, the bill was actively opposed by the League of California Cities, which viewed it as a threat to local control. However, the legislation did receive support from lobbyists and advocates for developers. Those interest groups saw the tenant protections as a sacrifice worth making if the law created a boost to housing production, said Michael Lane, deputy director at the housing advocacy group SV@Home.

"The idea here is to disincentivize a business model that displaces residents. Just because it's a hot market, we shouldn't be demolishing affordable units," he said. "Developers and their trade associations thought it was fair trade-off because they saw this law as creating more certainty."

Comments

Bravo
Martens-Carmelita
on Jan 10, 2020 at 1:09 pm
Bravo, Martens-Carmelita
on Jan 10, 2020 at 1:09 pm
24 people like this

Glad to see the state taking action when the cities have been unwilling to protect our residents.

The current council majority, led by Margaret Abe-Koga and Lisa Matichak, has paid a lot of lip service to protecting the vulnerable, but it looks like they're all talk. While they "discuss" solutions, people are having their homes demolished. Same with their talk about extending rent control to mobile homes. All they've actually done with respect to that has been to craft a ballot initiative that explicitly declares them to be unprotected by Measure V!

Pure and simple, they talk a good game on protecting residents, but their actions show they're not interested in protecting residents who are poor.


Bored M
Cuesta Park
on Jan 10, 2020 at 1:33 pm
Bored M, Cuesta Park
on Jan 10, 2020 at 1:33 pm
46 people like this

There has been plenty of warning to all those owners of rent controlled apartments. If their investments are declining another notch in value because of the law then it's their own fault.

The city is setting itself up nicely to have slums in a decade or two.


The Business Man
Castro City
on Jan 10, 2020 at 2:05 pm
The Business Man, Castro City
on Jan 10, 2020 at 2:05 pm
3 people like this

In response to Bored M you said:

“There has been plenty of warning to all those owners of rent controlled apartments. If their investments are declining another notch in value because of the law then it's their own fault.”

There is a good solution, new projects will provide more units. As long as the CSFRA and the new law is complied with, there is plenty of opportunity to make a good profit. If these people know how to make good business decisions. But that is a giant IF because this industry has not been efficient at all. That is why you have giant rent increases in the past. They simply passed on the cost of their poor management to the customers. You went on to say:

“The city is setting itself up nicely to have slums in a decade or two.”

That is not correct IF the City Council does it’s job well and provides passage of well planned new housing and complies with all state and local laws like the CSFRA. But it is true that the history of the actions of the City council has not been very good. But my prediction is that you are not going to see any new projects approved because the City Council cannot have its discretion anymore. It will simply freeze all projects itself.


BS
Another Mountain View Neighborhood
on Jan 10, 2020 at 2:26 pm
BS, Another Mountain View Neighborhood
on Jan 10, 2020 at 2:26 pm
7 people like this

[Post removed due to trolling]


The Business Man
Castro City
on Jan 10, 2020 at 4:20 pm
The Business Man, Castro City
on Jan 10, 2020 at 4:20 pm
5 people like this

In response to BS you said:

“Another commie BS law, to end investments in our cities.”

Please understand that our constitution has a provision for “eminate domain” because the land is not private in reality. So land should never be considered an investment. At the same time, even if you “own” a lot of land, it is not yours. How? Because you must pay for property taxes every year. The real history is that there is no exclusive use of land in any state of the U.S. If you read the article titled “There is No Private Property in the United States” (Web Link). You said:

“Liberals are doing anything they can get away with to end capitalism, but there will be a backlash, just like rent control.”

Capitalism is not ending, people are free to invest in anything they want. You want insurance that any investment must be guaranteed the rate of return they demand. Capitalism does not work that way, the reality is that poor investment decisions have a “moral hazard” of failure. That is what you demand of this country based on your arguments. You said:

“Our cities will turn into slums if we keep this up.”

Not if smart people make good decisions. But we have a lot of inexperienced decision makers regarding civil engineering and planning in all levels of government. We need to get skilled people to be decision makers. But our politics is designed so that it does not require expertise. It is done by a popularity contest and not a job interview, and requiring proof of skills necessary to achieve productive government.

Just understand what we need is a serious reform of the way decisions are made. But do the people actually have the choice? Especially with the big money in politics these days.


Steven Nelson
Cuesta Park
on Jan 11, 2020 at 5:34 am
Steven Nelson, Cuesta Park
on Jan 11, 2020 at 5:34 am
2 people like this

Thank you reporter Mark. This is a very interesting development with implications for defeating Measure D, from our own Democratic Suburbanite party leaders on our Council (Mayor MAK in particular).


The Business Man
Another Mountain View Neighborhood
on Jan 11, 2020 at 11:07 am
The Business Man, Another Mountain View Neighborhood
on Jan 11, 2020 at 11:07 am
2 people like this

Steve,

So correct.

The biggest argument regarding rent control was the idea that units would be demolished for other housing.

This law is going to be challenged I am certain. But I also think it will not be determined unconstitutional.

This is the biggest weapon other than going out of buisness. But by doing so, the exiting business will lose all revenues.


The Successful Businessman
Whisman Station
on Jan 12, 2020 at 2:26 pm
The Successful Businessman, Whisman Station
on Jan 12, 2020 at 2:26 pm
5 people like this

If I were working as a residential developmnet planner for the City of Mountain View, I'd be tuning up my résumé since SB330 is a guaranteed lych bell for any future redevelopment projects--which would otherwise rid MV of her thousands of '60's era units suffering from economic and physical obsolescence. And, yes, Business Man, the future is a steady decline--even surpassing present day Berkeley. Glad I'm out . . . by the hair of my chinny-chin-chin.


The Business Man
Castro City
on Jan 12, 2020 at 7:38 pm
The Business Man, Castro City
on Jan 12, 2020 at 7:38 pm
2 people like this

In response to The Successful Businessman you said:

“If I were working as a residential developmnet planner for the City of Mountain View, I'd be tuning up my résumé since SB330 is a guaranteed lych bell for any future redevelopment projects--which would otherwise rid MV of her thousands of '60's era units suffering from economic and physical obsolescence.”

First, this is STATE law, it doesn’t matter what city is in the approval of development. On top of this there are the other inclusionary housing price controls. So Mountain View is not being singled out, the private housing sector is going to have a state wide requirement.

As far as obsolete housing goes, if the private sector will not build any newer projects, than the state should build them. The private sector has exploited the market long enough dictating what it will build and where.

After 1965, the federal government started privatizing housing. There was plenty of housing during the baby boom through to 1965, so it was a solution looking for a problem. Ever since 1965, the housing shortages were born and were exploited ever since.

The public housing process worked to satisfy housing needs up to 1965 with federal money and state money. It was the private sector that promised that it could do a better job that diverted from public projects to private ones. Simply put, it is going to move back to that model, and either the private sector performs or it will lose ground on the housing market. You said:

“And, yes, Business Man, the future is a steady decline--even surpassing present day Berkeley. Glad I'm out . . . by the hair of my chinny-chin-chin.”

That statement can stand on its own.


mh
another community
on Jan 14, 2020 at 12:30 pm
mh, another community
on Jan 14, 2020 at 12:30 pm
Like this comment

The owner has option to offer the tenants buyout money to move out. Depending on the amount, it may be a fair deal.


The Business Man
Another Mountain View Neighborhood
on Jan 14, 2020 at 3:39 pm
The Business Man, Another Mountain View Neighborhood
on Jan 14, 2020 at 3:39 pm
Like this comment

in reponse to mh you said:

"The owner has option to offer the tenants buyout money to move out. Depending on the amount, it may be a fair deal."

I would expect he buyout to cover at least 1 years rent in another unit. That is fair.


mh
another community
on Jan 14, 2020 at 6:22 pm
mh, another community
on Jan 14, 2020 at 6:22 pm
Like this comment

The tenant should look at the market-rate rent of the new unit to be built there (not a similar-condition room they would move in next), because that's the stake for the developer. Maybe, that's what The Business Man meant, but I wanted to clarify because it's important. Then, I might even try 2 yr of the market rate.


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