Rent Control, AB 1229 and AB 697


Rent control has finally come back to the Legislature.

The last time the Legislature considered a rent control bill was 1995. In large part the “Costa-Hawkins Act” has not been touched by that body for 20 years. That is not to say that there has not been judicial challenges during this 20-year period.

Assembly Member Nora Campos (D-San Jose) will have her bill heard in two Assembly policy committees and if successful, the bill will be moved to the Assembly floor for a vote. And Assembly Member Kansen Chu should have his bill heard before the same committees shortly thereafter.

The bills:

AB 1229 (Campos) bars landlords from increasing rent on elderly tenants in certain rent control districts, unless the landlord agrees to collect the rent increase from the government through a tax credit in Alameda, San Francisco, Santa Clara and Ventura Counties.

AB 697 provides a tax credit to qualifying elderly tenants equal to the amount of any increase in rent. The bill only applies to tenants residing in the County of Alameda, the City and County of San Francisco, the County of Ventura, and the County of Santa Clara.

So what is the similarity between the bills?Both were written by the Service Employees International Union (SEIU) and both bills feature tax credits to be collected for senior citizens earning $50,000 a year or less.

And the main difference? The Campos measure freezes rent and forces landlords to collect any rent increase the following year when personal income taxes are due.

Why do we oppose AB 1229 (Campos) and support AB 697?

In no other industry is earned income paid through a tax credit. It defies reason that in order to receive part of his or her earned income, a landlord must apply for a tax credit. Tax credits are typically thought of as incentives to encourage behaviors or as a low-income subsidy. For example, the government offers a tax credit for those who purchase electric vehicles or solar panels, which serves to encourage reducing one’s carbon footprint. Another ex- ample is the Renter’s Tax Credit, which is a low-income subsidy that helps a particular renter reduce his or her end of the year tax burden. Tax credits are never provided as a refund on actual income that has been earned in the previous year. But that is exactly what this bill attempts to do, because the proceeds from a rent increase is a landlord’s earned income. If the purpose of the bill is to provide a low-income subsidy, then the tax credit should be applied for and given straight to the person who needs and benefits from the subsidy—the tenant. Landlords should be left out of the equation.

The procedure for the elderly tenant tax credit should mirror the Renter’s Tax Credit. In California, single tenants making less than $37,769 (or married couples making less than $75,536) can apply for the Renter’s Credit at tax time. If they qualify, the California Franchise Tax Board provides a tax credit to that tenant who ap -plied for it. Landlords are not involved in handling or dealing with the credit nor should they be. Because it is the tenant who seeks the credit, the tenant must be the one to apply for it and receive it. This procedure should be used for the elderly tenant tax credit.

Assembly Member Kansen Chu’s AB 697 is a better approach to this issue. AB 697 is a nearly identical bill to AB 1229, except that it requires the tenant to apply for and receive the tax credit from the government to offset any rent increases. We have written a let -ter of SUPPORT for Assembly- member Chu’s bill because it provides rental assistance to elderly ten ants who may need it, while ensuring that the person needing the assistance is the one who must request and receive the aid. We urge your support for that bill, while rejecting this one (AB 1229).

Preventing landlords from immediately collecting marginal rent increases is overly burdensome and unnecessary. Landlords are already burdened by heavy regulation in rent control districts, while tenants enjoy significant protections. In San Francisco, land- lords may only increase rent by 1.9 percent in 2015. In Berkeley it’s 2 percent, and in Oakland it’s 2.4 percent. Moreover, tenants are protected from evictions unless there is just cause. It makes no sense to require landlords to jump through additional hoops just to receive a marginal rent increase. Applying for tax credits for every single qualifying tenancy will become an administrative night- mare for landlords who will be required to account for all tenants who qualify, and keep track of all increases. As a result, both administrative costs and tax consultant fees will increase.

AB 1229 prevents landlords from immediately collecting rental in come necessary to maintain the property and make needed improvements. Landlords use in -come from rent increases in a host of important ways, including to:

  • address immediate problems or tenant complaints relating to habitability;
  • maintain the property to
  • ensure no substandard housing conditions arise;
  • meet new water conservation requirements and to upgrade water efficient appliances;
  • make energy efficient upgrades which includes roofing, insulation, water heaters, windows, solar panels, and heating and cooling units; and
  • meet new building code standards and housing regulations that are signed into law or adopted by a State or local agency from time to time.

Forcing landlords to wait a year and a half to collect the income from rent increases will impact a landlord’s ability to keep up with rising costs of operating and maintaining the property, and will delay improvements necessary to meet new water and energy efficiency needs.

Ron Kingston can be reached at This e-mail address is being protected from spambots. You need JavaScript enabled to view it

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