If you weren’t aware of rent control legislation, now is the time to be active. Bills proposing rent control (as well as restrictions on eviction and criminal records) have become an alarming trend within the multifamily housing industry. Just last week, I went with other CIC™ tenant screening experts to Washington, D.C. to lobby on behalf of the National Consumer Reporting Association. Our big concern is that without access to eviction or criminal records, property owners and managers like you will not have the information to determine if a rental applicant is a risk or not. While plenty of owners combat potential risk by raising the rent or fees, if rent control measures pass, that option will no longer be accessible.
Unfortunately, states like California, Oregon, Illinois, and Maine have already been targeted by rent control activists – and it seems like this is only the beginning. Take a look to see what multifamily legislation has passed and failed this November, and what bills will likely be reviewed in the Spring of 2018.
PENDING: Tenant Protection Act (S. 1758)
The Tenant Protection Act will amend the Fair Credit Reporting Act (FCRA) with further requirements for landlords and consumer reporting agencies (your tenant screening provider). The use of eviction records, or “housing court records”, will become more limited under this bill. Tenant screening providers will be prohibited from using eviction records (or any other court records pertaining to housing) in their resident screening report unless 1) the record resulted in a judgment of possession; 2) the decision of the court in the record’s case is not being appealed; and 3) the record is no more than 3 years old. Since being introduced on August 3, 2017, this bill has not made any progress.
Presently, eviction records are allowed to date back up to 7 years, and may include both judgments and filings so as to inform properties about applicants who demonstrate a trend of poor residency.
PENDING: FCRA Liability Harmonization Act (H.R. 2359)
Introduced in the House on May 4, 2017, this bill aims to amend the civil liability requirements under the FCRA, specifically the requirements with class actions. As currently proposed, this act would prohibit courts from applying a minimum amount of damages for each member of the class, with fees (excluding attorney’s fees) not exceeding $500,000. Since its introduction to congress this bill has had hearings held by the Subcommittee on Financial Institutions and Consumer Credit on September 7, 2017.
PASSED: Fair Employment and Housing Act Amendment (see amendment)
Effective on January 1, 2018, this employment amendment prohibits employers from directly or indirectly inquiring into, seeking out, or considering an applicant’s conviction (or criminal) history until after the job applicant receives a conditional offer of employment. This includes questions on your job application.
PASSED: Immigrant Tenant Protection Act (AB 291)
This bill prohibits landlords and properties from disclosing the tenant’s immigration or citizenship status to any immigration authority, law enforcement agency, or local, state, or federal agency unless obligated under federal law, a subpoena, warrant or order issued by the court. You are also prohibited from making inquiries into the immigration or citizenship status of a rental applicant or tenant. Violators could pay up to $2,000 in damages for each violation.
Quick Tip: Make sure your online rental application does not ask if the applicant is a U.S. citizen!
Aiming to boost California’s housing supply, these bills financially penalize local governments that deny or conditionally approve housing projects in “a manner that renders infeasible”. Local governments will now have to follow legal mandates before denying housing projects that comply with the law’s general plan and zoning rules. Money gained through fines would be later used to construct affordable housing.
PASSED: The Building Homes and Jobs Act (SB 2)
This bill adds a $75 fee to all real estate instrument, paper, or notices permitted by law (like mortgage refinances). Fees will not exceed $225. With the money generated from this fee, 20% will go towards affordable owner-occupied workforce housing and 10% to housing purposes for agricultural workers and their families. The remaining 70% will be expended for affordable housing, home ownership opportunities, and housing-related programs.
PASSED: Flood Hazzard Disclosure (AB 646)
On July 1st, 2018, landlords are required to add to their lease a flood risk disclosure (if applicable to the property).
PASSED: Smoking Ban Ordinance in Redwood City
Effective on January 1, 2019 for all existing units and January 1, 2018 for all newly constructed units (after Jan. 1, 2018), Redwood City rental properties with more than two units are prohibited from allowing smoking inside the units and within all common areas.
PENDING: Costa-Hawkins Repeal Ballot Initiative
A ballot initiative to repeal the Costa-Hawkins Act (an act that prohibits local governments from regulating the price of rent) has been filed. The measure has not yet qualified to be put on the ballot on November 2018. Activists will have until June 28th, 2018 to collect valid voter signatures.
FAILED: Rent Control Initiatives in Several Cities
Since our last legislative update, several rent control initiatives in cities across California have either failed or hit complications. These include the cities of:
- San Jose
On November 14th, 2017 the San Jose City Council voted to lower the rent cap from 5% to CPI. This did not pass and the rate remains 5%.
- Long Beach
While tenant advocates filed preliminary paperwork to place a rent control initiative on the November 2018 ballot, their application was incomplete. The organization, Housing Long Beach, currently has the opportunity to file again. If the city attorney issues a title and summary, they will still need 26,000 valid voter signatures.
According to the Los Angeles Times, Glendale’s rent control petition was filed incorrectly and is invalid. The Glendale Tenants Union vows they will try to refile again. The original petition capped rent increases at 3% a year in the city.
The city of Anaheim’s Homeless Policy Working Group was considering incorporating rent control to reduce homelessness, however after the California Apartment Association’s suggestion; the group has removed rent control from their list of policy recommendations.
On November 7th, voters rejected a measure (Measure C) that would have enacted both rent control and limit eviction record access.
- Palo Alto
Proposed by three members of the City Council, the rent control ordinance was rejected by the city council earlier this October after feedback from dozens of property owners and managers.
PASSED: Equal Pay Act of 2017 (HB 2005)
While this bill doesn’t only affect the rental housing industry, property management companies or property owners who employ staff members will be affected. Effective October 2017, Oregon employers are prohibited from seeking an applicant’s salary history. This law also requires an employer to post notices (a template will be supplied by the Oregon Bureau of Labor and Industries) and this will take effect on January 1, 2019. Civil actions against employers who seek an applicant’s salary history will not be permitted until January 1, 2024.
PENDING: No-Cause Evictions and Rent Control (HB 2004)
This bill will prohibit landlords from terminating a month-to-month tenancy without cause and would permit local government to implement “rental stabilization” (or rent control) programs. HB 2004 passed the Oregon House in April and has moved onto the Senate.
PASSED: Seattle’s Fair Chance Housing Ordinance (CB 119015)
Signed by the mayor on August 23, 2017, the City of Seattle’s new housing ordinance restricts the use of background information for resident screening. Seattle property owners and management companies are prohibited from requiring an applicant to provide (or go and obtain) criminal record information on any rental applicant. The sex offender registry is the only exception, and the grounds to deny an applicant who is on the registry are limited. Unless there is a “legitimate business reason”, property owners are prohibited from denying an adult applicant on the sex offender list (who was an adult at the time of conviction). Property owners and management companies within the city are also required to provide their screening criteria in all advertising.
PENDING: Seattle Relocation Reimbursement (see announcement)
Seattle city councilor Kshama Sawant has announced that she will introduce legislation that would require landlords to pay for their tenants’ relocation if they move out due to rental increases. Her proposal is that if the rent increases by 10% or more within a one year period, the property owner would be required to pay for 3 months of rent. This would only apply to tenants making under $50,000 a year. This ordinance is currently being drafted, and we’ll issue an update when the final draft is released.
PENDING: Repeal the Rent Control Preemption Act (HB 2430)
This bill would repeal the Rent Control Preemption Act of 1997, which prohibits local governments from “controlling the amount of rent charged for leasing private residential or commercial property.” This would allow local governments to create rent control ordinances, and as the Illinois Realtors says, “the intent of the law is bad enough: to create rent control in Chicago.”
FAILED: Portland, Maine Rent Control Measure
Voters in Portland voted against Question 1 on the city’s ballot, saying no to rent cap increases and more eviction restrictions.
PENDING: Milwaukee County Rent Abatement Ordinance (Bill Number 17-530 – opens in Word Doc)
Proposed on July 5, 2017, this Milwaukee County ordinance would enable residents to abate an amount off their rent for maintenance issues. Property owners will have to produce a written notice indicating the time frame to remedy the property defect within 24 hours after a tenant has sent an email or SMS text message, or 72 hours after a physical notice or mail. Oral and voicemail notification is also permitted. An abatement provided in this bill is $100 for a not provided, missing or broken kitchen or lavatory sink basin drain or faucet. Tenants will also be able to abate $25 from the rent for a non-functioning light switch (for 24-48 hours).
PENDING: Philadelphia’s Mandatory Inclusionary Zoning Ordinance (Bill Number 170678)
Introduced on June 22, 2017, this ordinance would require developers to set aside 10% of the new units to be maintained as affordable units for at least 99 years.
If you’ve been following along with our quarterly legislative updates then you know that rent control legislation (or legislation that would repeal an act preventing rent control) has been extremely popular with legislators across the U.S. this year. Alongside restrictions to eviction records, and even the use of criminal records, bills like these make it difficult for property owners and managers to manage their properties and adequately screen rental applicants for potential risks. While luckily rent control has only succeeded on a city level, it’s apparent that rent control advocates will continue to push until their initiative is effective state-wide. To combat bills like these, call your local and state-wide representatives, vote, and let others know about the bill in the comment section below.
What are your thoughts on these bills?
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