This Bill Would Extend Renter Protections to Homes Rebuilt After a Disaster. Some Say It Falls Short

More than six months after the Eaton and Palisades wildfires razed nearly 13,000 homes and apartments near Los Angeles, property owners are beginning the arduous process of rebuilding. As they do, state Senator Aisha Wahab wants to make sure renters aren’t left out.

Before the January fires swept in, tenants in many of the apartment buildings had certain protections, including rent control and limitations on when a landlord could evict them. But, under existing law, the apartments will lose those protections once rebuilt.

“The state legislature is not doing enough to focus on the issues that renters face,” the Fremont Democrat said.

Wahab’s bill, SB 522, aims to close a loophole in the Tenant Protection Act of 2019, which expires in 2030. The law limits annual rent increases and restricts evictions to only “just-cause” cases, including not paying the rent, violating the lease or withdrawing the unit from the rental market. The law applies on a rolling basis to most multifamily properties built more than 15 years ago.

SB 522 would extend those protections to homes destroyed in a wildfire, flood or other natural disaster, rather than waiting another 15 years for the clock to restart.

But the proposed legislation has been contentious since it was introduced — condemned by rental property owners for going too far and criticized by tenants for not going far enough. The bill is expected to head to the Assembly floor in the coming weeks.

Property owner interest groups say it sends “the wrong message to a landlord.” Debra Carlton, executive vice president for state government affairs at the California Apartment Association, said any regulation on new development could deter a property owner from entering or returning to the rental market.

“State law says that, even in a new construction, you have a 15-year exemption before you fall under regulations such as just cause,” Carlton said. “So this is treating [the rebuilt units] differently, as if they’re not new.”

Wahab argued there is no concrete evidence that protections in her bill deter developers from rebuilding homes. Researchers from the University of Minnesota published a study in March that examined permitting activity before and after California’s Tenant Protection Act passed into law, among similar state policies in Oregon and New Hampshire. It found that permits for new construction in counties across those states did not decline, controlling for counties in neighboring states.

But SB 522 is still shaking off the controversy it brought when it was first introduced.

Wahab’s bill previously included language that required rent-controlled units to remain that way, even after getting rebuilt. That version received strong criticism from various apartment associations, realtor groups and building trades, which argued the bill, if passed into law, would make rebuilding too expensive for rental property owners already reeling from losing their homes and dealing with insurance claims.

“Financing of replacement properties becomes extremely difficult if property owners do not have the ability to recover rebuilding costs through market-rate rents,” Dan Yukelson, executive director of the Apartment Association of Greater Los Angeles, wrote in an email to KQED. “Property owners will struggle to secure financing, delaying or preventing reconstruction altogether because rental income and cost recovery will be severely limited.”

According to Wahab’s staff, those terms were removed before the bill’s first hearing in April, despite the language still remaining in legislative digests because of a technical error to be corrected in the coming weeks. But Wahab admitted that by omitting rent control from her bill, it made it more politically palatable, especially for her colleagues in the legislature who are landlords themselves.

“It was largely a way to thread the needle and to provide stability for evictions — for unnecessary evictions when somebody has already faced a crisis of losing their entire home in a fire,” she said.

Tenants’ rights groups still largely support the bill — arguing that some protections are better than none — but they’re disappointed it’s now been watered down. Alfred Twu, secretary for the California Democratic Renters Council, said, “SB 522 is weaker without the rent cap.”

Ideally, said Joey Flegel-Mishlove with East Bay Housing Organizations, just cause eviction protections should be coupled with other policies that support renters, such as rent caps and anti-harassment protections.

The affordable housing advocacy group endorsed SB 522 when it was first introduced. “Rent stabilization is undermined when landlords can evict tenants without cause and set rents for new tenants at an uncontrolled level. Just Cause protections are undermined when landlords can carry out de facto evictions by raising rents to levels tenants cannot afford, forcing them to move out.”

Still, any renter protections that keep people housed, especially after a natural disaster, can provide relief to tenants, he added, “even if we aim to do more in the future.”

Lisa Geduldig benefited from similar protections when she lost her apartment in San Francisco’s Mission District to a fire in 2016.

Around 8:30 a.m., she said she heard a crackling sound. She went to her window and saw a little fire in the brush next door. Geduldig and 14 neighbors exited the building, figuring the fire would be put out shortly.

“We thought we were just going to be displaced for a year,” she said. Instead, it took more than three years to complete reconstruction on the severely damaged building. By then, she said, “There were five of us, I believe, who moved back in.”

She was able to return because her landlord was required to keep it rent-controlled, even after it was rebuilt. Though Geduldig would not have been covered under SB 522, even if it had been in place then, she said the bill would be more effective if it included rent control. If she had to return to her old apartment at a new, market-rate price, she wouldn’t have been able to afford it.

“I wouldn’t have been able to move back into the building, and I likely wouldn’t have been able to live in San Francisco,” she said.