Landlords across the state were alarmed this past month to read the details of Assembly Bill 828, which in response to the economic fallout of Covid-19, proposes to lower rents by 25% for tenants who are struggling to keep up with rent. While no one wants to see the state’s homelessness and affordable housing crises grow even worse during these times, the methods proposed in AB 828 immediately provoked questions about its constitutionality and the type of impact it would have on much-needed investment in more rental housing in the state.
In response to these concerns, State Senator Lena Gonzales (D-Long Beach) has introduced an alternative approach that has gained the support of the California Apartment Association: Senate Bill 1410.
What Does SB 1410 Propose?
The bill calls for the creation of an Emergency Rental Assistance Program to help cover 80% of a tenant’s missed rents for up to seven months.
Who Would Be Eligible to Participate?
In order to be eligible the following conditions would need to be true:
- The tenant can demonstrate their inability to pay rent between April 1, 2020, and October 31, 2020, is due to Covid-19
- The landlord has agreed to participate in the program
What Would Participating Landlords Be Agreeing To?
In exchange for getting the state to guarantee payment of 80% of the missed rent for seven months, landlords would have to agree to the following rules of the program:
- The 80% payment must be considered a full payment, meaning landlords would be giving up their right to collect the remaining 20%
- Rent on the unit can not be raised until December 31, 2020
- Late fees can not be charged for missed rents between April 1, 2020, and October 31, 2020
How Would The Program Be Funded?
This remains the biggest question, and the current version of the bill does not yet offer much clarity. A recent article from CalMatters estimates such a program could cost around $2 billion, and suggests that some of that may be able to come from redirecting funds previously approved for addressing homelessness and housing development. Still, compared to the alternative of AB 828 or even more extreme talk of complete rent forgiveness, landlords are showing favor toward this type of approach.