Legal Update Bulletin | June 15
CALIFORNIA LEGAL UPDATE BULLETIN
SENATE BILL 939 (COMMERCIAL RENT REDUCTIONS)
• Senate Bill 939 was flagged for “Suspense”, which puts a temporary hold on the bill pending passage of the State’s budget on June 15, 2020.
• The tag was applied due to the associated potential significant fiscal costs.
• The bill is set for hearing in the Senate Appropriations Committee on June 18, 2020.
• Thank you to all those who participated in the meetings with Senators and at the Judiciary Committee hearing. Your continued participation is critical.
• We will provide opportunities to speak directly to your elected representatives. We encourage everyone who is able to participate.
• Please visit the official “No on SB 939” website for additional information and action items: https://stopsb939.com
ASSEMBLY BILL 1436 (15-MONTH RENT DEFERMENT)
• AB 1436 will allow residential tenants 15-months after the emergency declaration is lifted to pay back rent where non-payment was related to COVID-19.
• A tenant is not deemed to be in default until the 15-month period expires.
• The bill prohibits the application of the security deposit, or any action to recover rent or the property during the 15-month period.
• The bill is currently awaiting assignment to committees for initial hearings.
• Your urgent participation is needed. The CAA’s website has tools to contact your Senator. The website can be found here: StoptheFreeRentBill
RENT CONTROL – 2ND ATTEMPT TO REPEAL COSTA HAWKINS
• This proposition failed to pass on the 2018 ballot on a 60/40% no vote. The same sponsor qualified a new version of the bill for the 2020 ballot.
• Costa Hawkins was passed in 1995. It restricts local governments from passing rent control on buildings built after 1995.
• The Proposition Aims to Allow Rent Control on 15+ Year Old Properties.
• Provides local governments with the authority to enact rent control for properties that were first occupied over 15 years ago.
• Rent Control will still be prohibited on: (i) properties less than 15 years old; or (ii) units owned by individuals who own 2 or fewer residential dwelling units.
• Landlords are authorized to raise rent up to 15% over three years after a unit is vacated.
SPLIT ROLL TAX – MODIFIES PROP. 13 FOR COMMERCIAL PROPERTIES
• Proposition 13 amended the CA Constitution to limit initial taxes to 1% of the property’s
value, and limited increases to a maximum of 2% per year. It passed by nearly a 2 to 1 margin.
• The new ballot measure attempts to remove business properties from Prop. 13’s tax protections.
• Requires all business properties to be reassessed to fair market value at the 2022-2023 lien date. The Legislature may phase in this requirement over three years.
• Requires reassessment of business property to fair market value every 3 years.
• It is anticipated that the ballot measure will increase business property taxes by $7.5 billion to $12 billion a year, which would be the single largest tax increase in California history.
• The bill has qualified for the November 2020 ballot measure. Although very early, current polling is very tight.
The above information is intended as an overview of proposed legislation only. It is not provided as commentary on legislation nor is it intended as legal advice. It should not be relied on for any investment, property, or other decision making. Please see your legal, financial, due diligence and other advisors for additional details and guidance.