Sacramento Report
by Debra Carlton
Winston Churchill once said that the most desirable qualification for a politician “is the ability to foretell what is going to happen tomorrow, next week, next month, and next year—and to have the ability afterwards to explain why it didn’t happen.”
A fascinating world emerged after the November elections, which many individuals never predicted. While California Republicans told us they expected to gain seats in November, they actually lost seats in both the Assembly and the Senate.
In short, political pundits explain it this way. The Latino and women voters aligned themselves with the Democrats, while the Republicans were unable to sway these voters who cared greatly about gun control, abortion rights, the environment, and HMO reform. There also appeared very clear political dividing lines in California. Voters living near the coast—particularly in high-density areas—casts their ballots for Democrats, while the interior parts of California voted Republican. (This is nearly identical to the pattern we saw for the United States as a whole.)
As political expert Tony Quinn so aptly put it: “Like the Cheshire cat in Alice in Wonderland, the California Republican party is simply disappearing. Now the Republicans face their most difficult challenge simple survival as an effective political party.” Over the past six years in California, the Republicans have lost two to three seats each session. Now the Republicans hold only 30 seats in the Assembly and 14 in the Senate, as compared to the Democrats’ 50 and 26 seats, respectively.
In the Senate, the Democrats are one vote away from a two-third majority and in the Assembly the Democrats are four votes away. A two-third majority gives a party the ability to control the state budget, tax legislation, and state reapportionment plans. At the same time, the Democrats hold all but one of the state’s Constitutional offices.
Given this political playing field and the current state of the economy, the rental housing industry can expect a very challenging legislative year in 2001, to say the least.
On the economic front, nearly every newspaper in the state has given front-page coverage to rising rents. As Sonoma County rental property owner Michael McCallum so correctly put it, “It’s basic Economics 101 —there are more people than there are houses.”
Given this fact, there are a number of ways consumer advocates and lawmakers may attempt to interject on behalf of tenants. They will look for ways to help tenants stay in their rental units, either by attempting to cap rents or making it harder for owners to evict tenants who are unable to pay higher rents. There may also be attempts to pass laws—locally and at the state level—that make it harder for owners to reject applicants who may not meet the owner’s income standards, including those tenants who receive Section 8. There may also be attempts to reduce or eliminate various ancillary fees that are currently imposed by owners on existing and prospective tenants, such as fees for water or applicant screening.
Consumer groups will bolster their arguments with statistics and demographics, such as the fact that California ranks second in the United States because of very high home values and outrageous rents. At the same time, California’s diverse economy, while maintaining a gross product that places it sixth in the World, has an enormous number of people who live in poverty—just over five million.
While lawmakers will struggle to find short-term solutions to California’s housing crises, the organized rental property industry must look for ways to help bring about a balance to the state’s housing shortage. This endeavor, however, will face its share of roadblocks, and the reasons are numerous.
The passage of Proposition 13 in 1978 created an unintended bias on the part of local officials who now work hard to attract businesses that generate sales tax revenue and in turn they discourage housing that promises fewer dollars for local coffers. With the lack of tax dollars from housing to support infrastructure, lawmakers are open to NIMBYistic (not in my back yard) arguments that have lead to the passage of local slow growth initiatives throughout California. Forcing state lawmakers to place reasonable restrictions on slow growth initiatives will not be an easy task, but it may be appropriate way to counter the less-desirable, short-term solutions.
On the upside, property owners can take heart in several things. Governor Gray Davis considers himself a “centrist” and “business friendly.” He will probably not readily sign legislation that hinders the operations of business owners.
Term limits have also provided some advantages for property owners who work to cultivate relationships with new state lawmakers. Freshman legislators will depend heavily on the “real” story from their constituents. Thirty-seven percent of the California Assembly and twenty-seven percent of the State Senate members have never served in state office prior to November of 2000. They will look to the organized rental housing industry to provide guidance and background on rental housing expenses and operations.
As the new legislative session takes hold, the California Apartment Association leadership will look to its members to provide accurate and necessary information when legislative proposals are made. If you have not yet participated, we strongly encourage you to write letters and make telephone calls this year when you receive a request from CAA to do so. Only with your participation will we find appropriate solutions for both owners and tenants in this booming economy.
The opinions expressed in this article are those of the author and do not necessarily reflect the viewpoint of the SFAA or the SF Apartment Magazine Debra L. Carlton is the vice president of policy and research for the California Apartment Association and is CAA's chief lobbyist, advocating association policies and positions at the legislative and regulatory levels of government in California.