The Sacramento Report

Ambitious Plans from the Governor

by Monica Williamson

Despite the fact that it is extremely difficult to keep California on a sound financial track, Governor Arnold Schwarzenegger has announced ambitious plans to overhaul the state’s infrastructure. He has proposed the issuance of $222.6 billion worth of bonds over the next ten years to fund projects from transportation and air quality to education, public safety and water/flood control. This plan signals a monumental shift in the governor’s position: from general alignment with the Republican Party to a big step into the center aisle of politics.

Media stories expound on the governor’s shift to the center. Hardly a day goes by without a report from conservative Republicans expressing dismay over the reshaping of the governor’s policies. But for the Schwarzenegger administration, the proof is in the polling numbers. Since the governor’s ballot losses in November 2005 and the attendant decline in his poll numbers, he has embarked on a massive campaign to rehabilitate his image. Early indications are favorable. His polling numbers have started to rebound, and his chances of being re-elected appear promising.

Upcoming Ballot Initiatives
Similar to prior election cycles, there are a large number of ballot initiatives in the early stages of qualification. Dozens of measures have been submitted to the attorney general for title and signature, but it is likely that just a handful will actually make it to the June primary ballot.

Eminent Domain
In response to the Kelo v. New London decision delivered by the U. S. Supreme Court last August, several initiative proposals have been submitted to clarify when property may be taken by eminent domain (the right of the state to assert dominion over real property). Most of the proposals are substantially similar, clarifying that private property may only be taken for a public use (not taken from one private property owner and given to another private property owner). One exception is an initiative that attempts to limit the impacts of rent control on property owners. It is too early in the process to analyze the full effect of this proposal, and it is still unclear which version of the initiative will be submitted to voters. CAA staff will provide members with a full analysis of these measures in the coming months.

ADA/Construction Defects
Several measures have been submitted to change current law with respect to construction defects and prelitigation requirements under the Americans with Disabilities Act. One proposal would suspend the license of a contractor who has had a requisite number of judgments or defects found against him. Another proposal would require a potential ADA claimant to provide notice and an opportunity to cure any defects before proceeding to litigation. Regardless of which proposal, if any, is submitted to voters, the impact to the rental housing industry would be minimal, for these proposals apply only to commercial properties.

Workers’ Compensation
The next installment of the workers’ compensation battle is beginning to take shape. Three proposed initiatives are in the qualification stages. Two of the measures attempt to dismantle the fundamental premise of the workers’ compensation system—as an exclusive remedy for workplace injuries—by asserting that employees must have the opportunity to sue for their injuries.

Tort Reform
One final initiative of interest to the rental housing industry is a measure that would limit the availability of punitive damages. Punitive damages are awarded to a plaintiff in addition to actual compensation for damages or injuries and are intended to punish the defendant for egregious behavior. This initiative would limit the availability of such damages where the defendant has complied with the standards of a government agency. Upon demonstrating such compliance, punitive damages would be restricted or unavailable.

Each of these measures is still in the very early stages of qualification. Watch for more information about these initiatives in this report in future editions of this magazine.

CAA’s Legislative Priorities
CAA has voted to continue its efforts to make amendments to California’s Megan’s Law. A variety of unintended consequences surfaced as a result of the electronic publication of California’s sex offender registry, which contains information on persons who are required to register for certain sex offenses. When the database went live in 2005, some tenants (and property owners) learned that sex offenders were living in their apartment complexes. Despite this knowledge, current law effectively prohibits property owners from using the Megan’s Law web site to deny housing to listed sex offenders. If a rental property owner or manager learns from the database that someone is a sex offender, he cannot deny the sex offender housing or warn other tenants based on this knowledge, without the risk of being sued.

CAA introduced legislation last year to resolve this dilemma. The bill, AB 438 (sponsored by Assemblywoman Nicole M. Parra), would have given lessors of real property permission to use the database to make housing decisions. Unfortunately the bill failed passage in the Assembly’s Public Safety Committee. Despite this defeat, CAA is committed to working with legislators to find a solution to the problem. Meetings are ongoing with key legislators and capitol staff in an attempt to devise a solution that allows landlords to put the health and safety of their residents first.

A second priority for the organization is to stop the tactics utilized by unscrupulous individuals and law firms to delay eviction. One such tactic includes a defense law firm’s request for a jury trial in an unlawful detainer action at the very last hour. An attorney who waits to request a jury trial forces a delay in the case by several weeks, which often results in additional delays in calendaring and scheduling a settlement conference. One way thought to remedy the use of these tactics was to include a provision in a lease agreement that would waive the parties’ right to a jury trial in the event that a dispute arises under the agreement.

But in August 2005, the California Supreme Court heard a case on this subject and ruled that parties may not contractually agree to waive the right to a jury trial before a lawsuit has arisen. The court ruled that the California Constitution provides that the right to a civil jury trial may be waived only if the waiver is expressly authorized by the Legislature—thereby inviting the Legislature to clearly specify whether such provisions are permissible. Although the dispute in the case arose under a business contract, other states have allowed jury waivers in all types of contracts, including consumer agreements.

CAA is working with other groups in the business community to craft legislation to allow contractual jury waivers. This issue is quite controversial and it remains to be seen if a legislative solution will be successful.

For an organization like CAA, the desire for less regulation on existing rental housing and the need for additional affordable housing units can only be successful when industry members understand the current state of affairs and the challenges facing lawmakers and citizens of this state. CAA is committed to staying atop these issues and will provide relevant and timely information to association members.

The opinions expressed in this article are those of the author and do not necessarily reflect the viewpoint of the SFAA or the San Francisco Apartment Magazine. Monica Williamson is the senior vice president of public affairs for the CAA. Copyright � 2006 by the San Francisco Apartment Magazine. All rights reserved.