rentalowner agai november 2015 ne … · your locks or rekeying is probably your most economical...

t h e v o i c e o f t h e r e n t a l h o u s i n g i n d u s t r y

Edition

1201101009080706050

November 2015

RentalOwner Magazine®

In this issue• Key management• Making solar work for your

property

Professional CertificationsandDesignations

Take your career to the next level with the National Apartment Association Education Institute (NAAEI) Professional Certifications and/or Designations.

These Programs are available online at www.sdcaa.com

Online LearningOnline ClassesSeminars

ONLINE: A Property Managers Disater Guide

Natural catastrophes and man-made disasters caused a worldwide economic loss of $218 billion in 2010. With so much of your property assets at stake, understanding and conveying your disaster plan is vital in being a successful apartment manager. Gary A. Pudles, President and CEO of AnswerNet, will navigate you through the development of a successful property disaster plan. This webinar will include the best processes to identifying risks and hazards, constructing and implementing a plan, how to effectively communicate that plan to your tenants and stakeholders.

TARGET AUDIENCE: Owners and Managers of multifamily properties.Cost: $19

Register at naahq.org

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Get up-to-date information through the convenience of learning on the Internet while providing the opportunity and bene-fits of peer-to-peer interaction through the Webinar Wednesday series or the NAAEI webinars.

December

• Dec. 2, 2015 - Escaping the Echo Chamber-Tech and Marketing Tips from Outside of the Multifamily

• Dec. 16, 2015 - Your 2016 Marketing Playbook

Webinars

Takeonlinecoursesorrecordedwebinars24hoursaday.Over80coursesareavailableinEng-lishandSpanish.Viewthebro-chureatwww.sdcaa.com.

Moreinformationoncostandregistration is available on www.sdcaa.com

5The Key to Safety, Security and Reduced LiabilityThe author reviews Key Security and reducing liability when changing and/or replacing locks in a unit or house.

Is Solar Still a Good Value Proposition?With the hundreds of companies now offering solar deals the Center for Sustainable Energey demystifies the benefits of solar rebates, tax credits available and net metering.

RentalOwner-RHCMagazine

Cover: ®NationalApartmentAssociation

We are very excited to bring you RentalOwner-RHC! Our main objective is to bring you informative articles that will help you manage your rental property. Whether you are a regional manager, onsite manager, leasing agent, independent owner or maintenance person, we hope you will find the articles and services useful.

MagazineStaffPublisher Alan Pentico, CAEExecutive Director

Design & Layout Olivia GalvezDirector of Publications

RentalOwner-RHCMagazineispublishedbytheSanDiegoMulti-HousingCorporation(SDMHC)awhollyownedsubsidiaryoftheSanDiegoCountyApartmentAssociation(SDCAA).ThemagazineispublishedmonthlyandisprovidedtoRHCmembersonly.Theviewsexpressedinthesearticlesaretheauthors'sanddonotnecessarilyreflectthoseoftheSDCAA,RHCorSDMHC.

AllRightsReservedMaterialsmaynotbereproducedortranslatedwithoutpriorwrittenpermissionbythepublisher.FormoreinformationonRentalHousingCoalition-SouthRiversideCountyorRentalHousingCoalition-DesertCitiesorRentalOwner-RHCMagazinecontactthepublicationsdepartmentatogalvez@sdcaa.comorat858.751.2217,visitwww.rhcsoriverside.org,www.rhcdesertcities.org.

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Columns

11 LocalLegislative 13 FromtheCapital-StateLegislativeUpdate19FromtheCapitol-NAAUpdate

8

4 |RHC-RentalOwnerNovember2015

The SDCAA-RHC is all about providing its members helpful information to manage their properties efficiently and cost-effectively, and

informing them on emerging trends in the rental housing industry. Looking and thinking ahead doesn’t mean seeing a few weeks or a few months into the future, but adequate planning requires observing current trends and identifying the trends to come in 2016 and beyond.

I understand there are events or situations that happen requiring our full and immediate attention. The holiday season is almost upon us, so we have less spare time in our personal and professional lives. But, the SDCAA-RHC is here for you, and the staff is already looking far ahead into next year. If members spend a few minutes each day to read our print and electronic publications, visit at our events calendar for seminars and classes, and use our many other services and products, members will be better prepared for the future. We already know there are big changes in store for rental housing in 2016. The state will require some multi-family properties to recycle or divert its organic waste and there will be new rules concerning clotheslines and mold at rental properties. If you haven’t seen the changes in your electric bill, you will see them soon. It is very likely you will see higher water bills, and 2016 is a presidential election year – So use the SDCAA-RHC as a resource.

The article, Key to Safety, Security and Reduced Liability is... on page 5 talks about the importance of having a lock and key policy for your rental property. Having an effective key and lock policy will promote tenant safety, reduce your liability, and save time and money. The article, Is Solar Still a Good Value Proposition, from the California Center for Sustainable Energy talks about the types of solar

systems you can install on your rental property, the benefits of having solar system on your property, and the rebates and tax credits for which you may qualify. Recently, Governor Brown signed SB 350 into law which will require the state to generate 50 percent of electricity from renewable energy sources and double energy efficiency standards for all buildings by 2030. Don’t forget to read our local and state legislative updates on page 11 and 13. You can visit the SDCAA website for legislative updates and white papers.

I want to encourage RHC members to attend the San Diego County Apartment Association’s 22nd Annual Mark of Excellence (MOE) Awards at the Hilton Bayfront on Friday, November 20 – if you haven’t registered, please do it as soon as possible. The MOE Awards is the largest event in the rental housing industry in Southern California that recognizes individuals and companies for their outstanding achievement – spend the evening with us an and support your friends and colleagues. Visit the SDCAA-RHC webpage to find out more.

Please contact us or visit our website if you need assistance. We always look forward to your feedback on SDCAA-RHC products and services.

Alan Pentico, CAEExecutive Director Rental Housing Coalition of South Riverside County and Desert Cities

From the Executive Director's Desk

RHC-RentalOwnerNovember2015 5

A Framework for Success Article

©Tan510jomast|Dreamstime.com

A New Key! As an owner or manager of rental property, you are naturally

concerned with the security of the property, the safety of your tenants, reducing your liability, all while remaining in budget. All of this can be accomplished by changing the locks between tenants. When you don’t change locks between tenants, you’re potentially leaving countless numbers of keys in the hands of past tenants who could return to the residence to commit theft or other crimes against current tenants, opening the property owner and the property manager up to potential lawsuits for not providing a safe living environment. While California does not require landlords to change the locks between tenants as some states do, it’s much more a question of providing a safe living environment for tenants and managing your liability. Many prudent property managers incorporate the practice of changing the keys into their tenant-turnover routine as a matter of fact. This article will consider some of the more economical options in providing

this overall measure of security.

Changing HardwarePurchasing new knobs and deadbolts is a nice aesthetic upgrade for your property. The tenant gets new keys and you have a receipt to show the locks are new. Changing hardware can be expensive, especially if there are multiple points of entry on the property. It may also result in each door having a different key, leading to a heavy key ring and confusion as to which key opens which door. Whether you pay someone to install or install yourself, this is another cost to consider.

SwappingHardware Accumulating a cache of knobs and deadbolts is another option. Your investment includes the initial purchase, storage space, time to remove and replace the hardware and to track the keys.

These resources will also be called on to

maintain the easthetics of the rental unit while you

match the finish of the hardware (brushed nickel vs. bright brass) on each door. As far as liability is concerned, the likelihood of prior tenants finding another property you manage with the lock that fits their old key is slim.

Rekeying Rekeying is another method of securing your property while reducing your liability. It is less costly than purchasing new hardware, requires no inventory and no storage space. Rekeying involves removing the pins from

The Key to Safety, Security and Reduced Liability is...ByJulieKern,MrRekeyLocksmith


InfoLink Rental FormsInfoLink Rental Forms:• Reviewed by California Attorneys• Updated annually to current regulations• Easy to use

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the lock cylinder, replacing them with new pins, and cutting a key blank to fit those pins. No hardware is removed, just the cylinders, so there’s less labor and time involved. This can be accomplished by removing the locks from the doors, taking them to a locksmith shop or kiosk to be re-pinned, and then reinstalling the locks on the doors. Another option is to call a mobile Locksmith to the property to change the locks on the spot.

When choosing a locksmith, ask some trusted colleagues for a referral. When calling for an appointment, ask the locksmith for an estimated price over the phone. Let them know how many keyholes there are to change and obtain a quote for a service call plus the fee to rekey each lock.

The locksmith invoice is evidence that the locks were all changed,

and the resulting peace of mind for the new tenant, for the property owner and property manager is well worth the cost.

So which option is best for you? It all depends on your budget, how you value your time, and what level of liability protection gives you peace of mind. Changing your locks or rekeying is probably your most economical and secure option. Hiring a professional locksmith provides an added layer of liability protection as they are a third-party doing the work, and not yourself.

Ahhh! Those locks are changed, the property is secured, the tenants are safe and your liability meter has plummeted. But, wait! Don’t forget to secure your copy of those new keys!

Key ManagementUndoubtedly, the stash of spare and master keys to your properties should be guarded like gold. If those keys are lost or stolen, you’ll spend a bank vault of profit dollars hiring a whole team of locksmiths to work overtime in order to secure your tenants before something tragic happens.

There are as many options for securing those keys as there are door knobs. Key management, key systems, key control, key cabinets, key vaults...where to start? Again with the most economical & practical options. First, the keys should be stored out of plain view of the casual visitor to your office. Perhaps in a back office in a locked cabinet, that is mounted in a closet that remains locked. If you have staff, limited access is still in order. Keys should be available only to staff with a specific need


Landlord Advice--Need

Help? Ask us!

Small operational issues can become significant problems

over time.

Whether you have questions about serving notices, or about normal wear and tear, or when you need a reliable tenant screening service we can help by providing expert, reliable advice, guidance and services on all kinds of landlord/tenant operational matters.

Call the RHC at 888.685.0980

and who have passed a background check. The key vaults or cabinets should be of sturdy construction that cannot be pried off the wall with a crowbar, and have a locking mechanism that cannot be easily pried open with a screwdriver. A wall or floor safe may be a practical option for an independent rental owner or a small property management office. Keys should be identified in a way that makes sense to you but not to the common thief. Tagging the key with the property address is not secure, no matter where you store them. Consider a numbering system on the key tag that relates to a code in the property file that is stored in a locked filing cabinet or in your electronic files. Space for these keys can also be an issue. Changing or swapping locks yourself may result in a different key for each point of entry on the home, resulting in multiple keys for each property, thus requiring larger storage space and more cost. Having a locksmith key each lock to the same key saves you & your tenant time and space, both of which equate to dollars.

About the author: Julie Kern is Business Manager and Co-Owner of Mr. Rekey Locksmith, San Diego. Mr. Rekey makes it easy for Property Managers by offering up-front pricing, billing accounts and a proprietary key system to their Property Managers clients at no charge. Mr. Rekey has been “Thinking Outside The Locks” for the real estate industry since 1995. www.Mr.Rekey.com


IsSolarStillaGoodValueProposition?

With the current barrage of radio ads and mailers proclaiming time is

running out to get a good deal on rooftop solar energy systems, what’s the real story? According to solar expert Ben Airth of the Center for Sustainable Energy (CSE), the future value proposition for commercial and multi-dwelling solar is somewhat uncertain, but it clearly will be taking a haircut as state energy regulators and utilities move forward with new policies and electricity rate structures.

Airth said the current success of commercial rooftop solar in California primarily results from three main factors: rebates from the California Solar Initiative (CSI), federal investment tax credits (ITC) and a favorable utility rate structure called net energy metering (NEM). Changes in all three are making the decision to go solar more complicated and

undercutting the solar industry’s ability to say with reliability what the finances and savings of photovoltaic (PV) systems will be over their 20-year lifetime.

Solar RebatesBeginning in 2006 with a $2.5 billion budget, the CSI program became the most successful solar installation program in the world. It has funded nearly 150,000 residential and commercial solar PV projects that provide nearly 2,000 megawatts of electrical power – the equivalent of about 30 nonnuclear power plants in California. Set to expire in December 2016, CSI has issued reservations for all of its funding and both commercial and residential CSI rebate applications are closed in San Diego.

That means if a solar contractor implies you can still qualify for a rebate, they are probably discounting the overall system

cost to make it appear they are making up the difference. The good news is that the price that local contractors are offering for solar is around $4.30/watt, which is about half the cost of solar ten years ago before the solar proliferation created by the CSI program.

Federal Tax CreditsCurrently, the federal government provides a considerable ITC allowance for solar PV systems – 30% of the total installed price with no cap. For those with sufficient “tax appetite” this is a true windfall. The problem is that the solar ITC is set to end for residential systems and go down to 10% for commercial systems on Dec. 31, 2016. The 30% solar ITC has been the main federal policy mechanism to support solar, and depending on who might be sitting in the White House or controlling Congress going into 2017, it

ByC.Colgan,TheCenterforSustainableEnergy


might be extended. At a recent solar industry conference, Vice President Joe Biden proposed shifting the oil industry’s $5 billion in annual tax credits to clean energy efforts to help solar and reduce overall carbon emissions while also pushing for apermanent extension of the solar

ITC.

So when solar sales reps tell you the tax credit is ending, they are partially right in that for commercial property owners it will be lowered to 10%, but what may eventually happen to the credit is unknown.

Net Energy MeteringThe third major component of solar’s value proposition is even more complex – net energy metering, a special billing arrangement that provides credit (at full retail rates) to solar PV customers who produce excess electricity and send it into the utility grid.

Currently, NEM customers pay only for the amount of electricity used from the utility over-and-above the amount of electricity generated by their solar system (in addition to a monthly minimum customer transmission,

distribution and meter service charge). A special type of “virtual” NEM allows multi-dwelling properties to allocate percentages of the output from a single PV system to individual units, resulting in a utility bill savings for each tenant.

Utilities don’t like NEM as they say it isn’t a fair policy while solar and sustainability advocates say it’s the most transparent policy to foster clean renewable rooftop solar installations. The crux of the NEM issue for those considering solar is that the California Public Utilities Commission is currently developing new policies that will change the way solar energy overproduction is credited in the future. That’s why solar companies are saying get in now and lock in the main benefit of today’s NEM, selling back clean energy at full market value, for the life of the system (about 20 years). It’s a fairly good strategy, especially when combined with the present ITC, Airth said, considering the value of the future NEM policy in California is uncertain.

What to do NowWhile there are certain advantages of going solar now, there’s really

no bad time to buy because you will always be replacing dirtier, nonrenewable energy with cleaner, renewable power from the sun, Airth said. And although upcoming circumstances may make it seem like solar won’t be as great of a value in the future, there are many other factors

beyond the three outlined that hold great promise. Among them are energy storage technologies combined with solar PV systems.

By storing solar energy on site in batteries that discharge their electricity during periods of peak demand, it is possible to shift energy needs from the grid to a more self-contained system, Airth explained.

“When solar and storage come together, it will create a source of clean, renewable energy that can reduce peak demand, help smooth the intermittent production of wind and solar, save utilities transmission and distribution costs and greatly reduce the need for fossil-fueled power plants,” he said.


White PapersSDCAA-RHC

• CAPP Brochure• City of San Diego Recycling Info Packet• County of San Diego Recycling• Craigslist Tips Paper• Crime Free Multi-Housing Programs• Dealing with the Death of a Tenant• Dept of Energy Water Heater Efficiency Standards• Do Not Track Disclosure Law (AB 370)• Domestic Violence in Rental Housing• Initial Pre Move-Out Inspections• Mandatory Recycling at Multifamily Properties• Mini-dorm Fact Sheet• NAA Criminal Background Check Toolkit• NMHC - Music Licensing• Plumbing Retrofit Requirements• Pool Safety and Maintenance Requirements - effective Jan. 1, 2015

• Pool Signage Requirements• Proposition 65 - Noticing & Posting Guidelines for Multifamily Properties• Rent Adjustment Kit • Renting to Tenants with Questionable Credit History• Renting to Tenants with Pets• Residential Battery Disposal• San Diego Cause Eviction Ordinance• San Diego Water Submeter Billing• Satellites in Rentals• Service & Companion Animals• Smoke Alarm Laws (Updated!)• Smoking Guidelines Packet• Smoking in Rental Housing• Towing Vehicles from Private Property• Water Conservation Information Packet

Smart insights to industry issues and practices that help you comply with the law and learn best practices.

To access the White Papers, login to your SDCAA/RHC account

M e m b e r s h i p


UpdateontheNovemberelectionsinRiversideCountyOn November 3, voters turned out to participate in various local elections in Riverside County. The elections included cities such as Desert Hot Springs, Menifee, Palm Springs, and Perris.

Kristin Bloomer and Craig Ewing were elected Board Members to the Desert Water agency. Menifee residents elected Planning Commissioner Lesa Sobek to serve the last year of former Councilmember Wally Edgerton’s term who left the seat and passed away earlier this year. In the City of Perris, former Councilmember Wayne Yarbrough easily won election to replace Julio Rodriguez who resigned his seat earlier this year.

In the mayoral and council elections for Desert Hot Springs, Councilmember Scott Mattas won narrowly over incumbent Adam Sanchez. Residents elected Russell Betts and Anayeli Zavala to serve the city’s two council seats.

Palm Springs residents elected Robert “Rob” Moon to be Palm Springs next Mayor, Moon emerged victorious from a field of 8 candidates. Voters also elected Geoff Kors as one of the city’s councilmembers, and J.R. Roberts won by only 20 votes for the other open council seat.

Palm Springs city races received a lot of attention in light of several state and federal investigations

and an FBI raid of City Hall this summer. The investigations centered on several city council votes concerning the sale of city parcels to a private developer who had a business relationship with Mayor Steve Pougnet. The investigations focused on Pougnet’s business dealings with the developer who purchased several city properties at a reduced price while the company’s business license was suspended for owing back taxes. Pougnet at one time was hired as the company’s consultant in other real estate transactions. The investigations are still ongoing.

TheGrowingPainsofPalmSpringsDevelopmentAside from the state and federal investigations regarding the business relationships of Mayor Steve Pougnet, one of the big issues that emerged during the Palm Springs elections was the redevelopment of downtown Palm Springs. In recent months, there has been tension between the Planning Commission and the developer managing the project area. Some city officials and residents have questioned the 14-acre, $350 million makeover of downtown Palm Springs - will the master plan adopted in 2009 and updated in 2012 make downtown too dense and too tall? Initially, the master plan would be a blend of hotels, residences, and shopping. However, the vision never really gained much acceptance with some city

RHC LocalIssues

• UpdateontheNovemberelectionsinRiversideCounty

• TheGrowingPainsofPalmsSpringDevlopment

• SouthernCaliforniaEdisonelectricityrateschange

By Molly Kirkland, Director of Public Affairs


officials, and is creating a point of frustration.

In recent weeks, the city’s Planning Commission and Architectural Advisory Committee grudgingly approved several redevelopment projects, but only on the condition that the developers overseeing the downtown project area, Wessman Development, would reduce the height and scale of adjacent projects that will be built in the project area. Back in October, the Architectural Advisory Committee voted 4-2 to approve a 70-foot, six-story, 142-room hotel project but only if future development around the hotel would be limited to 50 feet in height or less. In spite of the commission’s and advisory committee’s request to scale down the projects, Wessman Development stated that it is not planning to alter the projects contending the projects will enhance downtown and make it a destination popular with residents and tourists.

Wessman Development presented a detailed plan to the Planning Commission that their proposed plan will change the appearance of downtown, but not to its detriment. For now, the consensus between the city and the developer is continue moving forward. However, it remains to be seen if the developers and commissioners will see eye-to-eye on downtown’s development, or will the present differences between the project managers and commissioners cause more delays for future projects.

SouthernCaliforniaEdisonelectricityrateschangeLast July, the California Public Utilities Commission adopted significant changes in the state’s electricity rate structure. The new, and controversial, rate structure will consolidate user rate tiers and changes over the next four years. In 2019, the state will begin using a ‘time of use’ electricity rate structure.

Southern California Edison (SCE) began implementing those new rate changes in October. The new plan raised electricity rates for homes that used relatively less energy, while lowering rates for homes that used more energy. Regardless of energy usage, all residential customers must pay a minimum $10 per month even if they use less than $10 worth of electricity. Low-income customers enrolled in the California Alternate Rates for Energy still must pay a minimum of $5 per month.

Water Conservation Packetavailable

online at

www.rhcsoriverside.com


CaliforniaCAPITOL NEWS

AninsidersviewtoCaliforniaRentalHousingIndustryPoliticsandGovernment

ByAaronRead&Associates,LLC

When the legislative year ended, the Governor had

30-days to sign or veto legislation presented to him. That date, October 11, 2015, having just passed, we now know what new laws will be taking effect on January 1, 2016 that will impact SDCAA members.

It was another long interesting year with many hard fought battles with SDCAA coming out on the winning side most of the time. When the Legislature reconvenes on January 4, 2016, SDCAA will again be in the middle of the action; protecting the rights of rental property owners not only in San Diego, but throughout California.

Before we get to the year-end recap, we thought we would share some statistics with you. This year, Governor Brown considered 941 bills, the third lowest number he has considered since beginning his third term. Of those, Governor Brown vetoed 133 bills; his second highest percentage of bills vetoed (14.13%) since returning to office in 2010, and signed 808 of the bills sent to him for consideration.

Below is a recap of the 2015

legislative year including summaries of important rental-housing related legislation and their dispositions.

Bills of Significance

SB364(D-Leno)–EllisAct- SB 364 would allow San Francisco to prohibit, by ordinance or ballot measure, a rental housing owner from removing a building from the market pursuant to the Ellis Act unless all owners in the rental property have held their ownership interest for at least five-years. The second round of Leno and the Ellis Act ended the

same way it did last session. SDCAA, and others, opposed SB 364 when it was heard in Senate Transportation and Housing Committee, where it fell one vote short of passage. As the bill deadline approached, it became evident that none of the “NO” votes were going to change their votes forcing Senator Leno to table SB 364. Senator Mark Leno then announced that he was abandoning efforts this year to take on “greedy speculators” who he says are “gobbling up San Francisco’s limited rent controlled housing supply.”

AaronRead&Associates

Aaron Read

Pat MoranJennifer TannehillTerrance McHale


Senator Leno is a formidable legislator and he will no doubt take the bill up in January of next year for round three.

SB655(D-Mitchell)–Mold-This bill makes housing substandard if, in the judgment of a code enforcement officer, there is any visible mold growth, excluding the presence of mold that is minor and found on surfaces that can accumulate moisture as part of their properly functioning and intended use. As initially introduced, SB 655 would have added mold to the conditions that make housing substandard. The bill was later amended to make clear that a health officer or a code enforcement officer must be involved to declare any mold a health and safety risk to the occupants and to declare that it was not found on surfaces that can accumulate moisture as part of their properly functioning and intended use, such as shower stalls. As a result of these amendments, CAA removed its opposition to the bill.However, SDCAA informed the author and Legislature that while we support proven and scientifically sound approaches to help ensure safe housing while encouraging property owners, managers and occupants to follow best practices for controlling excess moisture and mold in buildings, SB 655 still did not address our concerns.

SDCAA vigorously opposed SB 655 in committee and on both the Senate and Assembly floors. Despite our aggressive opposition, SB 655 passed and was sent to the Governor for his consideration. As a result, we met and discussed

the shortcoming of SB 655 with the Governor’s staff and provided them with additional background information buttressing SDCAA’s arguments in opposition to the bill. Since SB 655 establishes a dire policy precedent by forcing a vague definition of mold, checked by untrained and ill-equipped personnel, increased liability, all when strong programs exist in other states as models for a more scientifically-sound and professionally-implemented approach, we requested that the Governor veto SB 655 because it does not address fundamental problems SDCAA has with the bill, including;

• A Definition Without Meaning. The bill is overly broad in defining any amount of any mold as a substandard housing condition. Mold is present nearly everywhere and widely-accepted governmental guidelines state that not all mold conditions present unacceptable risk and that small areas of visible mold can safely be addressed by occupants regardless of the cause.

• Inspections by Untrained Individuals. The bill relies on building inspectors without proper training or equipment for inspecting, testing, or remediating mold. SDCAA supports proven and scientifically sound approaches to help ensure safe housing while encouraging property owners, managers, and occupants to follow best practices for controlling excess moisture and mold in buildings. SB 655 does not do this.

• Increased Liability. Mold as a substandard housing condition will lead to abusive litigation

practices, as SB 655 applies to all 300,000 species of mold that exist in the world without distinguishing between harmful molds or harmful levels of molds, and would criminalize violations of these provisions.

• Why Ignore Proven Solutions? Other states have enacted laws for the licensing of mold contractors in order to ensure the proper assessment and remediation of mold. Provisions have also been adopted providing liability protection for property owners and managers who use licensed contractors to correct mold problems. These programs ensure that mold is properly identified and removed, as well as provide tenants and housing providers assurances that the issue has been resolved.

The Governor, on the second to the last day of his deadline to act on legislation, signed SB 655 (Chapter 720, statutes of 2015). As with all difficult decisions, the decision on SB 655 was left to the end. SDCAA members and staff put up a valiant effort in an attempt to garner a veto. We want to thank all of SDCAA members who responded to SDCAA’s “call to action” and sent letters to the Governor’s office requesting he veto SB 655.

AB396(D-Jones-Sawyer)-Rentalhousingdiscrimination:applications:criminalrecords- As introduced, and subsequently amended, the bill limited when a landlord may inquire about a prospective tenant's criminal record.SDCAA successfully argued that


criminal background checks are an important tool to assist rental property owners in determining whether applicants pose a risk to tenants and to the property based on relevant prior conduct. That AB 396 will impose significant costs on rental property owners, will put existing tenants at risk, and will be unfair financially and otherwise to individuals with a criminal history.

The bill requires owners to adopt a cumbersome, time-consuming, multiple-step process of evaluating prospective renters and which prevents them from completing their necessary pre-rental due diligence. It will be financially burdensome on property owners to wait 14 days after giving an applicant a tentative denial, as well as unfair to other applicants who are waiting for decisions on their applications. Also, we are now asking owners and managers to determine whether an applicant has an unacceptable criminal record and could face significant liability if they make the wrong decision, and would likely be forced to consult with their attorneys every time an applicant with a criminal record applies for housing.

SDCAA opposed the bill and it was held in the Assembly Appropriations Committee. This may be an issue we will see again in 2016.

AB1448(D-Lopez)–Clotheslines–AB 1448 will require a tenant to obtain permission from the landlord prior to using a clothesline on the exterior of the building. Let us

repeat that, AB 1448 will require a tenant to obtain permission from the landlord prior to using a clothesline on the exterior of the building. As initially introduced, AB 1448 would have prohibited lease provisions that restrict the use of clotheslines by tenants at a property.

The bill was later amended, as a result of SDCAA’s opposition to the bill, along with other apartment associations, to require approval from the landlord. The sponsors and the author knew the bill would be killed and approached us regarding amendments that would remove our opposition. We told them that landlord approval prior to using a clothesline was a requirement for SDCAA to remove its opposition. They submitted language to us that met our demands and SDCAA’s, and others, removed opposition and the bill sailed through the Assembly.

Well, no good deed goes unpunished, so in the Senate Judiciary Committee the author agreed to amendments removing the requirement that “a tenant obtain permission from a landlord prior to using a clothesline on the exterior of a building.” She and the sponsors undid the agreement they reached with us in the Assembly. SDCAA immediately sent a letter of opposition demanding that our agreement be honored. We participated in a conference call and demanded the same. No new amendments – honor the agreement you made.

Finally, the author, on the last day to amend bills agreed to honor her commitment and amend the bill back to reflect the agreement

reached in the Assembly. The bill, once amended, passed easily and the Governor signed it, Chapter 602, Statutes of 2015.

You may have seen articles referring to the bill as the “clothesline freedom act” or something to that effect. What they all fail to mention is that a tenant must obtain permission from the landlord prior to using a clothesline on the exterior of the building. SDCAA successfully had the language requiring landlord approval put back in the bill.

AB551(Nazarian)-bedbugs - AB 551, establishes protocols and duties for rental property owners and tenants to follow when bed bugs are identified in a rental unit. SDCAA took an oppose unless amended position on the legislation. We were concerned that it would require landlords to purchase bud bug management plans from pest control operators every time a landlord had a bed bug infestation issue.

We felt it was unnecessary to require a landlord to purchase a management plan every time a bed bug issue occurred. With that, we engaged the author and sponsors and worked diligently on the legislation. We were very close to reaching agreement, however, more work remains and Assembly Member Nazarian, unlike Senator Wolk in SB 7, agreed to make AB 551 a two-year bill. SDCAA thanks the Assembly Member for not forcing the issue and allowing all interested parties to work on amendments until we are all content with the final bill language. We will continue


to work with the author and the sponsors on AB 551.

SB7(Wolk)–submetering- As you may recall, SB 7 was introduced as a simple water submetering bill. The bill, among other things, requires the installation of water submeters in new apartment units on or after Jan. 1, 2017. It specifically authorizes the imposition of an administrative fee by property owners or third-party billing companies when they read and bill tenants for their water use. It authorizes fees on tenants who pay their bills late and allows for additional enforcement for unpaid bills. It specifically leaves in place ratio utility billing systems (RUBS) used by owners at existing properties and exempts cities where they have a local water submetering ordinance.

After months of negotiations on this bill, we thought we had reached agreement with all parties involved. However, when the bill was heard in Assembly Water, Parks and Wildlife Committee, last minute amendments were accepted by the author, amendments that were not shared prior to the hearing or listed in the analysis, requiring installation and maintenance of submeters shall be provided by licensed plumbing contractors using workers who have graduated from a state approved apprenticeship program. Considering this would, in SDCAA’s opinion, slow the installation of submeters due to lack of installers, and the fact that it disallows current certified installers to install submeters (because they haven’t graduated from a state approved apprenticeship

program), and because the amendments were not shared per our previous agreement with the author’s office before any amendments were accepted, SDCAA opposed the bill.

We met with the author’s office and voiced our opposition. The author, after several requests, refused to address our last remaining issue. The author was offered an opportunity to return the bill to committee and amend it or press forward.

She decided to press forward thus forcing SDCAA and others to engage full force in opposing the bill. After several days of constant lobbying, Senator Wolk presented her bill on the Assembly floor where it garnered no more than 30 votes (29-28), falling well short of the 41 needed for passage.

The bill is not dead. It is a two-year bill and Senator Wolk will undoubtedly try again when the Legislature returns in January. In the interim, SDCAA and other interested parties will need to assess whether or not to move forward with our own water submeter bill, one that we can control.

SB328(D-Hueso)–PesticideUse– SB 328 requires a landlord or the landlord’s agent who applies pesticides at the property to provide the affected tenants with a written notice. For some time, California law has required notification requirements of pest control companies when they apply pesticides at residential properties. This year, Senator Hueso introduced a bill attempting to extend these

same requirements to landlords when they apply pesticides inside tenants residences (at their request) and to common areas. So, when a tenant notifies a landlord s/he has ants, etc. and requests a landlord apply pesticides to eradicate said pest, prior to applying the pesticide, the landlord must tell tenants in writing the pest or pests being targeted, the name or brand of the product being used, and a specific notice like that required of pest control operators.

We met repeatedly with the author and his staff to negotiate amendments to a bill that, when introduced, was so onerous as to be unworkable. After months of discussion, AB 328 was amended into its final form and passed by the legislature and signed by the Governor.

LegislationSignedbyGovernorBrown

AB418(D-Chiu)–DomesticViolence;IntenttoVacate–AB 418 reduces the time limit for a tenant who is a victim of domestic violence, to give a notice of intent to vacate to the landlord from 30-days to 14-days. When the bill was first introduced, SDCAA took a support if amended position on the bill because the bill required the property owner to return the security deposit within the same 14-day timeframe as the notice of intent to vacate. SDCAA, while supportive of the bills intent, informed the author of the bill as to the difficulty of complying with the security deposit issue. Once the author removed the language from the bill, SDCAA was glad


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to support the bill. Signed by Governor, Chapter 70, Statutes of 2015

AB447(R-Maienschein)InsuranceDiscrimination–AB 447 will prohibit insurers from discriminating against rental property owners who offer housing for tenants with Section 8 vouchers or other low-income programs. Some insurers have discriminated against property owners who participate in housing assistance programs, treating similarly situated properties differently, or refusing to offer or renew policies, simply because of the presence of tenants who have availed themselves of legitimate government benefits. They argue this serves as a disincentive for property owners to participate in these important affordable housing programs, particularly in high-cost California. AB 447 will hopefully address this situation. refused to address our last remaining issue. Signed by Governor, Chapter 432, Statutes of 2015

SB600(D-Pan)–Discrimination:ImmigrationStatus–SB 600 amends the Unruh Civil Rights Act to prohibit discrimination on the basis of “citizenship,” “immigration status,” and “primary language.” Under this bill, a landlord who asks a prospective tenant to verify his/her immigration status will not constitute a violation of this law. Also, the bill clarifies that landlords need not provide documents in a language other than English unless the landlord negotiates contracts in another language (as already required by existing law). Signed by Governor,

Chapter 282, Statutes of 2015.

Bills Vetoed by the Governor

AB35(D-Chiu)–AffordableHousingTaxCredits– AB 35 would have increased California’s Low Income Housing Tax Credit by $300 million for the construction and rehabilitation of affordable housing units across the state. As you may recall, this was one of Speaker Atkins four bill package related to low income housing. SDCAA reviewed the four bill package and discussed several of the bills with the Speaker when SDCAA leadership met with her earlier in the year. When presented to the Governor, he vetoed the bill.

Governor’sVetoMessage To the Members of the CaliforniaStateAssemblyI am returning the following nine bills without my signature:Assembly Bill 35,Assembly Bill 88,Assembly Bill 99, Assembly Bill 428, Assembly Bill 437, Assembly Bill 515, Assembly Bill 931, Senate Bill 251, Senate Bill 377

Each of these bills creates a new tax credit or expands an existing tax credit.

Despite strong revenue performance over the past few years, the state' s budget has remained precariously balanced due to unexpected costs and the


provision of new services. Now, without the extension of the managed care organization tax that I called for in special session, next year's budget faces the prospect of over $1 billion in cuts.

Given these financial uncertainties, I cannot support providing additional tax credits that will make balancing the state's budget even more difficult. Tax credits, like new spending on programs, need to be considered comprehensively as part of the budget deliberations.

AB428(D-Nazarian)–SeismicRetrofit:TaxCredits– The bill would have allowed a tax credit in an amount equal to 30 percent of the qualified costs paid or incurred by a qualified taxpayer for any seismic retrofit construction on a qualified building. Seismic retrofitting of rental housing seems to be coming to the forefront especially in the Los Angeles and San Francisco and will undoubtedly become an issue for others. AB 428 was an attempt to help pay for the costs of the retrofitting. Unfortunately, the Governor vetoed the bill. His reasons are spelled out in the veto message above (AB 35).

SB251(D-Roth)–DisabilityAccess:Lawsuits–SB 251, among other things, establishes a presumption that certain “technical violations” are presumed to not cause a person difficulty, discomfort or embarrassment for the purpose of an award of minimum legal damages in a construction-related accessibility claim. The bill applies in those cases where the building or business owner is a small

business and has corrected the accessibility violations within 15 days of receiving legal notice of the claim. The bill also protects small businesses from liability for minimum legal damages if the owner receives an accessibility legal claim within 120 days after the business owner obtains an inspection of its premises by a certified accessibility inspector. The bill also creates tax incentives for businesses to correct violations, and requires the State Architect and the California Commission on Disability Compliance to post specified information to their respective Web sites for the purpose of educating the public on disability access laws.

The Governor vetoed the bill for the same reason he vetoed AB 428 and AB 35. In vetoing these three bill (and others), it seems the Governor was making a point as to what his policy priorities are and sending a message to legislators with his veto messages..

The Legislature reconvenes for the second year of the 2015-16

legislative session on January 4, 2016. All bills introduced in 2015 still in their house of origin must pass out of their house of origin (i.e., Assembly bills introduced in 2015 must pass out of the Assembly by January 31, 2016) or they are “dead” bills. We will see thousands of new bills introduced, many of which will be bills of interest to SDCAA. We will also continue to engage on two-year bills like SB 7 and AB 551 in the hopes of reaching agreement on amendments.

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All of us at one time or another had a job that was, let’s say, less than fulfilling

and that we dreamed of quitting. Hand-in-hand with that of course is how we would quit, thus inspiring many fantasies about telling off the boss, co-workers or interminable clients. Hollywood has provided great fodder for this – Jennifer Aniston in Office Space, Bill Murray in Stripes or Tom Cruise in Jerry McGuire. One wonders if Speaker of the

House John Boehner (R-Ohio-8) had similar whimsies last month as he announced his resignation both as Speaker and from his seat in Congress effective at the end of October. Likely not, as his announcement was characteristic of his usual professionalism and desire to put the institution he loves in front of his own needs. He seemed more inspired by the visit of Pope Francis than by visions of verbal comeuppance for those who made his life so difficult for the past several years.

As expected, Mr. Boehner’s resignation has created a chaotic environment as Republicans seek to fill the vacuum he will leave. The words had barely escaped the Speaker’s mouth when the jockeying began in earnest. (There

were some signs it had begun even before). Initially, things played out as one would expect - nearly all of those currently in GOP leadership positions quickly announced their intention to move up the ladder. Kevin McCarthy (R-Calif.-23), the current Majority Leader was running for Speaker; Steve Scalise (R-La.-01), the current Whip was running for Majority Leader, and Patrick McHenry (R-N.C.-10), the current Deputy Whip was running for Whip. Cathy McMorris Rodgers (R-Wash.-05), the current GOP Conference Chair and Luke Messer (R-Ind.-06) the current Policy Committee Chairman ultimately chose to remain in their respective positions. There were challengers outside of leadership for all of these positions, but at least in McCarthy’s case, the odds seemed to be in his favor.

Then, just one day before the vote to nominate the party’s candidate for Speaker, the ground shifted as the House Freedom Caucus (HFC), a group of about 40 very conservative members long displeased with existing leadership, announced their support not for Rep. McCarthy but for Rep. Daniel Webster (R-Fla.-10), a freshman and favorite of the conservative wing of the Republican Party. While this was certainly not good news for Rep. McCarthy, no one – including members of the HFC – thought this would ultimately stop him from securing the Speakership. Apparently, Mr. McCarthy did not have that same confidence and he announced during the nominating meeting that he would not seek that office and would instead remain Majority Leader. He reportedly said that he was not

THE

ByGregBrown,VicePresidentofGovernmentAffairs, NAA


the man to be the face of the party and wanted unified support within the party for whoever was the Speaker.

In the words of the Rep. Mark Sanford (R-S.C.-1), Mr. McCarthy’s announcement created “mayhem” in the caucus meeting. The news was apparently a surprise to literally everyone in the room, included Speaker Boehner who reportedly immediately postponed the Speaker nomination vote and left the room in a hurry. Since Mr. McCarthy is keeping his Majority Leader position, that freezes Rep. Scalise and Rep. McHenry in their current respective positions. It also ends the campaigns of all those members who were challenging them. Perhaps more importantly, it creates a free-for-all in selecting a new Speaker of the House.

In addition to Rep. Webster, Rep. Jason Chaffetz (R-Utah-3), chairman of the House Oversight and Government Reform Committee, is also a candidate for Speaker. Whatever the odds were that either of them would win the nomination before, they have changed radically now. It’s almost certain that other candidates will enter the election, but there are also discussions within the caucus of a “caretaker” Speaker to take the party through the end of the year. For his part, Speaker Boehner has committed to remaining Speaker until the party finds a replacement for him. No one was prepared for both Mr. Boehner and Mr. McCarthy to take themselves out.Mr. Boehner’s departure compiled with these late-breaking developments has serious implications for the legislative

calendar this fall. In his last month on the job, Mr. Boehner pledged to “clean out the barn” for his successor. And since he no longer has to care about reelection to Congress or the Speakership, he can make deals with whomever he wants. In fact, negotiations are already underway on a two-year budget deal that could eliminate the prospect of government shutdowns until 2017. Further, the Treasury Department updated its forecast for the debt limit, now reaching it on November 5 which means a deal could and probably should be made while Mr. Boehner still holds the gavel and can negotiate with Democrats and the Administration more freely. Look for deals on both of those items before Boehner departs.

Other outstanding legislative items remain but will not be solved this month. A highway bill and tax extenders are two at the top of the list and must see some kind of action before Congress adjourns for the year. As usual, these will come down to dollars and cents. The least common denominator is likely in both cases.

One legislative issue high on NAA’s priority list is nearly complete – negotiations over the National Defense Authorization Act (NDAA) and specifically the funding for the Basic Allowance for Housing (BAH). Recall that this subsidy for the housing costs of military personnel is critical to those NAA members who are partners in the

Military Housing Privatization Initiative. Once again we managed to stave off deep cuts to the BAH and instead will see only a modest 1 percent reduction. This is not a perfect outcome but at least minimizes the damage.

The x-factor with the NDAA is the President. He has stated that he will veto the bill as currently drafted. The Senate passed the compromise legislation with enough votes to override any veto, but it is unclear if the House has the votes to do the same. If the President does veto the bill and the Congress cannot override that veto then the bill will have to be changed. How the BAH fares under those circumstances is unclear. The great advocacy work of the NAA Privatized Military Committee members to get us to this point may be required again.

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