Local Advocacy Update January 2025

Local Advocacy Update (January 2025)

By Janet Gagnon, Senior Vice President, Government Affairs & External Relations

Once again, this past month, the Apartment Association of Greater Los Angeles’ (AAGLA) local government advocacy team was involved in numerous important issues impacting our members. At the time this article we written, some of the matters covered here had not yet been finalized – look for our email alerts for further updates. The following is a rundown of important issues.

L.A. Supervisors Reduce Allowable Rent Increase Limits to 60% of CPI with 3% Maximum

On November 6^th, the Los Angeles County Board of Supervisors voted 4-to-1, Supervisor Kathryn Barger being the only dissenting vote, to drastically reduce the allowable annual rent increase formula to just 60% of the Consumer Price Index (CPI) with a maximum of 3%. These reduced limits apply to all multifamily properties built on or before February 1, 1995, located within the unincorporated areas of Los Angeles County that are covered by the Rent Stabilization and Tenant Protection Ordinance (RSTPO). Smaller owners with 10 or fewer units will be allowed an additional 1% increase each year over and above the 60% CPI limitation, or up to a maximum of 4%. Luxury unit owners, defined as properties with 25 or more units per parcel receiving $4,000 or more in monthly rent, will be allowed to receive an additional 2% increase over and above the 60% CPI limitation, up to a maximum of 5%. The CPI is based on a 12-month average ending in September 2024. This new, greatly reduced formula will be effective starting January 1, 2025. 

In addition, a new provision was also added, Section 8.52.095 of the RSTPO, related to Reasonable Accommodations for Tenants with Permanent Physical Disabilities Related to Mobility. This new provision provides that any permanently physically disabled tenant may request to be relocated to an available accessible rental unit located on the rental property if certain conditions are met at the same amount of rent.

L.A. County Discusses Mandatory Air Conditioning (A.K.A. Indoor Air Temperature)

On November 14^th, the L.A. County Department of Public Health hosted a webinar to discuss indoor air temperatures, which is the first step towards the County requiring that multifamily properties become “cooling ready” specifically defined as air conditioning only. While the County’s ordinance would impose a requirement for multifamily properties within the unincorporated areas, the City of Los Angeles is also looking at imposing similar requirements and would likely adopt, at a minimum, whatever the County decides. Other cities are also highly likely to follow suit with similar requirements making this issue of utmost importance to ALL multifamily property owners throughout L.A. County.

The County is currently considering setting a maximum indoor air temperature of 82 degrees Fahrenheit. This low temperature means that only air conditioning as “active cooing” will be able to meet the new requirement, especially in high heat areas such as Antelope Valley, San Fernando Valley and San Gabriel Valley. This is in contrast to an earlier report by Public Health that recommends a maximum of 86 degrees Fahrenheit to allow for evaporator cooling as “active cooling”, which is the least costly active cooling technology requiring the lowest amount of electricity and not damaging the ozone layer. Further, the California Department of Industrial Relations set a maximum of indoor air temperatures of 87 degrees Fahrenheit in August 2024 for all workplaces throughout the state. Therefore, it is completely unreasonable for the County to set such a low maximum temperature as it is clearly unrelated to health needs and instead is to wrongfully limit compliance to the most expensive form of cooling for both rental housing providers and renters, namely air conditioning.

The cost of putting in new, much larger electrical panels, wiring, reinforcing load bearing structures to handle additional weight, and hanging new drywall and painting will be extremely costly for multifamily rental housing providers, especially mom-and-pop owners who have limited financial resources. These smaller property owners cannot afford to stay in business if forced to incur such monumental capital costs particularly after the County recently passed an ordinance that severely reduces the amount of allowable annual rent increases to just 60% of the CPI with a maximum of only 3% under the County’s Rent Stabilization and Tenant Protection Ordinance (RSTPO). The additional 1% increase added to the 60% of the CPI allowable increase for owners with 10 or fewer units will not be nearly enough to absorb such a huge new capital cost associated with installing retrofitting for air conditioning and will force many naturally occurring affordable rental housing providers out of business and their buildings off the market only to then be redeveloped by new corporate owners as luxury housing. Long-term, low-income renters will then lose their existing housing.

The County has a very large geographic area with cooler locations along the coast and in the mountains with warmer locations in the Valleys. As such, many locations do not need air conditioning and that is why they were originally built without it. Still, today many do not need air conditioning thanks to the coastal breezes and buffering mountains. In addition, as we have all experienced this past summer with multiple blackouts, our electric grid is already overwhelmed with current electricity demand. Requiring a maximum air temperature to be achieved by air conditioning would only make the grid far less stable by adding enormous amounts of increased demand.

In addition, air conditioners are appliances that require huge amounts of electricity to run and will cause huge increases in monthly utility bills for renters. Existing renters will not realize the huge financial impact of running these units until AFTER receiving their first utility bill. Lastly, air conditioners use refrigerant to cool that damages the ozone and is counter to local climate change goals. There are many “passive cooling” alternatives, including tree canopies, blackout curtains, solar screens and insulation.

L.A. City to Vote on Moving Forward with All Electric Appliances Mandate

On Tuesday, December 10^th, the Los Angeles City Council was to vote on moving forward with a requirement that all multifamily properties remove all natural gas appliances (furnaces, water heaters, stoves, and clothes dryers) and replace them with all electric appliances as well as take various energy efficiency measures Some of the ways that housing providers will be impacted are as follows:

• Deferred maintenance and repair for the property due to lack of funding for these new mandates.
• Sale of older properties (many under the existing rent stabilization ordinance (“RSO”) to developers for replacement as “McMansions,” luxury condominiums and luxury rental units unaffordable to existing renters.
• Increase in rents due to increased costs of converting to all electric appliances, including upgrading of existing electrical panels, caping of existing gas lines, cost to purchase electric appliances, skilled electricians and plumbers needed to do the work as well as cost for energy efficiency measures.
• Increase in cost of living for renters in running electric appliances as cost per unit of electricity is substantially higher than for natural gas.

L.A. City Creates New Enforcement Program Covering Non-RSO Property Owners

On November 5^th, the Los Angeles City Council voted unanimously to create a new enforcement program applicable to all rental housing providers with properties that are not currently subject to the city’s existing rent stabilization ordinance (RSO). All property owners who have multifamily properties built after October 1, 1978, single-family houses (including mansions), condominiums, accessory dwelling units (ADUs) and Junior ADUs (collectively, “Non-RSO” owners) will now be required to pay $31.05 per rental housing unit to the City of Los Angeles in order to pay for this new enforcement program, which will hold rental property owners accountable to comply with several, recently passed ordinances targeting Non-RSO owners, and that will be implemented in December 2024. The new ordinances include:

• Requiring property owners to pay mandatory relocation fees to renters of up to $12,211 if the owner raises the annual rent by more than 10% or Consumer Price Index (CPI) plus 5%, whichever is lower.
• Restricting evictions to specific Just Cause reasons only, including mandatory relocation fees for No-Fault evictions to be paid by property owners to existing renters in amounts up to $27,500.
• Restricting evictions to renters who have fallen behind in paying rent by at least one month’s worth of fair market rent (“threshold”).
• Restricting owners from asking certain questions or taking certain actions towards renters, including actions that disturb the comfort, repose, peace or quiet of a renter or interfering with their use and enjoyment of the rental unit, as forms of harassment with severe mandatory judgment awards.
• Mandating the continued allowance of pets obtained by renters during COVID-19 without the property owner’s permission.

We encourage everyone to spread the word to anyone renting out their single-family properties, condominiums, accessory dwelling units (ADUs), Junior ADUs and newer multifamily buildings of all sizes to become AAGLA members and become educated on these new requirements and the City’s new enforcement program.

L.A. City Imposes Extreme Damages for Claims of Harassment

On November 6^th, the Los Angeles City Council voted unanimously to make extreme revisions to the existing Tenant Anti-Harassment Ordinance (TAHO). The ordinance now requires mandatory damage awards equal to TRIPLE compensatory damages, including for mental and emotional distress, and civil penalties of no less than $2,000 PER VIOLATION. These changes will go into effect once Mayor Bass signs the ordinance, which must occur by November 18, 2024. In addition to these astronomical mandatory damage awards, the revisions also include a new prohibition against owners asking renters about their criminal history.

Unfortunately, AAGLA was the sole organization speaking out against these extreme damage awards and new prohibition on screening convicted criminals with no owners who spoke against them and very few who sent emails to the City Council opposing them. In strong contrast, there were dozens of tenant activists, renters, and legal aid societies that spoke in support of these drastic changes.

Burbank to Vote on Seismic Retrofit Requirements

On Tuesday, December 10^th, the Burbank City Council was set to vote on establishing a new seismic retrofit (a/k/a, earthquake retrofit) ordinance for all soft-story multifamily properties (these are properties that have open space ground floor parking underneath habitable units with the total structure being at least two stories in height). We urge all owners with soft-story properties in Burbank to immediately email the full City Council to express their concerns about this new, extremely expensive mandate imposed on small rental property owners that will devastate many existing naturally occurring affordable housing providers and force many such properties into the hands of developers for replacement as luxury housing. Some of the items that owners may wish to address with the members of the City Council include:

• Prior to passing an expensive, new seismic retrofit requirements, the City MUST conduct a cost analysis the same as every other city has done prior to passage of a retrofit ordinance. To do otherwise would be extremely irresponsible as it would have no relationship whatsoever with today’s actual costs of such major reconstruction and, as a result, it would create financial hardships and drive many existing rental housing providers who own older properties to sell out to luxury housing developers and force the relocation of their existing, long-term renters.
• The cost of seismic retrofit construction has skyrocketed since L.A. City Council passed its ordinance in November 2015 (more than 9 years ago) and the cost figures it used back then are now severely outdated. The city staff’s recommendations on a pass-through cost allowance, capped at a dollar amount that reflects L.A. City’s original program completely fails to recognize that the costs for materials have hugely increased since then, including steel, lumber and drywall, due to supply chain issues caused by COVID-19 and drastically increased rates of inflation rates over the past several years. Also, the proposed language fails to recognize that wages have substantially increased for professionals and skilled trades, including structural engineers, architects, carpenters, electricians, plumbers and painters. This is another reason that Burbank must conduct a robust cost study before passing an ordinance.
• The cost of seismic retrofit construction is extremely expensive, costing tens of thousands of dollars per unit. Small, independent rental housing providers do not have the financial resources to cover such expenses, and the city has identified no existing government sources of funding. As such, a mandate without government financial assistance would force mom-and-pop owners to sell their properties to developers for demolition and replacement as luxury housing. This will hurt all existing renters, particularly low-income renters, as well as reducing the total supply of naturally occurring affordable housing in Burbank at a time when such housing is critically needed.
• The PACE loan program mentioned by the city is fatally flawed and is why it has not been widely used anywhere it has been adopted for any type of program, including solar and energy efficiency. The problem is that the interest rates are excessive, and the loan entity takes first place in line as a creditor by replacing the existing mortgage company. This is unacceptable for mortgage companies as their loan covers the entire property for its full value. This requirement under PACE means that it is unusable for most property owners, especially multifamily property owners with 5 or more units that must take out commercial loans with average terms of only 5 to 10 years.
• The staff report on this item proposed NO distinction between smaller properties and larger properties in rolling out this new requirement. The reason that L.A. City’s program included different time periods for compliance was specifically to recognize that it would take small owners longer to try to obtain the necessary, substantial amounts of financing that would be required to pay for such major reconstruction work. In addition, L.A. City did not want to promote fly-by-night contractors lacking experience in competing for such work based on unrealistic timelines. The failure of the ordinance to provide for a staggered rollout based on different sizes of buildings is a substantial flaw that should be remedied prior to any ordinance being passed.

Huntington Park Passes Rent Control and Rental Registry Ordinance

On November 18^th, the Huntington Park City Council unanimously passed an ordinance establishing rent control and a new rental registry for all multifamily properties built prior to February 1, 1995. The ordinance also applies to duplexes when both units are not owner occupied and single-family houses with accessory dwelling units when both are not owner occupied. The ordinance goes into effect on December 17, 2024.

Rent increases are now capped at only one annual increase equal to 100% of the Consumer Price Index (CPI) or 3%, whichever is lower. In addition, the ordinance requires that all covered rental units be registered with the City within 60 days of the December 17^th effective date, namely February 16, 2024. However, no amount has yet been determined for the amount of rental registration fee that will eventually be assessed as the City will be conducting a fee study to determine it.

The ordinance also contains a tenant anti-retaliation provision that presumes retaliation if an action is taken against a renter by the owner within 180 days of the renter exercising their legal rights, including, but not limited to:

• Reporting habitability concerns or violations to local authorities;
• Joining or organizing tenant associations;
• Participating in the rent stabilization program;
• Requesting repairs or maintenance;
• Filing complaints about rent increases or unsafe conditions; or
• Exercising any other rights protected under either local, state or federal law.

Remedies for retaliation include reinstatement of rental terms prior to the retaliation, emotional distress and relocation costs for the renter, attorney’s fees and court costs. Penalties for violating the new ordinance include civil penalties of $1,000 per violation per day as well as criminal penalties of up to 6 months in jail or a fine of up to $1,000 or both.

Pomona Takes No Action on Rent Stabilization…Yet

On November 18^th, the Pomona City Council declined to take any action on creating a permanent rent control ordinance and rental registry with a new registration fee, paying private attorneys to defend renters during legal evictions (a/k/a, “Right to Counsel”), imposing a mandatory habitability program with a new fee or establishing a direct rental assistance program for renters facing emergencies. Instead, the City Council directed staff to bring back additional information in February 2025 to further discuss all these issues. We are truly thankful for this respite for the remainder of the year!

This delay means that the two new City Council members (replacing Council Members John Nolte and Robert Torres) who have been duly elected by the community to serve will be seated before these issues are discussed and decided upon. Also, it gives owners with properties in Pomona time to write personal emails to the continuing five City Council members as soon as possible expressing their personal stories of being responsible rental housing providers and how these costly and unnecessary regulations would seriously harm their ability to continue providing much needed affordable rental housing in the city and may ultimately cause them to sell their existing properties to corporate for conversion to luxury housing.

We urge our members to email the Pomona City Council now and express their strong opposition to permanent rent control, provide personal stories of how you operate as responsible rental housing providers in Pomona, and how these bad policies will force you to sell to corporate owners thereby reducing the supply of affordable rental housing.

This article is for informational purposes only. If you have any questions regarding your property or specific leasing issues and the requirements of any local law changes described herein, please consult with an attorney.