Exceptions to the Rule
Some rental properties are exempt from AB 1482. Find out which ones are exempt and how to keep them that way.
Editor’sNote: State and Federal guidelines and legislation are constantly changing regarding COVID-19 and the shelter-in-place order. For the latest information, resources, financial aid, and forms, visit www.sfaa.org or www.caanet.org/coronavirus.
Certain properties are exempt from AB 1482—the statewide rental law passed in 2019. According to the ordinance, most single family homes and condos are not subject to rent control if the owners or property managers give all existing residents a disclosure by July 2020, and then to all new residents thereafter.
SFAA has added this disclosure to the 2020 lease, so anybody using this new lease is already fulfilling this requirement for new renters. For any tenancy commenced or renewed on or after July 1, 2020, this notice must be provided in the rental/lease agreement. However, don’t forget to give this disclosure to existing renters in single family homes and condos by July. For existing members, use the California Apartment Association form available for members (www.caanet.org/ab1482/). If you do not provide this notice, your unit is not exempt.
To determine whether your property is exempt from AB 1482 rent caps and to download the CAA form, visit www.caanet.org/ab1482/.
Rental Affordability Act
California voters will decide whether or not to pass the Rental Affordability Act—Michael Weinstein’s latest anti-housing measure—on the November ballot. CAA and SFAA are preparing another campaign to prevent radical rent control and vacancy control from becoming law and further exacerbating the state’s homelessness crisis.
“With so much uncertainty and anxiety among rental housing providers during the pandemic, it’s easy to have lost focus on campaign season. However, Prop 10 2.0 has already qualified for the November ballot and represents another attempt by the Aids Healthcare Foundation to impose vacancy control on all rental housing statewide. It’s important that SFAA members fundraise and fully contribute to the Californians for Responsible Housing campaign as soon as possible in order to defeat this misguided and harmful ballot measure,” says Charley Goss, government affairs director at SFAA.
The measure, also dubbed Prop. 10 2.0, would weaken Costa Hawkins, allowing cities and counties to impose rent control however they choose—even below the rate of inflation—on buildings fifteen years or older.
The cost of the campaign battle will be around $70 million. Ultimately, the ask to fund the campaign is $100 per unit owned or managed; however, we know rental property owners are suffering losses due to COVID-19 and may not be able to contribute the full amount at this time. Anything helps though, so even small donations at this point will go a long way.
Please go to www.SFRH.org or www.sfaa.org for additional information.
CAA-sponsored legislation to help both landlords and renters endure the financial difficulties brought on by COVID-19 is now in print. Senator Lena Gonzalez (D-Long Beach) introduced SB 1410, the COVID-19 Emergency Rental Assistance Program. Under the bill, the state of California would make direct rental payments to help tenants who cannot afford to pay their rent. SB 1410 would cover at least 80% of unpaid rent attributable to the pandemic.
Gonzalez said her legislation aims to provide economic security—both for renters and housing providers—during this unprecedented time. “COVID-19 has immensely affected our economy, put pressure on both tenants and property owners to fulfill their payment obligations, and has exacerbated the need to keep people housed during an existing housing crisis,” Gonzalez said in this news release. “In order to protect our broader housing economy, SB 1410, an urgency measure, will not only provide much-needed immediate assistance to both tenants and property owners but also protect our most vulnerable communities.”
Debra Carlton, CAA’s executive vice president for state public affairs, added: “The COVID-19 pandemic has brought frightening and uncertain times, leaving many Californians with health challenges and economic difficulties.
“Senator Gonzalez has offered a solution that will help housing providers continue to pay their bills, and their employees, while also making it a little easier for struggling renters to get back on their feet financially when the pandemic ends.”
Eligible renters for the temporary COVID-19 Emergency Rental Assistance Program would include those who can demonstrate, as determined by the Department of Housing and Community Development, an inability to pay rent due to COVID-19 or a government response to the COVID-19 pandemic.
Rental housing providers can participate in the program on a voluntary basis. Qualifying landlords would receive at least 80% of the monthly rent the tenant owes for up to seven months, provided that they agree to not increase rent for the unit for a specified period; not charge late fees for the past due rent paid by the program, and not pursue any remaining rent owed for the months paid by the program.
This SB 1410 content was provided by the California Apartment Association.
Commercial Vacancy Tax on Hold
San Franciscans voted in favor of a retail vacancy tax in March 2020, which was scheduled to go into effect on January 1, 2021. Owners of commercial space that is vacant for more than 182 days will be taxed, according to the new law.
The San Francisco Board of Supervisors just voted to delay this tax for almost a year. Supervisor Aaron Peskin wrote the measure to postpone the retail vacancy tax hoping to ease some of financial burden businesses and landlords are enduring because of the shelter-in-place mandate.
Extensions for 1031 Exchanges
With a 1031 exchange under usual circumstances, a seller can defer capital gains on the sale of an income-producing property if the proceeds are reinvested in a similar property that is identified within 45 days of the sale, and then closed within 180 days.
The IRS released notice 2020-23, extending deadlines for 1031 exchanges (and like-kind exchanges) that fall within a certain timeframe. If the 45-day identification period deadline is between April 1 and July 14, then the deadline is extended to July 15, 2020. If the 180-day closing date is between April 1 and July 14, then the deadline is extended to July 15, 2020.
Delayed Property Taxes
After hearing from SFAA members, the Board of Supervisors passed a resolution to allow for property tax payments to be delayed until City Hall reopens to the public. This will give building owners additional time to submit payment without penalty during this period of economic uncertainty. Check sfaa.org regularly for updates.
SFAA is working round-the-clock to keep the nonprofit running during shelter-in-place. Timely payment of membership dues is necessary to help the association help you.
The SFAA 2020 lease is now available. Some updates include new language to comply with California’s rent control legislation (AB 1482, “Tenant Protection Act”) that passed in October 2019, and recommendations from SFFD and Recology.
SFAA members can pay to receive a hard copy of the SFAA Residential Lease Agreement or receive a PDF version via email. Eric Andresen—SFAA board member and former president—details the changes to the new lease in “Agree to Agree” on page 40.
Annual SFAA Trade Show has been rescheduled to September 3, 2020 at the Fort Mason Center. Attendees will learn all about the latest trends, products and services in the multifamily housing industry. Consult with legal and management professionals, get to know service providers, improve your overall effectiveness at the free educational classes, and meet peers in the San Francisco rental property market. The event is free and open to the general public, so bring your friends and enjoy! For more information on the tradeshow or to become a sponsor, contact firstname.lastname@example.org.
The SFAA Rent Forbearance Form and information on temporary rent reductions are available at www.sfaa.org. If a tenant has told you they are unable to pay full rent due to COVID-19, use this form to detail the financial hardship, the agreed-upon reduction, and length of time of the reduction.
For more information on how to help your tenants in this difficult situation while best protecting yourself, turn to the Legal Q&A on page 20.
SFAA classes will be available online during shelter-in-place. The San Francisco Apartment Association is happy to announce that current CCRM students can continue their education during the shelter-in-place right from home. We understand keeping up education is crucial and want to assist our members to stay up to date. Thus we will be setting up more webinars in the future. See the calendar on page 48 for a full list of classes.