AB 858: Another terrible idea from a Donk legislator in Sacramento
Moorlach: AB 828 Would Make California’s Housing Crisis Worse
Over at the Voice of OC John Moorlach has an article about AB 828, a bill to “help the poor” by making the landlords poorer.
Among other things, the bill would force most property owners to cut residential rents by 25 percent, even for tenants who didn’t lose jobs because of the economic disaster. Supposedly it would be “temporary” for 12 months. But “temporary” government actions commonly are extended. The Proposition 30 tax increase from 2012 even included “temporary” in its title, but was extended to 2030 by Proposition 55 in 2016, despite surplus revenues that year.
Any industry forced to make 25 percent cuts in prices would be devastated. Ting should ask such high-tech companies in his city as Uber and Twitter what would happen if they were forced to cut prices by 25 percent.
If AB 828 becomes law, many apartment owners would flood into already anticipated, overcrowded bankruptcy courts due to an inability to pay their own expenses, including mortgages, maintenance and staff. Their filings would compete with other businesses, especially restaurants forced to permanently close.
Under AB 828, what then is a financially strapped property owner to do? Consider converting an apartment building into condominiums? Selling or trading the units may avoid fiscal ruin for property owners, but it also will reduce the number of rental units on the market.
If bills like this become the norm, then do not be surprised when you see a freeze in new apartment construction. Why would anyone invest in apartments if their rents are reduced below the threshold of making a positive cash flow? And what would prevent California from forcing even more rental cuts? If 25 percent is needed today, why not 50 percent or 75 percent tomorrow?
This would hit some Los Angeles property owners particularly hard who in the last two years have been forced to retrofit their properties for possible earthquake damage prevention. As Moorlach notes in the article, this measure would kick landlords down and, combined with the recently passed statewide rent control measure, keep them there. In fact it is a double kick, as it doesn’t provide for reducing property taxes on these properties, only rent revenues.
Its time to make the phones in Sacramento ring.
I’m a landlord with four houses I rent. One House is occupied by a my disabled grandson with a family of three children and a nanny, the wife works, but is currently on furlough because of virus. The rent is $800. The next house is occupied by my son who is Disabled and on Medi Cal his rent is $800. Third house is housing two recovered alcoholics, their rent is $1800.
The mortgage is $1700. House four is one bedroom and is lived in by great grand daughter, currently on furlough, her rent is
$900. one and two are mortgage free, however there is gardening care on all and utilities on two and
insurance on all, Other maintenance is taken from my social
security. When necessary.
Explain to me how I can reduce rents!?
Shouldn’t Moorlach introduce a bill to provide needy renters with a 25% subsidy from the State? Or split the difference, 12.5% from the State and 12.5% from the landlord with a special low water rate on the unit, say 50% of the standard cost per Hundred Gallons.
Put competing bills in play to get a fair deal to all and divide opposition.
In HG Wells “the Time Machine” the Moorlachs were underground creatures that fed on the humans who lived above ground. There’s a parallel.