Just before the end of this year’s Legislative Session, the Governor’s office and several top state Legislators put together a proposal purportedly to assist both property owners and tenants. The piece of legislation is now known as Assembly Bill 3088 or the “The Tenant, Homeowner, and Small Landlord Relief and Stabilization Act of 2020.” This legislation is merely meant to be a temporary “stopgap” to get the Legislature through the end of January and provide it with needed time to develop a more permanent solution. The legislation covers rent payments from March 1, 2020 through January 31, 2021 only, and the Senate Pro Tempore and Governor have stated that this issue will be the first thing taken up in during the December and January time frame when the Legislature reconvenes. This legislation may just be the final “blow” to small property owners across the state.
While the Legislature and Governor’s office have given us rental property owners an “end date” of January 31, 2021 for the various local eviction moratoriums, there is nothing in this piece of legislation that will stop local jurisdictions from passing much more restrictive moratoriums or requirements after January 31. In effect, rental property owners are being forced to carry interest-free rent debt of their tenants for nearly two years without any assistance other than limited foreclosure protections for smaller owners.
The Tenant, Homeowner, and Small Landlord Relief and Stabilization Act of 2020, or Assembly Bill 3088 is merely another knee-jerk attempt to stabilize housing on the backs of rental property owners who are being forced to carry interest free loans for nearly two years. The likelihood of collecting on rental debts that are nearly two years old, for most owners, will be impossible. The Governor and State Legislature is merely setting rental property owners up for a complete write-off of past due rent. It is yet another financial burden we small owners are being forced to bear because we are believed to be politically expendable in the eyes of Governor Newsom and the State’s Legislature.
The Apartment Association of Greater Los Angeles and other associations like us are deeply and steadfastly opposed to this bill. The California Apartment Association, which represents the minority of owners in California some of whom are among the largest, publicly traded owners with healthy balance sheets and easy access to capital, had supported this legislation and pushed it through with all of its flaws in hope that the Governor will come out against Proposition 21, the rent control ballot initiative. At the same time, by helping this bill’s passage, the California Apartment Association and the bill’s proponents may very well be delivering a death-blow to many rental property owners throughout the state, particularly the small “moms and pops,” who cannot survive much longer without collecting rent. A political card has been dealt that will further exasperate an already horrendous housing situation here in California and will force thousands to ultimately lose their properties.
While the bill addresses various periods of loan forbearance for small property owners, California has little if any jurisdiction over Federally regulated banking institutions and has added that aspect as mere window dressing. Driving smaller owner out of business as the Governor appears to want to do, will only reduce housing supply and drive up the costs of housing in California.
Offering rental housing providers, a mere token of 25% of rent in another 5 months (no monthly payment requirement, just that it must be paid by January 31, 2021) following 6 months of no rent payments is of no consequence to owners facing foreclosure or that have liquidated their emergency fund of savings to maintain their buildings and support their families. This legislation may ultimately be a complete disaster for housing providers and will have long lasting consequences as lenders will surely pull out of the business of financing rent properties when the government can merely come in and alter rental contracts at their whim, and developers seek more favorable jurisdictions for housing development.
Rental property owners are suffering just like renters. They have been forced to forgo rent while trying to keep up with the costs of maintaining and operating their investment properties, while many have also lost fulltime jobs or have been inflicted with COVID-19. Yet, there has been no relief whatsoever that has been offered to small rental property owners. We have been forced to “take-it” and say “thank you.”
Daniel Yukelson is currently the Executive Director of The Apartment Association of Greater Los Angeles (AAGLA). As a Certified Public Accountant, Yukelson began his career at Ernst & Young, the global accounting firm, and has since served in senior financial roles principally as Chief Financial Officer for various public, private and start-up companies. Prior to joining AAGLA, Yukelson served for 15 years as Chief Financial Officer for Premiere Radio Networks, now a subsidiary of I-Heart Media, and for more than 3 years as Chief Financial Officer of Oasis West Realty, the owner of the Beverly Hilton and Waldorf Astoria Beverly Hills where he was involved with the development and construction of the Waldorf. Yukelson was formerly Chairperson of the City of Beverly Hills Planning Commission and served on both Beverly Hills’ Planning Commission for 6 years and Public Works Commission for 3 years.