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<br />Economic & Planning Systems, Inc. 4 Regulatory Context <br />2. Regulatory Context <br />This chapter summarizes the existing California legal context relevant to <br />evaluating the fiscal and economic impact of the proposed Ordinance and the <br />specific provisions of the proposed Ordinance in this context. <br />California Rent Control <br />The California Tenant Protection Act established a statewide maximum allowable <br />rent increase and just-cause evictions protections. The statewide policy caps rent <br />increases at the lesser of five percent plus the increase in the regional consumer <br />price index (CPI) or ten percent of the lowest gross rent charged over the 12 <br />months prior to the increase.5 <br />Cities and counties may also enact their own rent control with a lower rent cap <br />than the statewide provision. However, any local ordinance is limited by the <br />Costa-Hawkins Rental Act which exempts single family homes, condos, and all <br />housing built after 1995 from rent control (but not just cause eviction <br />protections). Costa-Hawkins also dictates that all units covered by rent control <br />are subject to vacancy decontrol, allowing landlords to establish market rate rents <br />for new tenants.6 As a result, while the proposed Ordinance would establish a <br />local rent stabilization program, several categories of housing would remain <br />exempt from rent control so long as Costa-Hawkins remains in effect. <br />However, the proposed Ordinance is written to automatically expand in scope if <br />Costa-Hawkins is repealed or amended. Specifically, the proposed Ordinance <br />would apply to all rental units except those with a certificate of occupancy issued <br />within the last ten years. This means that, in the event of a future repeal or <br />substantial amendment of Costa-Hawkins, rent stabilization could apply to single- <br />family homes, condominiums, and newer multifamily housing once those units are <br />more than ten years old. <br />Although the 2024 statewide ballot measure to repeal Costa-Hawkins did not <br />pass, similar measures were also placed on the ballot in 2018 and 2020. The <br />repeated appearance of Costa-Hawkins repeal measures suggests that future <br />repeal or amendment efforts remain a reasonable policy factor to consider. If such <br />a change occurs, the proposed Ordinance could have a broader long-term impact <br /> <br /> <br /> <br />5 Rent Control Is Here: California’s Tenant Protection Act of 2019 | Nolo California Civil Code Section 1947.12. <br />6 Costa-Hawkins Act • California Apartment Association (caanet.org) <br />8.A. - Page 132 of 168 <br />142