Dive Brief:

• California legislators passed a bill this week to implement a statewide rent cap for most tenants. It's an attempt to address the state's affordable housing crisis that is leading to high housing costs, low housing availability and an increase in homelessness in a number of cities.
• The bill limits rent increases to 5% each year, after accounting for inflation. It also provides other renter protections such as stricter parameters when owners try to evict tenants without just cause.
• Gov. Gavin Newsom, D, has expressed support for the bill and is expected to sign it into law. He said in a statement that the "anti-gouging and eviction protections will help families afford to keep a roof over their heads, and they will provide California with important new tools to combat our state's broader housing and affordability crisis."

Dive Insight:

Newsom has made increasing affordable housing capacity and reducing homelessness a priority since he took office earlier this year.

In July, he signed off on the budget — which he proposed in January with about $1.8 billion to address housing and homelessness — after legislators further amended it with provisions to improve housing capacity and affordability.

Newsom stressed that cities deemed not in compliance with a state law establishing housing goals will face fines ranging from $10,000 to $100,000 per month. That happened following his legal action against Huntington Beach for the city's alleged refusal to comply with state affordable housing requirements.

Los Angeles Mayor Eric Garcetti and Oakland Mayor Libby Schaaf tweeted support for the legislation.

No one should become homeless because of exorbitant rent increases or an unjust eviction. #AB1482 brings us one step closer to solving the housing crisis in our state. I'm glad to see this bill on its way to the Governor's desk. https://t.co/KBVVviEZG8

— Mayor Eric Garcetti (@MayorOfLA) September 11, 2019

Capping rents helps #Oakland families stay in Oakland -- thank you CA state senate. https://t.co/1ln3SyD9QT

— Libby Schaaf (@LibbySchaaf) September 10, 2019

Los Angeles and Oakland are among the cities hardest hit by California's housing crisis.

A Los Angeles Homeless Services Authority report released this summer indicates Los Angeles' homeless populations has increased 16% since last year. The following month, Garcetti outlined how the city would allocate $124 million from the state budget to curb homelessness.

Oakland received two housing-related funding boosts from Kaiser Permanente. The company committed several million dollars to create and preserve stable and affordable housing in the Oakland area. It also included Oakland among the 15 communities to receive $3 million to fight chronic homelessness; half of the communities receiving money are in California. 

Not everybody is on board with the rent cap legislation. Some opponents say it will be more difficult for landlords to profit from rental properties, possibly leading them to convert rental units to owner-occupied units. Opponents also say the measure discourages future investments in rental properties.

“The most effective way to fix California's housing crisis is by building more housing across a range of price points and AB-1482 makes that harder to do," Doug Bibby, president of the National Multifamily Housing Council, said in a statement.

The California Association of Realtors said in a statement that it is "disappointed" with the bill's advancement because it doesn't go far enough to help the housing crisis.

"While several of our recommendations were included in AB 1482, including the exemption of single-family homes and condominiums, the final bill did not do enough to increase the supply of affordable rental housing," the association said.

California is the third state to pass a rent control law this year, following the lead of Oregon and New York. The former was the first state in the country to pass rent control legislation, which is usually a topic cities handle. Colorado tried earlier this year, but it failed, while Washington is among the states where leaders reportedly are considering a rent cap law.