Anaheim Property Management Blog

Election Round-Up 2020

Election Round-Up 2020

Well, that was a nail biter.  Almost every political race and every ballot measure was tightly contested.  You undoubtedly have your opinion about the presidential election, but this piece will focus on the ballot measures and political trends that impact your income property in California.  

  • The Assembly and State Senate – As part of the larger voter turnout, both the state assembly and senate were impacted by this election: they both became bluer and more dominated by the democratic party.  Why should this matter to you?  

    • Before the election only 11 of the 40 state senate seats were held by republicans, the democrats already had a “super majority” and needed no votes from any republican senator to pass legislation.  Now they have a super super majority with four republicans losing their seats to democrats and only 7 republicans in Sacramento.  They can hold caucus meetings at a family dinner table and now have virtually no power. 

    • The assembly did not change much, but it did not have to because only 18 of the 80 assembly seats are held by republicans and the democrats already hold a super majority.  It appears they may have picked up one more seat and solidified their veto proof standing.

    • Because of these super-majorities, the legislature, with a signature from the Governor, can pass any laws they want.  As an example, they passed the emergency covid measure which banned evictions through January 31, 2021, placed all rentals under AB 1482 and instituted the 15 day notice to quit period. Nothing prevent them from making a few of these changes permanent even after the pandemic is over.

  • Proposition 15 – The split roll measure failed, but barely, and this might give the legislature some impetus to pass some version of this in order to shore up state finances, pay some pension bills and provide additional funding to schools. 

  • Proposition 19 – This measure was sponsored by, and supported heavily by the California Association of Realtors.  They spend nearly $30 million of their own dues money to get this narrowly over the finish line.  It allows anyone over 55, to transfer their property tax base anywhere in the state, even if they buy up, up to three times.  A person could sell their large family home in Orange County for $1 million, and buy a 2 bedroom condo with ocean views for $1.1 million, but keep their lower property taxes.  A piece of proposition 13 had to be sacrificed to pay for this economic largesse, so now all inherited property, if the inheritors do not occupy the property, will be reassessed to market value.  So, mom passes and leaves the $800,000 single family home with an annual property taxes of $1,000, making this property very attractive as a rental, now has to pay annual property taxes of $8,000, so more heirs will decide to sell rather than lease it out.  The state estimates this will generate almost a billion dollars a year in additional revenue, which the Realtors wisely committed to the cost of fighting wild fires.

  • Proposition 21 – A tweak to rent control, it would have expanded rent control properties to any owner with 3 or more properties, and then limit the rent increase from the previous rent to 15% over a 3-year period.  For example, a property is leased below market at $2,000 and market rent is $2,500.  The owner could only increase the rent to $2,100 the first year, $2,200 the second and $2,300 the third.  Although these changes would only be available to cities with rent control measures in place, it would have encouraged more cities to adopt rent control.  It failed badly and was not supported by the Governor, but don’t be surprised if legislation does pass expanding the properties subject to AB 1482 Statewide Rent Control, which only applies to buildings with 2 units or more.

I am a Director with the California Association of Realtors and we have already heard that the two priorities for the legislature next year is to pass laws making it easier to build more properties in the state and pass additional renter protection laws.  I would expect the unexpected in 2021, just like 2020.