Ban on evictions, fines for landlords clears committee

The state Senate Judiciary Committee on Friday passed bills to protect residential and commercial renters harmed by economic shutdowns resulting from the coronavirus. But organizations representing landlords and insurers pointed out these bills could have constitutional problems and may simply transfer risks onto property owners and company shareholders.

Much of the day's debate focused on SB 939 by Sen. Scott Wiener, D-San Francisco, a former assistant San Francisco city attorney. It would bar evictions of commercial tenants while Gov. Gavin Newsom's emergency orders relating to the pandemic remain in place. It would fine landlords up to $2,000 for harassing or retaliating against commercial tenants.

The bill would be limited to small businesses, not large corporate tenants.

Wiener testified his bill was designed to help persuade landlords to renegotiate with tenants to help prevent a wave of small business closures that could result from the crisis. It is also intended to address the lesser forms of social distancing that might last years or even become permanent. For instance, Wiener noted that many restaurants will likely be forced to offer many fewer tables when they reopen, making it all but impossible to pay rental rates that were established before the pandemic. "It's not in anyone's interest to have vacancies where the landlord gets no revenue to pay their loans off," Wiener said. "But sadly, all too many commercial landlords are refusing to renegotiate or insisting that the pre-COVID, unrealistic rent be paid."

Testifying in opposition, Rob Lapsley, president of the California Business Roundtable, said the bill would go beyond providing temporary protections during a crisis and instead fundamentally and permanently change landlord tenant relationships, creating new problems in the process. "A crisis due to this pandemic to our economy should not be a catalyst for public policies that would create a crisis in other sectors, such as housing and commercial property," Lapsley said. "If the goal is to protect restaurants, the state should prioritize financial resources and help support restaurants, not unfairly shift the crisis to property owners, which will in turn shift the crisis to banks and then to shareholders, which in reality are many of the small business owners you are trying to help."

Lapsley said, "The bill has significant constitutional problems" and if it passed in its current form his organization "will be pursuing this issue in the courts." According to a bill analysis, opponents say SB 939 exceeds the state's authority under the contracts clause of the U.S. Constitution.

Shortly after the bill passed, the California Business Property Owners Association put out a statement saying it would continue to seek amendments.

"We call on the Legislature to write a bill that helps all businesses and balances the needs of both property owners and commercial property renters," said Association President and CEO Rex Hime.

These critics will retain some leverage as the bill heads to the full Senate. Wiener wrote SB 939 as an urgency measure, meaning that it would go into effect immediately after passages rather than waiting until Jan. 1. This also means it will need a two-thirds vote to pass, demanding that he either gain the support of nearly all Senate Democrats or bring in some Republican support.

Sen. Maria Elena Durazo, D-Los Angeles, objected to the bill's use of the federal government's definition of a small business as one having 500 or fewer employees, saying this could result in big, solvent companies gaining an unfair advantage. Wiener said he was open to changing this number.

The committee also passed protections for a very different type of tenant: mobile home owners. Sen. Connie Leyva, D-Chino, testified that people who own their homes but not the land they reside on often get caught in a Catch-22 of rising rents and inability to move.

Her bill, SB 915, would prevent evictions, rent increases and refusal to renew leases during the duration of either the statewide or local states of emergency due to the pandemic and for 120 days afterward.

"The residents in mobile home parks face unique housing circumstances," Leyva testified, after reading off to each member of the committee the number of mobile home parks in their district.

Also at the hearing, Sen. Richard Pan, D-Sacramento, testified he was dropping SB 890 that aimed to make it a crime for a perpetrator to livestream a violent act, but would bring back a version of the bill next year. It was inspired by several livestreamed shootings, as well as a 2019 incident in which an anti-vaccine activist shoved Pan outside the Capitol while broadcasting on Facebook Live.