Amended  IN  Senate  June 10, 2024
Amended  IN  Assembly  January 25, 2024
Amended  IN  Assembly  March 09, 2023

CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Assembly Bill
No. 846

Introduced by Assembly Member Bonta

February 14, 2023

An act to add Section 50199.24 to the Health and Safety Code, relating to low-income housing.


LEGISLATIVE COUNSEL'S DIGEST


AB 846, as amended, Bonta. Low-income housing credit: rent increases.
Existing law establishes a low-income housing tax credit program, through which the California Tax Credit Allocation Committee allocates low-income housing tax credits aimed at providing affordable low-income housing within and throughout the state. Existing law authorizes the committee to undertake specified responsibilities in allocating the tax credit, including entering into regulatory agreements relating to projects that are allocated the tax credit. Existing law requires the committee, when allocating the tax credit, to prefer specified projects, including projects that serve lowest income tenants at rents affordable to those tenants. Existing law, the Costa-Hawkins Rental Housing Act, authorizes an owner of residential real property to establish rental rates for a dwelling or unit that meets specified conditions.

This bill would prohibit an owner of a project that received an allocation of the low-income housing tax credit and is subject to a regulatory agreement from increasing rent, over the course of any 12-month period, for a unit more than the lesser of the amount permitted by the program as a result of an increase in the area median gross income, 5% plus the percentage change in the cost of living, as defined, or 10% of the lowest rental rate charged for that unit at any time during the 12 months prior to the effective date of the increase. Notwithstanding these provisions, the bill would authorize an owner of a project to increase the rent up to 30% of the monthly income of the household occupying the unit. The bill would not apply when the committee or the Department of Housing and Community Development allows for a rent increase, as specified. The bill would specify that it does not authorize a local government to establish limitations on any rental rate increase not otherwise permissible under the Costa-Hawkins Rental Housing Act or affect the authority of a local government to adopt or maintain rent controls consistent with that act.

This bill would require the committee, on or before June 30, 2025, to adopt regulations to establish a limit on annual rent increases for tenants in existing properties that were allowed a low-income housing tax credit. The bill would require the committee, on or before June 30, 2026, and annually thereafter, to assess the limit, as specified. The bill would also make a related statement of legislative findings and declarations.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.Section 50199.24 is added to the Health and Safety Code, immediately following Section 50199.23, to read:
50199.24.

(a)For the purposes of this section, “percentage change in the cost of living” means the same as in paragraph (3) of subdivision (g) of Section 1947.12 of the Civil Code.

(b)An owner of a project that received an allocation of housing credit pursuant to this chapter or Section 12206, 17058, or 23610.5 of the Revenue and Taxation Code and that is subject to a regulatory agreement shall not, over the course of any 12-month period, increase rent for a unit more than the lesser of the following:

(1)The amount permitted by this chapter as a result of an increase in the area median gross income.

(2)Five percent plus the percentage change in the cost of living.

(3)Ten percent of the lowest rental rate charged for that unit at any time during the 12 months prior to the effective date of the increase.

(c)Notwithstanding subdivision (b), an owner of a project may increase the rent up to 30 percent of the monthly income of the household occupying the unit.

(d)This section shall not apply when the committee or the department allows for a rent increase due to the termination or exhaustion of project-based rental assistance or operating subsidy or to ensure financial stability, as determined by the committee, or fiscal integrity, as determined by the department.

(e)Nothing in this section authorizes a local government to establish limitations on any rental rate increases not otherwise permissible under Chapter 2.7 (commencing with Section 1954.50) of Title 5 of Part 4 of Division 3 of the Civil Code, or affects the existing authority of a local government to adopt or maintain rent controls or price controls consistent with that chapter.

SECTION 1.

 Section 50199.24 is added to the Health and Safety Code, immediately following Section 50199.23, to read:

50199.24.
 (a) The Legislature finds and declares all of the following:
(1) California has a critical lack of supply of housing affordable to lower income households.
(2) The lack of stable and affordable housing for lower income households threatens California’s economic, environmental, and social goals and is a primary contributor to homelessness.
(3) The low-income housing tax credit program is the largest ongoing funding source for the construction and preservation of housing affordable to lower income households in the state.
(4) It is the policy of the State of California that low-income housing tax credit funding maximize the provision of stable and affordable housing for lower income households.
(5) Federal low-income housing tax credit regulations give the states authority to apply further regulations, including rent caps.
(b) (1) Under the state’s authority to issue regulations to implement Section 42 of the Internal Revenue Code (26 U.S.C. Sec. 42 et seq.) and effect its purpose, the committee, on or before June 30, 2025, shall adopt regulations to establish a limit on annual rent increases for tenants in existing properties that were allowed a low-income housing tax credit.
(2) On or before June 30, 2026, and annually thereafter, the committee shall assess the limit established in paragraph (1). The committee may lower the limit, through regulations, if the committee deems it necessary based on the assessment.