For the first time in 2013, the California Apartment Association has taken official positions on a series of bills, from whether to ban smoking in multifamily complexes to a proposal that would require interest payments on security deposits.

CAA staff is continuing to analyze and debate the merits of hundreds of bills sponsored by the state Legislature.

As the CAA Legislative Steering Committee takes formal positions in the months to come, we’ll report that information in this newsletter, as well as on our blog, caapartments.org.

Here’s a rundown on CAA’s positions thus far:

Oppose: SB 603 (Leno-D) Interest on security deposits; penalties

As in the past, CAA is against local and state proposals that impose interest on security deposits. In the case of SB 603, a tenant would receive less money in interest than the costs incurred by his or her landlord to administer the account holding the security deposit. Landlords would have to pay interest on security deposits the second month of each calendar year. It also would mandate that the interest rate reflect the federal reserve discount rate as of Dec. 31 of the preceding calendar year, which is now .075 percent. The penalty for failing to pay by the last day of February could reach three times the interest amount from any rent due on or after March 1 of that year.

The landlord also would have to notify all tenants annually regarding the right to receive interest on security deposits.

Moreover, within 20 days of receiving the deposit, the landlord would be required to provide written notification to the tenant with the name and address — physical or electronic — of the financial institution holding the money. Security deposits would not be allowed to sit in an account with the landlord’s personal funds. This law would not overturn any local ordinance requiring that landlords pay tenants interest.

This bill would change penalty provisions as well. A judge must award a penalty if the landlord incorrectly — no matter the reason — fails to return any portion of the tenant’s deposit in violation of the law, including the walk-through process. The award must at least amount to the security deposit. Because the penalty is not capped at twice the amount — as found in existing law — the judge could award up to $10,000, the small-claims court cap.

With current law so vague on what the landlord can keep, many tenants will surely challenge their deposit return. Any degree of victory would mean getting all of a security deposit back, plus penalties and actual damages.

Oppose: AB 746 Levine (D- San Rafael) Smoking prohibition multifamily dwellings

Patterned after an ordinance passed in San Rafael, this bill would prohibit smoking cigarettes and other tobacco products in units and all other areas — with a limited outdoor area exception — of new and existing multifamily dwellings. The bill does not include marijuana.

AB 746 would apply to duplexes, apartment buildings, and tenant or owner-occupied condominiums. Smokers could still light up in  outdoor areas that meet several criteria, such as being at least 20 feet from any unit or enclosed location and at least 100 feet from playgrounds, swimming pools, and school campuses. The smoking zone would have to be identified by conspicuous signs.

Violations would constitute an infraction and punishable by a fine of up to $100. The bill implies but does not specify that local governments would impose and collect the fines. It is unclear, however, if a landlord who does not respond to complaints would also be breaking the law. This bill would not override stronger laws at the local level.

CAA sponsored, and the governor signed legislation in 2011, that lets landlords decide whether to allow smoking on the premises. CAA members seem to agree that tenants who smoke add a considerable amount to the cost of turnover and cleaning of units and at times cause disputes between neighbors. This was confirmed in a study performed by CAA and the University of California, Los Angeles in 2009. Certainly, a demand exists for smoke-free multi-family housing. It makes good business sense for property owners to provide housing where tenants can live free of second-hand smoke. We believe the free market will meet the goals of this bill while allowing smokers to continue enjoying their freedom to partake in a legal activity in the privacy of their homes, wherever landlords allow it.

Oppose unless amended: SB 750 (Wolk-D) Water submeters & meters multi-family housing

This bill would require the installation of water submeters on all new multifamily units and commercial structures built after Jan. 1, 2014.

It’s similar to a pair of bills introduced in the past four years on which CAA took “oppose unless amended” positions. CAA has a policy that encourages meters and submeters on new construction and on existing construction where feasible. SB 750, however, is problematic for property owners and developers for a number of reasons.

The bill does not authorize an administrative fee for recouping the actual costs associated with operating a submetering program and prohibits ratio utility billing systems – or RUBS. CAA has repeatedly asked for wording in any submeter-requirement bill explicitly authorizing an administrative fee.

Additionally, the availability of approved submeters in California is unclear. CAA has asked for wording in the previous bills that would suspend the requirement for installation of submeters if an adequate number of submeters are not approved and available in the state. CAA has received information from builders and developers that certain local governments are charging arbitrary “hook up” fees for each submeter. When rental property owners install water submeters, local government bears no burden or cost whatsoever. CAA has requested specific wording that stops or prevents this practice for water submeters.

Other groups opposed to this kind of measure include the California Building Industry Association, the California Business Properties Association and the Utility Conservation Coalition party billing vendors.

Oppose: SB 626 (Beall-D) – Workers’ compensation

This bill would severely undercut a deal last year between labor organizations and employers to reform the state’s workers’ compensation system.

The reform package guaranteed injured workers nearly $1 billion in benefit increases, while projecting a reduction in employer costs by closing certain loopholes and making California’s workers’ compensation system operate more efficiently — with fewer disputes and litigation.

Specifically, SB 626 would roll-back reforms dealing with timely, high-quality medical treatment and a more predictable – and less litigious – permanent disability system.

The legislation would leave California employers worse off than before the reforms. Not only would they face pre-reform escalating costs, they would face $1 billion in benefit increases with no expectation that the cost be offset by system savings. A very large coalition of employers throughout the state is opposing the bill.

Support: AB 116 (Bocanegra-D) Subdivision map extensions

Like other legislation before it, AB 116 would extend the life of expiring subdivision maps by 24 months, keeping existing, approved maps and the jobs they create active as the construction industry continues to rebound from the recession.

CAA supported all previous legislation to extend subdivision maps. According to the author, about 2,500 active, tentative tract maps are in existence, representing roughly 330,000 housing units — a significant portion of the maps higher density, multi-family variety. Without AB 116, construction projects associated with these maps would need to restart the entitlement process should they expire.

Support if amended: SB 612 (Leno-D) Human trafficking

Like related bills supported by CAA and signed into law, SB 612 would allow survivors of human trafficking to end residential leases without penalty, a protection already available for victims of domestic violence, sexual assault, stalking, and elder or dependent-adult abuse. The bill also would expand the type of documentation allowed to prove abuse and mandate confidentiality of such documentation.

It also would allow domestic violence victims and human-trafficking survivors to document their abuse with a statement from one of the following professionals, acting in a professional capacity, as an alternative to a court-issued restraining order or a police report, as currently required.

CAA will request clarification in light of the overly broad categories of people who can issue statements of abuse. The bill, for example, would allow a medical professional and health care provider to offer such confirmation.

We could support this bill if it were more specific, tying all “qualified third parties” to definitions found in existing law, narrowing the list of professionals authorized to confirm a tenant is a victim.

Oppose unless amended: AB 59 (Bonta-D) Parcel taxes

This bill would clarify that school districts can assess parcel taxes in accordance with “rational classifications” among taxpayers or types of property within a district — as long as the taxes are applied uniformly within those classifications. For example, while parcel taxes would still have to be uniform for all commercial property, a different rate could apply to residential property or industrial property. Now, under Borikas vs. Alameda Unified School District, the rate must be the same for all parcels, regardless of zoning. Bonta’s bill would overturn this case.

As a general rule, CAA’s local divisions and members, while not always opposing local parcel taxes, have argued that the local initiatives must clearly put multi-family housing in the same classification as single family homes when calculating a parcel tax and that the tax should be per parcel –- not per door and not square footage. If classifications are not defined in the bill, leaving local governments with the decision, apartment owners will be vulnerable to higher taxes. In this light, CAA members would be well-served with an amendment in the bill that classifies multi-family housing in the same category as single family homes.

Oppose: AB 188 (Ammiano-D) Split roll tax

This bill seeks to impose a form of “split roll” by triggering more frequent reassessments of property.  The bill defines change in ownership so that a reassessment of property could occur when, cumulatively, 100 percent of the ownership interest transfers in a rolling three-year period.

Split roll proposals such as AB 188 that address ownership in a legal entity typically are viewed in the context of commercial properties, but any type of real property owned by a legal entity could be subject to a new change-in-ownership definition. Such a proposal could affect the assessment of single-family homes, multi-family properties — such as apartments, duplexes and mobile home parks, agricultural property, family farms, and small businesses whenever such properties are owned by a legal entity as defined.

A large coalition of employers throughout the state oppose the bill.  AB 188 is viewed as the first step toward a full-fledged split roll, with the goal of eventually requiring reassessment of all commercial property on an annual basis.

Oppose: SCA 3 (Leno-D) Parcel taxes

SCA 3 would allow school districts, community college districts and county offices of education to impose, increase or extend parcel taxes on real property with the approval of 55 percent of voters, rather than the existing two-thirds requirement.

The governor has proposed to significantly alter the way school districts are funded, and it could take several years to discern the effect of any shifts. Until we are able to measure the result of those changes and the impact of more than $30 billion in education funding increases over the next five years from recently enacted Propositions 30 and 39, voters will not have constructive information to ascertain whether student achievement has improved, and consequently, whether more taxes are warranted. CAA staff anticipates that a large coalition of business groups will oppose this bill and other tax measures to follow.

Support: AB 227 (Gatto-D) Proposition 65

This legislation would amend the Health and Safety Code to allow a business that receives a notice for violating the warning provisions of Proposition 65 to correct the violation within 14 days. If the violation is corrected within this period, the business would be shielded from further legal action.

Proposition 65 — the Safe Drinking Water and Toxic Enforcement Act — was enacted by ballot initiative in 1986. It was intended to protect Californians and their drinking water from chemicals known to cause cancer, birth defects, or other reproductive harm, and to inform citizens about exposures to such chemicals. Since its enactment, Proposition 65 has been a tool to keep toxic chemicals out of the state’s water supplies and has raised awareness about possible exposure to carcinogens. Unfortunately, some people, specifically lawyers, have taken advantage of provisions in the law to ensnare businesses in lawsuits, with the hope of obtaining settlement payments that were never contemplated by the voters when they passed Proposition 65.

The rental housing industry has been the target of these types of suits.