Governor-declared emergencies with price restrictions lapse

At least for now, California has no governor-declared states of emergency that trigger the state's anti-price-gouging law, including limits on rent increases.

The last three such emergencies - for wildfires in Butte, El Dorado and Plumas counties - expired on June 30. The proclamations had been in effect since 2018.

However, some cities and counties may have ongoing local emergencies that also trigger California's anti-price-gouging law. Therefore, it's important to check with your local jurisdiction to see what emergency proclamations may be in effect at the local level before engaging in a rent increase.

Each of the governor's declarations trigger Penal Code Section 396, which makes it illegal to increase the price of many consumer goods and services, including that of rental housing, by more than 10% above pre-emergency levels for the life of the declaration. This limitation also applies to rent increases at turnover - and to any increase while the price-gouging restrictions remain in effect - even if those limits are extended for years.

With fire season underway and drought conditions lingering, the lack of state-level emergency proclamations will likely be brief. Last summer, the governor declared states of emergency for a range of issues, from an energy crunch to wildfires to a heat wave to an oil spill.

Keeping tabs on the areas affected by states of emergency, and the reasons for the protections, is challenging for landlords and business owners. Although states of emergency are designed to expire after 30 days, both California and local governments often extend declarations multiple times, sometimes for years, without making it easy to track. This causes confusion for landlords attempting to determine whether a local, state, or federal emergency declaration applies to their property. Further complicating matters, local governments are not required to disclose when they have an emergency proclamation in place

To help address this situation, the California Apartment Association is sponsoring SB 1133 by Sen. Bob Archuleta, D-Pico Rivera. The bill would require California's Office of Emergency Services to post on its website all emergency proclamations by the governor and California local governments, and it will prohibit criminal penalties for noncompliance with Section 396 until the applicable restrictions are posted on the CalOES website.

SB 1133 also would address the overly broad application of Penal Code Section 396. At present, all states of emergency, regardless of their type, trigger the 10% price cap on nearly all consumer goods and services during the time that the proclamation is in effect.

Under SB 1133, if an emergency declaration lasts for more than a year, the corresponding rent cap may only continue if it can be justified as relevant to housing. To carry on the cap, the declaration must explain why the underlying emergency has - or is likely to cause - abnormal disruptions in the rental housing market. SB 1133 last week passed the Assembly Public Safety Committee and next goes to the Appropriations Committee.

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