In the laundry list of things contributing to the affordability crisis, housing undoubtedly remains at the top for California.
Lawmakers have had to come up with creative ways to cut what seem to be a neverending litany of things that contribute to skyrocketing housing prices, reforming the state’s marquee environmental law being chiefly among them.
One other alternative? Making homeowners associations more affordable.
This session, lawmakers are going all-in on curbing HOA fees and rules as part of their latest effort to curb rising housing costs. Some proposals — from requiring HOAs to have rainy day funds to transparency protections for members — have been uncontroversial, even leading to unusual mutual support from Democrats and Republicans.
But one is spiking a bit more controversy.
Sen. Caroline Menjiver’s bill to dramatically reduce how much associations can increase monthly dues sparked a rare moment of public opposition from Democrats last month, with some voting against it alongside their conservative colleagues.
For this week’s newsletter, we’ll dive into the HOA fever in Sacramento and why the most drastic measure to curtail HOA authority has parties split.
Some things in life, like taxes, are certain. For more and more Californians, HOA fees are, too.
More than 14 million people, about 36 percent of the state’s population, live in an HOA community, according to the California Association of Homeowners Associations.
And the vast majority of new homes are managed by one, with the self-governing bodies increasingly contributing more to local governments for the cost of everything, from maintaining pools to public roadspublic roads to pools., with local governments.
Because everyone in an association is responsible for shared use property (such as a roof in a condominium) the costs of upkeep are budgeted by HOA boards each year by board members in a monthly assessment fee.
That fee is usually charged per month, from the low hundreds to several thousand dollars per month. Current law caps increases in these fees to 20 percent per year.
Average monthly payments statewide are about $300, according to the California Realtors Association, although costs can vary dramatically by area.
Rising utility costs and insurance premiums in recent years have driven up assessment fees, leading to eye-popping charges come the end of the month, like a $1,500 bill for one Walnut Creek man.
It’s led to crippling costs for homeowners already squeezed by hefty mortgages, according to Menjivar, a Van Nuys Democrat. Her legislation, Senate Bill 1007, would cap yearly increases at 8 percent, down from the current 20 percent.
“This does not mean that HOAs cannot raise assessments beyond the cap. HOAs can still go to their homeowners, but they have to put it for a vote,” Menjivar said at an April committee hearing.
“I get it, that it’s difficult to put it up for a vote. But I wanna make sure that you are made aware that if you’re gonna pay more, that you should have made that decision yourself, and that you’re able to plan.”
Consumer groups are sold. The California Association of Realtors and California Low-Income Consumer Coalition view the bill as a lifeline for homeowners feeling crushed by their mortgages.
“I trust the homeowners on this,” senior realtors association lobbyist Sanjay Wagle said. “I think they would make the decisions that are necessary if carefully explained to them.”
Developers and HOAs don’t feel as fondly.
Many associations are already struggling to cover rising inspection and labor costs. Limiting how much they could increase dues would make things worse, not better, said Louie Brown, a lobbyist for the Community Associations Institute, at the April hearing.
“The last thing a board member that’s elected by their members wants to do is increase assessments,” Brown said.
Building groups also argue a lower cap could spell trouble for members trying to sell their homes. If an already cash-strapped HOA can’t take in enough money, they argue, banks will be less willing to fund mortgages.
The strife made it onto the Senate floor last month.
Thirteen senators voted against the bill, including six Democrats who publicly voted against their colleague from Van Nuys. Typically, if members of the same party don’t support a member’s legislation, they don’t vote.
Pro-housing Sen. Scott Wiener, a San Francisco Democrat was among them, as were Encinitas Democrat Catherine Blakespear and San Diego Republican Brian Jones.
“I don’t see this as an area of abuse where anybody is making money on the backs of homeowners,” Blakespear told Voice of San Diego about rising HOA fees. A cap would leave homeowners with less money for fixing routine problems, she said. “I don’t see this as the right way to attack affordability.”
California’s Building Industry Association is a major opponent of the bill and gives tens of thousands of dollars to dozens of lawmakers nearly every year.
Jones has received a total of $22,900 from the association across more than a decade in office, according to CalMatters’ Digital Democracy database.
Blakespear, who took office four years ago, has received $6,500 from 2024 to 2025.
They’ve also received lots of money from the California Realtors Association, the bill’s biggest proponent. More than $10 million has been donated to state lawmakers since 2001, according to Digital Democracy, including thousands to both Jones and Blakespear.
What’s next? After passing the Senate by the skin of its teeth in a 24-13 vote last month, the bill awaits a hearing in the Assembly Housing and Community Development Committee on Wednesday. There could be amendments before it heads for a final floor vote in the lower chamber later this month.
In Other News
What Gov. Gavin Newsom and many other Democrats feared would come true materialized earlier this week: A wealth tax initiative qualified for the November ballot, according to the secretary of state.
The tax, which would impose a one-time five percent tax on the assets of residents who own more than $1billion in property and other assets, is fiercely opposed by the governor and powerful labor groups such as the California Teachers Union. They fear it’d drive tech executives (and their tax dollars) out of California and off to Texas or Florida.
However, it can still be negotiated off the ballot if Newsom and lawmakers are able to reach an agreement. They have until Monday to reach a deal ahead of a June 25 deadline.
What I’m Reading Now
- Oakland’s mayor used a rare power to potentially give her an even bigger one, the San Francisco Chronicle writes.
- It’s even easier to visit more than 30 state parks thanks to a new initiative in honor of Juneteenth and America’s birthday, the Los Angeles Times explains.
- ‘Ride the D.’ Take the A. The world is your transportation-oyster this World Cup as fans pile into passenger cars to witness the historic games in Southern California, from the Los Angeles Times.
Thanks for reading the Sacramento Report, as always. Please send any tips or questions to nadia@voiceofsandiego.org.
Leave a comment