California Rent Control Bill Advances, Fueled by Housing Crisis

California’s escalating housing costs have yielded epic commutes and a rising tide of homelessness. Now they are close to producing a political milestone: a vast expansion of tenant-protection laws that would cap rents statewide.

On Tuesday, the State Senate voted to advance a bill to limit rent increases to 5 percent a year plus a cost-of-living adjustment. The State Assembly, the Legislature’s lower house, could give final approval as early as Wednesday, though passage is uncertain.

The legislation is the latest in a series of measures that have swept through state and local governments this year to regulate rents and strengthen tenant rights. For decades, such provisions have been mostly limited to a relative handful of apartments in the nation’s big cities.

“Passing tenant legislation in Sacramento is incredibly difficult,” said Assemblyman David Chiu, a San Francisco Democrat who is the bill’s author. “But we’re in the midst of the worst housing crisis in our state’s history, and I think my colleagues and policymakers understand we have to do something differently.”

The signs of that crisis include the nation’s steepest home prices and the highest state poverty rate once housing costs are figured in. In recent years, state and local governments have allocated several billion dollars to encourage subsidized affordable housing, only to see California’s homeless ranks swell.

All this has opened the door for rent control, historically a lost cause in Sacramento but a legislative priority of Gov. Gavin Newsom in his first year in office. Mr. Newsom, a Democrat, was previously mayor of San Francisco, where the housing pinch has been particularly acute.

The bill is technically an anti-gouging measure that borrows language from the typically short-term price caps imposed after disasters like fires and floods. It would extend price protections to an estimated eight million tenants, though only a small fraction now face annual rent increases in excess of the bill’s limit.

“California is at the doorstep of enacting strong, statewide renter protections — safeguards that are critical to combating our state’s housing and cost-of-living crisis,” Mr. Newsom said after the Senate vote.

In its initial draft, the bill covered every rental unit in the state, apartments and single-family homes alike. Then it was winnowed to a proposal that exempted most single-family homes and expired in three years. The rent cap was set at 7 percent plus inflation.

But after leaving the Assembly, the bill was beefed up, requiring landlords to cite “just cause” for any eviction. And Mr. Newsom got involved, brokering a deal in which the rent cap was lowered to 5 percent after inflation and its term expanded to a decade.

Landlords’ groups were initially the bill’s fiercest opponents but are now neutral, while the California Association of Realtors, whose support helped get the bill out of the Assembly, is fighting the latest version.

The shift by landlords was a strategic move. Last year California voters rejected a ballot initiative that would have allowed cities to expand rent-control policies, and the initiative’s financial backer, the Los Angeles-based AIDS Healthcare Foundation, is collecting signatures for a 2020 ballot measure.

Facing the possibility of another initiative fight, and a governor and a Legislature pressing to bolster tenants’ rights, landlords chose to influence what is passed rather than fight the tide.

“We’re not happy about this, but it’s as workable as it can be,” said Tom Bannon, chief executive of the California Apartment Association.