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California: The Resistate

Michael Belote

By Mike Belote, California Advocates, UTA California Lobbyist

In political circles, it is common to hear the comparison “As Texas was to Obama, California is now to Trump.”  Texas sued the federal government dozens of times during the previous presidential administration, and California is just beginning to return the favor for President Trump.  Heading this effort are new Attorney General Javier Becerra, and former U.S. Attorney General Eric Holder, recently retained to represent the California Legislature.

The potential grounds for conflict are almost endless, but certainly immigration, health care, environmental laws, sanctuary cities, and the CFPB are at the top of the list.  Lawyers specializing in constitutional law, federalism and the reach of the Tenth Amendment are going to be busy.  And while California, the sixth-largest economy in the world, has lots of legal options, most experts would bet on the president prevailing more often than not.

Meanwhile, with two-thirds supermajorities in both houses of the legislature, California Democrats will pursue an unusually ambitious agenda to protect and reinforce what they perceive as California values.  Even stronger environmental protections (a bill has been introduced to require every new house built in California to be solar-equipped), stronger labor protections (a bill to require every residential project to pay “prevailing wages”), and broader health care reform (a “single-payer” bill has been introduced) will all be considered in Sacramento this year.

Another major issue is housing. Even while builders argue that the state cannot fix the housing crisis by making housing more expensive with prevailing wage requirements, SB 2 (Atkins) has been reintroduced to impose a $75 surcharge on recording real estate documents to fund affordable housing.  Arguably UTA has a particularly compelling point of concern with the proposal: by imposing the surcharge on recording notices of default and sale, the bill would actually make it more difficult for homeowners to cure, in order for others to obtain housing.

SB 2 will be an interesting test of Democratic power in the legislature.  Because of the nature of this surcharge, the bill requires a two-thirds vote in each house. Democrats are one vote over the supermajority in the Assembly, and possess the exact two-thirds supermajority (27 votes out of 40) in the Senate.  But Democrats rarely vote completely together, and the bill is unlikely to garner any Republican votes, so passage would appear uncertain.

When the bill introduction deadline passed on February 17 in Sacramento, almost 2500 new proposals were introduced, a significant increase from recent years.  Nearly five dozen have been identified of potential interest to UTA; all may be viewed through the UTA website. The bills cover such disparate issues as property taxes, homeowners associations, PACE liens, recordings, and much more.

Interestingly, a high percentage of the 2495 bills were introduced as “spot bills”, a Sacramento term for a bill which, as introduced, makes no substantive change in the law but merely holds a “spot” for substantive language to be added later. Perhaps as high as 40% of all the bills are spot bills at this point, suggesting that legislators are waiting to add language later, possibly in response to issues emerging from changes in federal law under President Trump.  This means that UTA and other groups will have to be especially vigilant in reviewing all amendments to bills throughout the year.

For 2017, UTA will once again sponsor legislation as well. SB 479 (Morrell) has been introduced to accomplish at least two objectives.  First, as increasing numbers of UTA members receive notices threatening fines for failure to maintain foreclosed properties, it is important to clarify that trustees are not “legal owners” for purposes of registration and maintenance obligations.  Second, the bill will correct an unintentional error with last year’s SB 983, which failed to properly increase the base fee upon the trustee’s sale, in the same manner the fee was increased for the notice of default and notice of sale stage.

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