Self Storage Association/ California Self Storage Association
2022 California State Legislative Session
While not exhaustive, here is a brief overview of the issues the Self-Storage Association (SSA) and the California Self Storage Association (CSSA) worked on in the 2022 Legislative Session.
Price Gouging
SSA and CSSA have continued to monitor and report on actions taken by Governor Gavin Newsom and the California Attorney General (AG) regarding price gouging restrictions. This includes closely following the counties that are under price gouging protections as a result of Proclamations or Executive Orders issued by the Governor.
In welcomed news, throughout 2022, some orders – such as the August Executive Order for Monkeypox , the July proclamation for Santa Barbara County due to the impacts of the Alisal Fire, and the July proclamation in Monterey County due to the Colorado Fire – included helpful language stating the following: The restrictions set forth in Penal Code section 396, which are automatically triggered upon a State of Emergency proclamation, are suspended, and no such restrictions are imposed with respect to this proclaimed emergency.
Further, at the time of this writing, the counties that are under price gouging restrictions, including Butte, El Dorado, Mariposa, and Plumas, do not include storage services as the orders specifically stated applying more narrowly to the “Provisions of Penal Code section 396, subdivision (b), as it relates to building materials and housing...”
Please find the Cal OES Price Gouging Chart here .
Additionally, SSA and CSSA tracked SB 1133 by Senator Bob Archuleta (D-Pico Rivera). The measure was sponsored by the California Apartment Association (CAA) and would have required that the 10% rent limitation prompted by emergency declarations be justified if in place for more than one year. The bill also included a provision, specific to housing, providing that criminal penalties for price gouging shall not be enforceable until Cal OES posts the proclamation or declaration of the underlying emergency on its website. SSA and CSSA thought those provisions could be helpful for future efforts to amend Penal Code 396 and even discussed with the CAA the possibility of expanding that provision beyond just housing. Unfortunately, SB 1133 stalled in the Assembly Appropriations Committee. Moving forward, we can chat further with CAA about legislative efforts they may decide to pursue next year. We may also explore whether there is an opportunity to partner with CAA on more general price gouging relief, such as the Cal OES website posting requirement.
SSA and CSSA also spoke with Senator Tom Umberg (D- Santa Ana) about potentially carrying legislation for the storage industry related to price gouging laws. Specifically, we noted with Senator Umberg and his staff that unlike the other businesses mentioned in Penal Code 396(b), self storage facilities do not offer goods and services. Self storage facilities rent non-residential real property. In this sense, they are more similar to hotels than they are to the providers that offer the goods and services listed in Penal Code 396(b). Penal Code 396(d) applies to hotels. We suggested adding self-service storage facilities to that subsection.
Further, Penal Code 396(d) allows for price increases greater than 10% if the increase is “directly attributable to additional costs imposed on it for goods or labor used in its business.” We suggested deleting “for goods or labor used in its business” as this excludes common additional costs such as increased property taxes, insurance, and capital improvements.
Finally, we suggested adding “regularly scheduled rate increases that precede the proclamation or declaration” as a permissible reason for price increases greater than 10%. We highlighted that self storage businesses base their financial projections on regularly scheduled rent increases. The ability to meet those projections allows businesses to, among other things, improve their facilities and increase employee compensation. Owners inform tenants of regularly scheduled increases in the rental agreement and should be permitted to implement rent increases for which the tenant is notified before the emergency.
See the specific language for SSA/CSSA’s proposal below:
(d) Upon the proclamation of a state of emergency declared by the President of the United States or the Governor, or upon the declaration of a local emergency by an official, board, or other governing body vested with authority to make that declaration in any county, city, or city and county, and for a period of 30 days following that proclamation or declaration, it is unlawful for an owner or operator of a hotel or motel, or self-service storage facility to increase the hotel or motel’s its regular rates, as advertised immediately prior to the proclamation or declaration of emergency, by more than 10 percent. However, a greater price increase is not unlawful if the owner or operator can prove that the increase in price is directly attributable to additional costs imposed on it for goods or labor used in its business, to seasonal adjustments in rates that are regularly scheduled, or to previously contracted rates, or to regularly scheduled rate increases that precede the proclamation or declaration.
Unfortunately, despite a series of good meetings, Senator Umberg decided not to pursue the measure in 2022. However, we can continue to speak with the Senator and other members about the issue and about authoring a potential bill next year.
Electronic Lien Notices Sunset Extension
AB 3364 (Committee on Judiciary)from 2020 extended the sunset date on the provisions allowing a self storage owner to send the initial notice and/or sale notice to an occupant via email and to proceed with the lien sale under the existing statutory methods of demonstrating actual delivery and receipt of the emailed notices, to January 1, 2023. Additionally, the bill added a new method by which an owner can demonstrate the actual receipt of an initial and/or sale notice by the occupant. Under this new method, the owner can demonstrate that the occupant received a notice where the occupant acknowledges receipt of the document by sending a reply email to the owner’s email communication, and there is evidence demonstrating the delivery path of the reply email. This addition was also scheduled to sunset on January 1, 2023.
In 2022, SSA and CSSA worked on AB 2960 by the Committee on Judiciary to extend provisions allowing electronic notices of liens for self-storage facilities indefinitely. Notably, the Assembly Judiciary Committee analysis states that neither of its committee staff nor the staff of the Assembly Privacy Committee have received reports of consumer harm from these electronic notices. AB 2960 was passed on August 30th, 2022. At the time of this writing, we are still awaiting action from the Governor on this measure. The Governor has until September 30th to act.
In the future, SSA and CSSA may want to revisit seeking additional flexibility around electronic notification. This may be best to explore in 2024 with consideration of how the political landscape shapes out. The current Chair of Assembly Judiciary, Assemblymember Mark Stone (D-Scotts Valley), has been an obstacle on this issue in the past. However, Stone is leaving office at the end of 2022.
2023
For 2023, McHugh Koepke & Associates (MKA) recommends continuing to not only track but also to look for opportunities to advocate for, and find other stakeholders interested in pushing, changes to the state’s price gouging laws. This includes speaking with members of the Legislature about authoring a sponsored bill related to price gouging for the storage industry.
Additionally, MKA will also speak with lawmakers about changing newspaper-advertising requirements for the self storage industry. Unfortunately, getting rid of the advertising requirement entirely may be too difficult to overcome. However, our effort could include exploring options for operators to advertise lien sales through methods other than newspaper advertisements, such as online auction sites.
Finally, MKA recommends engaging on bills that affect storage operators as employers and defeating any potential legislation that would be harmful to the storage industry.
Posted by Naomi Padron - lobbyist for SSA/CSSA
