Senator Cortese Introduces Legislation Supporting Tenant Preferences to Fight Displacement

Senator Dave Cortese (D-San Jose) has introduced SB 649 to make policy findings that allow the use of tenant preferences to prevent residential displacement and stabilize neighborhoods. The bill permits developers that receive local or state funds or tax credits designated for affordable housing to prioritize those at the highest risk of displacement and most in need of stable housing.

“Nobody deserves to be forced out of their community because they can’t find stable and affordable housing, especially during a time when families are already facing extreme financial hardship,” says Senator Cortese.

Cortese co-chaired the campaign that led to the $950 million “Measure A” Affordable Housing bond in Santa Clara County. Measure A has produced 27 projects in Santa Clara County with many more in the pipeline and is projected to create approximately 4,800 affordable housing units across the County. 

“This policy will play a vital role in bolstering the state’s efforts to protect our most vulnerable residents from displacement and addressing the homelessness crisis ravaging our cities,” Cortese added.

Even before COVID-19, rising rents and development pressures were threatening to displace thousands of households in California. The pandemic has only magnified immeasurably the displacement pressure in the Bay Area and State as a whole. These pressures are forcing low-income Californians, who are disproportionately people of color, to overcrowd in their homes and move farther away from their employment, friends, families, and communities they once called home. Displacement also poses environmental harm by increasing commutes, which would cause an upsurge in greenhouse gas emissions. 

In response to this crisis, the Legislature has implemented policies, such as the Teacher Housing Act of 2016, that allow developers to prioritize certain groups of tenants who are particularly impacted. In order for an affordable housing project to set aside units for these tenants, the Internal Revenue Code requires that they be members of a specified group under a State program or policy. However, the state currently lacks a state policy supporting housing for tenants who are at risk of or have experienced displacement.

SB 649 creates a State policy that supports housing for those populations, aligning tenant preferences with Internal Revenue Code requirements and thereby qualifying affordable housing projects that use tenant preferences for tax credit or bond financing. With these changes, the Legislature can help communities to target the benefits of scarce affordable housing, limit displacement, and reduce the physical, mental, educational, and environmental harms that result from displacement. 

"Neighborhood preference is key to stabilizing neighborhoods and protecting tenants at risk of displacement, which is why the Housing Action Coalition strongly supports SB 649,” says Todd David, Executive Director of the Housing Action Coalition.

"This legislation will empower local governments to effectively implement tenant preference policies, which can help families facing displacement to get a better chance at finding a safe and affordable home in their communities," says Jacky Morales-Ferrand, Director of Housing for the City of San José.

The bill creates two types of tenant preferences to help keep people in place and prevent displacement:

The first, Anti-Displacement Tenant preference, sets aside a portion of affordable apartments for low-income applicants who live in areas with a high likelihood of displacement. Eligible residents would live in census tracts categorized as “high-risk” or “undergoing displacement by a credible, authoritative external source” such as the Urban Displacement Project at the University of California, Berkeley.

The second, Neighborhood Tenant Preference, sets aside some newly available affordable apartments for low-income applicants who already live in the vicinity of the newly-available affordable homes. This increases the likelihood that low-income renters can remain in their neighborhoods while improving their housing and stability costs.

For more information, contact Tara Sreekrishnan, Office of Senator Dave Cortese, at 408 480 7833 or tara.sreekrishnan@sen.ca.gov.