California Health and Safety Code Sections 1569.185 and 1518 lawfully prohibit the imposition of rent controls upon assisted living. That is, no city or county, and not even the state, can dictate the amount charged for care and services rendered to residents by a licensed assisted living facility. But that may change or open the door to rent controls if SB433 is enacted.
SB433 is aimed only at RCFEs that accept residents on Medi-Cal (Medicaid) through the Assisted Living Waiver Program (ALWP) in addition to facilities admitting residents on SSI/SSP. The ALWP is championed as the salvation of the assisted living industry but read the small print. It allows individuals who require skilled nursing services to live in nonmedical, assisted living because they “wish to live in a residential care setting.”
In December 2024, California amended its CalAIM “master” program that has and will continue to have terrible consequences for facilities and taxpayers. The recent revisions continue to push populations “at risk” (defined as the homeless, the mentally ill and currently and formerly incarcerated persons) into residential care.
SB433, the assisted living waiver rental rate protection act, was introduced by Senator Aisha Wahab (D-Hayward) who describes herself as “dedicated to addressing issues including housing affordability…and economic inequality.” Her district includes Union City, Fremont, Sunnyvale, San Jose, and Santa Clara. She Chairs the Senate Housing Committee. SB433 would authorize state agencies to “waive compliance with the prohibition on rent controls when determined necessary and appropriate in the context of the above-described program to ‘test’ the efficacy of providing an assisted living benefit.” This means the state can cut ALWP rates and payments to facilities based upon the state’s rent control models per area.
Most RCFEs do not participate in the ALWP which is still experiencing financial instability due to the state’s gross fiscal mismanagement. Yet, Governor Gavin Newsom continues to obsess over the program claiming it will reduce homelessness because it will place homeless persons into assisted living.
Government agencies and nonprofit organizations claim the state’s drastic increase in homelessness is “due to a lack of affordable housing and rising housing costs” and “…poverty, mental illness, addiction, and domestic violence.” By placing RCFEs under rent controls and the ALWP, will it “create affordable housing, solve poverty, stop addiction and cure mental illness?”
A Genworth study on the costs of assisted living revealed California ranks as the most expensive U.S. state averaging $6,250 a month, about $900 more than the national average. Is the state attempting to force facilities into lowering fees when the 2025 cost of living in California is estimated to be 38% higher than the national average?
Establishing rent controls might lower the state’s Medi-Cal expenses but it will have a negative effect upon the current 1,103 ALWP facilities. This program is not the assisted living savior but its curse.