Local ordinances vs. state and federal law: which layer wins

California rental regulation is layered: federal rules for federally insured or assisted assets, state statutes that both impose (AB 1482) and limit (Costa-Hawkins) regulation, and local ordinances that fill every gap the state leaves open. The underwriting question is never "is there rent control?" but which layer controls each rule for this building, this tenancy, this year.

The constitutional frame comes from Article XI and the charter-city cases: under California Federal Savings v. City of Los Angeles, even a charter city's "municipal affairs" power yields to state law addressing a matter of statewide concern — the doctrine that lets Costa-Hawkins, AB 1482 and the housing-production statutes bind every city in the state.

• Price caps on legacy stock: units first occupied before February 1995 (or the city's older cutoff) can carry local caps far below AB 1482 — LA's RSO, SF, Santa Monica, Berkeley annual allowances often run 0–5%.
• Just cause beyond AB 1482: locals can cover exempt unit types (SFRs, newer buildings), start protections from day one, and enumerate narrower cause lists.
• Relocation payments: no-fault relocation frequently far exceeds AB 1482's one month — LA-scale schedules run to tens of thousands per household by tenure and income.
• Registration, rent registries and program fees: annual per-unit fees and rent reporting; noncompliance can bar rent increases or evictions.
• Condo-conversion and demolition controls: local permits layered on top of the state demolition rules covered in the next topic.

• Underwriting watch-outs:
• Pull the ordinance text and the rent board's current allowance — the municipal codes for ~540 jurisdictions are searchable in the Code Library.
• Banked increases, capital-improvement pass-throughs and fair-return petitions differ city by city and materially change value-add math on legacy stock.
• Estoppels should confirm base rents as registered, not just as collected — unregistered increases can be unwound.

Costa-Hawkins guarantees vacancy decontrol and shields post-1995 and separately alienable stock from local price caps — Palmer applied it against inclusionary rent-setting until Gov. Code § 65850(g) restored the inclusionary channel. The Ellis Act (next guide) preempts local attempts to force owners to stay in the rental business. And the production statutes — HAA, Density Bonus, SB 330's demolition rules — preempt local approval-side obstruction.

Ballot fights to repeal or narrow Costa-Hawkins recur; a repeal would move the ceiling and re-expose post-1995 assets in rent-control cities to local caps. Treat that as a monitored political risk, not a base case.

For HUD-insured, HUD-held, and certain HUD-assisted projects, 24 C.F.R. Part 246 preempts local rent regulation where it would jeopardize the federally approved rent structure — HUD, not the rent board, controls those rents. Project-based Section 8 rents follow the HAP contract and HUD renewal rules, and voucher tenancies carry their own federal cause and rent-reasonableness standards.

• Underwriting watch-outs:
• Buying a HUD-insured asset in a rent-control city? The Part 246 preemption is often the difference between local-cap growth and budget-based/OCAF growth — confirm which regime the asset actually operates under.
• Preemption ends when the federal hook ends: prepayment or opt-out can drop the asset back into the local regime (and trigger state preservation notice laws).