California Rejects Allowing Stronger Rent Controls

California Rejects Allowing Stronger Rent Controls

 

Published: 
December 2018

California voters on Nov. 6 solidly rejected a ballot initiative that would have enabled local governments to enact stronger rent-control laws.

The Proposition 10 initiative received only 39 percent of the vote, losing by more than 1.9 million votes. It would have repealed the 1995 Costa-Hawkins Act, which prohibits local governments from limiting rent increases in vacant units or enacting rent controls that cover housing occupied since February 1995, housing built after earlier rent-control laws went into effect (such as San Francisco’s, from 1979), and single-family houses or condominiums.

The measure lost because of “money,” says Larry Gross of the Coalition for Economic Survival, a Los Angeles-based tenants group. Opponents outspent supporters by more than 3 to 1, raising more than $75 million from the likes of the California Association of Realtors and the Blackstone private-equity fund, and using it for ads that said allowing stronger rent controls would “make a bad situation worse.” 

“They pulled money from all over the country,” says Gross. Supporters raised about $25.7 million, about 90 percent from the AIDS Healthcare Foundation. 

Support for rent regulations in California has increased as housing prices have escalated, says Deepa Varma, executive director of the San Francisco Tenants Union. The state has the nation’s highest poverty rate once housing costs are taken into account, she says. More than half of its 17.5 million renters spend more than 30 percent of their income on housing, according to a study released in September by the University of California at Berkeley’s Haas Institute. 

“All polls indicate overwhelming support for rent control,” says Gross. But tenant groups were not surprised by the initiative’s defeat. The real-estate lobby has much more political infrastructure statewide, says Varma.

Proposition 10 did best in areas where the tenant movement is most organized, she notes. It won by 15,000 votes in San Francisco and by about 4,700 in Alameda County, which includes Oakland, Richmond, and Berkeley. It got 48 percent of the vote in Los Angeles County, losing by about 86,000 votes. But it won less than one-third of the vote in the Los Angeles suburbs of Orange, Riverside, and San Bernardino counties, and barely a quarter in Central Valley areas such as Fresno and Bakersfield.

The landlord lobby did not attack rent control, Varma notes. Instead, it was “spreading disinformation” with ads claiming that Proposition 10 would drive up rents, stop affordable-housing construction, and had no protections for the elderly and disabled—a claim Varma calls “really outrageous,” as the Costa-Hawkins Act has no protections for them either.

In August, Los Angeles landlord Rampart Property Management told its unregulated tenants that it was raising their rents—from $1,550 to $2,250 a month in one case—because it feared it would be unable to charge increases if voters didn’t say “no to government control of apartments.” It said it would “revisit” the increases if the initiative was defeated.

Tenant advocates scored two smaller victories in the San Francisco Bay Area. Oakland voters approved Measure Y, which will extend the city’s law against evictions without just cause to owner-occupied duplexes and triplexes, and allow the City Council to add further limitations on evictions. And San Francisco passed Proposition C, which will levy an 0.5 percent tax on the gross receipts of corporations with revenue above $50 million in order to fund programs for homeless people. The measure, promoted by billionaire Salesforce owner Marc Benioff and opposed by Twitter, is expected to raise close to $300 million a year if it isn’t derailed by litigation.

Democratic governor-elect Gavin Newsom opposed Proposition 10. The California Democratic Party endorsed it, as did labor unions including the California Nurses Association, the California Teachers Association, and the Service Employees International Union. But they put more effort into campaigning for Democratic House candidates, says Gross.

The campaign, however, “mobilized a whole army of new activists,” he says. The tenant movement’s next priorities are to organize for local rent-control laws in places like Sacramento—where a rent-control initiative will be on the ballot in 2020—and to lobby the state legislature to repeal the Costa-Hawkins Act and the Ellis Act, which gives landlords latitude to take apartments out of rent control. 

One possible compromise, Gross says, would be to allow rent controls on single-family homes if their landlord owns more than five. This, he says, would exempt homeowners while regulating private-equity funds like Blackstone, which now own most of the single-family homes for rent in the Los Angeles area.

“This is just a start. We have no option but to keep fighting,” says Varma. “The more folks that experience housing instability, the bigger this movement is going to get.”