Less than three weeks before voters head to the polls in an anticipated high-turnout election, the topic of housing affordability has been one of the most hotly debated issues of 2018. A controversial rent-control initiative could affect the state’s housing politics for the near future.
Proposition 10 would repeal the Costa-Hawkins Act of 1995, which halted the ability of California cities to implement rent-control measures in their cities. Currently, landlords in municipalities with rent-controlled units can raise the rent 3 percent annually.
Opponents of the ballot measure include Lt. Gov. Gavin Newsom, the front-runner in the race to succeed Gov. Jerry Brown, as well as the California Republican Party and the California Chamber of Commerce.
Supporters include the California Democratic Party, the AIDS Healthcare Foundation and state Sen. Kevin de León (D-Los Angeles), who is trying to oust Dianne Feinstein from her seat in the U.S. Senate.
On Tuesday, the L.A. County Board of Supervisors voted 3-1 to support Proposition 10.
“The impetus for supporting Proposition 10 is that we’ve seen studies that show that there is a link between homelessness and higher rents. We’re seeing more people who have become homeless for the first time and 50 percent of them cite that the reasons are economic,” Supervisor Sheila Kuehl said in an interview before the vote. “Costa-Hawkins passed with only one vote, and it has really gutted the ability for cities to enact rent control.”
In Marina del Rey, renters are waiting to see how a rent-stabilization ordinance recently approved by the supervisors would affect them, due to the county’s complicated leases agreements. If Proposition 10 passes, it also will apply to units in unincorporated areas of Los Angeles County, including Marina del Rey.
California Apartment Owners Association senior vice president of public affairs Debra Carlton said passing Proposition 10 would make the current housing crisis worse. “Small owners will exit the market and we’ll see decreases in home values and a decrease in new construction,” Carlton predicted. “Tenants’ rights groups are using this as a call to action.”
Carlton thinks some apartment owners who own one or two buildings will choose to invoke the Ellis Act if Proposition 10 passes.
The Ellis Act, passed in 1985, gives rental property owners the right to exit the rental housing market but also places conditions and restrictions on landlords who evict tenants under the state law.
These conditions include a requirement to notify tenants 120 days prior to withdrawing a unit, with a longer one-year notification requirement for tenants who are disabled or older than 62. It also restricts when owners can re-enter the market, at what price they can re-rent units when doing so, and requires that all units in a building be removed simultaneously.
“We’ve seen some landlords already begin to Ellis their tenants, and if the state law forces them out of the market we could see a lot more,” Carlton said. “And that’s going to make our housing situation much worse. We need to find solutions to the housing crisis but Proposition 10 is not the answer.”
Kuehl dismisses the argument that landlords will have to go out of business if cities are able to consider enacting rent control and that developers will no longer want to build apartments and single-family homes in cities under rent control.
“This is what the groups that have spent $50 million opposing Proposition 10 say. They want to create a myth that rent control will be enacted in every city. Proposition 10 only give cities the right to create rent control,” explained Kuehl, who was a state senator when Costa-Hawkins was enacted. “Rental properties are already making a huge amount of money in places that do not have rent control and they’ll make huge amounts of money even with rent control.”
Potential rental adjustments to pre–Costa-Hawkins levels were a concern for the Santa Monica Chamber of Commerce, which also opposes Proposition 10.
“Any consideration of changing Santa Monica’s rent-control law should wait until we know the results of the November 2018 election regarding Costa-Hawkins, and there is no robust public process concerning any potential changes, including an examination of the economic and environmental effects of such changes,” wrote Santa Monica Chamber of Commerce president Laurel Rosen to the Santa Monica City Council earlier this year.
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Santa Monica officials have pledged not to roll back rents if the ballot measure is successful.
At the supervisors meeting, Los Angeles resident Stanley Chatman took issue with the argument that opponents of the ballot measure have raised. “What [Proposition 10] will do is give the people the power to effect change in their communities, not the rich. The apartment buildings being built today are not affordable,” he said.
A Public Policy Institute of California poll last month found support for the measure trailing 48 percent to 36 percent, with 16 percent undecided.
“We’re finding that the more people find out what’s in the initiative, the less they support it. Most people understand that we’re in a housing crisis but this is a simple solution that will make matters worse,” said No on Proposition 10 spokesman Steven Maviglio.