CAA warns that Prop 10 would cause exodus from rental market

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During a televised round-table discussion of Proposition 10 last week, Debra Carlton of the California Apartment Association recalled the days before the Costa-Hawkins Rental Housing Act.

In 1995, the Legislature passed Costa-Hawkins to protect against extreme forms of rent control, including rent caps on single-family homes, individually owned condominiums and new construction. Before those protections were in place, many landlords were quitting the rental-housing business.

“Property owners were getting out,” Carlton, senior vice president of public affairs for CAA, said during an episode of KQED Newsroom. “Even in Berkeley, we lost about 3,000 single-family homes because owners said, ‘I’m not going to work under this system.’ If Prop 10 passes and turns it over to the cities, I think that, unfortunately, we’re going to see that again.”

The debate over Proposition 10, which will appear on the Nov. 6 statewide ballot, aired Friday, Aug. 9, on KQED Public Television 9 in San Francisco. To watch, scoll down to the YouTube video embeded below.

Prop 10 would repeal the Costa-Hawkins Rental Housing Act, allowing cities and counties to once again impose radical forms of rent control.

Representing repeal proponents during the discussion was Joseph Tobener, a San Francisco tenants rights attorney.

If Costa-Hawkins is repealed, it won’t just be small towns that bring single-family homes under rent regulations, according to Tobener.

Debra Carlton

“I think the reality is, in big cities, we’re going to see single-family homes and condos return to rent control, which is important to local communities,” he said, adding that, “Our city has been gentrified, and Costa-Hawkins will return a huge amount of units to rent control to keep people housed in The City.”

Carlton, however, pointed out that radical forms of rent control actually cause gentrification. Because rent control has no means testing, she said, landlords tend to rent to wealthier applicants — people more likely to pay the rent on time over the long term.

“[If] the owner has the choice of the guy who drives the BMW or the person they’re not really sure who can pay the rent going forward,” Carlton said, “you’re going to take the sure bet, and I think that’s most unfortunate, because we’ve never been able to talk about means testing.”

In addition to applying rent control to single-family homes and new construction, the return of extreme rent control includes vacancy controls — policies that prevent owners from ever raising rents to market levels, even after changes in tenancy.

The return of extreme rent control, Carlton said, will lead to an another exodus from the rental market, particularly among mom-and-pop owners.

Added Carlton, “They’ll sell their homes, and tenants are going to get an eviction notice instead of a rent increase, and I think that’s so unfortunate.

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