The California Apartment Association is pleased that the State Building and Construction Trades Council of California has joined efforts to defeat Proposition 10, which would repeal the Costa-Hawkins Rental Housing Act and bring extreme forms of rent control back to California.
The CAA-sponsored campaign committee to defeat Prop. 10, Californians For Responsible Housing, issued a press release today announcing that the Building Trades Council, one of the most powerful labor groups in the state, has joined several other important statewide organizations in voicing opposition to the Costa-Hawkins repeal measure. Prop. 10 would create a major disincentive for investors to build rental housing, exacerbating the state’s housing shortage.
Other key groups opposing Prop. 10 include the California NAACP, AMVETS Department of California, the American Legion Department of California, the California Council of Local Housing Finance Agencies, the American G.I. Forum of California, the California Chamber of Commerce and more than a dozen other veterans, labor, and housing groups.
On Thursday, Secretary of State Alex Padilla announced that the Costa-Hawkins repeal measure and 11 other measures would appear before voters in the Nov. 6 election. He assigned proposition numbers Friday.
If the Costa-Hawkins repeal measure succeeds, cities will be authorized to apply rent control to single-family homes and new multifamily housing. They’ll also be able to make rent caps permanent, even after changes in tenancy.
Over the next four months, proponents of the repeal, including anti-growth activists Michael Weinstein, are expected to spend more than $30 million arguing that overturning Costa-Hawkins would help solve California’s housing crisis.
In reality, returning extreme forms of rent control to California would bring construction of rental housing to a halt while driving many existing landlords out of the rental housing market. It would worsen California’s housing shortage and make it more expensive for most renters in the state.
UC Berkeley Professor Ken Rosen offered his take in today’s press release from Californians For Responsible Housing.
“We’ve made it very difficult to build new housing, and wages have not kept pace with the rising cost of home prices and rents, which has grown into a crisis,” said Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at Berkeley’s Haas School of Business. “This measure could limit much-needed investment in new housing construction and exacerbate our current crisis.”
Alice Huffman, president of the California NAACP, added: “California NAACP opposes this initiative because it will make affordable rental housing even more scarce than it is today, widening the gap between our state’s haves and have nots.
“We need to increase the availability of affordable housing targeted to those most in need – but this initiative is the wrong approach that will only make the problem worse.”
Battle brewing for more than a year
The path to Prop. 10’s placement on the ballot began in 2017. In February of last year, lawmakers attempted to repeal Costa-Hawkins legislatively, introducing Assembly Bill 1506. When the proposal faced fierce opposition from CAA and stalled, repeal proponents decided to pursue a second path to overturning Costa-Hawkins — the statewide initiative. In October, they filed their measure with the state.
By January, AB 1506 was back in play and scheduled for its first committee hearing. Hundreds from both sides of the debate descended on the Capitol to testify for or against repeal. In the end, AB 1506 fell one vote short of advancing.
This narrow miss served to galvanize the California tenants movement, which focused its energies on qualifying the repeal measure. By April, they had collected more than half-a-million signatures, far more than necessary for qualification.
On June 21, the debate over Costa-Hawkins returned to the Capitol for an informational hearing.
Although no vote would be taken, the hearing was reminiscent of the AB 1506 hearing in January in that hundreds of people from both sides of the debate turned up to make emotional pleas to committee members.
The California Apartment Association and its allies explained that repealing Costa-Hawkins would worsen California’s housing crisis.
Debra Carlton, CAA’s senior vice president of public affairs, said returning extreme forms of rent control to California would reduce the existing stock of rental housing, increase rents in neighboring communities, and increase blight and homelessness. In her testimony, Carlton pointed to findings from California’s Legislative Analyst’s Office and studies on rent control.
“We’ve all seen news reports that tell us soaring housing costs have led thousands of people to leave California,” Carlton said. “This will continue even if this initiative passes. While existing tenants may experience lower rents, it will be harder to find vacant units for new employees and students.”
Too often, veterans returning from service also struggle to find housing, L.J. Plass of AMVETS pointed out in the Californians for Responsible Housing news release.
“This measure would make a bad problem even worse, and make it even more difficult for our service men and women to find an affordable place to live in our state,” , said Plass, 3rd vice commander of legislation and state legislative chair, AMVETS Department of California.
Measure would drive landlords from market
Without Costa-Hawkins, many existing landlords, including seniors whose retirements hinge on their rental income, will face the burdens of extreme rent control and exit the rental housing business. Those who sell will likely lose equity, as rent control reduces values on affected properties by up to 20 percent.
Carlton said, “As an organization that represents rental property owners, CAA does not want to see a reduction in rental housing, but when rent control becomes too extreme, getting out of the business is an option that is chosen by some owners, and CAA will continue to defend that right.”
If extreme rent control is permitted, cities without rent control today are more likely to adopt the policy – and in its most radical form. Communities throughout California would face unworkable rent regulations like those imposed on San Francisco and Santa Monica in the 1980s.
Proposition 10 heads to the ballot as tenant activists in several cities in both Northern and Southern California attempt to place local rent control measures on the November ballot, and some are written with a Costa-Hawkins repeal in mind. A measure that recently qualified in Santa Cruz, for example, is written so that if Costa-Hawkins goes away, rent control could apply to single-family homes.
Now it’s up to the California Apartment Association and its campaign to defeat the repeal, Californians For Responsible Housing, to help voters understand the pitfalls of extreme rent control.
To get involved in the campaign to preserve Costa-Hawkins, visit NoProp10.org and click on the “Join the Campaign” button.
- California voters will weigh these 12 propositions on November’s ballot (Los Angeles Times, June 29)
- Three states, gas-tax repeal, rent control and property tax breaks for seniors: What is on — and off — the ballot (Mercury News, June 28)