Proposition 10: California’s rent control ballot measure, explained

Proposition 10 was defeated by a large margin Tuesday. For more election results, click here.

Proposition 10 would give cities the ability to expand rent control, including potentially to more buildings. It would do that by repealing the Costa Hawkins Rental Housing Act, a state law that limits how cities can apply rent control.

Right now, in the city of Los Angeles, for example, only buildings constructed before 1978 are rent controlled under Costa Hawkins.

Costa Hawkins passed in 1995; at the time, Sacramento Bee columnist Dan Walters referred to it as an “anti-rent control law.” There are three main ways it softens rent control.

Under Costa Hawkins:

• Landlords have the right to raise rent on a rent-controlled unit to “fair market value” every time a tenant moves out.
• Cities are not allowed to apply rent control to units built after February 1995. For cities that already had rent control on the books when Costa Hawkins was passed, the cutoff is backdated. In the LA area, the dates are even earlier: October 1, 1978 for the city of Los Angeles; April 10, 1979 for Santa Monica; July 1, 1979 for West Hollywood; and February 1, 1995 for Beverly Hills.
• Single-family homes and condos are exempt from rent control restrictions.

These provisions would be overturned if Costa Hawkins were repealed, giving cities more freedom to decide how to implement rent control.

Who’s behind it?

The initiative was drafted by three people, including Michael Weinstein, president of the AIDS Healthcare Foundation. The Hollywood-based nonprofit has made a foray into housing, homelessness, and development issues, going so far as to spend more than $4.6 million trying (unsuccessfully) to get Los Angeles voters to temporarily halt major development projects citywide in 2016 through Measure S.

The other two are Elena Popp, a Los Angeles attorney who represents tenants facing rent hikes and evictions; and Christina Livingston, who helms the LA-based Alliance of Californians for Community Empowerment, or ACCE Institute. (Popp serves as president of the ACCE’s board of directors.)

The backstory

There’s a shortage of housing in California, and it’s driving up the cost of rent and helping fuel a homelessness crisis.

The cost of rent in the Los Angeles metropolitan area has jumped at least 3 percent every year from 2012 to 2016, according to the U.S. Department of Housing and Urban Development. (Low inventory is a big culprit behind the high prices, though Los Angeles is finally making progress on that front).

Estimates vary, but the median-price of a one-bedroom in LA is now $1,690, according to CoStar. Housing costs are so high that when factored in with other basic necessities, nearly one in five Californians lives in poverty, according to U.S. Census Bureau data.

The soaring cost of rent, along with sky-high housing prices and low household incomes, are significant factors driving the state’s homelessness epidemic, according to a June report authored by UCLA economist William Yu.

It makes “perfect sense,” Yu wrote in the report, “that a state with higher rent will make rentals less affordable and increase the probability of becoming homeless,” he concluded.

Another 3 percent increase in the Los Angeles metro area’s median rent, according to Zillow, would leave an estimated 1,180 more people homeless.

What impact would it have on Los Angeles?

Repealing Costa Hawkins wouldn’t mean immediate changes for renters, and it would only affect the 15 cities in California that have rent control.

It would give those the cities the option to decide whether to amend their local rent control and rent stabilization laws. (Los Angeles technically has rent-stabilization, though it’s colloquially referred to as rent control).

It will be up to local lawmakers to decide how to change LA rent control laws. For example, the City Council could choose to limit rent increases when a unit becomes vacant or to expand rent control policies to cover more of LA’s housing stock.

Los Angeles Mayor Eric Garcetti—who has endorsed the measure—says he would “‘absolutely’ consider extending rent restrictions in Los Angeles to cover newly built apartments,” the Los Angeles Times reports.

That could have a huge impact in a city where more than 64 percent of households are occupied by renters.

About 80 percent of apartments citywide are rent-controlled today. If Costa Hawkins were repealed, local lawmakers could also choose to extend rent control to single-family homes, which make up about one-fifth of all rentals in Los Angeles, according to UCLA.

Arguments for

• While boosting supply is crucial, California won’t be able to build its way out of a housing crisis; strengthening rent control is one of the only ways to immediately protect tenants from excessive rent hikes—and keep residents in their homes.
• Rent control can provide stability to tenants, enabling residents to live in and invest in their communities in the long-term while “build[ing] savings that facilitate upward mobility,” according to UC Berkeley’s Haas Institute. Researchers at Stanford have found that in San Francisco, rent control has helped prevent minorities from being displaced.
• Los Angeles desperately needs more affordable housing, but the number of rent-controlled units in the city has dropped, in part because new construction is exempt from rent control. About 80 percent of apartments in LA are rent-controlled now, compared to 100 percent in 1982, according to UCLA’s Luskin Center for History and Policy.
• Cities and counties know the needs of their communities best, and it should be up to them to decide how to alleviate the housing crisis locally.

“Local governments are on the front lines of managing homelessness, displacement and gentrification. They need the ability to stop the bleeding. Proposition 10 would give them an additional option for helping those at risk of losing their homes.” — Los Angeles Times editorial board

Arguments against

• Proposition 10 isn’t a cure-all for California’s housing crisis. It doesn’t encourage the construction of more housing, which California desperately needs. California should be focused on housing production, including the construction of affordable housing. But the nonpartisan California Legislative Analyst’s Office predicts that if “many” cities opt to adopt strengthen rent control, “economic effects (such as impacts on housing construction) could occur.”
• Economists tend to “frown” on rent control, mostly because it can limit supply, and it discourages property owners from maintaining units.
• The same Stanford researchers who found that rent control helped minorities from being displaced in San Francisco also determined that rent control actually contributed to gentrification. How? When landlords remove their rent-controlled units from the rental market—which tightens the overall supply—they typically convert the units to for-sale homes that “cater to higher-income individuals.”

“Proposition 10 targets a symptom: soaring rents that are pricing some people out of the market. But it ignores the disease: a shortage of apartments and other housing units.” — The Santa Rosa Press Democrat editorial board

Who supports it?

The measure has won the endorsement of the following organizations: Los Angeles City Council, Los Angeles County Board of Supervisors, Inner City Law Center, Western Center on Law and Poverty, Public Counsel, Democratic Socialists of America Los Angeles, Los Angeles County Democratic Party, ACLU of California, League of Women Voters of California

Who opposes it?

The following groups oppose the measure: BRIDGE Housing, California Council for Affordable Housing, California State Conference of the NAACP, California Apartment Association, California Building Industry Association, Los Angeles Latino Chamber of Commerce, Los Angeles Area Chamber of Commerce

For more information:

• Rent control in Los Angeles: How it works [Curbed LA]
• Landlords are threatening rent hikes if Proposition 10 passes [Curbed LA]
• California’s rent control ballot measure triggers $24M fundraising battle [Curbed LA]
• Why Wall Street is putting millions into beating California rent control [Curbed SF]
• Rent control foes hire California NAACP leader after her group opposes initiative [San Francisco Chronicle]
• How California public employees fund anti-rent control fight unwittingly [The Guardian]