Last week, a ballot initiative to repeal the Costa-Hawkins Rental Housing Act qualified for the November ballot. Yesterday, the Assembly Committee on Housing & Community Development and the Senate Judiciary Committee held a joint initiative hearing on the measure.
Costa-Hawkins was passed in 1995 and was most recently amended in 2004. The law limits the ability of local governments to enact rent control measures. Specifically, it exempted single family units and condominiums from rent control, as well as exempted apartment units built after February 1, 1995 from local rent control ordinances. The legislation also bans vacancy control, also known as strict rent control, which is described by Elijah Chiland at Curbed LA as “which is when a unit’s rent is capped even after a tenant moves out.”
Costa-Hawkins is now back in the conversation as part of the overall conversation around California’s housing affordability crisis. In the analysis the LAO presented at yesterday’s hearing, it was pointed out that the typical renter in California pays more than 50% more than the typical renter nationwide. There are also areas in California where rent is at twice the national average, per LAO’s analysis.
Those factors, among numerous others, are what drive the supporters of the initiative to repeal Costa-Hawkins. Repealing the initiative would mean that single-family homes, condominiums, and apartment units built after February 1, 1995 could become subject to rent control should local governments choose to enact rent control measures on those units. A repeal would also allow local governments to enact limits on how much a landlord could increase rent on a unit as it changes from one tenant to the next.
Proponents of the repeal argue that rising rents are forcing people out apartments and into their cars or on to the streets, with Dr. Peter Dreier of Occidental College pointing out that a five percent rent increase in Los Angeles led to 2,000 people losing their homes. The argument in favor of repealing Costa-Hawkins can be easily summed up – as it was said by many of the almost 150 supporters who spoke in favor of the repeal at yesterday’s hearing – by internet famous former New York gubernatorial candidate Jimmy McMillan:
Opponents of the repeal argue that repealing the rent control restrictions in Costa-Hawkins will not only not help California’s housing crisis, but could potentially make the crisis worse. Karim Drissi, with the California Association of Realtors, argued that the real issue driving the housing crisis is the lack of supply of housing noting that California needs to build 180,000 housing units annually just to keep pace with population growth. The current pace is half that. Rather than enact rent control, he pointed out that streamlining the permitting process and fixing parts of CEQA would be more effective ways to address the crisis.
Debra Carlton, with the California Apartment Association, pointed out that the LAO’s analysis showed that repealing Costa-Hawkins would reduce the existing stock of rental housing – as property owners would convert their rental homes to personal living spaces. She also noted that builders continue construction of apartment units because Costa-Hawkins exempts the apartments they build from rent control.
Money will be an interesting factor to watch in this ballot fight. Michael Weinstein of the AIDS Healthcare Foundation is behind the proponents of the repeal, and he is no stranger to pouring money into high profile campaigns. In 2016 his organization, the AIDS Healthcare Foundation (AHF), “spent $4.6 million on Proposition 60, which mandates that performers in all pornographic videos wear condoms, and $17.7 million on Proposition 61, which forbids California to pay any more for the prescription drugs is purchases than does the federal Veterans Administration” according to LA Weekly. AHF’s spending was in support of both of those ballot measures, and in both cases, they lost. It is worth noting that the Prop. 61 battle was “one of the priciest ballot measures in California history.” In addition to the aforementioned Realtors and Apartment Associations, opposition to the repeal includes the California Chamber of Commerce. All of these groups are well heeled and won’t be afraid to spend large sums of money, potentially into the high tens of millions of dollars, on a campaign to defeat the repeal.