Californians Vote Down Rent Control Expansion

More than 61% of California voters Tuesday rejected Proposition 10, which would have expanded city authority over rent control measures. The proposition would have repealed the Costa-Hawkins Rental Housing Act, a 1995 law that restricts rent control measures.

This latest effort was among the strongest appeals to provide rent control across the state and gained support from the Democratic Party and large activist organizations.

Landlords and developers fought back, spending over $76M campaigning against the proposition, according to the California Secretary of State. Early October polls suggested that Prop. 10 was losing ground among Californians with nearly half of Californians against the expansion of rent control. Tuesday’s election results verified these polls.

“The stunning margin of victory shows California voters clearly understood the negative impacts Prop. 10 will have on the availability of affordable and middle-class housing in our state,” California Apartment Association CEO Tom Bannon said in a statement. The CAA led the campaign against Prop. 10.

The call for the expansion of rent control is largely being driven by rising rents across California. Rents have increased by nearly 50% in major Bay Area metros since 2010. Many residents have had to move farther away from their jobs to places where they can afford rent and housing prices.

Costa-Hawkins prohibits rent control on all types of housing built after 1995. It also allows landlords with rent-controlled apartments to bring a unit's rent back to market rates when a tenant vacates. 

Supporters of Prop. 10 argued that rent stabilization would help keep rents affordable for existing renters, especially key members of communities, such as nurses, teachers and firefighters, and keep people from being displaced or homeless when rents increase, according to a fact sheet from the Yes On Prop 10 campaign.

It also was part of an effort to address homelessness and affordable housing with three propositions this year. Proposition 1 was meant to build more affordable housing, and Proposition 2 was meant to address homelessness. Both of these propositions passed Tuesday.

The Fight Against Rent Control

Prop. 10 has been hugely contested by landlords and developers who argued rent control would stifle future investment and development. Many have said the housing shortage needs to be solved by allowing the construction of more housing instead of keeping rents capped.

“While it is clear rent control is the wrong path, more needs to be done to alleviate housing affordability challenges across the country,” National Multifamily Housing Council CEO Doug Bibby said in a statement.

He said addressing the housing crisis will take a three-pronged approach: First, the shortage of homes needs to be addressed and barriers to adding more homes need to be removed. Without adding more units, the country will not be able to address the shortage of 4.6 million apartments expected by 2030, he said.

Local governments must also be more involved and find public-private partnership opportunities to bring price points down to create more affordable housing. Additionally, targeted subsidies need to be provided to help the neediest families now.

“Proposition 10 was an example of short-term, wrongheaded policy,” Bibby said. “However, it also highlights the very real affordability problems that families are facing. NMHC will continue to work to put forward creative, unique ideas and policies while remaining vigilant against proposals like Proposition 10 that would inhibit growth and deepen the affordability crisis.”

Bay Area Council Senior Vice President of Public Policy Matt Regan said he wasn’t surprised that Prop. 10 failed given the polls had it behind from the get-go, but he was surprised at the magnitude of its defeat. 

“I think the proponents of Prop. 10 really have to go back and take a long, hard look on what they put on the ballot and why,” Regan said. “If you lose by over 25 points, you can say that voters understood what Prop. 10 was really intended to do and soundly rejected it.” 

He said the results revealed that voters understood that rent control is not the solution to solving the housing crisis in California. 

“We now need to refocus and double down on increasing the housing supply in California,” he said. “We now certainly have a clear direction from the voters that we need to look at supply-side solutions and how we build more housing in California and reduce the affordability gap that most Californians are experiencing.”

The Bay Area Council isn’t opposed to tenant protections, but doesn't want them at the expense of the housing supply, which rent control expansions would have impacted, Regan said. Discretionary rules and restrictions that end up making it more expensive to build and limit housing supply need to be rolled back to make it more feasible to build in California, he said.

He said he is hopeful that Gov.-elect Gavin Newsom will work on increasing the supply of housing in the state with a goal of 3.5 million homes by 2025. 

“We're optimistic that we'll see a return to historic levels that we had up until the early '90s when housing production fell off a cliff,” Regan said. “We need to get back to historical levels of housing production if we want to see an end to this crisis.”

The Fight For Rent Control May Continue

Despite the defeat, this may not be the end to the rent control battle.

Prop. 10 supporters plan to stage a sit-in Wednesday afternoon in front of the office of a major landlord in Southern California and are calling on Newsom to immediately act on rising rents.

Proponents of Prop. 10 want Newsom to enact a moratorium on rent increases until state legislation is passed to repeal Costa-Hawkins.

“Our new governor will be judged on how he addresses this crisis," Alliance of Californians for Community Empowerment member Gloria Cortez said in a statement. “We are ready to help him move solutions forward, but the time to act is now. We cannot just build our way out of this current situation.” 

Alliance of Californians for Community Empowerment Executive Director Christina Livingston said in a press release that Californians have increasingly shown their support for rent control, which started to appear on local ballots during the 2016 election. 

Proponents of rent control will remain vigilant to make sure the governor and legislature put reasonable limits on rents, Livingston said.

The Prop. 10 campaign also garnered support from many political groups and tenant activists, including the Democratic Party, the California Federation of Labor and additional civic organizations, Los Angeles Tenants Union founding member Walt Senterfitt said in a statement.

“Proposition 10 was a major grassroots effort, with thousands of volunteers working across the state to protect renters,” Senterfitt said. “We go into 2019 with a much broader coalition and tens of thousands of fired-up tenants who want some relief. We’ve just begun.”