California voters are set to vote this November on an initiative that would allow California cities and counties to adopt stronger rent control laws, which limit how much landlords are allowed to raise rents each year.
The Secretary of State's office reported last week that initiative backers have enough valid signatures to qualify it for the Nov. 6 ballot. Christina Livingston, a tenants' rights activist and one of three main proponents behind the initiative, said the coalition collected nearly 600,000 signatures in total, while 365,880 valid signatures were needed to qualify.
"They were so easy to collect because the severity of the housing crisis is broad," Livingston said. "Low-income people and working class communities are experiencing it, not just in coastal cities but in the Central Valley — everywhere in California."
What would the initiative do?
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It would repeal a 23-year-old state law that sets tight limits on all forms of rent control across California.
The 1995 Costa-Hawkins Rental Housing Act said any local rent control passed after February 1995 would not apply to large amounts of housing stock, including new apartment buildings occupied after that date, single-family homes, duplexes and condominiums. Local politicians and activists seeking to pass new laws could only limit rent increases for tenants living in housing built before that year.
But more than a dozen cities across the state, from Santa Monica and Los Angeles to San Francisco and Berkeley, had already in the late 1970s and early 1980s adopted local rent control ordinances. The 1995 law essentially froze those in place, preventing them from being changed.
Repeal would allow cities and counties seeking to adopt new rent control to apply limits on rent increases to any housing of their choice. It would also allow jurisdictions to change or strengthen existing local rent control laws.
Costa-Hawkins also gave landlords more power over what they could charge for their rentals. It says after a tenant vacates a rent-controlled apartment, the landlord is permitted to adjust the rent to market rate prices, setting a new price floor for the next tenant. Repeal of the state law would allow jurisdictions to change that and set more restrictive policies.
How did Costa-Hawkins become law?
Costa-Hawkins was, in part, backlash to cities that had adopted local rent control laws as a response to growing housing costs. It was also tied to Proposition 13, whose proponents, including anti-tax crusader Howard Jarvis, argued that rents would fall if homeowners and landlords paid less in property taxes.
But as rents continued to climb, taxpayer advocates and landlords saw the movement for rent control spreading.
In 1995, a then-Democratic state senator from the Central Valley, (now U.S. Rep.) Jim Costa, joined forces with a Republican assemblyman from Orange County, Phil Hawkins, to author the state law seeking to blunt the rent control movement.
At present, 15 cities have some form of rent control. The vast majority of local laws were adopted decades ago, but a new generation of housing and tenants' rights activists have awakened the movement as housing costs grow. In 2016, the Bay Area cities of Richmond and Mountain View became the first in more than three decades to pass new rent control ordinances. Three other Bay Area efforts failed amid opposition from the California Apartment Association and other real estate interests.
What if I already live in a rent-controlled unit?
Nothing would change overnight. Tenants would still likely receive minimal annual rent increases. But over time, laws could change and become more or less restrictive.
What kind of impact would repeal have on California's economy?
No one knows for sure.
California's high cost of living has made it difficult in some parts of the state for employers to recruit and retain a skilled workforce. Soaring housing costs have led to a net loss of 1 million who have fled California from 2007 to 2016, according to the nonpartisan Legislative Analyst's Office, and homelessness is higher here than any other place in the nation.
Rent control proponents argue stronger tenant protections will help low-income people and moderate-income earners such as teachers, service industry employees and agricultural workers be able to afford to stay.
"Certainly there is a housing shortage, so we need to be building housing, but what we are also seeking to address is the crisis of displacement," Livingston said. "We're seeing vulnerable communities — people of color, elderly folks, people with disabilities, single parents, low-income people and the middle class — being pushed out of California and becoming homeless."
But opponents, including the California Apartment Association and building industry representatives, argue stronger rent control will deter new housing construction and lead to less tax revenue to pay for schools and other public services.
"The heart and soul of our argument is something this radical pours gasoline on our housing crisis and makes it worse," said Steve Maviglio, a spokesman for the opposition campaign called Californians for Responsible Housing.
The state Legislative Analyst's Office found in an analysis of the initiative that repeal would likely lead to more rent control, lower rents and increased stability for tenants, but the wider economic impact to the state would be great.
It said construction of new rentals could decline, property owners could remove their units from the market, and the value of housing could fall. That could lead to a decline in property taxes, a major source of revenue for local governments amounting to about $60 billion annually.
If that revenue falls, the state could be forced to pony up more money for schools. Repeal could also lead to increased costs by local governments of "up to tens of millions of dollars per year in the long-term" to enforce new rent control laws, and losses in personal income tax revenue, the state's largest share of taxes for budgeting. Property owners' income would decline as units fall under rent control, causing them to pay less in income taxes.
Analysts found, however, that sales tax revenue could climb. As renters pay less toward housing costs, they'd be free to spend more on goods and services.
Why are voters deciding and not California lawmakers?
California lawmakers killed a bill from Assemblyman Richard Bloom, D-Santa Monica, this past January that sought to repeal Costa-Hawkins. After it died in committee, backers ratcheted up their initiative campaign.
Who is behind it?
Los Angeles activist Michael Weinstein, president of the AIDS Healthcare Foundation who partly funded Proposition 61, the 2016 fight over prescription drug costs that emerged that year as the most expensive initiative.
The foundation Weinstein started has already poured more than $1.6 million into the repeal effort. He told The Sacramento Bee that he and other backers will "spend what it takes to get our message out."
"We'll be on TV, we'll be on slates, we'll be in the mail and we'll be on the ground," Weinstein said. "They want to make it about me. They don't want to talk about the hardships people are facing — displacement, homelessness and evictions. They don't want to talk about the fact that almost all of what's been built is luxury and not affordable housing."
Activists with the Alliance of Californians for Community Empowerment are organizing rallies, protests and other actions in cities across California, and Elena Popp, a tenants' rights attorney with the Eviction Defense Network, is also working on behalf of the effort as a sponsor of the initiative.
It's backed by powerful union groups, including the California Teachers Association and the California Nurses Association. Los Angeles Mayor Eric Garcetti also has voiced strong support for Costa-Hawkins repeal.
Who is against it?
The California Apartment Association is leading the opposition campaign, and the California Association of REALTORS is a major ally. Both groups represent large and small landlords across the state and lobby on behalf of property owners. The California Building Industry Association has voiced opposition, though it hasn't yet taken a formal position. The California Chamber of Commerce is against it, as is buildings trades groups.
The State Building & Constructions Trades Council of California supports measures to house low-income renters but fears outright repeal "would have a chilling effect on new housing construction," said Cesar Diaz, legislative and political director for the organization.
Both candidates running for governor, Democrat Gavin Newsom and Republican John Cox, oppose outright repeal.
The campaign committee working to preserve Costa-Hawkins has raised more than $6.7 million to date, according to state campaign finance filings — more than three times that of the other side.
How big a fight will this be?
The battle over rent control is shaping up to be among the biggest ballot box fights this year, with Weinstein promising to pump more money into the campaign, as well as possible future contributions by housing activists, unions and grassroots tenants' rights groups across California.
The nurses union has given $100,000 so far, and the American Federation of State County & Municipal Employees Local 3299 has contributed $60,000. Supporters say they expect to be outspent by large- and small-scale property owners, business groups and other real estate interests.
Those opposed are "taking it as serious as a heart attack," Maviglio said, noting he expects Weinstein and other initiative backers to donate up to $30 million of his own money. He said the campaign fighting repeal would have to at the very least match spending by proponents.
"It's going to be an expensive race," Maviglio said, suggesting they'd have to raise perhaps $40 million or more. "We're going to have to be competitive."