Californians rejected rent control two years ago. Will a pandemic change their minds?

For the second time in two years, California voters next month will decide whether more cities should be allowed to restrict rent hikes.

The 2018 campaign to establish a state rent control law combusted after 59% of voters rejected Proposition 10.

But this year, Californians will head to the ballot box amid a global pandemic that has infected more than 813,000 Californians, killed 15,900 and left millions in financial straits after unemployment rates skyrocketed this summer into double digits.

Advocates behind the new measure, Proposition 21, argue economic devastation caused by COVID-19 strengthens their argument that California is overdue for rent control.

More than 900,000 renter households in California experienced a pandemic-induced job loss from February to June, an August UC Berkeley Terner Center for Housing Innovation report found. Additionally, up to 5.4 million Californians have reported slight or no confidence in being able to pay rent, according to an analysis by the D.C.-based nonprofit Aspen Institute.

“It’s the crisis that’s pushing people over the edge,” Proposition 21 campaign director René Christian Moya said. “(Proposition 21) was absolutely necessary before COVID-19, and it’s an urgent necessity during the crisis.”

But landlords counter that rent control is the wrong kind of remedy, especially when rents are falling in big cities. They argue both the 2018 and 2020 campaigns for rent control fail to address evictions, homelessness or the construction of affordable units.

“Rents are DROPPING during COVID,” Steven Maviglio, spokesman for the No on 21 Campaign, said in an email, referencing records of housing prices decreasing in major cities like San Francisco and Los Angeles.

San Francisco one-bedroom rent prices in the last year have dropped 20.3% from a year ago, to around $2,830, according to an October report from the housing search site Zumper. That dip represents “the largest yearly decreases Zumper has ever recorded.”

Maviglio also pointed to a law Gov. Gavin Newsom signed last year to curb steep rent increases by capping how much landlords can raise prices by 5% plus inflation, or 10%, whichever is the lower number, as proof of existing protections for renters.

“What’s the logic of needing rent control when rents are dropping and the governor just signed the toughest rent control law in the country?” Maviglio said.

What would Proposition 21 do?

About 20% of Californians already live in cities with a form of limited rent control, according to the review of the ballot measure by the Legislative Analyst’s Office. Those cities, including Los Angeles and San Francisco, adopted their ordinances before the Costa-Hawkins Rental Act went into effect.

Should Proposition 21 pass, the initiative would modify the 25-year-old law that blocks local governments from freezing rent increases on buildings constructed after Feb. 1, 1995 and single-family homes.

But this year’s measure isn’t a repeat of the 2018 measure, when landlords outspent the campaign by three to one to block the attempt to repeal Costa-Hawkins.

Instead, after the $100 million Proposition 10 battle ended, rent control advocates narrowed their concept to what they believe is a more palatable approach.

Proposition 21, sponsored by the Los Angeles-based nonprofit AIDS Healthcare Foundation, would exempt buildings constructed in the last 15 years, and owners with fewer than three single-family properties would also get a pass. Cities and counties could regulate rent increases once a unit is vacated, but landlords would be able to boost prices by up to 15% over three years after another tenant moves in.

Moya argued that the measure doesn’t overhaul Costa-Hawkins, but moderately adjusts it to better reflect how out-of-control rent prices in some parts of the state have ballooned to in the last two and a half decades.

“Proposition 21 is meant to take matters into our own hands and actually solve the housing affordability crisis,” Moya said.

Money matters

Like 2018, the attempt to change the historic housing law has ignited a fierce, and expensive, debate between housing activists and California’s powerful real estate industry.

Among the opposition is Gov. Gavin Newsom, who in addition to signing the rent cap law, approved legislation in late August to prevent certain evictions during the pandemic, though that law does not excuse renters from eventually paying their landlords any rent owed.

“In the past year, California has passed a historic version of statewide rent control — the nation’s strongest rent caps and renter protections in the nation — as well as short-term eviction relief,” Newsom said in a statement. “But Proposition 21, like Proposition 10 before it, runs the all-too-real risk of discouraging availability of affordable housing in our state.”

So far, Newsom’s argument is resonating.

A considerable portion of the population remains unconvinced that rent control is necessary, according to a Sept. 23 UC Berkeley Institute of Governmental Studies poll, with 37% of voters against the measure, 37% supporting it and 26% undecided.

Proposition 21 opponents, led by the California Apartment Association and backed by business and real estate groups, affordable housing advocates and labor representatives, have poured around $45 million into boosting their campaign.

The “yes” campaign, which has the state Democratic Party, SEIU and other left-leaning civil rights groups in its corner, has raised $28 million in contributions.

Maviglio said the pandemic won’t convince voters that rent control is necessary, despite proponents saying COVID-19 highlights housing affordability disparities.

“As the (Legislative Analyst’s Office) points out in its analysis of the initiative, Prop 21 will result in tens of millions in cuts to communities because it will result in a decline in property values,” Maviglio said. “It’s just about the last thing our communities need during COVID...further cuts to schools, firefighting and the other services we need during this crisis.”

Even so, the Democratic lawmaker who wrote both the rent cap and COVID-19 eviction moratorium laws, Assemblyman David Chiu of San Francisco, said Proposition 21 would give communities the chance to build even stronger tenant protections.

“The pandemic and recession have only intensified the plight of millions of desperate renters in California,” Chiu said. “For the sake of public health, we need to keep California renters stably housed.”

This story was originally published October 2, 2020 at 5:00 AM.