By Martin Macias Jr.
In less than three weeks, California’s 19 million voters will decide a slate of midterm ballot measures aimed at easing the state’s affordable housing crisis, but not all initiatives may bring residents the relief they seek.
California’s rate of home-building hasn’t kept up with a booming economy and a surge in population, resulting in a drastic shortage of homes and apartments and soaring housing costs.
The crisis has left more than 130,000 Californians homeless.
In response, affordable housing and tenant-rights advocates – backed by $22 million from the AIDS Healthcare Foundation – garnered enough signatures to place the Affordable Housing Act on the statewide ballot.
Known as Proposition 10, the measure would repeal the Costa-Hawkins Rental Housing Act. Passed in 1995, Costa-Hawkins limits cities and counties from imposing rent control.
Proponents say the measure could stem the rise of homelessness in the state by protecting renters from spikes in housing costs.
Sylvie Shain of Los Angeles, a volunteer with the campaign to pass Proposition 10 and a previously evicted renter, said while she agrees more homes need to be built in the long term, she supports rent control because it can provide relief now for some people now.
“People are being driven out onto the streets and losing their social safety nets,” Shain said, adding her turbulent experience with eviction threw her off-balance. “[Rent control] is one of the most immediate tools at our disposal to spot the bleeding.”
With nearly 20 percent of Californians living near the poverty line according to the Public Policy Institute of California – the most in the nation – an affordable apartment or owning a home has become unattainable for many in the nation’s most populous state.
In 2016, 1 in 5 California households used more than half of their incomes for housing, according to a California Budget & Policy Center analysis of U.S Census Bureau data.
If approved by voters, Proposition 10 would allow cities to pass laws to limit rent increases for single-family rental homes, apartments built after 1995 and apartments turning over to new tenants.
Under the measure, cities could also block landlords from raising rents to market levels once a tenant moves out, a practice known as vacancy decontrol.
The Budget & Policy Center analysis notes Proposition 10 “would not force landlords to rent out units at a loss,” adding that in cities with rent control – including Oakland, Santa Monica and Mountain View – landlords are offered incentives such as a higher rent ceiling.
Some local jurisdictions already have power to limit rent increases in older housing units not covered by Costa-Hawkins, which make up 50 percent of existing rentals in California.
Additionally, rent control would not automatically extend to all cities across the state.
Advocates will have to organize city-by-city to enact rent control laws and educate renters on what those laws mean for them according to Pete White, executive director at Los Angeles Community Action Network.
“When the cameras go dark, that’s when the work happens,” White said at a ballot analysis event by the California Budget and Policy Center held this month.
The center’s analysis of Proposition 10 indicates rent control alone won’t solve the state’s housing crisis – state and local investment is needed to increase construction of affordable rental units – though the measure could provide much-needed relief to renters now.
“Rent control is one of the few financially feasible and scalable policy tools available to address the immediate needs of those facing rents in the private market that are rising faster than incomes,” the analysis says.
The movement has recently garnered support from the California Democratic Party, the American Civil Liberties Union, California Teachers Association, and the U.S. Sen. Bernie Sanders-backed organization Our Revolution.
Voters are another story. A Sept. 26 poll by the Public Policy Institute of California found just 36 percent of likely voters support the measure, though another 16 percent were undecided.
Victor Ocampo, 24, of Los Angeles said he supports the idea for “relief for struggling renters” and bonds that will boost home construction in the state, but remains uninformed about the current propositions on the ballot.
“With work and school, I don’t have much time to research [ballot measures],” Ocampo said, adding that easy-to-digest voter guides would be most helpful for him at the polls.
Groups opposed to the measure – including realtor groups, private equity firms and, perhaps surprisingly, the California chapter of the NAACP – acknowledge California’s housing woes but say the measure will decrease the supply of rental units and stifle new home construction by scaring away investors.
University of California, Berkeley, economist Kenneth Rosen agrees. In his study “The Case for Preserving Costa-Hawkins” released this month, Rosen said single-family rent control could decrease property values by up to 15 percent and reduce the supply of single-family rental units.
Rosen found rent control could push property owners to convert their rental units into condos or for-sale units.
To allay developers’ fears, proponents point to state law that protects landlords’ right to a “fair rate of return” on their rental property. And they believe the state’s real estate market is large enough to keep investors from walking away.
But in a statement, Debra Carlton of the California Apartment Association said rent control would lead to an “exodus” of mom-and-pop rental owners – leading to “eviction notices instead of rent increases” for tenants.
Rosen backs Carlton’s claim, finding rent control could increase competition for available units and make it harder for low-income residents to find affordable housing.
In a statement, the California Association of Realtors, another main opposition group, said the California Legislature should finance construction of more housing units and “not introduce price ceilings.”
The group said rent control laws passed in San Francisco and Los Angeles have done little to address soaring housing costs and instead point to its ballot measure – Proposition 5 – which it believes will generate construction and sales of single-family homes.
Proposition 5 would amend state law to lower property taxes for mainly older, wealthier residents who built or purchased a second home.
The measure would also allow homeowners to buy or build a second home worth more than the home they’re selling but pay property taxes that are tied to the value of their old home.
It would also allow homeowners to transfer the property tax value under Proposition 5 to anywhere else in the state an unlimited number of times.
A Budget and Policy Center analysis of the measure said it would result in an annual loss of $1 billion in funding for public services.
At the Oct. 10 Budget and Policy Center event, Veronica Carrizales of California Calls described Proposition 5 as a “sham” to benefit realtors.
“This measure doesn’t create new housing or help low-income seniors,” Carrizales said.
The California Association of Realtors did not immediately respond to request for comment.
Many housing advocates remain undecided on Proposition 2, which would authorize the state to sell up to $2 billion in bonds to build permanent housing with services attached for homeless people living with mental illness.
The conflict lies in the diversion of Proposition 63 funds that pay for other mental health services.
Building supportive housing could decrease state and local costs of using jails and emergency rooms in dealing with mental health crises, according to the Budget and Policy Center analysis.
“A key question for voters is whether [building] up to 20,000 supportive housing units outweigh the potential impact of a relatively small decrease in counties’ annual mental health funding,” the report said.
An aerial view of the Skyline Ranch development in the Santa Clarita Valley, June 14, 2018. Photo: Stephen K. Peeples.