Prior to the Costa-Hawkins Rental Housing Act (1995), California local governments were able to set rent control provided that landlords receive jest and reasonable returns on their rental properties (a provision accorded by the CA law). The Costa-Hawkins Rental Housing Act limited local government’s ability to set rent controls by 1) forbidding rent controls on housing units built after 1995, and 2) forbidding rent controls on “housing units with distinct titles,” which includes things like condos, townhouses, and single-family homes. In 2019, AB 1482 was passed and it contained the following clauses: 1) caps annual rent increases at 5%+inflation for housing units except those with distinct titles and those built after 1995, 2) required landlords to have just cause to evict tenants that have occupied rentals for at least one year, and 3) the law will sunset after 10 years. This is all taking place in the background of California’s housing rental market. California has the second highest median rent in the US ($1,297/mo.), with median rents even higher in urban areas (SF Bay Area over $1,600/mo., LA-SD area over $1,500/mo.). As a result of high rents, more than 50% of renters in 14 of California’s 15 largest cities pay more than 30% of their income on housing, a metric that the US Department of Housing and Urban Planning uses to define cost-burdened households. California leads the nation in the number of homeless persons, estimated at over 151,000 persons on any given day or 22% of the nation’s population that are experiencing inadequate housing.
Specifics & Figures
Local government: Allows local governments to enact rent control measures on residential properties over 15 years old and for rent control measures to differ from statewide limit.
Vacancy decontrol: allows rent-controlled properties to increase rent by up to 15% over three years at the start of new tenancy.
Exemptions: Exempts individuals who own no more than two homes.
Estimated to decrease local government revenues by high tens of millions per year over time, depending on whether local communities will enact rent control measures. As a result, it is difficult to estimate the effect Prop 21 will have on median rents. Prop 21 will regulate the practice of “vacancy decontrol,” when a landlord raises the rent to market value after a tenant moves out.
At a time when rents are rising and wages are stagnant, Prop 21 is needed more than ever. Prop 21 would cap the increases in rent and prevent people from being forced out of their communities. Rising rents take money that would otherwise go to small businesses in the community and puts it towards housing instead, harming small businesses and the local economy. Prop 21 will actually save taxpayers money because the rent controls will stop the rise in California’s homeless population, which studies have estimated that the state spends $35,000-$45,000 per year per homeless person. Passing Prop 21 will allow for teachers, grocery clerks, healthcare workers, and more to stay in the communities that they serve, rather than moving farther away.
Prop 21 does nothing to address California’s homelessness and housing shortage crises. Rent controls introduced by Prop 21 is a financial disincentive that will discourage the building of new housing units. Non-partisan research has shown rent control measures like Prop 21 will reduce the property values up to 20%. The rent control measures threaten California’s senior citizen and veteran population by decreasing available housing, increasing the severity of the housing shortage, and making housing even less affordable across the entire state.
Endorsements In Support
AIDS Healthcare Foundation, CA Democratic Party, several CA Legislators, several labor unions/organizations including UAW 2865, state and national progressive organizations [website]
Endorsements Not in Favor
Gov. Gavin Newsom, Chambers of Commerce, taxpayer advocacy organizations, construction and housing associations, unions of construction and related professions, senior citizen advocate groups, veteran advocate groups [website]