A hard-fought and controversial campaign to expand rent control in California, home to some of the priciest housing markets in the nation, was defeated Tuesday night.
Proposition 10, the measure to broaden rent control’s reach by repealing a state law restricting its use, trailed throughout the night as it was soundly rejected by the state’s voters.
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“The stunning margin of victory shows California voters clearly understood the negative
impacts Prop. 10 would have on the availability of affordable and middle-class housing in
our state,” said Californians for Responsible Housing, the group opposing the measure, in a statement late Tuesday.
Prop. 10 took aim at a decades-old state law that prohibits cities from enforcing certain types of rent control. Without that law, cities would have had the power to place price caps on rented single family homes, condominiums and apartment buildings constructed after 1995 — or in the case of cities with older rent-control policies, such as Oakland and San Francisco, apartments built after the late 1970s or early 1980s. Under current state law, those units cannot be subject to rent control.
The campaign thrust rent control into the spotlight amid soaring prices that have squeezed the state’s 6 million renters, forcing 30 percent of them to spend more than half their income on shelter, according to state estimates, or move to far-flung areas that are more affordable. In August, the median monthly rents for a two-bedroom apartment were $2,640 in San Jose, $2,267 in Oakland and $3,100 in San Francisco, some of the costliest in the nation, according to estimates from Apartment List.
But the threat of expanded price caps sent fear up and down the real estate food chain, from small landlords to publicly traded real estate investment firms. That fear translated into cash — and a barrage of negative advertising.
As of Tuesday, opponents had raised $76 million to defeat Prop. 10, compared to $26 million by the Prop. 10 campaign, which was largely underwritten by the Los Angeles-based AIDS Healthcare Foundation.
“What I can say is it’s the power of money. The imbalance of money in this race really showed its strength,” said Ged Kenslea, a spokesman for the foundation.
As they conceded defeat, tenants’ rights advocates quickly called upon the governor-elect, Gavin Newsom, to place a moratorium on rent increases until the Legislature repealed the state law in question, the Costa Hawkins Rental Housing Act.
Newsom opposed Prop. 10, and a bill to repeal Costa Hawkins failed in its first committee hearing this year, but some legislators have expressed interest in amending the law, rather than repealing it. Meanwhile, activists vowed to keep the issue alive.
“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,” said Walt Senterfitt, a founding member of the Los Angeles Tenants Union, in a statement late Tuesday.
Another housing measure trailing in early results was Proposition 5, a realtor-backed initiative to expand property tax benefits for homeowners over 55 by allowing them to keep their relatively low tax base regardless of where they move in the state.
Proposition 1, which would fund affordable housing construction for veterans and low-income Californians with $4 billion in state bonds, was in a tight race with a slight majority of voters favoring the plan in early returns. Proposition 2, which authorizes the use of existing tax revenues for mental health services to house the mentally ill, held a comfortable lead.
In addition to expanding the types of properties that would fall under rent control, Prop. 10 would have let cities permanently cap the price of an apartment, allowing only modest increases even after tenants move out. That policy, known as vacancy control, was used decades ago in a handful of cities including Berkeley, East Palo Alto and Santa Monica before California passed the Costa-Hawkins law banning it. Currently, landlords can raise prices to market rates after a tenant in a rent-controlled unit leaves.
Vacancy control would have immediately taken effect in Berkeley if Prop. 10 passed, as it has remained on the books, unenforced, for more than two decades.
Tuesday’s returns reflected the measure’s weak showing in recent polls. A Berkeley IGS survey released last week found that just 35 percent of likely voters supported Prop. 10. A PPIC poll late last month estimated that just a quarter of likely voters would vote for the measure — even though two-thirds said they felt that housing affordability was a big problem in their part of the state.
The proposition’s well funded opponents spent money on TV ads and mailers warning the measure could lead to lower property values, cut the supply of available rental housing and reduce multifamily apartment construction in the midst of an already dire housing shortage.
One factor that likely weighed heavily against Prop. 10 is the sheer number of property owners who rent out — or might one day consider renting — their single-family homes, which are currently exempt from rent caps, said Carol Galante, a former Obama administration housing official who now is professor of affordable housing and urban policy at UC Berkeley’s Terner Center for Housing Innovation.
Nationally, Galante noted, 37 percent of the rental housing stock consists of single-family homes.
“That puts lots of pressure on the situation,” she said. “You’ve got a large number of owners of that rental stock, and you have more people who would be concerned about price controls.”
