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The Acorn: Rent control initiative a key issue

October 29, 2018

Rent control initiative a key issue

Proposition 10 would allow cities to cap prices

By Ian Bradley


Southern California is home to some of the most desirable real estate in the country, but not everyone in the land of beaches, mountains and sunshine can afford their piece of the pie. Rents, for one, are among the highest in the nation.

The USC Lusk Center for Real Estate issued a report last year that said leases on SoCal homes and apartments will jump as much as $150 a month by 2019.

One measure on the Nov. 6 ballot gives voters a chance to fight back. Proposition 10, the rent control initiative, expands the authority of local government to regulate rent on residential properties.

Rent control is a limit on the price a landlord can charge tenants, and it prevents rent increases from going above a certain percentage. More than a dozen California cities have a form of rent control, including Berkeley, San Francisco, Los Angeles and Santa Monica.

Agoura Hills and Calabasas do not have rent control, but tenants in these and other affluent communities in the region probably wish their cities did. The average two-bedroom rental is $2,500 in Calabasas, $2,200 in Westlake Village and almost the same in Thousand Oaks, real estate records sources show. A 900-square-foot, two-bedroom in Moorpark or Simi Valley is almost $2,000.

“Organizations including the ACLU, the California Democratic Party, the League of Women Voters, the L.A. Times all endorse Prop. 10, because it really is a key step toward reigning in skyrocketing rents and addressing the housing crisis, and California is obviously ground zero for that,” said Charly Norton, a Prop. 10 spokesperson.

If it’s passed, the measure would repeal the state’s Costa- Hawkins Rental Housing Act, a 1995 law that prohibits rent control on single-family homes and on any housing built after Feb. 1, 1995. The law would leave landlords free to set prices on new rents.

The rent control debate has turned the November election into a lightning rod.

The “Yes on 10” campaign argues that locally-imposed rent control is a key first step in solving California’s housing crisis. Norton said rents across the state are unsustainably high, and that the passage of the proposition would keep landlords in check.

“You have predatory corporate landlords and Wall Street speculators who (have spent) the last 20- plus years gaming the system to make more profit at the expense of renters,” Norton said. “The statusquo benefits these interests, the corporate landlords, not the millions of California renters whose rent is too high.”

The “Yes” campaign has received some $23 million in donations, primarily from the AIDS Healthcare Foundation, a Los Angeles-based nonprofit organization that provides HIV prevention services. But opponents have countered with more than $59 million in fundraising, including $3 million from the Blackstone Group, a New York-based private equity firm with some 12,000 California rental homes at stake.

The “No” campaign argues that repealing Costa-Hawkins will aggravate the state’s housing crisis, not help it. Steve Maviglio, spokesperson for the opponents, said giving rent control powers to local cities will curtail new construction on housing and could force some landlords to take their rental properties off the market.

“Apartment buildings will be converted to condominiums. We’ll lose single-family homes that are rented. Berkeley lost 3,000 single-family homes the year they implemented rent control,” Maviglio said. “Building anything new in California is exorbitantly expensive. Rent control keeps developers from recouping their investment.”

Maviglio fears that if rent control spreads, landlords will be inclined to discriminate who they rent to, based on their income, and people living paycheck to paycheck will be overlooked.

“Study after study has found there’s people with huge incomes living in rent-controlled apartments, like actors in San Francisco. People are paying $900 a month for a rent-controlled apartment and they’re making six figures,” Maviglio said. But Norton argues that costly housing with no rent control has increased the state’s homeless population, which rose 14 percent between 2016 and 2017. And the people who can afford rent are either forced to live in cramped conditions with roommates, Norton said, or commute long distances to work.

The California Legislative Analyst has published some likely outcomes if Prop. 10 is passed including a potential decrease in the number of statewide rental properties— and their market value—as landlords choose to invest less.

If the proposition passes and local cities make a move toward rent control, the property tax revenue that flows to the cities and the state could decline, the legislative analyst said.

At the same time, renters with lower housing costs would have more disposable income that could be spent on taxable purchases.

John Loesing contributed to this article.

The original article can be found here.