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Should Caifornia Expand Its Rent Control Laws?

Proposition 10, dubbed the Affordable Housing Act, is an initiative on the November 2018 ballot to repeal the state’s Coast-Hawkins Rental Housing Act.

The Costa-Hawkins Rental Housing Act (“Costa-Hawkins”) is a California state law, enacted in 1995, that sets limits on municipal rent control ordinances. Costa-Hawkins affects rents in two main ways. First, it prohibits cities from setting a rent control on certain types of residential units, for example, single-family homes, condominiums, and newly built apartment units that are considered exempt. Second, it prohibits municipal “vacancy control”, also called “strict” rent control.

If an apartment is under “vacancy control,” the ordinance works to deny or limit a landlord’s ability to increase their rent to a new tenant (s). It works this way even in cases where the previous tenant voluntarily vacated the apartment or was evicted for some cause (such as not paying rent). In other words, Costa-Hawkins, by now prohibiting “vacancy control” in the above circumstances, requires cities to allow an apartment owner the right to rent it when it is vacant at any price (that is, generally the price of market).

Rent control in California is largely the creation of its municipalities. This capacity of municipal governments is limited by federal and state constitutions, as well as federal and state laws. Costa-Hawkins is a key state statute enacted to manage the power of California cities to regulate their rental markets. The original rent control efforts sought to provide affordable housing to the public, but caused a drop in the number of new units being built, exacerbating the housing shortage. Later rent control laws exempted new construction. Such regulation also removed incentives to upgrade or even maintain older housing units.

Repealing Costa-Hawkins would mean eliminating current rent control regulations, opening the door for city governments to impose their own rent regulations on newer buildings, and allowing the possibility of vacancy control.

There are opposing sides to the repeal.

“Securing the backing of the Democratic Party is huge” for repealing the Costa-Hawkins Housing Act, said Joe Trippi of Trippi, Norton, Rossmeissl Campaigns, the chief strategist for the Yes on 10 campaign. He clearly supports the millions of Californians struggling to pay rent and supports returning the power to respond to the state’s housing affordability crisis to people and local communities. ” The repeal is believed to allow communities to create strong protections for tenants against displacement, rent increases, and evictions without interference from state law.

David Crown, CEO and founder of LA Property Management Group, refutes the idea that the repeal will create affordable housing. According to David, much of the debate around Costa-Hawkins is colored by a fundamentally false dichotomy: Supporters of the repeal seek to characterize opponents as greedy corporate owners eager to profit from the increased gentrification of California cities at the expense of low-income tenants. clinging to your home. “As a property manager who works with tenants and landlords every day, I can tell you from experience how unfair and untrue this is.”

Although the proposed ballot initiative is called the “Affordable Housing Act,” a repeal does not provide any new affordable housing. It simply opens the door to rent regulation that hurts landlords without benefiting those in need of more affordable housing, according to Crown.

This author believes that the repeal limits the number of potential investors who buy these units because the tenants have more rights than the owners. Also, as in 1995, additional rent controls can limit new home development.

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