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Despite Defeat, California's Rent Control Battle Remains A Big Issue

Even after its defeat, the battle over rent control in California is far from over.

California voters in November voted against Proposition 10, which would have repealed the Costa-Hawkins Rental Housing Act that limits rent control. But proponents of putting a cap on rent and those against it are continuing to square off. 

Protesters in front of Blackstone Group's office in Santa Monica, Calif.

"This fight is not over," Housing is a Human Right Director René Christian Moya said. "We believe the tide is turning and Californians want rent control."

Housing is a Human Right is the housing advocacy division of the nonprofit AIDS Healthcare Foundation.

National Apartment Association Senior Vice President of Government Affairs Greg Brown said this is an issue the association is paying very close attention to. The rent control debate is not only happening in local cities across California but picking up steam around the nation, he said.

"We're watching what those [cities and states] are doing and then working closely with our members and affiliates in those markets to assure them that we are doing as much as we can to educate policymakers and residents about the implications of rent control," Brown said. 

The debate over rent control comes as the cost of housing reaches an all-time high in the state. While Prop. 10 was defeated on the ballot, developers and property owners know that this is an issue that will continue to come up unless a middle ground is reached — if that is possible. 

"The [tenant] advocacy community and the operators and developers community, we all want the same thing — we want more housing available to more folks across the income spectrum. ... Where we disagree strongly is the method to get there," Brown said.

In California, homeownership rates are at the lowest point since the 1940s. Of the 6 million renters in the state, more than 3 million households are paying more than 30% of their income toward rent. One-fourth of renters — about 1.5 million households — spend more than 50% of their income on rent, according to the California Department of Housing and Community Development

Gov. Gavin Newsom has set out a goal of building 3.5 million new housing units in the state by 2025. But given the current housing climate and cost to build, most experts don't believe that Newsom's goal is realistic.

Tenant advocates had set their sights on passing Prop. 10 to repeal the Costa-Hawkins Rental Housing Act.

Passed in the mid-1990s, Costa-Hawkins prohibits cities and local governments from enacting rent control on single-family residences, condominiums and multifamily properties built after 1995. It also allows landlords to raise capped rents to market rate when a tenant vacates a unit.

National Apartment Association Senior Vice President of Government Affairs Greg Brown

About a dozen cities in the state have some form of rent control put in place prior to the passage of Costa-Hawkins. If the repeal passed, it would have given local governments free rein on enacting rent control. 

The real estate community, backed by major institutional funds, raised more than $80M to defeat the repeal, according to the LA Times

But Moya, the director of Housing is a Human Right, said tenant advocates have stepped up the pressure on the local level since losing that battle.  

The city of Inglewood — where the new home of the Rams, the multibillion-dollar Los Angeles Stadium and Entertainment District, is being built — last month passed an emergency ordinance to cap rent increases and evictions as the city looks into a more permanent solution. 

In the Bay Area, the Hayward City Council adopted a new measure that would make it harder for landlords to evict tenants unless they have just cause.

Most recently, Housing is a Human Right introduced a new statewide ballot measure: the Rental Affordability Act

Filed in April, the act would allow cities and local governments to develop and implement rent control policies and rental rates. 

"Our willingness to go back to the ballot is a sign that Prop. 10 was the beginning of a movement — a long-term campaign to allow our cities to enact actual rent control policies," Moya said. "We are hoping the legislature takes seriously the need to take on rent control again." 

Protesters in front of Blackstone Group's office in Santa Monica, Calif.

While tenant advocates have been lining up and supporting those cities that are pushing for some type of rent control or stabilization, Brown said he and other members of various apartment associations are engaging local city officials and community groups about the impact rent control would have if enacted. 

Education is the only way to win the rent control battle, Brown said. 

"Rent control is not new," Brown said. "It's been researched ad nauseam and the conclusion is always the same: that it is a bad option for addressing housing challenges, yet we continue to have situations that think this is the answer."

Brown contends building more housing is the only solution to the issue. But for now, the group is focused on finding ways to educate the voter base and work with elected officials. 

Last month, state officials introduced new legislation to prevent landlords from raising rents by more than a yet-to-be-determined percentage and other restrictions, according to the LA Times

California Apartment Association Senior Vice President Debra Carlton told the Times that her group is against rent caps but is open to engaging officials.

Brown said it is important for tenant advocates and owners, landlords and developers to work together. 

"I think the answer is we can work together to get to the same outcome, which is dealing with the undersupply of rental housing in communities, which drives up rent," Brown said. "We have to work together. We need to bring down barriers to construction, need to enable more supply and push back on NIMBYism, which is an ugly sentiment in communities that prevent new housing from being built."

"Every major metropolitan area and other tier 2 cities are dealing with housing affordability," he said. "I know it's cliche, but we all need to work together to develop more housing."