There is no question that California is in a housing affordability crisis; it is stated that nearly 1 in 3 households statewide spend more than half their income on rent, leaving so many families on the verge of losing their homes (Lowe 2018). And in much of California, rents are rising far faster than incomes. A recent McKinsey study found that in California alone 50% of California households cannot afford market rate housing and virtually no low-income families can afford to pay market rates (Solomon 2018).
Proposition 10, the Affordable Housing Act, repeals the state law referred to as the Costa Hawkins Rental Housing Act, that currently restricts the scope of rent control policies that cities and other local jurisdictions may impose on residential property (Mantel 2018). The measure which ultimately failed at the ballot box, would have repealed the limits on local rent control laws in Costa-Hawkins Housing Act, and, under the measure, cities and counties can regulate rents for any housing within their jurisdictions.
State lawmakers have repeatedly failed to enact even modest tweaks to Costa-Hawkins Housing Act that would have given cities the option to prohibit exorbitant rent increases, permanently or temporarily (LA Times 2018). Proposition 10 purpose was to allow cities to input rent control on nearly all new housing units, not just the older buildings as is currently restricted under state law (Lowe 2018). The measure itself does not make any changes to local rent control laws. With a few exceptions, cities and counties would have to take separate actions to change their local laws (Mantel 2018).
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In the past four years, “Los Angeles’ population has increased by about 250,000 people, but only 45,820 new housing units have been approved for construction” (Lowe 2018, 1). Prop 10 could have inevitably encouraged some owners to convert their properties to condos or vacation homes (Lowe 2018). For example, San Francisco’s already limited rent control has reduced the city’s rental supply by 15%, and further rent control would continue to inflate the Bay’s luxury housing, leaving low-income Californians in the dust. Opponents to prop 10 argue that rent control has the perverse effect of discouraging the development of new housing, limiting supply and driving up rents (LA Times 2018). Although this could be a risk, it may not necessarily be the result. Research has shown that “moderate regulations that allow modest rent increases and let landlords raise a unit’s rent to the current market rate when the tenant moves out do not affect housing production” (LA Times, 2).
The risk that Prop 10 could lead developers to back away from building new apartment complexes as they would fear a less than favorable return, is a great one. The existing rental units could also potentially be converted to condos and ‘Mom-and-pop’ landlords could sell their single-family rentals to owner-occupiers (Skeleton 2018). For years the single dwelling residences and homes that were built later than 1995 have been out of the rent control zone but prop 10 would change all of this, thus now allowing rent control for the first time in these areas. Skelton (2018) states Proposition 10 sponsors say that 17 million Californians live in rentals, 7.7 million of them in single-family homes which currently are not rent controlled due to current act in place. About one-third spend roughly half their income on rent and experts say it shouldn’t be more than 30% (Skeleton 2018).
Rents go up, tenants can’t pay and they’re evicted. Senior citizens on fixed incomes are especially vulnerable, therefore not causing a favorable outcome from prop 10. Forbes reported that a shrinking housing inventory “is the principal reason why home prices have been outpacing people’s income growth for the past five consecutive years (Solomon 2018). The fact is that over the next decade we will produce approximately 8.7 million units when in actuality we will need 15 million. Therefore, the fear that prop 10 will steer away new construction, leads to the majority in disfavor of the measure.
Dolores Huerta, a labor leader and civil rights icon shares a different perspective on proposition 10. She states “prop 10 is a key step toward solving California’s housing-affordability and homelessness crises as it will protect California’s renters and guarantee landlords a fair rate of return, all while laying the foundation for stronger communities” (Business Wire 2018, 1). By empowering local communities to limit rent increases and curtail predatory housing practices, cities and counties will be able to create thoughtful laws to address their local housing situations. Huerta states that Proposition 10 will create the change we need to improve the lives of millions of working Californians (Business Wire 2018).
Improving wages, working conditions, and education equity is at the foundation to securing a better California, according to Huerta. Prop 10 is an essential step in these fights because housing is a key component of economic security and community stability. The “Rent Is Too Damn High!” Bus Tour is a statewide grassroots mobilization push to further develop organic person-to-person relationships, hear community housing concerns and raise awareness for the importance of Proposition 10. To date, the Bus Tour has rallied support for Prop 10 across California (Business Wire 2018).
Too many families spend over half their income on housing. That’s simply unacceptable. Living paycheck to paycheck means it’s difficult for these families to make ends meet, much less save for an emergency. Seniors on fixed-incomes have less to spend on food and medicine. Many of the people who should be the foundation of our local communities such as teachers, nurses, firefighters etc., are forced to move far away from the communities they serve because corporate landlords are doubling or even tripling the rent. With so many families struggling, many are driven to move away from California altogether, leaving jobs, relatives and schools behind. Even worse, many are forced into homelessness and living on the streets. With every 5% rent increase, 2,000 more people are forced out of their homes—a devastating blow to them and an even worse homeless problem for California to cope with.
The idea was that Prop. 10 would allow cities that need it to pass laws limiting rent increases. Prop. 10 would not mandate rent control and would not force any community to adopt any rent control measures that would not be a good fit for their own housing situation (Mantel 2018). It was stated that Prop. 10 would have simply allowed communities that are struggling with skyrocketing housing costs to put an annual limit on how much rents can be raised. Communities would be free to bring more fairness to housing, ensuring that tenants have protections against huge rent increases, while ensuring that landlords receive a fair rate of return with reasonable yearly increases.
At this point, everyone knows there isn’t enough housing supply for the demand in California, at least in the more desirable areas where people tend to have a greater desire to live in. The LA times article by Skelton (2018) states that California has been under supply and not meeting the demand for years. He blames ‘regulatory impediments’ imposed by local governments and the state (Skeleton 2018, 1). This adds years and millions of dollars to development costs. Another problem stated was that Governor Jerry Brown and the Legislature abolished local redevelopment agencies in 2014. ‘They were putting $4 billion into affordable housing,’ he explains (Skeleton 2018, 1). That money is now gone. Those agencies also were putting money into stuff that didn’t quite make sense, so they were easy targets.
The public viewed Prop. 10 with too many flaws that could hurt homeowners by authorizing a new government bureaucracy that can tell homeowners what they can and cannot do with their own private residence. It could make homes more expensive for future buyers and hurt families trying to purchase their first home. Not only homeowners, but also renter would be negatively affected. Tens of thousands of renters, including senior citizens and those on fixed incomes, could be forced out of their apartments and communities under Prop. 10, which allows wealthy corporate landlords to turn apartments into condos and short-term vacation rentals.
It would increase the cost of renting and make it even harder to find affordable housing. Under prop 10, homeowners would no longer have the ability to rent out their homes for whatever they wished, as the government would then have the right to dictate how much their homes could be rented out for. And because of this, taxpayers may be looking at paying much more in taxes. Many are weary of government controlling prices charged by private enterprise. Skeleton (2018) states that’s ok for energy utilities because they’re allowed monopolies. But housing is a wide-open market. Government should get involved, but directly. Perhaps go back to public housing, only in a different way than 50 years ago such as adding more rent subsidies or streamline building regulations and provide tax incentives.
In addition to all of these issues, rent control creates unintended consequences that further reduce the supply of rental units through an inefficient allocation of housing, especially over long periods of time (Rosen 2018). In an environment of scarcity, it is difficult for residents to find new housing and many existing tenants may feel stuck in their units, unable to move or downsize as their housing needs change along with their stage in life. For example, a family household may require a relatively large multi-bedroom apartment today, but will likely require less space later in life once their children reach adulthood and form their own new households. However, for households living in a rent-controlled unit and paying substantially below-market rent, it is significantly less likely that they will be able to find an opportunity to downsize to a smaller unit. The result is a decrease in the total number of people living in the same number of rental units over time (Rosen, 2018).
The California housing crisis is has been an ongoing issue and is only continuing to get worse as time goes by. There are many issues to consider in relation to proposition 10 and how it can effect Californians. Controlling rent hikes would help keep tenants under shelter and off the street. At least that’s the theory. There is an absolute shortage of units, aggravated by the increasing prices of existing housing which exceed what is affordable, producing gentrification, displacement, ghettoization, evictions, and ultimately homelessness for a surprising number.
But prop 10 could also could drive up rent prices by reducing housing supply in several ways. Opponents of rent control frequently refer to government invading private rights if it interferes with activities as to housing that should be solely in its citizens’ private control, that the less government the better, that government taxes used to subsidize housing take “your” money for the benefit of others who should be able to take care of themselves.
The initiative simply opens the door to local determination whether a particular community wants rent control, by repealing Costa-Hawkins, which denies local communities such a choice. If Proposition 10 would have passed, the battle about rent control would have simply have been moved to the local level, where housing policy decisions are usually made. The numerous “flaws” of prop 10 repealed citizens to say yes and therefore the current housing act and rent control stays as is.
References
- Business Wire. 2018. “Proposition 10 Will Restore Independence and Economic Justice for Millions of Californians”. 26 October. ProQuest. file:///C:/Users/thesa/Documents/Restoring%20Independence%20Prop%2010%20proQuest%20aticle.pdf (accessed January 15, 2019).
- [bookmark: R434806899421296I0]LA Times. 2018. “Rent Control Isn’t the Answer to California’s Housing Crisis, but it Could Help. Yes on Prop 10.” 15 September. ProQuest. file:///C:/Users/thesa/Documents/La%20times%20article%20yes%20on%20prop%2010.pdf (accessed January 15, 2019).
- Lowe, Tiana. 2018. “California’s Prop 10 may double down on its insane housing crisis”. The Examiner. 1 November. ProQuest. file:///C:/Users/thesa/Documents/Housing%20crisis%20article%20proquest.pdf. (accessed January 15, 2019).
- Mantel, Henry and Sebastian Silveira. 2018. “Proposition 10: Affordable Housing Act.” California Initiative Review. 1 January 2018. https://scholarlycommons.pacific.edu/cgi/viewcontent.cgi?article=1048&context=california-initiative-review. (accessed January 22, 2019).
- Rosen, Kenneth T. 2018. “The Case for Preserving Costa-Hawkins: Three Ways Rent Control Reduces the Supply of Rental Housing. 1 September 2018. https://escholarship.org/uc/item/9dn0n4g7. (accessed January 22, 2019).
- Skeleton, George. 2018. “Prop 10 Wont Get State out of its Housing Mess”. LA Times. 08 October. ProQuest. file:///C:/Users/thesa/Documents/Prop%2010%20wont%20get%20state%20out%20of%20mess%20proQuest.pdf. (accessed January 15, 2019).
- Solomon, Robert A. 2018. “How To Increase Our Affordable Housing Stock Introduction-Our National Housing Policy”. 6 November 2018. UC Irvine School of Law Research Paper No. 2018-62. https://ssrn.com/abstract=3279153. (accessed January 22, 2019).
