What Do Affordable Housing Developers Think of California's Potential Rent Control Initiative?

A California November 2018 ballot initiative seeking to repeal the Costa-Hawkins Rental Housing Act could have unintended consequences, according to Related California's Bill Witte.
July 9, 2018, 7am PDT | rzelen | @rzelen
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David Harmantas

In California’s continued debate over housing affordability and stability, tenant advocacy has begun to take a more prominent role. An initiative on the November ballot seeks to repeal the Costa-Hawkins Rental Housing Act, a 1995 state law that restricts local rent control ordinances.

The Planning Report caught up with Bill Witte—CEO of Related California, a major developer of multifamily housing in the state—to understand what affordable housing developers are thinking about regarding this initiative. The initiative was deemed Proposition 10 by the California Secretary of State Alex Padilla, and will be listed as the initiative to "expand local governments’ authority to enact rent control on residential property." 

The two largest cities in California—Los Angeles and San Francisco—have forms of rent stabilization in which older buildings’ rents can be controlled. But when they have a vacancy, they can be priced at market rates. As a result, there have been no inhibition of investment in rental housing under that scenario, while there is some protection for tenants such as the Ellis Act. Strengthening and reforming the Ellis Act has been a focus of California's state legislature this session, but many of the core tenant protection bills have failed. 

Witte expressed grave concern that rents have been increasing too much, exacerbating inequality among a growing lower-income and moderate-income population. However, Witte explained that the initiative to expand rent control has "an unusually untargeted policy impact" because there is no rent control by zip code or income. Witte states that "the economic benefits disproportionately go to people in higher- and middle-income neighborhoods." 

He stated that "the real debate ought to be on tools that can legitimately protect tenants who are in need." Witte noted that Carol Galante of the UC Berkeley Terner Center for Housing Innovation has proposed an “anti-gouging” provision in which rents could not be increased more than 10 percent in any given year.

A former Deputy Mayor of San Francisco addressing Housing and Neighborhoods under both Art Agnos and Dianne Feinstein, Witte explained that expanding rent control might also curb new construction or impose vacancy controls. To Witte, the effort to repeal Costa-Hawkins distracts from the considerable focus in Sacramento lately on providing more affordable housing.

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Published on Friday, July 6, 2018 in The Planning Report
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