Rent Control Initiative Likely on 2020 Ballot

Timothy L. Coyle
Consultant specializing in housing issues

Housing activists are at it again.  After seeing last year’s ballot measure – Proposition 10 – go down in flames, they’re taking another run at establishing statewide rent control.  Recently, last year’s losing side submitted a market-constraining draft initiative for the 2020 ballot to the state attorney general (AG) for “title and summary”.  

The AG’s approval is pro forma so all proponents of the measure have left to do is gather the requisite number of signatures – which they surely will do – and finance a campaign.  The amount in favor of the initiative will likely run the sponsors somewhere north of last year’s nearly $26 million. (Opponents of the defeated measure spent three times that much in 2018.)

The draft law looks a lot like last year’s effort but has been modified, somewhat.  It begins with a statement of the horribles, presumably to justify why California needs more controls in the marketplace.  Of course, it ignores the state’s woeful lack of an adequate supply of housing as it presents the following findings:

  • An increased number of renters in California, amid soaring prices, are spending more of their incomes on rent;
  • To avoid becoming homeless, more families are skipping groceries so they can make rental payments;
  • Labor unions (a key political constituency) are now feeling the affordability squeeze, making rent control their number-one public-policy initiative;
  • Housing affordability is directly responsible for the state’s increasingly high rate of homelessness;
  • All that ails people in poverty – including a lower rate of life expectancy, a higher rate of cancer and more birth defects – is being blamed on increased neighborhood gentrification; and
  • The surrounding physical environment is worsening.

It then lays out the premise for a new California housing policy, saying that “[A] growing body of evidence suggests that stabilizing rents can bring broad-based benefits to renters, the state’s economy, environment and its public services.”

Pretty grand statement – and promise.

Under the initiative, single-family homes will now qualify for rent control.  So will new housing construction and new limits are to be placed on units previously protected by vacancy de-control.  The initiative defines a single-family home as being subject to rent control if an individual owns three or more houses; classifies newly constructed units as those aged 15 years or less; and subjects 85 percent of existing, privately owned rental housing to price controls.

It’s statewide rent control, no doubt about it.  The initiative goes so far as to repeal the Costa-Hawkins Rental Housing Act, the state law enacted in 1995 which regulates onerous local rent-control policies.

Though one can raise several practical and philosophical arguments against the imposition of statewide rent control, as this initiative would do, there is an honesty threshold that voters – and its authors – must cross in its defense:  

after 25 years of experience with a state law that arguably has worked – and after legislative deliberation over half as much time on the rights and the wrongs of rent control – what went awry that would warrant such a radical change?

And, what about the so many truly needy individuals who lose under rent control?  Those disenfranchised by the many well-to-do who cut in front of them to take advantage of the policy’s below-market rents?  Or, how about those who have no place to live? Who with rent control in place have to search harder and harder for an apartment they can afford after market constraints chase new construction away from the neighborhood?

Last year, in citing rent control’s miserable history, the editorial board of the Sacramento Bee (“the Board”) said that “imposing rent control only makes housing problems worse.”  The Board referenced pundit Paul Krugman, the left-leaning economic spokesman for the New York Times, who warns of rent control’s “adverse side effects” leading to a reduction in the “quality and quantity of housing.”  He continues, declaring about the basic limitations of rent control that they are “right out of the textbook . . . they are exactly what supply-and-demand analysis predicts.”

For sure, against a more sympathetic political backdrop, the new initiative will best last year’s 19-point defeat – but not by much.  California voters know better. They oppose price controls of any kind. They don’t want government bureaucrats telling them how much they can charge for something they obtained privately, fair and square.

The initiative being on next year’s ballot is unfortunate, however.  Once more, we’re forced to take our eyes off the ball – the state’s housing crisis – to fuss around with a frivolous “solution” that will actually discourage an increase in needed supply.  Too bad.

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