The promise of aggressive rent control alleviating the pressure of California’s housing crisis is seductive. It almost certainly will not happen under Prop 33
It’s no secret that California has a housing affordability crisis.
Seventy-two percent of renters say that the cost of housing puts at least some strain on them and their families, according to a recent Public Policy Institute of California survey. Renters here typically pay about 50% more than they do in other states. High housing costs are prompting a growing number of low-income residents to move to cheaper inland areas or leave the state altogether.
The question is what to do about it.
Proposition 33 would repeal a state law that limits the ability of local governments to enact rent control. Proponents say their measure is critical to keeping Californians in their homes and ensuring new residents can afford to live here.
We have our doubts.
The AIDS Healthcare Foundation, a Los Angeles-based nonprofit that has routinely devised ways to block new housing in that city, is responsible for bringing the issue back to voters after they resoundingly defeated similar initiatives in 2018 and 2020. (Infuriated landlords are funding their own ballot measure, Prop 34, that would effectively hamstring the foundation’s ability to bankroll future initiatives.)
Prop 33 is even more flawed than its predecessors.
Like the past initiatives, Prop 33 would repeal the Costa-Hawkins Rental Housing Act, a 1995 state law that generally prevents local governments from limiting what landlords can charge new tenants when they first move in and from limiting the rent increases landlords can charge existing tenants in housing built on or after Feb. 1, 1995, condos and single-family homes.
As we noted in editorials recommending that voters reject the previous two rent-control measures, research shows that while rent control can protect some existing tenants, it also tends to disincentivize the production of new housing — which is key to bringing down costs — and the maintenance of existing housing while reducing the supply of existing rental housing.
Furthermore, about 25% of Californians already live in areas with laws limiting how much landlords can increase rents each year — including in San Francisco. And a 2019 state law limited annual rent increases for most occupied units more than 15 years old to 5% plus inflation, or 10%, whichever is lower. It also expanded tenant protections to ensure that landlords can’t evict renters without just cause.
This editorial board is open to reasonable and targeted expansions of existing rent control laws, especially given that the statewide cap is set to expire in 2030.
But Prop 33 isn’t reasonable.
It goes beyond simply repealing Costa-Hawkins. It also explicitly blocks the state from limiting the ability of local governments to “maintain, enact or expand residential rent control.”
According to Chris Elmendorf, a UC Davis law professor and California housing law expert, this clause is a Trojan horse that local governments could exploit to make it nearly impossible to build new housing. That’s because courts, including the California Supreme Court, have interpreted “rent control” to include price controls established through inclusionary housing ordinances, which require a certain percentage of units in a development to be affordable.
Supporters say this is intended to protect local decision-making on key housing policies.
But that’s a recipe for disaster. Because, unfortunately, as we know all too well here in San Francisco, most local California governments can’t be trusted on housing.
Indeed, Huntington Beach (Orange County), which sued California over its housing laws, has already announced its intention to use the language in Prop 33 to impose steep affordability requirements on projects — effectively making it impossible for them to pencil out and halting new development.
It’s possible that courts could interpret Prop 33’s definition of “rent control” differently than they have in the past. But there’s still plenty of evidence of how local governments can and will intentionally misuse inclusionary housing laws to block development.
This year, the wealthy Los Angeles County community of La Cañada Flintridge attempted to block its first multifamily housing project in more than a decade by arguing that a California law meant to desegregate historically exclusionary neighborhoods, known as “affirmatively furthering fair housing,” is unconstitutional due to the U.S. Supreme Court striking down affirmative action in college admissions.
In other words: It argued that building affordable apartments where they haven’t traditionally been built is racially discriminatory — mostly against rich white people.
And last April, Santa Monica asked the state housing department for permission to backtrack on its approved plan to permit higher-density buildings in key commercial districts. The city argued, absurdly, that doing so would advance fair housing by “allowing local residents to participate in the local economy.”
Prop 33 opponents say the measure could render the state powerless to stop these shenanigans — and to enforce state housing laws that local governments have gone to ludicrous lengths to circumvent. Remember the affluent Silicon Valley suburb of Woodside declaring itself a mountain lion sanctuary and the wealthy Bay Area city of Sausalito proposing to develop affordable housing on underwater eelgrass?
Prop 33 supporters dismiss these arguments as far-fetched. But the AIDS Healthcare Foundation itself routinely misuses state environmental laws to try to block new housing.
Any loophole in California housing law can and will be exploited.
Studies show that robust housing supply, not rent control, is the most essential factor in keeping housing prices down. Rents are currently plummeting in Austin, Texas, despite intense demand from people moving there because of the city’s vigorous development of new housing. The same is true of Tokyo, which has kept rental prices stable by adding more units of housing in recent years than exist in all of New York City. Housing supply was also at the core of Houston’s successful effort to move 25,000 homeless people indoors.
The promise of aggressive rent control alleviating the pressure of California’s housing crisis is seductive. But instead of helping to make sensible rent control part of the larger toolbox of housing solutions, Prop 33 risks throwing away the most effective housing policies in service of its backers’ preferred tool.