Prop. 21 Asks: Should Local Governments Be Allowed to Set Rent Control? (Transcript)

Current law requires buildings built after 1995 be exempt from local rent control measures. But in many cities, like San Francisco, the cutoff date is older.  (ibsky/iStock)

Bay Curious is exploring the 12 statewide ballot propositions in our Prop Fest series. This episode tackles Proposition 21, which would largely return decision-making power for rent control measures to local governments.


The audio and transcript have been updated in this post.

Transcript

Olivia Allen-Price [00:00:00] Welcome to Monday, people. I hope you had a great weekend. Maybe you got a chance to catch up on the seven Bay Curious Prop Fest episodes that are already live. Today, we're on to Proposition 21. I'm Olivia Allen-Price.

Olivia Allen-Price [00:00:18] Ads for Proposition 21, the rent control prop, are everywhere. You've probably heard some of them.

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Vote Yes on Prop 21 Advertisement [00:00:24] How did homelessness get so bad? Keep families in their homes. Vote yes on Prop 21 this November.

Vote No on Prop 21 Advertisement [00:00:30] California is in a deep hole with the shortage of affordable housing. Prop 21 digs an even deeper hole.

Vote Si en la Prop 21 Advertisement [00:00:37] El sueño Californiano no es lo que solía ser.

Olivia Allen-Price [00:00:38] Rent control has become a perennial issue in California elections. But how is this year's law different from others that we've seen? That's what we're here to figure out. Stick around.

Olivia Allen-Price [00:00:53] Like so many of the propositions on our ballot this year, Proposition 21 on rent control proposes changing an existing law. In this case, it's called the Costa-Hawkin's Rental Housing Act. And before we can talk about Prop 21, you really need to know how it works. Reporter Jessica Placzek explains.

Jessica Placzek [00:01:13] In California, rent control limits how much a landlord can raise rent year after year. And right now, only 15 cities in the state have some form of rent control.

Matt Levin [00:01:23] It's really the bigger cities, those, so LA, San Francisco, Oakland, San Jose.

Jessica Placzek [00:01:29] This is Matt Levin, a data reporter for CalMatters and co-host of the housing podcast Gimme Shelter. And he says even in those cities, not every home is under rent control. That's because of this 1995 law that was trying to encourage building by limiting rent control. It's called the Costa-Hawkin's Rental Housing Act.

Matt Levin [00:01:49] It passed by one vote that shapes rent control policy across California.

Jessica Placzek [00:01:55] It's a huge deal that most people know very little about. And it limits rent control in two big ways. First, Costa-Hawkins made it so when a tenant moves out of a rent controlled apartment, the landlord can raise rent to whatever they want. This is called vacancy decontrol.

Matt Levin [00:02:13] I see old apartments all the time. They're total pieces of crap and they're, they're they're charging like a bazillion dollars, right. But once you get into that apartment, they're limited in how much more they can raise it. Every time a person moves out, they can reset it.

Jessica Placzek [00:02:30] Costa-Hawkin's also made it so you can not have rent control on most single family homes or condos, meaning most of the suburbs can't be rent controlled. And you can't have rent control on new buildings. So, the law created a cutoff date.

Matt Levin [00:02:45] You can't impose rent control on properties that were built after 1995.

Jessica Placzek [00:02:50] As for the cities that already had rent control, Costa-Hawkins froze their cutoff dates where they stood. In Oakland the cutoff is in 1983. Berkeley is 1980. While in San Jose and San Francisco, nothing built after 1979 can have rent control.

Matt Levin [00:03:06] So anything new and nice looking in San Francisco is not going to have rent control on it.

Olivia Allen-Price [00:03:16] Proposition 21, what we're voting on this year, would overturn that cost to Hawkins-Housing Act and shift future decisions about rent control from the state to local governments. Now, the economics of rent control, who it works for and who it works against, are debated. And we don't have time to get into all of that on today's show. But we do have an episode from a few years ago that does look closer at that issue. We'll put a link on our show notes, so if you find yourself wondering, go give that a listen.

Olivia Allen-Price [00:03:49] OK. Back to Proposition 21. KQED reporter Joe Fitzgerald Rodriguez is here to help us untangle it all. Welcome, Joe.

Joe Fitzgerald Rodriguez [00:03:56] Hiya.

Olivia Allen-Price [00:03:57] So give us the top line for Prop 21. What does it do?

Joe Fitzgerald Rodriguez [00:04:01] Well, it's very easy to misunderstand the whole premise. It does not impose new rent control laws, but what Prop 21 does do is allow cities to pass their own rent control laws so they can make their own tenant protections on more recently built buildings, with some exceptions.

Olivia Allen-Price [00:04:20] And the details on this one really matter, because we did see a similar proposition two years ago, which California voters turned down. Now, the same tenants rights groups are back, but they've made some changes this time around. What are the specifics here?

Joe Fitzgerald Rodriguez [00:04:34] Well, property one really does three things. First it would overturn the statewide Costa-Hawkins law, and allow lawmakers to make decisions about whether or not to have rent control. Getting rid of Costa-Hawkins also means doing away with the vacancy decontrol. What does that mean? That's a wonky word, "decontrol". It basically means if a tenant leaves a rent controlled unit, the landlord could no longer crank up the rent. They'd be able to raise the rent 15 percent over the first three years.

Olivia Allen-Price [00:05:03] So under Prop 21, let's say a tenant moves out and they were paying $1000 in rent. Wouldn't that be a dream? And then a new tenant moves in, the landlord could only raise the rent by 15 percent, which would be $1150 and no higher.

Joe Fitzgerald Rodriguez [00:05:22] Right. Right. Good back of the napkin math.

Olivia Allen-Price [00:05:26] Thanks.

Olivia Allen-Price [00:05:27] And what about the third thing Prop 21 would do?

Joe Fitzgerald Rodriguez [00:05:30] It also has this provision that says after a new building goes up, the developer can charge whatever they want for the first 15 years. That's so they can make their money back. After 15 years, if the city has rent control, that building would then be subject to the local rent control laws. This was added by the authors of the Prop 21 to address criticism that more rent control might deter developers from building more housing.

Olivia Allen-Price [00:05:52] And that's a common critique of rent control laws in general, that basically they cause less development. And that could actually drive market rate rents in the city up.

Joe Fitzgerald Rodriguez [00:06:01] Now, the last thing Prop 21 would do, is it makes an exception for small landlords who rent out one or two single family homes. They're the little guy. So this would not apply to them. However, if an individual owns a multi unit building, Prop 21 would still apply to their property.

Olivia Allen-Price [00:06:22] Now, here's a bit of a wrinkle on Prop 21. A state law just went into effect that caps rent increases statewide in many cases, even in cities that are not currently covered by a local rent control law. Joe, tell us about that law and how it's different from Prop 21.

Joe Fitzgerald Rodriguez [00:06:40] Well, it seems you're talking about the California Tenant Protection Act passed in 2019.

California Tenant Protect Act Advertisement
[00:06:45] Are you a renter in California? Your rights may have grown under a new law . . .

Joe Fitzgerald Rodriguez [00:06:51] For buildings in locales that are not already under rent control – now, just to be clear, it does not supersede existing rent control – but if you aren't protected, it would cap the amount of rent that your landlord could raise by five percent. It also says that landlords have to have just cause to evict someone. Just cause is pretty much how it sounds, like a right, a right cause, right. If you didn't pay your rent, if you were violent, if there's a health issue that you've created inside your apartment, those are all just causes that can lead to your eviction. I will add as a quick addendum, there are other tenant protections for the pandemic that recently passed at the state that prevents landlords from kicking you out if you lost your job due to the pandemic and you swear to it under penalty of perjury.

Joe Fitzgerald Rodriguez [00:07:41] But essentially, this maintains the landlords ability to evict you for some just causes. And it also sunsets in 2030. But that's actually part of the critique. The Prop 21 proponents are like, well, hey, guys, this sunsets in 2030, that's way too soon, we have a pandemic, we have a potential pandemic fueled recession, we don't know how long it'll last, we don't know how long the economic effects will last, and, they maintain, a lot of these protections, while they sound good, were meant to undercut Prop 21. And we're, in fact, a calculated political method of doing just that.

Olivia Allen-Price [00:08:17] OK. Let's turn our attention back to Prop 21. Who is supporting it and what are their arguments?

Joe Fitzgerald Rodriguez [00:08:23] Yeah, so Michael Weinstein, the president of the AIDS Healthcare Foundation, is a perennial supporter of trying to repeal Costa-Hopkins and put this on the ballot. It may seem a little far afield from AIDS help to be spending on housing and rent laws, but the organization makes the argument that housing is health care. And that's an opinion shared widely in the homelessness community, where many folks die of ailments on the streets. Other supporters include former presidential runner Bernie Sanders, a Democratic Party and tenants rights groups. Broadly, they argue that this is an issue of local control, that there are lots of different kinds of communities in California with lots of different needs, and local lawmakers should be able to make policies that fit their locale. They also say high rents are pushing people out of California and increasingly rental properties are owned by big companies who are making the affordability problems worse. This is especially pronounced during the pandemic where Latins and Black households are especially hurt by job losses due to COVID-19. And they say that they listen to voters' concerns that rent control could possibly discourage developers from building more housing, which is why they have that 15 year provision that we talked about earlier.

Olivia Allen-Price [00:09:38] Let's hear about the opposition.

Joe Fitzgerald Rodriguez [00:09:39] Well, notably, a pretty big opposition, Governor Gavin Newsom, but also construction groups, business groups, landlord groups. They say the law that went into effect earlier this year covers a lot of the same ground as Prop 21. And they say that rent control is not the ultimate answer to California's housing problem. They say a lack of housing is the problem. So we should not be passing a law that could discourage development of that needed housing. Now, they don't think the 15 year window of market rate rent is enough to mitigate the potential downsides of this proposition of potentially discouraging development. And finally, they argue this could hit seniors particularly hard. Many people live off rental income in their old age, and this could sap their wallets when they have no other source of income.

Olivia Allen-Price [00:10:27] Let's move on to the campaign finance here. So how is financing looking on Prop 21?

Joe Fitzgerald Rodriguez [00:10:32] Yeah, well, the opposition is far outspending yes on Prop 21, that's 42 million dollars on the no side.

Olivia Allen-Price
[00:10:39] That's developers, right?

Joe Fitzgerald Rodriguez [00:10:42] Yeah, basically. Twenty four million dollars on the yes side. I mean, it doesn't take rocket scientists to see who would be against it, right. As you're saying, it's property management firms as developers, it's the Apartment Association of Los Angeles, which represents landlords.

Olivia Allen-Price [00:11:02] All right. KQED reporter Joe Fitzgerald Rodriguez, thank you so much.

Joe Fitzgerald Rodriguez [00:11:07] Thank you.

Olivia Allen-Price
[00:11:13] Let's recap that, shall we? A vote yes on Proposition 21 means you want cities to have the power to pass or update local rent control laws on almost all rental housing, as long as it's at least 15 years old. A no vote means you want state limits on rent control to stay in place.

Olivia Allen-Price
[00:11:37] Bay Curious is produced by Katrina Schwartz, Rob Speight, Katie McMurran and me, Olivia Allen-Price. But we could not do it without the help of the entire KQED newsroom. Check out more election coverage at KQED dot org slash elections. Tomorrow, we take on Proposition 22, the most expensive proposition in California history.

Olivia Allen-Price
[00:12:00] Bay Curious is made in San Francisco at member supported KQED. I'll see you tomorrow.

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