The Fight Over Rent Control

Tenants are pushing to repeal the 1995 Costa-Hawkins Act, which strictly limits local rent control. But landlords are spending big to beat Prop. 10.

Vanessa Bulnes rents a single-family home in Oakland from Invitation Homes, a Wall Street landlord. Since 2012, she’s experienced three rent increases, with the last one amounting to $200 more a month. Because of a state law known as Costa-Hawkins, Invitation Homes can increase Bulnes’ rent as much it wants, almost whenever it wants, regardless of Oakland’s rent control law.

“My rent is more than 30 percent of my household income. It’s closer to 50 percent,” said Bulnes, referring to the maximum rent that experts believe tenants can afford before the hit to their pocketbook starts to harm them and the broader economy.

Bulnes said many of her friends have been moving out of the Bay Area due to rising rents. “A lot of people are moving to Stockton, Tracy, Antioch, and now even those places are getting expensive, and we’re seeing gouging,” she said.

Marco Gonzalez is in a similar situation. His apartment is in a 14-unit building on 29th Avenue in Oakland’s Fruitvale neighborhood. He currently pays $1,150 a month, but his landlord is asking for a $350 hike starting in December.

The building, which, according to Gonzalez, needs basic repairs to fix mold, broken doors, and a cracked toilet, was built in 1988. As a result, Gonzalez’s apartment isn’t covered by Oakland’s rent control law.

That’s because Costa-Hawkins prevents all cities in California that didn’t already have a rent control law when it was passed in 1995 from applying rent control to housing built after that year. But several cities like Oakland, which had existing rent control laws when Costa-Hawkins passed, were stuck with whatever pre-1995 date was spelled out in their ordinance for “new construction.” In other words, to cover housing built after 1983 in Oakland with rent control, and after 1995 in most other cities, Costa-Hawkins has to be repealed.

All this is exactly why Bulnes, Gonzalez, and an army of renters are helping build a statewide movement to topple Costa-Hawkins. Last Saturday, they gathered with several dozen activists at the offices of ACCE, an Oakland activist group, to phone bank and send out teams of canvassers in advance of the Nov. 6 election.

If voters approve Proposition 10, the Costa-Hawkins Act’s multiple limitations on what local governments can do regarding rent control laws will be repealed entirely. In other words, Prop. 10 itself won’t change anything about California’s rental housing laws except to remove the state-level constraints that prevent cities from doing the following: extending rent control to single-family homes and condos; applying rent control to buildings constructed after 1995; and enacting a stronger form of rent control known as vacancy control, which limits landlords’ ability to raise rents on vacant buildings.

“Costa-Hawkins is outrageous in that it steals from local governments the ability to make decisions which the California State Constitution leaves specifically to local municipalities,” said Marc Janowitz, a staff attorney and housing law expert with the East Bay Community Law Center.

If Costa Hawkins is repealed, some cities like Berkeley will certainly implement stronger rent control laws, but others won’t. It merely puts decision-making power back in the hands of local communities so they can determine the best way to address rising rents and displacement.

The real estate industry is united in its effort to defeat Prop. 10. So far, Wall Street landlords and local property owners who control a significant portion of the East Bay’s housing stock, have poured tens of millions into the “No on 10” campaign. Landlords argue that if Costa-Hawkins is repealed, developers will lose their incentive to build new housing because it could become subject to rent control.

But repealing Costa-Hawkins itself won’t extend rent control to any newly built housing. That’s up to cities to decide, and many will likely keep new construction exempt, or, like Berkeley, might decide to institute a rolling period in which rent control doesn’t apply to new construction for its first 20 or 30 years on the market.

Landlord groups also argue that Prop. 10 will reduce the value of real estate, thereby harming the economy and people’s savings and generating less revenue for government. But it’s not clear exactly how a Costa-Hawkins repeal would impact the economy. Proponents of rent control argue that if tenants have more money to spend on things besides rent, it could boost sales taxes and actually create more jobs.

Yet another argument against Prop. 10 is that landlords will simply remove rental housing from the market if they can’t profit from it. Rent control supporters counter that landlords are actually guaranteed a fair-market return — even under existing rent control laws.

Prop. 10 isn’t the first attempt to repeal Costa Hawkins. Last year, Assemblymembers Rob Bonta, David Chiu, and Richard Bloom introduced a bill that would have done the same thing. Asked about it at the time, Bonta told the Express, “We are swinging for the fences for tenants and Californians, and it’s running straight into some of the biggest most intense resistance you’ll see. For some groups that oppose this, it’s a declaration of nuclear war, and they’ll do almost anything to stop it.”

The bill was subsequently defeated in committee, but Bonta noted that it took about a decade for landlords to get Costa-Hawkins passed. It could also take years for tenants to repeal it.

Bulnes describes the campaign for Prop. 10 as a David vs. Goliath battle due to the tens of millions that landlords and realtors have already spent opposing the ballot proposition, mainly by spreading fear about its impact on the economy.

So far, landlord groups have raised $46 million to oppose Prop. 10. Tenants groups have only raised $13 million.

“I can’t even think of what will happen if we lose,” Bulnes said. “But we gotta keep hope alive.”

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