Rent Control Comes Roaring Back to Life in California
A suite of bills just dropped that would impose price controls and limit evictions
California legislators are trying to revive rent control. This week, state lawmakers introduced a package of new bills that would roll back existing state limits on the policy, and impose new regulations on how much landlords can charge tenants and when they're allowed to kick them out.
The bills are light on policy meat at the moment, but there's enough gristle to give us an idea where the legislature is headed.
"Millions of Californians are just one rent increase away from becoming homeless," said Assemblyman David Chiu (D–San Francisco), one of the legislators who introduced rent control bills Thursday. "This legislation will help bring some peace of mind and predictability to renters, allowing them to plan for their future and stay in their homes."
Chiu's bill, AB 1482, is the most ambitious of the set. It would cap rent increases across the state at a yet-to-be-determined percentage, plus inflation. If this passed, California would become the second state behind only Oregon to have statewide rent control.
Assemblyman Rob Bonta (D–Alameda) introduced his own sweeping proposal with AB 1481, which would ban no-cause evictions and require landlords to show a government-approved reason for kicking out a tenant renting month-to-month. Yet again, the bill contains no specific set of government-approved reasons, though you can bet lobbyists and activists will help figure them out.
Assemblyman Richard Bloom (D–Santa Monica) introduced a bill which would allow local governments to impose price controls on single-family homes and rental units that were built more than 10 years ago. If passed, Bloom's bill would overturn major portions of California's Costa-Hawkins Act, which largely forbids local governments from passing their own rent control policies.
Assemblymember Buffy Wicks (D–Oakland) has also introduced legislation that would create a statewide database of all rental properties.
This legislation comes a few short months after Proposition 10—a ballot initiative that would have repealed Costa-Hawkins and allowed cities to impose whatever rent control policies they wanted—was absolutely crushed at the polls. Nearly two-thirds of voters rejected the measure in November 2018.
That result, lopsided as it was, did not necessarily signal Californians' absolute rejection of rent control as a solution to the state's mounting housing affordability problem. In polls before the election, large pluralities of voters pointed to a lack of rent control as the source of high housing costs.
Post-election analysis pinned the blame for the loss on the confusing nature of the ballot initiative, and divisions within the 'yes' side, many of whom reportedly thought running a ballot initiative in 2018 was premature. A promise from then-gubernatorial candidate Gavin Newsom that he would take up rent control if Prop. 10 failed also lowered the stakes.
As one might expect when faced with an unprecedented degree of government regulation, landlords are not happy.
"The proposals outlined today distract from the solutions," said Tom Bannon, CEO of the California Apartment Association, in a statement. "Applying rent control statewide and allowing rent caps on single-family homes and newer construction would only worsen our housing shortfall. We need to encourage new housing, not create policies that stifle its creation."
Economists also generally take a dim view of rent control, saying that it discourages new construction by capping the return developers can expect from their investment. This is an especially acute risk in California, where ever-increasing land and construction costs make all but the ritziest developments unprofitable.
State politicians would be far better off attacking restrictions on new rental housing, whether that's restrictive zoning, urban growth boundaries, or a cumbersome permitting process that gives development opponents ample opportunities to delay or sabotage projects.
SB 50, a bill that would upzone land near transit stops and in some wealthier neighborhoods, is a better approach. It has its flaws, but would allow more housing construction and improve on the status quo. Rent control, especially of the kind proposed yesterday, would be a huge step back.