Bernie-Backed Ballot Initiative Would Expand California's Brand New Rent Controls

The new initiative from the AIDS Healthcare Foundation would allow local governments to go beyond the state's existing caps on rent increases.

Last year, California became the second state in the union to pass statewide rent control. But that wasn't enough for some activists, who've succeeded in putting a new, more expansive rent control initiative on the ballot this year.

The California Secretary of State's office announced on Monday that the Rent Affordability Act had earned enough signatures to qualify for the November 2020 ballot. The measure is being sponsored by Housing Is A Human Right, a project of the AIDS Healthcare Foundation (AHF).

"Housing affordability and homelessness are the most pressing social justice and public health emergencies in our time," AHF President Michael Weinstein said in a press release. "We'll face a tough road ahead but are ready for the fight—and victory!—for all Californians and for housing affordability."

This is round two for AHF, which was also the primary backer of the state's last rent control ballot initiative in 2018, Prop 10.

That measure went down in flames, receiving only 40 percent of the vote. In the wake of its failure, the legislature passed a rent control law that capped rent increases at 5 percent plus inflation for buildings older than 15 years.

What that bill did not do was repeal the Costa-Hawkins Act, a state law that forbids local governments from imposing rent control on buildings constructed after 1995 and guarantees landlords the right to raise rents as much as they want on vacant units.

That was a major disappointment for tenant activists who wanted lawmakers to go farther. Weinstein himself criticized the rent control bill that passed as too weak, telling the Los Angeles Times, "it won't stop the homeless crisis which is being caused by people losing their homes or being evicted…it won't advantage working people and people on fixed incomes who need affordable housing."

AHF's initiative would thus largely eliminate Costa-Hawkins, allowing local governments to impose rent caps that are lower than the state's existing ones. It would also limit the amount landlords could raise rents on vacant units to 15 percent over a three-year period.

In addition, the ballot initiative would expand rent control to single-family homes and condominiums that are owned by people with more than two housing units in their possession. Current law exempts single-family homes and condominiums, except for those owned by corporations or real estate investment trust funds.

The ballot initiative has been endorsed by Sen. Bernie Sanders (I–Vt.), who said it "will allow California cities to pass sensible limits on rent increases and protect families, seniors, and veterans from skyrocketing rents."

Neither landlords nor labor unions are happy about the ballot initiative, however.

Both the California Apartment Association (CAA), a landlord trade group, and the State Building and Construction Trades Council, which represents construction trade unions, have issued strong condemnations of the measure.

The initiative would "block the path towards future investment in the construction of affordable housing units for the working class," said Cesar Diaz of the Construction Trades Council.

Tom Bannon, who heads up the CAA, was even more blunt, saying in a press release that Weinstein is "abusing the statewide initiative process to impose extreme forms of rent control and satisfy his extreme form of NIMBYism."

This sets the stage for another contentious, expensive campaign. AHF spent $21 million supporting Prop 10 in 2018. Opponents spent $72 million to counter the measure.

Critics contend that rent control limits the construction of new units and encourages the owners of existing ones to convert them to pricier, but unregulated, condos.

That's less of a concern for Weinstein, AHF, and other left-wing activist groups, however. They see speculation, not supply constraints, as the cause of California's housing problems.

Indeed, in the same press release announcing that the Rent Affordability Act qualified for the ballot, Weinstein also dissed the recently failed SB 50—which would have legalized four-unit homes statewide and mid-rise apartments near transit—as "deeply flawed."

If recent history is any guide, this latest rent control ballot initiative will likely fail. Unfortunately, the fact that it exists at all speaks to the growing popularity of the worst idea in housing policy.