2020 Proposition 21: Rent Control All Over Again
I’m hoping to give readers an early glimpse of what to expect with the dozen proposals on the November statewide ballot.
Later on in the season I’ll post more materials on the higher profile measures under consideration.
As has been true with elections since 2012, I’ll endeavor to research and post about as many propositions and local elections as I can. I have no schedule, other than to say it will be done when it’s done.
One thing we can know for sure, tons of money will be spent to support or oppose the various propositions. Where that money comes from is, to me, more important than what the messages being pushed are. I’ll get around to more specifics on funding as the election approaches.
Here’s where we are:
Monday, July 13: Proposition 14, which asks Californians to continue to support stem cell research funding via bond sales.
Tuesday, July 14: Proposition 15, which seeks to amend the property tax structure so commercial land isn’t taking advantage of a law passed with protecting elders from excessive increases.
Wednesday, July 15: Proposition 16, which seeks to undo the state’s ban on affirmative action.
Thursday, July 16: Proposition 17, expanding voting rights to include parolees.
Friday, July 17: Proposition 18, the right to vote for 17 year olds
Monday, July 20: Proposition 19, Shuffling Tax Breaks & Making Realtors Happy
Tuesday, July 21: Proposition 20, Do We Really Need to Send More People to Jail?
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Proposition 21: Expands Local Governments’ Authority To Enact Rent Control On Residential Property. Initiative Statute
This can seem complicated, pay attention. Four things you should know:
**In 1995, the state legislature passed the Costa-Hawkins Rental Housing Act, a law that limits the ability of local governments to enact far-reaching rent control.
**In 2018, Proposition 10, which would have repealed Costa-Hawkins, allowing individual cities to enact rent control, was soundly defeated at the polls. The housing industrial complex spent nearly $80 million to convince Californians that the individual homeowner or small-time entrepreneur would suffer if this measure won at the ballot box.
**In 2019, Governor Newsom signed Assembly Bill 1482 aka the “Tenant Protection Act of 2019,” designed to prevent the most “egregious” rent hikes in California. Interestingly enough, the industry remained neutral on this law.
** In 2020, the same people who advocated for Proposition 10 are back for another stab at it, with a new and improved version. They know that “AB1482” is a paper tiger, since no enforcement capabilities were included, and the real money maker for big money interests --namely excessive increases in rent when units are vacated-- remained in place under the law.
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For: Yes on 21, largely funded by the AIDS Care Foundation, with support from Senator Bernie Sanders and Representative Maxine Waters and a host of progressive political organizations.
Website | Facebook | Twitter | Endorsements | Text of Measure
Against: No on 21, led by an entity associated with the California Apartment Association, with financial backing from some of the nation’s largest corporate landlords, including Essex Property Trust & Founder George Marcus and Equity Residential, along with political support from unions associated with the building industry.
Website | Facebook | Twitter | Endorsements |
Why --The typical arguments for and against rent control concern housing affordability vs. an assertion of scarcity should the industry not be profitable enough.
It’s true that having a place to live is becoming a financial challenge for a large chunk of the population. Just a few years back housing costs were normally close to 25% of income; now, more than 54% of California renters pay more than 30% of their incomes just to keep roofs over their heads.
Housing and the lack thereof has become a major social and political concern. The state’s 18% poverty rate isn’t going to get any better in the face of coronavirus related economic downturns.
A recent report on the rental situation for Los Angeles estimates that at least 365,000 households in Los Angeles are likely to be unable to pay their rent because they have lost jobs and have no access to income assistance such as unemployment insurance. These include families with an estimated 558,000 children.
Multiply those numbers by a factor equal to the rest of California’s population and we’re looking at millions of newly homeless humans. (I realize this is a worst case scenario, but even a percentage of those needing a roof over their head will be disastrous.)
How: At this point the Aids Healthcare Foundation has invested $5.1 million to get Prop. 21 on the ballot. The mega-landlord industry has coughed up $6.2 million just to get their ducks in a row to oppose it; most of that money is unspent.
The rest of the story: The assertion of scarcity in arguments against rent control needs to be examined in context, namely that the rental industry inventory has been increasingly absorbed by major financial entities who have bundled up their investments and securitized them.
Properties are piled together, diced into pieces that have nothing to do with the actual physical entities, and sold off (kind of) like shares of stock. If this seems familiar, it’s because this is what happened with all those failed mortgages in the last recession. Which incidentally made all those foreclosed properties an attractive corporate investment.
What this means in practical terms is that income from these properties under their control must always increase enough to make the speculative investments and interest payments on them attractive. Corporate entities create additional income by creating systems of fees, like mandating that rents being paid through an internet portal charging more than a $100 “transaction fee.” (See this New York Times article for just what a hell these schemes are for tenants.)
The changes in housing ownership post 2008 are called the Great Reset in a Bloomberg article:
In a twist that is both ironic and disturbing, the Great Reset turns out to be more than just a simple shift from owners of single-family homes to renters of urban apartments. It has been bound up with the broader financialization of housing—the transformation of housing from shelter into yet another investment vehicle.
Just as high-priced condos in expensive cities have become a new kind of asset for large companies and wealthy foreigners, so too have larger and larger numbers of single-family homes been turned into investment vehicles for large corporations. For a growing number of families, the American Dream of owning their own home and the wealth and financial security that comes from it have given way to renting a place to live from a mega-corporation.
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What you’ll see on TV as the elections near will be advertising suggesting that it’s individual small investors and homeowners who will be impacted; nothing could be further from the truth.
Specifically, what Prop 21 does is to allow (but not mandate) local communities to:
Expand rent control to more buildings while exempting newly constructed buildings
Exempt Single-Family homeowners who own up to two homes
Allow limits on rent increases when a new renter moves in
What rent control, or the lack thereof does not do is to address systemic housing affordability.
Obviously, things like decent wages, worker protections, and a functional social safety net are important in addressing systemic economic issues. And we’ve got to turn the corner on the thing that got us Trump, namely the sacralization of property and profit. (“We,” not “me,” okay?)
Short term protections tenants (a good thing) get from price gouging are going to inevitably be worn down by the evil magic hand of the marketplace as it exists today. San Francisco comes to mind as an example.
And if simply building more housing (always promised if rent control is defeated) was THE solution to scarcity, don’t you think it would have happened by now?
Scarcity is the name of the game here, one that serves the interests of the privileged neighborhoods (keeping the ‘other’ out) and builders, who benefit from the higher prices induced. (10% on $100K isn’t nearly as good as 10% on 500K)
I don’t agree with Matty Yglesias (he writes off the top of his head in a mad rush to create content) on a lot of things, but I think he got this part about rent control right:
Rent control is, at its best, a regulatory policy that aims to manage scarcity. Many US cities developed housing scarcity during World War II as part of the legacy of the Depression-era collapse in homebuilding paired with wartime restrictions on civilian construction. A giant global war was a perfectly good reason to implement anti-building regulations, and rent control was a perfectly good response to the regulation-induced scarcity.
But modern-day scarcity-inducing regulations are not defeating Hitler. They are, at best, maintaining people’s privileged access to in-demand public schools.
The solution to the scarcity is to remove the regulations that create it, and then to go beyond that by investing money in creating additional subsidized social housing. (One good source of money would be the tax revenue unleashed by additional market-rate construction.)
And, no, I don’t believe in letting developers run wild. Even though YIMBY is now apparently a dirty word in some circles, the way we've been going about building housing needs to be changed, and pronto.
If I had to pick out one thing, I'd say single family housing as the default in zoning in much of the city is an example of something that needs to go.
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I will vote for Prop 21, understanding that’s a band-aid at best. We’ve got to do something to get the housing industrial complex and the NIMBYs to the table, and this could be the ticket.
Voter Guide – You’ve Voted for President, what’s next?
I’ll be writing about many ballot measures and candidates between now and the end of September. That work will be condensed into an handy-dandy voter guide just in time for your mail-in ballots to arrive. I’m the guy who coordinated San Diego Free Press’s Voter Guides over the past decade, so this won’t be my first effort. Stay tuned.
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