Tenant Protections on the November Ballot?

A petition making the rounds would qualify an initiative for the November ballot to repeal a state law called Costa Hawkins Rental Housing Act. That law has greatly limited the reach of local rent control protections. The ballot measure titled, ‘Expands Local Governments’ Authority To Enact Rent Control On Residential Property,’ is our best opportunity to expand tenant protections both statewide and in Beverly Hills.

To date our representatives in Sacramento have failed us: year-after-year legislation to amend or end Costa Hawkins dies in the legislature. Last year, a repeal bill, AB 1506, never even made it to a vote in the housing committee. (Read correspondence in support of the bill). Our assemblymember Richard Bloom revived the bill again this session but ultimately a committee voted it down despite a strong showing by tenants’ advocates.

What is Costa Hawkins and why will landlords fight tooth-and-nail to keep it on the books?

Costa Hawkins Rental Housing Act

The Costa Hawkins Rental Housing Act and was passed in 1995 with the strong backing of property owners and their national, state and local industry associations. The law has been called by landlords a “gift” to landlords because it overrides local rent stabilization laws to defeat tenant protections in these key areas:

  1. Any rental building built after 1995 is exempt from rent control. For cities that implemented some form of rent control prior to enactment of the law, as did Beverly Hills in 1978, the exemption reaches back to that date. So in effect, no rental housing constructed in Beverly Hills after the cutoff date 1978 will come under local rent control – and will be exempted from rent control forever thereafter.
  2. All single-family homes and nearly all condominiums are categorically exempted from rent controls. That means that a family renting a house or a condominium unit cannot benefit from a capped annual rent increase. They can be evicted for no-just-cause because local laws preventing that practice don’t apply; and if evicted for no-just-cause receive no relocation fee.
  3. Costa Hawkins introduced ‘vacancy decontrol’ even for properties that were already rent controlled. So when a tenant leaves a rent-controlled apartment, the rent for that unit – and by extension the prevailing cost of rental housing more broadly – rises to the market price. The locality is not able to keep those vacant units price controlled (although the unit comes under rent controls again but starting at the new, market rent).

Under the law, a landlord can raise his unit to market rent if the tenant has sublet in violation of the lease or rental agreement. And Costa Hawkins preempts local rent control laws that would moderate decontrol on vacancy. Repeal of Costa Hawkins would simply give back local control to local governments to address a locality’s housing needs.

So-called vacancy decontrol brings every unit to market rent on vacancy. Indeed landlords count on Costa Hawkins to keep up their cash flow. (That is the ‘gift’ landlords crow about.)

There is also the distinction between households that rent rent-controlled apartments and those in condominiums and private homes. For the latter tenants, no local Beverly Hills rent stabilization ordinance protection applies. However there are limited circumstances where a condo may not be exempt from local rent stabilization. (Pleaseget in touch if you rent a condo and want more information about those exemptions.)

And in the broader housing picture, Costa Hawkins means that no newly-constructed apartment will come under local rent control at all. No cap on the rent increase, for example. Over time, an increasing proportion of renting households will inhabit non-rent-control units. The decontrol problem is compounded because condominiums comprise an ever larger segment of new units here Beverly Hills.

Aids Healthcare Foundation to the Rescue

Where our representatives in Sacramento have let us down, the AIDS Healthcare Foundation (AHF) in Hollywood has stepped up: the initiative to repeal Costa Hawkins is well-funded and backed by a variety of tenants’ rights organizations (Renters Alliance supports it too).

Is the initiative worthy of your support?

Repeals state law that currently restricts the scope of rent-control policies that cities and other local jurisdictions may impose. Allows policies that would limit the rental rates that residential-property owners may charge for new tenants, new construction, and single-family homes. In accordance with California law, provides that rent-control policies may not violate landlords’ right to a fair financial return on their rental property. -- Expands Local Governments’ Authority To Enact Rent Control On Residential Property initiative

Landlords are terrified by the prospect!

Behind repeal of Costa Hawkins is the safeguarding of local autonomy: localities to make their own policy decisions about rent control. Recall the title of the initiative: ‘Expands Local Governments’ Authority To Enact Rent Control On Residential Property.’ It’s about home rule.

The emphasis on local autonomy aligns with our own city’s legislative platform that guides our lobbying in DC and Sacramento. This year our legislative platform includes not one but two relevant provisions: one supports enhanced local control so that our elected councilmembers make our policies (instead of the legislature making policy for us); and the second supports local control in land use, planning and zoning, of which rent stabilization as a housing policy is an important component.

We suggested to our legislative committee last year that the city ought to get behind Bloom’s bill to repeal Costa Hawkins. We heard reassuring sounds. But with a ballot initiative in motion the question is mooted for now.

Even if successful, the AHF initiative is not the last word. A locality would have to take advantage by enacting local tenant protections. Repeal of Costa Hawkins is just the necessary first step.