Proposition 10 Defeat: A Setback for Rent Control

There’s no way to sugarcoat the voters’ rejection of Proposition 10: it was a shellacking and a thumping that has set the cause of rent control in California back decades. And it has emboldened already-empowered property interests to push back on any legislative effort to repeal or amend Costa-Hawkins (which limits how every locality regulates rents in California). No matter that voters — and even the tenants it could benefit — may have not understood the measure. The voters have spoken.

And the voters spoke clearly: Proposition 10 lost in nearly every county in the state except San Francisco. (Yes it is a county!) On the numbers alone that should be a surprise: of the state’s 12.8 million households nearly half (46%) reside in rental quarters according to federal census data. Many of those families that live in single family homes currently excluded from rent control would have benefitted most from Proposition 10.

Who Would Have Benefitted From the Affordable Housing Act?

Proposition 10 would have put on the state’s books the Affordable Housing Act. It simply would have repealed the Costa-Hawins Rental Housing Act. Who would it have benefitted from repeal? Families renting single-family homes, condominiums and apartments built after 1995 could be extended local tenant protections if our City Council so chose.

The timing makes Prop 10’s defeat even more unfortunate: those protections could have been included in the current effort to update the Beverly Hills rent stabilization ordinance. But how many families would that affect?

A greater proportion of Beverly Hills residents live in rented housing than do statewide. Fully 59% of the city’s 14,578 households are in rented accommodations, according to the census. Yet only about 7,700 units are rent-regulated in the city. Subtracting those rent-stabilized units from all rented units reported by the census suggests that about 900 families in Beverly Hills live here without local tenant protections.[1]

Again these families live in single-family homes, condominiums, and apartments built since 1995. Today they enjoy no cap on the annual rent increase. They are not protected from eviction. If evicted they get no relocation fee. They could have directly benefitted from the passage of Proposition 10.

Who Benefits from Proposition 10 Defeat?

The obvious answer is the landlords. They funded misleading and scare-mongering TV ads to the tune of $76M (three times the pro-campaign spend). They pushed on local government endorsements of Proposition 10 (Beverly Hills endorsed it). And though their associations at the local and state levels they spread the message through fact sheets and social media. It was an effective campaign and it’s time for them go gloat:

Proposition 10 failed at the ballot box 62 percent to 38 percent. This victory cannot be overstated and comes as a big win not only for California, but for the industry at-large…NAA is committed to this fight and will remain vigilant in monitoring other areas experiencing rent control pushes anywhere they may surface in the future. — National Apartment Association

In a critical victory for the multifamily industry, California voters defeat Prop 10. California voters sent a resounding message yesterday that rent control is not the answer to solving the housing affordability crisis…Proposition 10 was an example of short-term, wrongheaded policy. — National Multifamily Housing Council

Thanks largely to a campaign led by the California Apartment Association, voters in the Nov. 6 election overwhelmingly rejected Proposition 10…The stunning margin of victory shows California voters clearly understood the negative impacts Prop 10 would have on the availability of affordable and middle-class housing in our state. — California Apartment Association

Orange County voters have spoken tonight rejecting the ill-conceived rent control Prop 10 initiative….Tonight demonstrates that voters want a real solution to our affordable housing crisis by soundly rejecting Proposition 10’s ill-conceived rent control initiative. — Apartment Association of Orange County

The voters have soundly rejected the flawed Prop. 10 by soundly rejecting it….Prop. 10’s failure shows voters are not easily fooled by proposals that cannot solve the housing crisis.

Ironically the National Apartment Association had the gall to caution, “We cannot allow fear to drive us backward into archaic and economically unsound policies like rent control.” Stoking fear of course was the modus operandi of the No-on–10 campaign. They relentlessly fanned the fear of veterans and seniors on television. Prop 10 passage would have affected none of them. It could have benefitted seniors by rent-controlling properties built after 1978 in Los Angeles, for example, and after 1995 in Beverly Hills.

Why Did Prop 10 Fail to Gain Support?

Yes-on–10 messaging was not effective. Polling suggests that a majority of Californians support rent control as a means to preserve residential stability and put a lid on runaway housing costs. Public Policy Institute polling in September found that two-in-three said housing affordability was a problem, yet the same poll found that only a quarter of respondents supported Proposition 10.

It was difficult to cut through the election-year clutter. When tenants contacted Renters Alliance to ask why seniors and veterans would be harmed, we knew it was too late for the measure. Yet those tenants also received our emails and perhaps saw pro-Prop 10 posts on the Renters Alliance website. Still there was confusion because the Yes-on–10 message could not break through.

Landlords understood they needed a massive TV ad campaign to defeat it. Question: if landlords number so few relative to those who rent (much less the voters as a whole), how did property interests swing a decisive 62% victory? By persuading voters that one day they too could become landlords and collect the rent rather than pay it. And the prospect of everyman-as-landlord is not that fanciful because many rental units in California are single-family homes and somebody owns them. They are landlords!

Single-family rentals are the future of rental housing in California. Given runaway housing costs and the cost of borrowing rising with inflation, it is more difficult than ever for a family to buy a home. And the tight supply of available apartment rentals means added competition and higher rents. Single-family homes will be the state’s growth area in the rental housing market. Corporate owners already know that single-family tenancies are beyond the reach of rent control. Soon everyman-as-landlord will realize it too.

What Does the Prop 10 Loss Mean?

The failure to repeal Costa Hawkins means that localities like Beverly Hills that has enacted some form of rent control, or that may want to enact some form of rent control, finds their hands tied by the legislature. Costa-Hawkins preempts any effort to cap rent increases for those who rent condominiums or single-family homes. Often those tenants are surprised to find a double-digit rent increases or a notice of termination with no recourse. (In Beverly Hills, because such rentals are exempt from rent stabilization there is simply nobody to call.)

And occupants of apartment buildings built since 1995 in Beverly Hills now have no hope to see their tenancy regulated by the city. That will go for any rental housing units built from now on. At least until the legislature, or the voters, amend or end Costa Hawkins.

  1. Estimates for California and Beverly Hills for the 2012–2016 period according to the American Community Survey. (An actual enumeration comes only with the decennial census.) The Bevery Hills rented accommodations not under RSO is calculated as such: (14,578 total households x 59% rented) – 7,700 rent-regulated equals about 901 units. Those families do not fall under the city’s RSO protections. They have no capped increase, receive no relocation fees, and are not protected against no-just-cause eviction. Proposition 10 would have allowed the city to extend RSO protection (at our discretion) which is why City Council voted to endorse Prop 10!  ↩

Comments are closed, but trackbacks and pingbacks are open.