Proposition 10 Defeat: A Setback for Rent Control

There’s no way to sugarcoat it: voters rejected Proposition 10 with a real shellacking that set the cause of rent control back decades. That has emboldened property interests to push back on any legislative effort to repeal or amend Costa-Hawkins, repeal of which was the objective of the measure. It was a flawed campaign that failed to persuade even tenants, who may have not understood the benefit. But 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 live in dwellings currently excluded from rent control by the Costa Hawkins Rental Housing Act. They would have benefited from Proposition 10 but they didn’t turn out to support it.

Who Would Have Benefited From the Affordable Housing Act?

Proposition 10 would have put on the state’s books the Affordable Housing Act. The sole objective of the measure: to repeal the Costa-Hawins Rental Housing Act. Families renting single-family homes, condominiums and apartments built after 1995 would have benefited the most because rent control could then be extended to them if a locality so chose.

Prop 10’s defeat is even more unfortunate because Costa Hawkins repeal could have put a whole new set of issues on the table for our rent stabilization ordinance discussion in Beverly Hills.

A greater proportion of Beverly Hills residents live in rented housing than do households statewide. Fully 59% of our city’s 14,578 households are in rented accommodations, according to the census, yet only about 7,700 of those dwellings are rent-regulated. Subtracting those rent-stabilized units from all rented units per the census, we get a figure of about 900 families living in Beverly Hills condos and single-family homes without local tenant protections.

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 benefited from the passage of Proposition 10 had it passed.

Who Benefits from Proposition 10 Defeat?

The obvious answer is the landlords. They funded a misleading and scare-mongering campaign to the tune of $76 million — three times the pro-10 campaign spend. Local government endorsements of Proposition 10 began to stack up (Beverly Hills endorsed it!) but the landlords, though their associations at the local and state levels, spread the message very effectively through fact sheets and social media.

And a ton of damn money don’t hurt. It was an effective opposition 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

Ironically the National Apartment Association had the gall to say, “We cannot allow fear to drive us backward into archaic and economically unsound policies like rent control.” Yet stoking fear was the modus operandi of the No-on–10 campaign. They relentlessly fanned the fear of veterans and seniors on television even though Proposition 10 passage would have affected few to none of them while benefiting many who live in rental housing.

Even today’s seniors who live in rent-controlled properties built after 1978 in Los Angeles, and after 1995 in Beverly Hills, would have benefited.

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 to put a lid on runaway housing costs. Moreover, two-in-three respondents in a different survey said housing affordability was a problem. Yet that same poll found that only a quarter of respondents supported Proposition 10.

It was difficult message to communicate. Rent control is complicated. Voters are attuned to slogans. So no surprise that Renters Alliance was contacted by tenants asking why seniors and veterans would be harmed. By then, we knew, it was too late. Th3e Yes-on–10 message could not break through.

Landlords understood they needed a massive TV ad campaign to defeat it. But defeat it they did by persuading voters that one day they too could become landlords and one day they would be collecting the rent and not paying it. The prospect of everyman-as-landlord is not fanciful: today many rental dwellings in California are single-family homes owned by individuals. These landlords saw their own interests at stake.

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.