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Proposition 33 on the November Ballot: Initiative to Expand Rent Control

Mark Elliot ,

Proposition 33 (aka ‘Justice for Renters Act’) is on the November 2024 ballot. The measure boils down to only twenty-three words: “The state may not limit the right of any city, county, or city and county to maintain, enact or expand residential rent control.” If approved by voters it would right a wrong perpetrated by the legislature in 1995: the enactment of the Costa-Hawkins Rental Housing Act which prevents a locality in California from expanding most tenant protections to renting households. Here is why Renters Alliance says it deserves your support at the polls in November.

Yes on 33 logoFirst, passage of the measure would remove a decades-old roadblock for local tenant protections. Second, the measure only allows localities to expand tenant protections. Despite the doom-saying of landlord associations it would not require any locality to enact or expand rent control. And third, residential rental landlords are dead-set against this measure. Like the last two times similar measures went to the ballot, landlord associations are expected to spend $100 million (!) to tank it. If landlords are so opposed then it must be good for renting households!

‘Costa-Hawkins’ is Protection for Landlords

Rent control in California is primarily a local affair. Starting in the 1970s, cities reacted to periods of rising rents and evictions with rent controls designed to bring stability to the local rental housing market. Beverly Hills for example adopted price control in 1978 to limit rent increases for certain tenants. After another wave of rent hikes and evictions in the 1980s the city extended a weaker form of rent control to most multifamily households. Then the legislature stepped in to put a stop to it.

In 1995 Sacramento legislators – nearly all of them homeowners – enacted the Costa Hawkins Rental Housing Act to restrict localities from expanding rent control. A new law commonly called ‘Costa-Hawkins’ added new sections to the Civil Code (specifically 1954.50 through 1954.535) in order to:

  • Keeps localities from controlling the asking rent of a rent-controlled dwelling after a voluntary vacancy, which is known as ‘vacancy decontrol’ – §1954.53(a);
  • Requires localities to exempt entire rental properties from rent control if the property was tenanted on or after February 1, 1995 – §1954.52(a)(1); and,
  • Requires exemption also for nearly all rented single-family homes and condominiums – §1954.52(a)(3).

The practical impact of Costa-Hawkins was to prevent Beverly Hills, like other cities with rent control, from protecting thousands of renting households. Courtesy of Costa-Hawkins, anybody renting a condo or a single-family home could see an unlimited rent increase and even be evicted with just 60 days notice. Even with the state’s weaker form of rent control, any Beverly Hills multifamily tenant renting in a building that is fewer than 15 years old has no protection against limitless rent hikes.

Proposition 33: Enabling But Not Requiring Rent Control Expansion

Proposition 33 on the November ballot would strike Costa-Hawkins from the law books. The measure itself is only twenty-three words to be added to the Civil Code:

The state may not limit the right of any city, county, or city and county to maintain, enact or expand residential rent control.

The rest of the measure as submitted to the Secretary of State is several pages of strikeout text that would eliminate all sections of Costa-Hawkins that were added in 1995.

If Proposition 33 were to pass in November, City of Beverly Hills could extend rent control to households that have no tenant protections under our rent stabilization ordinance. That includes rented single-family homes and condominiums in the city; as well as occupants of multifamily buildings built within the past fifteen years. Today those households can see a rent increase of any amount with only 60 days notice.

Another potential change but unlikely to be enacted in Beverly Hills is vacancy control: when a tenant vacates the amount of the rent increase could be capped at some percentage. Today we see asking rents that are 50% higher than the rent that was paid by the former tenant. We have seen asking rents triple after the landlord invests in remodeling of the kind denied to longtime tenants. Vacancy control could moderate the excessive rents that are demanded and which inflate housing across across the city.

Landlord associations are beside themselves with grief that Proposition 33 could pass and thereby crimp the outsize profits that many Beverly Hills landlords extract. But the reality is that this measure requires no locality to enact stronger tenant protections or any rent control policy. Passage of Proposition 33 would only remove existing restrictions on local rent control. What these localities choose to do is up to policymakers and voters.

Not the First Rodeo for Costa-Hawkins Opponents

This is the third statewide ballot measure to take aim at Costa-Hawkins. On the 2018 ballot was Proposition 10 which, if passed by voters, would have allowed local governments to enact or expand rent control. By eliminating Costa-Hawkins altogether it would have allowed a locality, if it chose, to eliminate vacancy decontrol (to let the locality establish the rent once a tenant vacates); and to limit rent increases for any type of rental housing, including condominiums and single-family detached homes. Landlords would still be afforded a ‘fair return.’

Two years later in 2020, Proposition 21 on the November ballot, if passed by voters, would have enacted the Rental Affordability Act to modify (rather than eliminate) Costa-Hawkins. The ends were the same: the Act would have allowed a locality to chose whether to eliminate vacancy decontrol; and to expand rent control to properties currently categorically exempted by Costa-Hawkins such as condominiums and single-family detached dwellings. Again the measure would still afford the landlord a ‘fair return.’

Landlords spent upwards of $85M to defeat Proposition 10 and $60 million to defeat Proposition 21 two years later. That spend must have persuaded some voters because Proposition 10 went to defeat by a 19-point margin (support was 41% statewide) while Proposition 21 was defeated by a slightly larger 20-point margin (40.1% support).

Beverly Hills voter support largely reflected the statewide numbers. Only 42% of city voters supported Proposition 10 in 2018 and that that support ebbed two years later when city voter support dropped to 38% for Proposition 21. More than half of city households are rent-stabilized and directly benefit from local rent control.

Many more households rent housing that today is exempt from local rent control due to Costa-Hawkins. Those households could have materially benefitted from passage of either ballot measure. Will the third time be the charm for Proposition 33?Yes on 33 demonstration

The Organization Behind Proposition 33

Proposition 33 (like the two earlier measures) is only on the ballot due to the generosity of the Los Angeles-based AIDS Healthcare Foundation (AHF). That nonprofit is a politically-active champion of affordable housing and it puts money behind its convictions.

In 2018 AHF spent $25 million to support Proposition 10 through its political action committee, Yes on 10 – A Coalition of Teachers, Nurses, Seniors and Renters for Affordable Housing. It spent millions more to qualify the measure for the ballot in the first place. In contrast, a coalition of allied groups spent barely $1.5 million more to promote the measure.

Two years later in 2020 AHF put $40 million behind Proposition 21 through its political action committee, Yes on 21 – Renters and Homeowners United to Keep Families in their Homes. But the measure garnered less support at the ballot box than two years earlier.

This election cycle AHF’s political action committee, Renters and Homeowners for Rent Control Yes on 33, and allied groups, have collected $13 million to date in donations to support Proposition 33 in November. A coalition of landlords, landlord associations, realtors, building trades unions and industry-funded YIMBY groups have collected $59 million to oppose it.

Realtors alone are responsible for $22 million of the Proposition 33 opposition’s donations. But a cabal of the largest corporate landlords also oppose Proposition 33. However they are a bit bogged down at the moment as they defend themselves against state and federal charges that they collude to keep rental housing costs high.

Far and away Proposition 33 is the single-most expensive initiative on the ballot to date. And despite the very heavy thumb of AHF on the scale, it is the David to the Goliath of the anti-rent control forces with their very deep pockets.

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