With the California November election about five months away, several tenant rights groups and apartment associations representing owners and landlords are gearing up for a big fight over the state’s Costa-Hawkins Rental Housing Act, which limits rent control.
On one side, tenant unions want to repeal the law. They are concerned with low- and middle-income earners, elderly and disabled tenants being forced out of their neighborhoods due to lack of housing supply, unaffordability and high rent.
Property owners on the other side are worried that repealing Costa-Hawkins could financially hurt a majority of apartment owners and drive them out of business.
“The fact that people are being forced out of their neighborhoods and into the street, we will continue to target corporate landlords from now until November,” Alliance of Californians for Community Empowerment Executive Director Christina Livingston said.
The ACCE is a nonprofit community organization that advocates for policies that help low-income families.
“We are just beginning our campaign to get our stories out there,” Apartment Association of Greater Los Angeles Executive Director Dan Yukelson said. “While there are corporate landlords like Blackstone and Essex and others, more than 80% of our members are not Wall Street tycoons, these are mom-and-pop shop operators trying to make a living.”
The debate over the Costa-Hawkins Rental Housing Act comes at a time when a growing housing shortage on both ends of the spectrum continues to plague the state’s housing landscape.
A bipartisan bill enacted in 1995, the law limits local rent control ordinances, prohibits rent control on newly constructed apartments built after 1995 and single-family homes, condos and duplexes, and allows multifamily property owners to raise rent to market rate when a tenant moves out.
About two dozen cities across the state have some form of rent control ordinance, including Beverly Hills, Los Angeles, West Los Angeles, Santa Monica, San Francisco, Oakland and San Jose.
Tenant groups such as the Coalition of Affordable Housing cite Costa-Hawkins as one of the reasons tenants are being priced out of the housing market — especially in big metros such as Los Angeles, Orange County and San Francisco. Many want to expand rent control to developments built after 1995 and single-family homes.
Rent is up because apartment owners are trying to pay their own mortgages due to the rising cost of construction, maintenance, water, insurance and other utilities, Yukelson said.
Since the end of April, hundreds of tenants across the state have joined a groundswell of protests and rallies in major cities on a mission to curb what they say are out-of-control rental hikes and unaffordability.
Carrying signs that read “The Rent Is Too Damn High” and “Families Need Rent Control Now,” the rallies began on April 23, when the Coalition for Affordable Housing and other proponents of rent control filed more than 560,000 signatures in a petition to repeal the state’s Costa-Hawkins Rental Housing Act. The group only needed 365,880 signatures to qualify.
Just before Mother’s Day, the groups rallied again, this time in Santa Monica, in front of Blackstone Group’s office.
A week later, protestors showed up in Long Beach to protest an eviction attorney who spoke at a seminar against rent control at a trade show hosted by the Apartment Owners Association of California.
More rallies and protests are planned in the near future leading up to the November election, Livingston said.
Yukelson said his group has yet to put up a fight and is losing the public relations battle. That will change soon, he said, with a public campaign to keep Costa-Hawkins.
“Costa-Hawkins is our No. 1 protection,” Yukelson said. “Repealing this could bankrupt the industry. Some of our members are already selling off their property and fleeing the state.”
Coldwell Banker Broker Associate Jason Insalaco said people are frustrated with the rising cost of housing. Low vacancy is driving up rent and a shortage of new housing supply with less homeownership and stagnant wages “have created a perfect storm over the state of housing.”
“While recent data shows modest to stagnant rent growth this year, housing affordability has become the hottest political issue in 2018,” Insalaco said.
In the past five years, the average rent in San Francisco for one-, two- and three-bedroom units rose by 16% from $2,970 in 2014 to $3,453 in 2018, according to RentCafé using data from YardiMatrix. In Los Angeles, average rent increased by 28% from $1,827 in 2014 to $2,337 in 2018.
Insalaco said both sides agree there is not enough housing to meet increasing demand but repealing the law would harm future developments and new construction.
“Margins are already thin on most modest residential projects,” he said. “Present and future rent restrictions on new construction would make development financially untenable in most cases unless the government funds the entire development. More housing needs to be built, not less.”
Stephen Barton, who once served as director for the City of Berkeley Housing Department, disagrees that repealing Costa-Hawkins would lead to less construction. He said many major cities that have adopted a rent control ordinance, such as Santa Monica and Los Angeles, have had plenty of new construction to add to the housing inventory.
Barton said the current ordinance needs to be updated. He said the cost of housing has led to massive displacement of low-wage earners, workers and teachers in major cities.
“Look at what is happening now, a lot of businesses in the higher rent areas are having real troubles coming up with staff,” Barton said. “In a high-end rent city like San Francisco, it causes a lot of disruption in the economy.”
A fair solution that both sides can agree on, though, is harder to come by.
Yukelson is suggesting for Los Angeles and other cities to adopt a public-private partnership pilot program similar to what Denver enacted called LIVE Denver. The program stands for Lower Income Voucher Equity Program and allows a qualified renter based on income to pay a portion of the rent, with the city, nonprofit or other group making up the difference. The program also sets aside a small percentage into an escrow savings account that can later be used by the tenant as a down payment for a home or a new unit, Yukelson said.
“It’s a win for property owners and win for tenants,” he said. “It’s not a hand out but a hand up.”
ACCE’s Livingston said politicians and every major group involved in this issue need to come up with better solutions.
“We know that in the months between now and until November, more families will be displaced, so it’s no time for us to take our foot off the gas pedal,” she said. “This is a crisis and we are responding to the crisis.”