CALIFORNIA – Between now and the next presidential election, opponents and proponents of rent control in the state will again do battle as supporters of Initiative 1942, known as the Justice for Renters Act, gathered more than 800,000 signatures to guarantee the measure will be on the November 2024 ballot.
This will be the third time in six years a rent-control measure will be voted on by California residents. In 2018, voters rejected Proposition 10; in 2020, Prop 21 met the same fate.
Proposed by Ashoke Talukdar, deputy general counsel for corporate affairs at the AIDS Healthcare Foundation (AHF), if passed, Initiative 1942 (1942) would effectively eliminate nearly all of the existing language in the Civil Code that references rent control. What would remain reads as follows: “The state may not limit the right of any city, county, or city and county to maintain, enact or expand residential rent control.”
In 2018, AHF was in support of Prop 10 and was even the main funder of the “Yes on 10” campaign, according to CalMatters. According to Talukdar, the intent of Initiative 1942 is purely jurisdictional – if passed, the initiative would give local jurisdictions that authority to impose rent-control measures as they see fit.
“Rent control should be left to the cities and communities,” he said. “Costa-Hawkins has tied the hands of local officials when it comes to enacting local legislation.”
According to RentCafe.com, $1,750 is the average rent for a one-bedroom in California. In Fresno County, renters can, on average, expect to pay roughly $1,507 in the city of Fresno. In Sanger, the average rent is about $1,199 and $1,010 in the city of Parlier.
In Tulare County, renters can expect to pay, on average, $1,586 in the city of Visalia. In Tulare, the average is reported at $1,633. In Kern County, Bakersfield’s average rent comes out to $1,460; in Delano, the average is $1,419; and, over in Kings County, rent averages to $1,527 in the city of Hanford.
For the state’s coastal counterparts, renters can expect to pay, on average, $2,781 in Los Angeles; in San Francisco, $3,313; and in San Diego, $2,917.
COSTA-HAWKINS RENTAL HOUSING ACT
The year 1995 was the seminal event in California’s history of rent control legislation. In 1995, voters approved the Costa-Hawkins Rental Housing Act, sponsored by Democratic Senator – now Congressman – Jim Costa, Fresno, and Republican Assemblymember Phil Hawkins, Bellflower. In short, the Act exempted certain types of rental units from rent control and allowed landlords to change – increase – rent on rent-controlled units when they became vacant.
Since Costa-Hawkins, California’s renters and renters’ advocacy groups and landlord associations, such as CAA, have locked horns over rent control.
IN FAVOR
Michael Weinstein is president of AHF. Weinstein was the financial driving force behind props 10 and 21 and is lending his backing to 1942. During a July 27 virtual press conference, referring to California’s skyrocketing rents, Weinstein said the third time may be the charm. Weinstein said, “The situation has gotten so extreme and dire and catastrophic.” He added, “We can never give up, that’s the bottom line.”
In a July 26 press release on its website, AHF wrote, “The statewide initiative will remove California’s rent control ban and give local communities the right to stabilize rents and make apartments more affordable for low-and middle-income renters.”
Tenants Together is a statewide advocate for renters’ rights. In an email to the Times, Shanti Singh, communications and legislative director, said, “It took the real-estate industry over fifteen years to pass the Costa-Hawkins Rental Housing Act, and we are committed to taking however long it takes to repeal it.”
Regarding prior anti-rent control campaigns, Singh said, “What we saw with the Prop 10 and 21 campaigns was real estate industry opponents misleading voters and claiming their ‘no’ was a pro-rent control position. We believe that is because the real estate industry knows rent control is sufficiently popular among California voters to the point that they cannot honestly message their intentions anymore.”
AGAINST
The California Apartment Association (CAA) opposed Prop 21. CAA has offices across the state, including Los Angeles, San Diego, Long Beach, Sacramento and Fresno. The Times reached out to the Fresno office but was unable to speak to a local CAA representative.
On its website, the CAA states, “The California Apartment Association has the State’s most effective network of government advocacy for rental property owners. No other rental housing organization in California can compete with CAA’s statewide outreach.”
According to a July 28 press release, CAA warns that 1942 would “drastically slow down the construction of affordable housing, adversely impact homeowners and small landlords and exacerbate the state’s homelessness crisis.”
According to CAA, 1942 would also eliminate the state’s ban on vacancy control. In the press release, CEO Tom Bannon said, “With vacancy controls, landlords lose any hope of ever changing fair market value for their investment.” He added, “There is little incentive to keep the unit on the market, let alone invest in improvements.”
Governor Newsom opposed Prop 21. As of this writing, Newsom did not respond to the Times request for comment on 1942.
PROPERTY TAXES/VALUES
Rent-control opponents maintain that when rents stay fixed, property taxes and property values are negatively affected. During the run-up to the 2020 vote on Prop 21, Avail.co – which is part of the Realtor.com network – published a report on how the proposition would affect the rental market.
In the report, Avail noted, “In terms of local and state revenue under Proposition 21, there is an understanding that both would likely be reduced over time, with property taxes being affected the most. This is because landlords would pay less property taxes due to the decrease in property value over time.”
The site also noted: “However, more extensive rent control laws would also result in an increase in sales taxes caused by renters who have more buying power after paying rent.”
