History of the Rent Control Debate in California

History of the Rent Control Debate in California

Early history: 1970s-2010s

More than a dozen cities in California have some form of rent control, including Alameda, Berkeley, Beverly Hills, East Palo Alto, Hayward, Los Angeles, Los Gatos, Mountain View, Oakland, Palm Springs, Richmond, San Francisco, San Jose, Santa Monica and West Hollywood. Of these, most measures were passed in the 1970s and early 1980s.   They were backed by organized tenants and their allies, including many local landlords, labor unions, faith-based organizations, community groups, and elected officials, and influenced by tenant movements gaining influence nationwide at the time.

Opposition to rent control also has a long history in California.  Much of this has been organized by the California Apartment Association [CAA] and the California Realtors Association (CRA), representing landlords and real estate interests, together with local Chambers of Commerce, business coalitions, trade unions, individual landlords, and elected officials. Of the “three P’s,” these groups typically support Production. They argue the only way to address the housing crisis is through building new housing, and loosening zoning and land-use restrictions to do so, rather than regulating markets.  Thus, these groups have sought to challenge local ordinances, as well as repeal or curtail rent control generally.

One of CAA’s early victories was the “The Ellis Act,” a state law passed in 1985 that allows landlords who are “going out of the rental business” to evict tenants —often en masse—and take their buildings off the rent control rolls.  In principal, this law can be used by building owners who wish to cease being landlords. In practice, it is commonly been used to “flip” rent controlled buildings, selling them to new owners at higher costs once long-term tenants are gone. Landlords have also been found to use the Ellis Act to harass tenants, i.e.: threatening them with eviction unless they leave, then decontrolling their units.

In 1995, opponents of rent control had their most sweeping victory with the passage of Costa Hawkins. This law prevents rent control from being applied to single family homes or units constructed after 1995. It also allows for “vacancy decontrol,” through which owners can return units to “market rates” once a rent-controlled tenant leaves. Since its passage, the law has been very effective in both limiting the effectiveness of rent control and de-controlling thousands of units.

Costa Hawkins was also a key part of a 2009 court decision, Palmer v Sixth Street Properties, which struck down a Los Angeles requirement that developers include affordable rental units in new apartment buildings as part of local inclusionary zoning laws. State courts sided with plaintiffs, saying that these rules violated Costa Hawkins by mandating lower rents for post-1995 units. This had the further effect of weakening inclusionary zoning laws state-wide. A bill signed by Governor Jerry Brown in September 2017, however, reversed this decision, restoring the ability of California cities and counties to compel developers to include affordable units in new rental projects.  In 2008, an effort to overturn all forms of rent control in the state was rejected by voters.

The Growing Rent Control Movement

With the rapid escalation of the housing crisis in recent years, the political tide has begun to turn for rent control in California.  New local and statewide coalitions, Tenants Together and Renters United Network, have formed in an effort to create a network of tenant organizations and build support for tenant protections both locally and statewide.  Elected officials have become more sympathetic to the issue.

There were early signs of this shift in November 2016, when new ordinances were passed in Richmond and Mountain View—the first in over 30 years—while Oakland and Berkeley also voted to strengthen their existing measures.   The momentum continues to build, with over a dozen new local rent control measures across California being proposed or on ballots for November 2018. This includes our own Measure M in the City of Santa Cruz, put on the ballot by newly formed Mobilization for Housing Justice and Students Uniting Renters.  as well as measures put on the ballot by tenant movements in Glendale, Inglewood, Long Beach, Mountain View (to defend rent control passed in 2016), Pasadena, National City, Pomona, Sacramento, San Diego, Santa Ana, Santa Rosa, and Unincorporated L A County.[8]

One of the most significant victories for pro-rent control movements was getting Proposition 10 to overthrow Costa Hawkins on the November ballot, after numerous effort in recent years failed. Rent control is “strongest” and most effective when paired with just cause evictions policies. Yet Costa Hawkins, primarily through the vacancy decontrol provision, limits the effectiveness of both policies.  As was intended, throughout its 20-year history Costa Hawkins has helped erode the power and reach of rent control wherever it exists. The fact that there are so many rent control measures on the ballot statewide, despite Costa Hawkins, is another victory for the pro- movement.

Yet it is far from sure these measures will pass. A recent poll out of UC Berkeley finds 60 percent of likely voters in Californians support rent control in some form.  Nonetheless, the opposition is organized and extremely well-funded. Through lobbying bodies such as the California Apartment Association, landlords have sought to block tenant protections statewide, as well as any attempts to amend or overturn pro-owner legislation, spending billions to fight local and statewide measures.

Whatever happens, the upcoming elections will be a watershed moment for rent control across the state. In what follows we briefly outline local and California-wide measures to introduce tenant protections that will be on the ballot in November, and provide links for more information.


 

Map: rban displacement project at UC Berkeley

Compare our policies to those of other bay area locations using The Urban Displacement Project at UC Berkeley's interactive map.


The three Ps

Image: Production of affordable housing

Image: Preservation of existing affordable housing

Image: Protection of tenants, so they can afford their rents. avoid displacement, and defend their rights

 

 

 

What are: rent control, rent review boards, and just cause eviction protection?

What support services exist for tenants?

Who would be covered?

 

 

Why rent regulations are needed

Responding to common arguments against rent control

Early history, 1970s-2010s

The growing rent control movement

City of Santa Cruz Measure M

California Proposition 10


Sources

[1] The California Tenants’ Rights guide distinguishes between two types of rent control policies: “Weak Rent Control” laws allow landlords to raise the rent generously, and even above the fixed amount unless a tenant protests to a rent board. These policies do not require landlords to register their units with the city. “Moderate-to-Strict Rent Control” laws require the landlord to “bear the burden of petitioning the rent board for an above-formula rent increase and of justifying the need for such an increase based on certain cost factors listed in the ordinance,” include a just cause evictions ordinance, and require landlords to register units with the city.

[2] Collins, ibid, 4.

[3] Frey, Pommerehne, Schnieder and Gilbert, “Consensus and Dissension Among Economists: An Empirical Inquiry,” 74 American Economic Review, 986 (1984); Paul Krugman, “Reckonings; A Rent Affair.”  New York Times, 2000 https://www.nytimes.com/2000/06/07/opinion/reckonings-a-rent-affair.html

[4] Keating, W. Dennis, Michael B. Teitz, and Andrejs Skaburskis. Rent Control: Regulation and the Rental Housing Market (New Brunswick: Center for Urban Policy Research, 1998), 46.  Beyond MNOI,  fair-return standards can also include: cash-flow levels, return on gross rent, return on equity,, return on value, and percentage of net operating income.

[5] Dennis Keating, “Rent Control in California: Responding to the Housing Crisis.” Berkeley: Regents of the University of California, California Policy Seminar, No 16, 1983.

[6] Timothy L. Collins, “Rent Regulation in New York: Myths and Facts, Second Edition.” New York State Tenants & Neighbors Information Service, May 2009.

[7] Michael Mandel, “Does Rent Control Hurt Tenants?: A Reply to Epstein,” Brooklyn Law Review, vol. 54, 1267, 1268 (1989).

[8] For a full list of of cities with rent control, partial rentrol, and mobile home rent control in California, see: https://www.caltenantlaw.com/RCcities.htm