Protection

 
A number of measures exist to protect tenants from the myriad issues they face in a housing crisis, and which we explore on this website, including skyrocketing rents, unsafe housing conditions, and displacement.  The most prominent of these measures are rent control and just cause eviction protections.  Additional protections include pro-bono legal aid and emergency financial assistance for renters.
In what follows we draw on research to respond to a number of frequently asked questions regarding rent control and just cause eviction protections, as well as discuss current pieces of legislation related to rent control that will come to voters in November:  Measure M, on the ballot for the city of Santa Cruz; and Proposition 10, on the California ballot.  At the end of page, please also see discussion of policies that create or expand emergency legal and financial assistance for renters.
 
 
What is Rent Control?
Rent control limits the annual amount rent can increase for tenants currently occupying their unit.  It also guarantees landlords a “fair return” on their investment. Beyond the above two features, rent control measures may vary, and be “stronger”  or “weaker.” For instance, they may or may not also include restrictions on the pricing of new construction, just-cause eviction protections, requirements that landlords petition to exceed rent limits, and the use of “rent boards” to set changes in rental increases and register units with the city.[1] Rent boards can either be independently elected or appointed by officials. Both tenants and owners can petition a rent board for or against a change in rent amount, as well as use rent boards in the mediation of disputes.

 

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

Map: rban displacement project at UC Berkeley


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

 

 

Who would be covered by tenant protections?
Rent control and stabilization apply only to tenants in non-subsidized rental units. On the other hand, eviction protections, as well as legal aid and financial assistance, can also apply to tenants in subsidized units, such as public housing or units accepting housing choice vouchers (also known as Section 8).   Most forms of tenant protection are governed at the city and state level, while federal guidelines can apply to federally-subsidized units. [For more on federal laws protecting tenants, see these links].  
Who would be covered by tenant protections?

Rent control and stabilization apply only to tenants in non-subsidized rental units. On the other hand, eviction protections, as well as legal aid and financial assistance, can also apply to tenants in subsidized units, such as public housing or units accepting housing choice vouchers (also known as Section 8).   Most forms of tenant protection are governed at the city and state level, while federal guidelines can apply to federally-subsidized units. [For more on federal laws protecting tenants, see these links].

Does rent control work?

The goal of rent control is to prevent rent gouging and unexpected rent-hikes for tenants, to bring fair and predictable returns to landlords, and over the long term, to help create more affordable, stable, diverse, and economically healthy communities.  What does the literature show about how effective rent control is in achieving these goals?

A number of critics, using what has been dubbed “the Econ 101 argument,” say rent control is not effective. Their fundamental argument is that, left to its own devices, a free market would function better than a regulated one in achieving the above goals.  This argument, in turn, is based on a few assumptions: a) the higher profits landlords could make in a free market would be passed on to tenants in the form of lower or more stable rents; b) under rent control, landlords cannot make a fair return due to a “rent cap” or “ceiling;” and c) by limiting landlord profits and decision-making power, rent control has perverse effects on rental markets that reduce housing quantity, quality, and affordability. Yet many scholars and practitioners dispute these claims.   A few points:

The current housing crisis is a result of a market failure
  • Not simple commodity market, speculative
  • Scarcity market, monopoly rents produced by restrictive land-use; supply side problems
  • Regulated to benefit landlords through vacancy decontrol.
  • Simple supply and demand doesn’t work in this context

Landlord profits don’t “trickle down.”  There is no evidence that landlords pass on their increased profits to tenants.  To the contrary, the period of greatest increase in rents in California, the Bay Area, and Santa Cruz, has also been a period of unprecedented profits for landlords.  Evident by NOI in Bay Area and Santa Cruz

Rent control mandates fair returns, prohibits “caps” or “ceilings.”

If they did not, these ordinances would not be constitutional; the courts have upheld the constitutionality of rent control time and time again. There are several definitions of fair returns, but at a minimum: “it is agreed that rents must be periodically adjusted to enable landlords to cover their increased operating and maintenance costs without unduly long delays or lags in such rent increases.” [2]

Perverse effects —loss of rental units, new construction, increase in harassment and habitability issues— need not occur

Cities with and without rent control have similar levels of new housing construction.

Plenty of places around the state, county and world have grown and thrived economically while rent regulations have been in place.   [e.g. New York] Rent control has made cities in the bay area relatively less expensive. Landlords in our region are not only making a living, they’re making a killing. One of the hindrances to the effectiveness of rent control is actually costa Hawkins.

On the other hand, rent control helps to cool speculative real estate markets driven by large, out-of-town corporate landlords distorting markets for renters, prospective first time home buyers, and mom and pop landlords.

Under the right conditions, rent control works

Research finds the major goals of rent control —greater affordability,  stability, diversity, and economic health—are achieved when rent control is working as it should.  In terms of affordability, …  Among cities in the Bay Area in 2015, research finds that According to research by the Urban Displacement Project at UC Berkeley, the California cities that have this policy in place have less turnover in their renter populations, indicating that rent control can be a contributor to greater residential stability.

History of the rent control debate in California

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. In November 2016, new ordinances were passed in Richmond and Mountain View—the first new ordinances in over 30 years—while Oakland and Berkeley also voted to strengthen their measures.

These ordinances were backed by organized tenants and their allies, including many local landlords, labor unions, faith-based organizations, community groups, and elected officials.  The statewide coalition Tenants Together emerged out of these struggles, in an effort to create a network of tenant organizations and build support for tenant protections locally and statewide.

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 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, citing 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 have formed,   Property Owners for Fair and Affordable Housing.  Elected officials have become more sympathetic to the issue.

Early signs of this were the hard-won victories in Richmond, Mountain View, Oakland and Berkeley.  The momentum continues to build, with over a dozen new local rent control measures across California being proposed or on ballots for November. 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.

Perhaps the most significantly victory for pro-rent control movements been getting Proposition 10 to overthrow Costa Hawkins on the November ballot. As we have seen, 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.

The fact that there are so many rent control measures on the ballot, locally and statewide, is itself a victory for the pro-rent control 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, spending billions to fight local measures as well as oppose Prop 10.   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.

Measure M: Rent Control, Just Cause Eviction Protections, and Legal Assistance for the City of Santa Cruz

The Santa Cruz Rent Control and Tenant Protection Act (SCRCA), also known as “Measure M” on the November 2018 ballot, There is an ordinance on the ballot for the City of Santa Cruz this November, 2018. is a three-part rent stabilization and protection plan for Santa Cruz, modeled after similar laws passed by voters in other California cities in recent years. [For more on these laws, see here] These three sections are:

  1. Rent Control, including limits to yearly rent increases in protected rental units. These limits will be tied to inflation, based on the annual increase in the Consumer Price Index for the SF Bay Area.
  2. Just Cause for Eviction, to strengthen tenants’ right to remain in their rental units. Current state law allows landlords unrestrained use of eviction as a tool to increase their profits, by resetting controlled rents to market rates when a new tenant moves in, or to retaliate against a tenant who asks for repairs or is involved in a dispute. Therefore, for rent control to be effective, it must be paired with protections that allow evictions only for specific, valid reasons. Just Causes for Eviction due to action by the tenant include failure to pay rent, violating the terms of the lease, engaging in illegal activity, creating a nuisance, denying access, or refusing to sign a new lease. If tenants are forced to move due to no fault of their own, such as in the event of owner move-in or removal of the property from the rental market, landlords are required to pay relocation assistance to the tenants, to help defray the costs they incur by their displacement.
  3. Elected Rent Board, to administer the Rent Control law and undertake these duties:
    • Setting the allowable limit for annual residential rent increases, proportional to the increase in the cost of living
    • Ensuring that landlords receive a fair return on their investment
    • Handling petitions by tenants and landlords
    • Scheduling and conducting rental arbitration hearings and mediation sessions
    • Investigating reports of illegal rent increases and wrongful eviction
    • Creating rules and regulations to run the program
    • Hiring staff and hearing officers
    • Conducting studies and surveys
    • Issuing reports to the City Council
    • Establishing penalties for violations of the Rent Control law
    • Educating tenants and landlords about their rights

The initial members of the Rent Board will be appointed by the City Council. Thereafter, like the City Council and other rent boards across the Bay Area, its members will be elected by, and fully accountable to, the voters of Santa Cruz.

Prop 10: Repeal Costa Hawkins

In California, organized landlords, through lobbying bodies such as the California Apartment Association, have sought to block tenant protections statewide, as well as any attempts to amend or overturn pro-owner legislation such as Costa Hawkins.

What about other supports for tenants, like Emergency Rental Assistance and Pro-bono Legal Aid?

[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] Fair-return standards could be: cash-flow levels, return on gross rent, return on equity, return on value, percentage of net operating income, or maintenance of net operating income (NOI).]