Rent Control Showdown in Sacramento

Dyan Ruiz, Joseph Smooke | 01/13/2018


On Thursday, California Assemblymembers considered reversing a major barrier to expanding rent control in cities, such as San Francisco, where rents are rising much faster than most people can pay.

Tenant, landlord and developer groups traveled to Sacramento by the busload to show support and opposition to the proposed bill that would reverse the Costa-Hawkins Rental Housing Act.

Among the estimated 1000 people who appeared for public comments was Beverly Roberts from Los Angeles.

“I’m a landlord. A small landlord. But, I don’t believe in gouging rents. That’s the reason why I’m so avid about repealing Costa Hawkins.” (Beverly Roberts, Landlord, Los Angeles)

The Assembly’s Housing and Community Development Committee considered AB 1506 put forward by Assemblymember Richard Bloom of Santa Monica to repeal Costa-Hawkins. In cities that have rent control laws in place, the state law prohibits rent control on single family homes and condos. It also prohibits rent control on any new buildings built after 1995, or it goes back further, such as 1979 in the case of San Francisco. Under the law, landlords are also allowed to increase rents as much as they want, once a tenant moves out.

One tenant was a witness to the Committee, stating that she and her family were recently given an increase of $1,500 a month for the rent on their single family home in Oakland. Many others have experienced similar rent increases.

“You have to be very wealthy to live in Oakland now.  So largely, communities of color, immigrant communities, disabled communities, senior communities just don’t have the income stream to keep up with the raising rents. So they’re moving out.” (Chanée Franklin Minor, Oakland Tenant, Former Fair Employment and Housing Commissioner and Councillor)

California has the most expensive rent in the country with half of all tenants paying over 30% of their income on rent, levels that are considered unaffordable.

Sixteen California cities have rent control in place, but those controls are limited by Costa-Hawkins. Advocates calling for the repeal of Costa-Hawkins say that cities need to be able to address the housing affordability crisis without those restrictions.

“Studies have shown across the board that rent control is effective in stabilizing those lower income families- stabilizing their home lives, making sure that they are not victims of displacement. And so the State should not be imposing on local governments what they can and can’t do to address this crisis.” (Allison Regan, Deputy City Attorney, City of West Hollywood)

Hundreds of members of the public lined up for comment, pouring into the hallways from the packed hearing room to voice their support and opposition to the bill.

One of the many property owners present said that current restrictions on rent control already made it difficult for him.

“In addition to the costs going up faster than our income is going up, the government is mandating that we do certain things like earthquake retrofit.” (Charles Betz, Landlord, Sherman Oaks)

Under current rent control laws, landlords can raise rents to pay for capital repairs and operating expenses. Courts have determined that landlords are entitled to a fair and reasonable rate of return.

While stability of residents and communities was on top of mind for the rent control advocates, maintaining the current business climate for developers and owners was most important for those who wanted Costa-Hawkins to stay in place. Some Assemblymembers were seeking more of a middle ground and not a full repeal. 

The Senior Vice President Public Affairs for the California Apartment Association was a witness against the bill.

“If you have every city that has the ability to do whatever they want, and especially in San Francisco, we have a really large tenant base that outnumbers property owners 3, 4 to 1, there is no assurances that unless we have a statewide policy, that we’re going to have something that is consistent throughout the State.” (Debra Carlton, Senior Vice President Public Affairs, California Apartment Association)

Ms Carleton also said that ordinances like the new inclusionary housing laws enacted last year was enough of a price control on the market.

“We did put in place what we call Inclusionary Zoning, and that means that a City can impose a certain percentage of rent control on new construction. But they can’t put it on the entire structure. So that’s helpful, right?” (Debra Carlton, Senior Vice President Public Affairs, California Apartment Association)

Some Assemblymembers echoed the concerns of the Apartment Association, who said that developers would stop building in California if Costa-Hawkins is repealed.

Ms Regan disputes this idea.

“What I constantly hear from owners who are opposed to rent control is that it’s just a question of supply and demand, and if we build, build, build, that will solve the affordable housing crisis. We already know that’s not the case because-- we have-- The construction is happening at a rate never seen before in Los Angeles and that hasn’t solved the problem because [of] market rate housing. We have a vacancy rate in Downtown Los Angeles of 12%. We have huge multi-family residential rental buildings that are sitting empty because the rents are too high and landlords aren’t willing to lower them.” (Allison Regan, Deputy City Attorney, City of West Hollywood)

“The bill needed four votes to get out of the Housing Committee. When only three Assembly members voted yes, the crowd immediately erupted in frustration.” (Dyan Ruiz, Reporter, [people. power. media]

“So at this time AB1506 fails passage today.” (Assemblymember David Chiu)

[Cheers and booing]

“We have occupied the Housing Committee chambers because we didn’t get the votes we needed. And it’s because of lies that the real estate industry told and it’s because people making cowardly choices saying that they wanted to see a compromise, when everyone knows that the compromise can happen at the local level after this vote.” (Deepa Varma, Executive Director, San Francisco Tenants Union)

The Yes votes came from Co-Authors, Assemblymembers David Chiu and Rob Bonta, as well Mark Stone. Marc Steinorth and Steven Choi voted no, while Ed Chau and Jim Wood abstained. The bill now fails in Committee. 

The supporters of the bill were visibly upset.

“I live in Los Angeles. Some of the rents have jumped four and $500 a month and then I hear sometimes it can a $1,000. Who can afford that-- the average working person? Who can afford it? How can somebody do these type things and do it to another human being? It’s unconscionable to me. I just don’t get it. And I hope that in some way that this can be rectified. Because it has to. If not, we’re in trouble.” (Beverly Roberts, Landlord, Los Angeles)

Another chance to repeal Costa-Hawkins could come on the ballot this November

This is Dyan Ruiz for People Power Media.

Community Engagement

We don’t just report on people power efforts, we believe in people power.

Our work includes participating in the community-based, grassroots efforts that we report on. Joseph Smooke is currently the Program Assistant and was previously the Program Director since October 2015 at Housing Right Committee of San Francisco.

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