Prop 21: Local Governments & Rent Control

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The League supports efforts to help resolve California’s housing crisis. We promote solutions aimed at increasing housing production in a sustainable, accessible, and equitable manner. Rent control policies are one strategy to address California’s housing challenges, offer tenant protections, and prevent displacement. Rent control may be an effective short-term solution but studies suggest that its longer-term impact may, in certain cases, stifle the building of high-density and more affordable housing. Some of the modifications in Prop 21 have already  been addressed through recently passed legislation. Because there are benefits and drawbacks to rent control, the League has chosen to be neutral on Prop 21.

League Analysis: 

Prop 21  would make some changes to the 1995 Costa-Hawkins Rental Housing Act (Costa Hawkins), allowing local governments  to apply rent control on more properties, along with other changes, including increasing the rental increase cap to 15 percent over three years. Rent control is seen as a tool to provide low and more affordable rent.  Recent studies  on the longer-term impact of rent control suggests that it may discourage construction of new housing units. For this reason, the League takes a neutral position. 

In recent years,  the state legislature has passed a series of bills changing the landscape of tenant rent control protection. These bills have dealt with issues such as landlord abuse of eviction policies and gouging, escalating costs of rentals, displacement and homelessness. In 2019 the League supported successful legislation to set a cap of 5 percent (plus inflation) on rental increases -  one of the strictest in the nation.  As of January 1, 2020  a new set of rent control/eviction protection laws went into effect to prevent landlords from getting around rent increase caps.  They addressed leases, tenant evictions, relocation assistance, extended notices for rent increases, mandatory consideration of Section 8 and its criteria, and other changes. 

Proposition 21 would modify some of the limitations of Costa-Hawkins, allowing cities and counties to:
Apply rent control to more properties than under current law.
Allow local limits on annual rent increases to differ from current statewide limits. 
Expand local government authority to enact rent control on residential property with the authority to apply new rent control ordinances only to homes at least 15 years old.
Exempt single family homes owned by landlords with no more than two properties (e.g. single-family homes, condos, and some duplexes or subdivided interests, such as stock cooperatives and community apartment projects.)
Allow landlords to increase their rental rate by 15 percent during the first three years following a vacancy, above any increase already allowed by local ordinance.
Stipulate rent control policies may not violate landlords’ right to a fair financial return on their property.

Proponents of Prop 21 say that these proposed rent control policies  would help improve the housing challenges faced by renters and help stem the tide of evictions and displacement.  Yet Prop 21 also authorizes  landlords to increase rental rates at a higher level than currently allowed  (15 percent within three years), calling into question this measure’s claim to protect tenants from rent gouging.  Furthermore, some of the modifications in Prop 21 have already  been addressed through recently passed legislation.