California Proposition 21 Defeated in Projection, Localized Rent Control Fettered
Photo by Kristi Blokhin
California Proposition 21, the localized rent control measure that appeared on the Nov. 3 ballot, was defeated according to a Ballotpedia projection by a 60/40 margin as of Nov. 13, with 100% of precincts tallied.
The proposition attempted to overturn the 1995 Costa-Hawkins Rental Housing Act and would have given local city and county governments the authority to pass rent control policies on housing units within their jurisdiction, save for those that were first occupied within the last 15 years, and those owned by non-corporate property owners of up to two housing units.
Under Costa-Hawkins, landlords could increase rent prices to market rates when a tenant moved out, and rent control on housing units with distinct titles, such as condos, townhouses, and single-family homes were blocked.
A similar measure, Proposition 10, in 2018, was rejected by Californian constituents by 59% and was recognized as overreaching in its aims by its own advocates.
“The one lesson we learned from Proposition 10 is that the voters were not interested in a wholesale repeal of Costa Hawkins. But the other message we got in polling and focus groups is that people believe there are excesses to Costa Hawkins and there needs to be reforms,” a lobbyist for the AIDS Healthcare Foundation, which is the main sponsor of the proposition, Rand Martin, said.
Proponents of Prop 21 assert that, in the words of United States Senator Bernie Sanders (D), an endorser of the proposition, that “This initiative will allow California cities to pass sensible limits on rent increases and protect families, seniors and veterans from skyrocketing rents.”
College student Gerry Gomez, 22, when asked about the difficulties he and his family face to ensure a roof over their heads and pay for other basic necessities, told Scriberr News that “Ultimately most of our [family’s] money goes to rent and food, anything else is kind of a luxury.”
“We pay 80% of our income on rent [and though] I’m not the type to go about complaining, our funds are limited, and the majority of what we have, does go to food and shelter,” Gomez said.
Gomez said after COVID-19 had beset his family, he became acutely aware of the fragility of their financial situation. His parents were both recently infected with the virus, and the ability to pay rent with their medical expenses hung on a tenuous thread.
“My parents were sick with no work for about 2-3 weeks, we had to dip into what little savings we had so we could afford the rent,” Gomez said. “People gave us money too, and we had to apply for the L.A. emergency fund.”
Gomez depends on Medi-Cal for his healthcare and state-funded grants for higher education. If it weren’t for government subsidy, most if not all things beyond rent and food, would be financially burdensome for the young-adult.
“I’m pretty dependent on it (government subsidy),” said Gomez. “Yeah, it would be significantly more stressful [and] near impossible to pay for anything other than rent, food, and clothing.”
“[Having enough money] to just put down, being able to save-up for things, or [invest in] a cheap house, it just seems kind of out of reach,” Gomez continued.
He said “bad things happen but overall I’m grateful for what I have, I’d like rent to be cheaper, of course, who wouldn’t, but overall it’s not my biggest concern. I’m happy with what I have and am doing what I can.”
Proposition 21 is supported by the AIDS Healthcare Foundation, ACLU of California, and the National Lawyers Guild of Los Angeles, among various other organizations.
It is opposed by the Republican Party of California, California State Governor Gavin Newsom (D) and the California Council for Affordable Housing. Yes for Prop 21 and No for Prop 21 are funded at $40,195,035.99 and $73,439,401.96 respectively.
Opponents to Prop 21 contend that passing this legislation would disincentivize investors and contractors from building more housing in California, which is desperately needed amidst the state’s housing shortage.
“Proposition 21, like Proposition 10 before it, runs the all-too-real risk of discouraging availability of affordable housing in our state,” Newsom said.
Dominique Arnould, a local entrepreneur and owner of five properties, told Scriberr News if Prop 21 were to pass he would simply sell his properties and invest his money elsewhere.
“As property owner and investor for myself and my family, I view any obstacles to growth and profit by restrictions from politicians as an attack to freedom of enterprise,” Arnould said.
“Prop 21 would not make it difficult to conduct business, it would [just] make me more likely to sell [my properties] and go elsewhere (in another state) so my investment [can] work at its best return,” he said.
Arnould said while the ramifications of Prop 21 may not impact him substantially at an individual level, the detriments to his business practice, however, specifically in his ability to maximize his returns on property investments, would be noticable.
“[Prop 21] would … eliminate the prospect of increasing rent to my tenant and limit the amount I could rent when a tenant leaves and is replaced by a new one,” he said.
He added that rent increase serves two purposes, “first it enables me to receive more money for my investment, and increase my cash flow. Second it increases the value of my property in the eyes of potential buyers.”
Prop 21, and rent control initiatives like it, would also demotivate Arnould from investing in non-essential upgrades or miscellaneous improvements to his properties, he said. Without proper market incentive or a high probability of financial return on his investments, he would see no reason to invest his money in unremunerative upgrades for his properties any further.
“[With Prop 21] I wouldn’t be motivated to invest my own money in cosmetic upgrades or inessential improvements to my properties, not at all. Without proper market incentive my motivation to do so would be diminished, and I would either sell or just wait until I could get a better return,” Arnould said.
“Honestly, there would and will be better and more updates without Prop 21.”
Arnould said upgrades are an act of mutual exchange, where both parties benefit. Renters are happy to see their units modernized with state-of-the-art modifications, and Arnould is delighted to see his properties value increase as a result.
“Maintenance and upkeep is probably the biggest expense throughout the ownership of rental units. At the same time the upkeep assures me that my property will grow its value upward, keep tenants happy with immediate repairs and updates thus allowing and justifying a yearly allowable increase,” Arnould said.
“It benefits me and it benefits them.”
He said he wouldn’t invest any more of his money in “a city where laws prevent you from maximizing your profit.”
“I am glad that Prop 21 was defeated just as Prop 10 was in 2018.”