A California initiative that would allow local governments to impose stricter rent caps than those allowed under the statewide law that when into effect last month has qualified for the November ballot, another effort to grapple with the Golden State's worsening housing and homelessness crisis.
California Secretary of State Alex Padilla said this week that that the measure known as the Rent Affordability Act collected enough valid petition signatures to appear on the Nov. 3 general election ballot.
The measure is the second attempt by the Los Angeles-based AIDS Healthcare Foundation and its president Michael Weinstein to pass a ballot measure that would repeal or partially repeal California's Costa-Hawkins Rental Housing Act, which prohibits cities from setting even lower rent caps than the 5% annual increases plus the cost of inflation allowed under a new statewide law this year.
Voters in November 2018 soundly rejected the Weinstein-sponsored Proposition 10, which would have fully repealed Costa-Hawkins, in what analysts called a victory for landlords, real estate investors and even tenant rights groups. Opponents argued the law would have discouraged apartment construction that could increase housing supply and help reduce rents in the nation's most populous state, where rising housing prices and dwindling affordability have become a crisis that has exacerbated a serious homelessness problem.
Prop 10 would have allowed local governments to impose rent control on houses and apartments built after 1995. The proposed measure on this year’s ballot would allow cities to establish rent control on buildings over 15 years old and raise rents on affected properties by no more than 15% every three years, excluding single-family homes.The measure would exempts people who own one or two homes from the rent-control policies, according to the ballot measure's official title and description.
Assembly Bill 1482 written by San Francisco Assemblyman David Chiu and signed into law by Gov. Gavin Newsom last October, made California the second state after Oregon last year to pass statewide rent control and won the unlikely support and praise from the California Association of Realtors and the state's building trade groups. The bill extends for 10 years and exempts rental housing built within the past 15 years.The California Secretary of State on June 25 is scheduled to officially certify the initiative as qualified for the Nov. 3, 2020 ballot unless proponents withdraw the measure.
AIDS Healthcare Foundation filed papers in April 2019 to get apartment rent control back on the California ballot. Weinstein said this week that the defeat of Senate Bill 50, an effort to build more housing near transit lines, underscores the importance of the difficult task ahead of building support to expand tenant protects at the ballot box in November.
"With the defeat of the deeply flawed SB 50 in Sacramento last week and now, the certification of our Rental Affordability Act ballot measure signatures, the affordable housing revolution has begun” Weinstein said in a release. “Housing affordability and homelessness are the most pressing social justice and public health emergencies in our time, especially in California."
Publicly traded apartment and office developers responding to question from analysts during recent earnings conference calls said that the proposed ballot measure likely won't have much effect on their California portfolios but are still keeping their eye on the measure.
Richard Campo, chief executive of active California apartment developer Camden Property Trust, said that while "we still like our California portfolio in spite of the legislative issues," but the proposed ballot measure makes him "a little more nervous."
"The renewed Costa Hawkins ballot legislation that's likely to be on the ballot in 2020 would allow cities to get more aggressive," Campo said. "Our portfolios just are not in the cities that are more militant when it
comes to rent control, and even with all the sort of negative aspects of California, with cost of living and all that, it's still a pretty good market to be a multifamily owner in. I like the exposure there."
Eliott Tencher, senior vice president of corporate strategy with Los Angeles-based developer Kilroy Realty Corp., said the company won't comment on whether the proposed Rent Affordability Act can succeed.
"Given the age of our product which is pretty new, we don't think it will have a material impact on us," Tencher told analysts this week.
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