5 Ways Proposition 33 Could Transform California’s Rent Control Landscape!

Proposition 33, if approved by California voters, could empower local governments to expand rent control regulations, affecting single-family homes and newer properties previously exempt under the Costa-Hawkins Act. Advocates argue it would help prevent housing insecurity and allow tenants more flexibility, while opponents warn it could stifle housing development. Major cities like San Francisco and Los Angeles are preparing to implement changes, highlighting the measure’s potential to reshape the state’s housing landscape significantly.

CONTENTS: 5 Ways Proposition 33 Could Transform California’s Rent

• California ballot spending exceeds $300 million.
• Proposition 33 debates California rent control.
• Rent control measures face strong opposition.
• Proposition 33 may reshape rent control.

5 Ways Proposition 33 Could Transform California’s Rent Control Landscape!

California ballot spending exceeds $300 million

5 Ways Proposition 33 Could Transform California’s Rent This year’s California ballot propositions have sparked a surge of campaign spending, with more than $300 million already spent to influence voters. The highest spending has come from opponents of Proposition 33, which would permit cities and counties to enact stringent rent controls on various housing types. By October 19, the main “No on 33” committee, largely funded by the California Apartment Association, had raised $77 million. This figure rose by another $11.5 million after the reporting cutoff, as the group intensified ad campaigns warning that the measure could raise housing costs.

The state’s 22 million registered voters, many of whom may still have their ballots on their kitchen tables, are tasked with navigating multiple pages of complex propositions rooted in California’s century-old direct democracy system. Menlo College political science professor Melissa Michelson noted that while direct democracy is popular, it presents challenges, as voters must make simple yes-or-no decisions on intricate issues.

Shaun Bowler, a political science professor at UC Riverside, pointed out that this year’s propositions face an uphill battle for attention due to the highly charged presidential race. Though the total spending on this year’s ballot measures hasn’t surpassed the $357 million raised in 2022 for sports betting initiatives or the over $200 million spent in 2020 to defeat a law affecting gig workers, it is still substantial.

By the end of October, more than 6 million ballots had already been cast. Support for Proposition 33 has also seen significant financial backing, with close to $42 million spent in favor. Proposition 35 has drawn the most spending for a “Yes” campaign, exceeding $50 million and facing no opposition. This measure seeks to make permanent a tax funding Medi-Cal, California’s Medicaid program for low-income residents.

5 Ways Proposition 33 Could Transform California’s Rent Bowler highlighted that these campaigns face an immense task to reach around 20 million voters. For more complex measures, endorsements from trusted groups such as environmental organizations or local unions can help guide voter decisions. Simpler measures, like Proposition 3, which would repeal 2008’s Proposition 8 defining marriage as between a man and a woman, have drawn less financial attention as public opinion is largely settled on the matter.

Michelson advised voters to consider campaign funding sources for better insights, as this can sometimes reveal more than the proposition names or ad content. The $300 million spent averages out to approximately $13 per registered voter, reflecting a continuing trend of substantial spending in recent election cycles. According to Bowler, unlike promoting popular products such as pizza, promoting political measures requires overcoming voter disinterest.

 

Proposition 33 debates California rent control

5 Ways Proposition 33 Could Transform California’s Rent During the COVID-19 pandemic, Reyna Aguilar, a chef in San Francisco’s Mission District, lost her job when her restaurant closed. This sudden change left her struggling to afford rent for the studio apartment she had called home for nearly 10 years. Initially relieved when the government announced rent vouchers, her hopes were dashed when her landlord refused to accept them, insisting on cash instead. Aguilar’s situation worsened when the landlord’s employees allegedly harassed her, making her feel unsafe in her own home. By late 2021, her fear and exhaustion forced her to leave, beginning a three-year quest for affordable housing.

Unaware of relevant laws at the time, Aguilar later learned that leaving her rent-controlled apartment allowed the landlord to increase rent significantly due to the Costa-Hawkins Rental Housing Act, a 1995 law that exempts certain properties from local rent control and permits rent hikes once a tenant vacates. This act is now at the center of Proposition 33 on the November 5 ballot, which seeks to repeal it and expand rent control.

Opposition to the repeal has seen significant financial backing. Large real estate developers and landlords have raised over $124 million, more than doubling the funding for proponents of rent control. An analysis revealed that major contributors to the opposition include real estate giants like the Blackstone Group, Essex Property Trust, Equity Residential, and Avalon Bay. These firms receive investments from pension funds, such as those of California public employees and teachers, raising ethical questions about their role in financing the anti-rent control campaign.

5 Ways Proposition 33 Could Transform California’s Rent Campaigns opposing Proposition 33 have used this funding for widespread flyers and ads warning that repealing Costa-Hawkins could lead to cities creating rent boards that regulate rental prices. Supporters of the law argue that eliminating it would discourage new housing development and worsen California’s housing shortage.

The issue comes as housing affordability remains a key concern for Californians, second only to inflation. As nearly half of California’s residents are renters, the decision on Proposition 33 could significantly impact future housing policies. Critics note the conflicting position of public pension funds supporting real estate firms that oppose rent control, which affects many of the very public employees whose pensions they manage.

 

Rent control measures face strong opposition

5 Ways Proposition 33 Could Transform California’s Rent The ballot measure on rent control had been rejected in both 2018 and 2020. During those times, landlords raised $76 million and $95 million, respectively, surpassing the financial efforts of those supporting rent control. The California Apartment Association Issues Committee, funded largely by major real estate entities, outspent proponents on both occasions. Public sector pension funds, including those for California’s public employees and teachers, invested in these large real estate groups, a situation described as conflicted by Eileen Appelbaum of the Center for Economic and Policy Research (CEPR). She noted that while retired public employees often face high rents, their pension investments fuel the opposition to rent control.

For this latest measure, the opposition raised $124 million, with over $88 million coming from the California Apartment Association Issues Committee. Essex Property Trust and Equity Residential, two major corporate landlords, contributed $32 million and $22.3 million, respectively. Other significant contributors included Blackstone Group, Avalon Bay, and Carmel Partners. All of these entities had investments from CalPERS and CalSTRS, as confirmed by a review of CalPERS’ 2023 portfolio and past press releases.

Proponents of rent control, led by groups like Housing is A Human Right, argue that stagnant wages and increasing rents have led to widespread housing instability. Susie Shannon of Housing is A Human Right pointed out that many Californians are homeless or struggling to find stable housing.

Dean Preston, a San Francisco city supervisor and former tenants’ rights attorney, highlighted that large corporate landlords often use evictions as a tool to raise rents. This tactic became more apparent after the pandemic-era eviction moratorium ended, with Unlawful Detainers—eviction notices demanding tenants vacate within days—doubling in fiscal year 2023. Preston noted this led to a surge in evictions, despite a city-run rental assistance program.

The campaign supporting Proposition 33 raised $50 million, largely funded by the Los Angeles-based AIDS Healthcare Foundation (AHF). While AHF is involved in global healthcare, including providing low-cost drugs and housing the homeless, its properties have been criticized for poor conditions. In response to AHF’s involvement in rent control advocacy, real estate interests have backed a measure requiring AHF to allocate its discounted drug revenues exclusively to patient care.

5 Ways Proposition 33 Could Transform California’s Rent Tenant stories underscore the struggles faced by many. María Aguilar, who lived in her car for nearly a year after being unable to pay rent, now volunteers for tenant rights groups. Other tenants, like Valente Casas and Christian Dominguez, continue to live in homes damaged by fires, unable to afford alternatives and fearing rent hikes if they leave. Cases like these illustrate the dire need for stable rent control, according to housing advocates.

Jordan Ash from the Private Equity Stakeholder Project noted that pension funds across California, including those of city utilities, have investments in real estate companies like Blackstone that oppose rent control. Although fiduciary responsibility traditionally focuses on financial returns, a 2018 state law expanded the concept, requiring funds like CalPERS to consider negative social impacts when assessing investments.

Despite being financially outmatched, tenant advocates believe their grassroots efforts, bolstered by volunteers like Aguilar, can sway public opinion. Shanti Singh of Tenants Together remarked that even with limited funding, community outreach has encouraged more cities, such as Pasadena, to adopt rent control policies.

Aguilar’s journey from struggling to find affordable housing to advocating for tenant rights is fueled by her desire to support her children, whom she has not seen since they were young. Despite facing significant personal and financial challenges, her resilience and dedication embody the human side of the rent control debate.

 

Proposition 33 may reshape rent control

5 Ways Proposition 33 Could Transform California’s Rent If California voters approve Proposition 33, local governments could gain the authority to expand rent control regulations. San Francisco and Los Angeles officials have already shown interest in using this power. In cities like Berkeley, where current local laws already include provisions for stricter rent regulation than state law allows, immediate changes could occur, limiting annual rent hikes on certain single-family homes and newer apartments.

Leah Simon-Weisberg, chair of Berkeley’s rent board, believes this measure could allow tenants to move without losing affordable rents and help prevent housing insecurity. However, Krista Gulbransen from the Berkeley Property Owners Association warns that this could lead to severe challenges for landlords, reminiscent of past restrictive decades.

Proposition 33 would repeal the Costa-Hawkins Rental Housing Act of 1995, which currently limits local rent control by preventing regulations on single-family homes and properties built after 1995. If repealed, cities like Richmond could see their local rent control ordinances apply to previously exempt properties, though some officials, like Richmond’s rent program head Nicolas Traylor, suggest legal clarification may be necessary to implement new rules.

San Francisco has proactively prepared by passing legislation that would extend rent control to approximately 16,000 more units if Prop. 33 passes. Mayor London Breed is expected to approve this. Cities with established rent control laws, such as San Francisco, Oakland, and Los Angeles, face current constraints from Costa-Hawkins, which exempts buildings constructed after the late 1970s. Los Angeles Council member Hugo Soto-Martínez emphasizes the urgency of updating rent control policies to address the housing crisis.

5 Ways Proposition 33 Could Transform California’s Rent Landlords, already burdened by rising costs, have expressed concern. Some property management firms advise landlords to raise rents to market levels now and consider buyouts for tenants paying below-market rates in anticipation of the law’s potential changes.

Opponents of Prop. 33 argue it could deter housing development at a time when the state needs more housing. Nathan Click, a No on 33 campaign spokesperson, fears cities could use rent control to block new construction efforts. However, San Francisco’s recent legislative compromise to apply rent control only to buildings up to 1994 shows that even progressive cities may opt for balanced policies.

USC’s Manuel Pastor notes that rent stabilization without vacancy control can reduce tenant displacement without hindering new construction. Implementing stricter vacancy control measures could have more complex outcomes, given the lack of recent data from similar policies. Pastor predicts varied approaches across California, with progressive coastal areas likely enacting stricter measures and more moderate inland cities favoring looser regulations.

Pastor suggests that while Prop. 33 could address certain housing affordability issues, it will not single-handedly solve the crisis, nor will it lead to disastrous outcomes as some opponents fear.