These California cities could see big changes in rent control if Prop. 33 passes

CalMatters

If Californians vote to approve a rent control measure on the ballot, thousands of Berkeley tenants could immediately see new limits on how much their landlords can raise their rent each year.

“Families who are living in units that aren’t right for them will have a chance to move without losing their affordability,” said Leah Simon-Weisberg, a longtime tenant lawyer and chair of the city’s rent board. “For some people, it will keep them housed.”

That same scenario, in which the city could cap rent increases on single-family homes and apartments more than 20 years old and units with new tenants, is a nightmare for Krista Gulbransen, who heads the Berkeley Property Owners Association, representing the city’s landlords. “We would revert back to the 1980s and it wouldn’t just be roller skates or rainbow headbands, it would be a lot worse,” she said.

Proposition 33 would repeal a state housing law limiting how cities can regulate rents, letting local governments make that decision. Most California cities wouldn’t see an immediate change. But in a few cities like Berkeley, local laws already contain language allowing much more sweeping regulation than current state law. In those cities, and in others where left-leaning elected officials have expressed public support for expanding rent control, renters could see the soonest benefit from Prop. 33 — and landlords the soonest headaches.

More than 30 cities in California already place some limits on rent increases, with caps ranging from 3% to 10% annually for covered units, some pegged to inflation.

At the state level, California caps rent increases for apartments and corporate-owned houses more than 15 years old at 10% per year — a rate that tenant advocates have said can still place a significant burden on tenants.

Some of those local ordinances were once much stricter. In the late 1970s and early 1980s, concern about soaring housing costs led a few cities to limit rent increases even when a new tenant moves in — known as vacancy control. But the 1995 law that Prop. 33 would repeal, known as the Costa-Hawkins Rental Housing Act, put a stop to that, along with any rent control on single-family homes or those built after 1995.

It’s the ban on rent control for single-family homes that most bothers Melvin Willis, a city council member in Richmond, one of the Bay Area’s few remaining solidly working-class cities. Many families in his district rent their houses, he said, and some complain to him about steep rent increases.

“It’s a hard conversation to have with someone when they say, ‘My rent increased, but we have rent control,’ ” he said. Willis recalled explaining to one family whose rent had doubled that the city’s 3% cap on rent bumps doesn’t apply to single-family homes. “I’ve had that conversation multiple times and it doesn’t feel good,” he said.

Richmond’s rent ordinance leaves out any housing “exempt from rent control pursuant to the Costa-Hawkins Rental Housing Act.” Willis and other affordable housing advocates take that to mean that if Costa-Hawkins goes away, single-family homes and other dwellings that the state law excluded would automatically fall under rent control.

Nicolas Traylor, the executive director of Richmond’s rent program, was more cautious. The ordinance could be referring to units actually exempt under Costa-Hawkins, he said, or just the types of units, like single-family homes, that Costa-Hawkins excluded. If Prop. 33 passes, he said, the rent program’s general counsel would have to recommend how to move forward.

In San Francisco, city supervisors avoided that ambiguity by unanimously passing legislation that would kick in if Prop. 33 passes, bringing rent control to an estimated 16,000 additional units. Mayor London Breed has said she will sign it if the proposition passes, the San Francisco Standard reported.

San Francisco belongs to a group of cities — along with Berkeley, Oakland, Los Angeles, and the southern California cities of West Hollywood and Santa Monica — with longstanding rent control that current state law especially constrains. That’s because Costa-Hawkins grandfathered in any exemptions they had for more newly built units. So in San Francisco, apartments built after 1979 are considered “new construction” and exempt from rent control. In Los Angeles, it’s 1978.

“It’s completely arbitrary that we can create rent control for buildings from 1978 but we can’t do it for 1980,” said Los Angeles City Council member Hugo Soto-Martínez, pointing to the city’s homelessness crisis. “Every year we continue to lose more of our rent-stabilized housing.”

The council last week passed a resolution, authored by Soto-Martínez, endorsing Prop. 33.

Those kinds of actions by cities trouble landlords, who point out that their costs for utilities and insurance are rising, in some cases outpacing inflation.

In an email newsletter sent to housing providers Friday, real estate firm Bornstein Law warned its clients that “there is a real possibility that Proposition 33 will pass because of the widespread belief that the rents are too damn high.”

The firm urged landlords, in preparation for the potential policy shift, “to raise the rents to market rate if landlords are able to do so” and to consider offering voluntary buyouts to tenants paying below-market rent.

Prop. 33 opponents have also raised concerns that cities will enact rent control so strict it will stifle new housing construction at a time when the state desperately needs it.

“The state has done so much to remove barriers to building housing and to incentivize affordable housing construction, but Prop. 33 would give NIMBY cities a really powerful weapon to do an end run around those rules,” said Nathan Click, a spokesperson for the No on 33 campaign.

But San Francisco shows that, given the flexibility to craft new policies, even cities with strong histories of tenant advocacy might opt for more modest changes to rent control that can win broad political support. Board of Supervisors President Aaron Peskin had originally proposed that the city expand rent control to cover housing built before 2024, but walked that back to 1994, an idea that won backing from both the city government’s progressive and moderate wings.

Local rent control expansion “is also going to depend on not just tenant and housing organizations but other civil society organizations in those communities,” said Shanti Singh, legislative director for Tenants Together. “Are they going to be ready to or willing to push for it?”

Manuel Pastor, director of the University of Southern California’s Equity Research Institute, said his research shows that rent stabilization without vacancy control helps prevent displacement by keeping rents more affordable, while avoiding slowing new construction since there are still incentives to build.

If cities start capping rent increases when new tenants move in, he said, the effects become more difficult to predict. That’s in part because the last time California cities experimented with vacancy control was more than 30 years ago — back when more multifamily housing was being built and before the tech boom put unprecedented pressure on Northern California’s housing market.

One thing that is likely, he said: California would see geographic variation, with more progressive coastal cities putting in stricter rent caps while inland cities with moderate politics seek to lure development with looser rules.

“If the proponents of Prop. 33 think this will solve our housing crisis, they’re mistaken,” he said. “If the opponents of Prop. 33 think that this will result in housing armageddon, they’re mistaken as well.”

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This story was originally published by CalMatters and distributed through a partnership with The Associated Press.