California Voters Poised to Weigh in on Major Changes to Rent Control Law

California voters will consider a November ballot initiative (Proposition 10) that would repeal the 1995 California Costa-Hawkins Rental Housing Act (“Costa-Hawkins”). Costa-Hawkins generally limits rent controls that may be imposed by local jurisdictions on housing units in buildings with a certificate of occupancy issued after February 1995, prohibits local jurisdictions from expanding rent control to include “vacancy control,” and exempts single-family homes and condominiums from rent controls, with limited exceptions.

In San Francisco and Los Angeles, Costa-Hawkins prohibits rent control for housing units in buildings with a certificate of occupancy issued after June 1979 and October 1978, respectively, because of the local rent control ordinances that were in effect in those cities when Costa-Hawkins was adopted. In other words, in San Francisco, rent control only applies to tenants in buildings built before June 1979, meaning that generally, owners of buildings built after that date can increase rental rates at any time (subject to required notice) to reflect market conditions.

Proposition 10 is not the only attempt to repeal Costa-Hawkins in the recent past. In 2017, Assembly Members Chiu, Bloom and Bonta introduced AB 1506 to repeal Costa-Hawkins, which was rejected by the Assembly Housing and Community Development Committee, in part because two Democrats abstained from voting.

If passed by California voters, the ballot initiative would allow—but not require—local jurisdictions to adopt rent control laws without any state-imposed limitations related to the type of housing or the date that a certificate of occupancy was issued for a building (see above). If Proposition 10 were to pass, the San Francisco Board of Supervisors could vote to impose rent control on units in buildings built after June 1979, including new construction. Earlier this month, the San Francisco Board of Supervisors voted on a resolution to support Proposition 10. That resolution failed, with “no” votes from Supervisors Cohen, Safaí, Stefani and Tang.

The Coalition for Affordable Housing is leading the campaign in support of the initiative and the California Apartment and Rental Housing Associations are leading the opposition, with major donations from the real estate investment and development communities. A myriad of elected officials, businesses, organizations, labor unions representing the construction trades, and some affordable housing developers and advocates are also in opposition. Opponents generally argue that Proposition 10 would worsen the existing housing crisis because it would discourage investment in housing. Supporters, including the California Democratic Party and the California ACLU, generally argue that Proposition 10 is necessary to protect residents from being displaced due to skyrocketing rent increases.