Bill to End Statewide Limits on Rent Control Fails in Committee

Last Thursday, the California State Assembly Housing and Community Development Committee narrowly killed a controversial bill that would have repealed the Costa-Hawkins Rental Housing Act, which limits local jurisdictions’ ability to enact or strengthen rent control laws.

In order to pass out of the committee, the bill — A.B. 1506 — needed four votes, but received only three, with two of the committee’s five Democratic Assemblymembers abstaining after voicing opposition to repealing Costa-Hawkins.

Assemblymember Richard Bloom (D-Santa Monica), along with Assemblymembers Rob Bonta (D-Alameda) and David Chiu (D-San Francsico), introduced the bill last year as part of a comprehensive package of housing bills, 15 of which were ultimately signed into law by the governor.

Among those bills, the ones that received perhaps the most media attention were Senate Bills (S.B.) 2 and 3 — more than $4 billion funding for affordable housing construction, assuming voters approve next year — and S.B. 35, State Senator Scott Wiener’s controversial streamlining bill designed to lower barriers to new housing construction.

While Bloom acknowledged the strides made last year with the housing package, he noted that there is an urgent need to help tenants now who currently live on the edge of losing their homes due to high housing costs.

“We have to be frank with one another. New units in sufficient quantities will take years to build. In the meantime, the current dramatic shortage of units contributes to rapidly escalating rents in much of the state, affecting a vast range of Californians on a daily basis, from young to old across all ethnic groups and even including those holding good, middle-income jobs,” Bloom told the committee Thursday.

He argued that repealing Costa-Hawkins, which became law in 1995, would put decisions about rent control laws back into local hands, allowing jurisdictions the flexibility to consider passing rent control laws or altering existing rent control laws to address the immediacy of the housing crisis. In part, Costa-Hawkins prevents rent control from being applied to new construction or to single-family homes or to condos.

Chiu, who chairs the committee, cited the fact that more than a third of California renters pay more than half of their income to rents.

“It is going to take a multi-prong effort, a multi-year effort to address the affordability crisis,” Chiu said from the dais. “The fact of the matter is that our economy continues to soar. Our state is the sixth largest economy in the world. But, when you factor in housing costs, California has the highest poverty rate in the country. That is unacceptable.”

The opposition focused its arguments on the proposition that repealing Costa-Hawkins would actively undermine one of the more important long-term solutions for California’s housing affordability crisis by discouraging new construction.

Assemblymember Jim Wood (D-Healdsburg), who ultimately abstained from voting on the bill along with Assemblymember Ed Chau (D-Monterey Park), said that he believed the ultimate cause of the housing crisis was the failure to build enough affordable housing to keep pace with population growth. He criticized the loss of redevelopment money, which was a major source for affordable housing funding.

He called the bill a “take-it-or-leave-it” approach.

Bloom and other supporters noted that allowing local jurisdictions more flexibility to enact rent control laws and removing barriers to increasing housing supply are not mutually exclusive strategies.

Bloom’s hometown, Santa Monica, has one of the strictest rent control laws in the state. Before Costa-Hawkins, Santa Monica’s rent control law had no “vacancy decontrol” provision, meaning landowners were unable to raise rents on units that had been vacated. That’s in contrast to Los Angeles, which has a vacancy decontrol provision baked into its original rent stabilization ordinance.

In 1998, the year before the Costa-Hawkins Act went into effect, 60 percent of Santa Monica’s rental homes were affordable to low- and moderate-income households. In 2013, that percentage shrunk to 32 percent, according to data presented to city staff at a city council meeting in 2015.

This figure shows the impact of Costa-Hawkins on the percentage of housing units in Santa Monica affordable to people with low- to moderate-incomes. In 1998, the year before Costa-Hawkins went into effect, 60 percent of homes were affordable to low- and moderate-income households. In 2013, that percentage has shrunk to 32 percent.

Thursday’s hearing drew hundreds of public speakers on both sides of the issue. Public testimony went on for more than two hours and was roughly evenly split between supporters and opponents of the bill.

While the bill failed to pass out of committee in its current form, Bloom and Chiu both reiterated their commitment to finding a compromise that would allow for more immediate relief for those suffering as a result of the housing crisis.

“Regardless of the outcome today, I think there is no choice but for the conversation to continue,” Bloom said shortly before the committee voted. “Win, lose, or draw, I commit to do that going forward.”

Still, voters may have a chance to weigh in on the issue as a petition is currently circulating to put the question of whether to repeal Costa-Hawkins on the ballot.

5 thoughts on Bill to End Statewide Limits on Rent Control Fails in Committee

  1. Rent control simply doesn’t work at all. Anywhere. Never has. There are an obscenely large number of studies proving this.

    Essentially, rent control removes the incentives for private building owners to build or upgrade housing. So it reduces the housing supply. If there are any non-rent-controlled apartments, their rents go up. If there are none, people just have to live outside the city and commute.

    The capitalist solution is to eliminate the zoning restrictions and allow for the construction of lots and lots of apartments in tall apartment buildings or rowhouses. When this happens, rents go down. So this usually works.

    The socialist solution is public housing. This works. Though it’s important to have the same block contain both poor people and people who can afford private housing — so a “public housing percentage” in each building is good, or public housing rowhouses alternating with private rowhouses, or public housing which is so nice that middle-class people want to live in it too.

    Either the capitalist or the socialist solution works — or both of them together works, too. The stupid non-solution is rent control, which doesn’t work.

    So a real compromise would be “We’re abolishing all height limits, FAR restrictions, and property line setbacks from all local zoning codes, but we’re *also* funding $X billion dollars in public housing, which must be distributed all across the cities intermixed with market-rate housing”.

  2. Because Costa Hawkins exempts new construction from rent control, rent control in CA is largely an exercise in rationing housing, i.e. it is largely neutral with respect to the shortage itself. It tends to favor older established residents over younger residents and the newly arrived. Studies have shown that that tends to mean that the affluent are more likely to take advantage of it as opposed to minorities, immigrants or the working poor who change jobs, move more often, and be younger, but certainly there are some in constrained financial circumstances that are helped by the stabilization.

    However, removal of Costa Hawkins would be a catastrophe for the CA and the housing crisis, because it would absolutely suppress supply. Even the threat of its repeal has had a chilling effect, and therefor the bill’s sponsors are responsible for aggravating the CA crisis even with the bill ultimately failing. The SF non-profits leading up the charge for repeal are a Who’s Who of stanch NIMBY’s who are especially vehement again any construction of market rate housing.

    It should also be noted that ‘affordable housing’, as in: ” failure to build enough affordable housing to keep pace with population growth.” is word game played by actors who aren’t really serious about the crisis. The only new construction that qualifies as ‘affordable housing’ is heavily subsidized. CA’s housing crisis has nothing to do with quantity of subsidized housing constructed, which has always been tiny. It is instead related directly to the aggregate of new residential units built, the vast majority of which are necessarily market rate, and don’t qualify, and by definition can’t qualify as affordable new construction. People Bloom and Chiu have showed themselves to be totally seriousness about CA’s housing crisis and willing to pander to narrow constituencies against the common good of Californians, especially those who’ve been impoverished by CA’s housing debacle.

    StreetBlog’s Islas is also failing its readers by not challenging their word games and promoting absurd arguments like the fact that because rents have increased since Costa Hawkins passed that means that somehow it is responsible. That is a transparently dishonest argument. Housing costs have risen steadily since the late 70s. With an especially torrent appreciation in the 2010s. One could use exactly the same argument to blame the housing crisis on any piece of legislation passed between 1979 and today. Employing that argument is shamefully insulting to our intelligence.

  3. Presumably because they want a diversity of locations represented.

    More rent control deters supply. Vacancy control would near kill it. Rent control on post-1996 build would deter construction. Repealing Costa-Hawkins would make the housing situation much worse.

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Image from Outlook Archives via Susan Cloke

Santa Monica Lawmaker Introduces Bill to End Statewide Rent Control Limitations

Assemblymember Richard Bloom (D-Santa Monica) introduced a bill that would repeal the Costa-Hawkins Rental Housing Act, the 1995 state law that weakened the strictest rent control laws in the state. The law required cities to allow property owners to raise rents on units when they were vacated, a practice that had been prohibited by strict rent control laws in Santa Monica, West Hollywood, Berkeley, Cotati, and East Palo Alto.
Bloom and his colleagues spoke Friday about action the State legislature will be taking to address California’s worsening housing crisis. Photo courtesy of Assemblymember Bloom’s office.

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