California Proposition 21 is the latest effort to combat the affordable housing crisis in the state, as it would allow local governments to continue to institute rent control on local apartment complexes.
If passed, the ballot measure would let local government continue to manage rent control on housing units over 15 years old, while excluding single-family homes owned by people with two or less properties.
It is a scaled back version of Proposition 10, which was voted down in 2018 by 59% of voters, which would have allowed counties and cities to adopt rent control ordinances.
Currently, rent control in California falls under the Costa-Hawkins Rental Housing Act of 1995, which was signed into law by Republican Gov. Pete Wilson in 1995. Costa-Hawkins Rental Housing Act of 1995 allows local governments to use rent control only on housing units that were first lived in before February 1995. Landlords have the ability to raise rent by a maximum of 5% plus the rate of inflation or 10%, whichever is lower.
Single-family homes do not qualify for rent control. In Los Angeles, only properties built before October 1978 can be rent controlled, with annual rent increases capped at 3%.
Endorsements have not fallen down party lines cleanly. Democratic Gov. Gavin Newsom and the Republican Party of California both oppose the measure, while the Democratic Party of California and the Southern California American Civil Liberties Union endorse it.
Supporters of the measure say rent control is necessary to help solve the issue of housing affordability, but its detractors cite the economic uncertainty the proposition could bring.
Radha Bhattacharya, an economics professor at Cal State Fullerton, said that when it comes to the housing situation, intentions are not all that matter.
“Economists in general are skeptical of rent control because it can lead to unintended consequences,” Bhattacharya said in an email to the Daily Titan. “When prices are set below the equilibrium price, economic theory dictates that there will be a shortage or an excess demand of that good.”
There are 28 cities in California that have their own rent control laws, none of which are in Orange County, but in places like San Francisco, Bhattacharya said that desperate residents might be paying higher rent than is legally allowed.
According to an analysis by the state’s nonpartisan Legislative Analyst’s Office, if Proposition 21 passes, the state could see an overall decline in rental property value, leading to less property taxes paid by landlords and higher sales taxes paid by renters with more spending money.
In October 2019 Newsom signed into law a bill passed by the California State Legislature that set a cap on annual rent hikes at a maximum of 5%.
According to the U.S. Census Bureau, the median gross rent in Fullerton between 2014 and 2018 was over $1,500 per month, compared to the over $1,700 per month cost throughout the county.