In November, the California Local Rent Control Initiative will allow voters to decide whether to repeal the Costa-Hawkins Rental Housing Act, which limits local governments’ ability to pass rent control laws.
If the initiative passes, local jurisdictions will have the ability to set their own rent control laws, but a blanket statewide rent control law would not be implemented, according to Berkeley Rent Stabilization Board Commissioner Igor Tregub.
“The most significant change is that under the current Costa-Hawkins scheme, any time that a tenant moves out, a property owner can set the next rate for that unit to market for the next tenant,” Tregub said. “This is what historically has led to a much greater appreciation in rents than what we saw prior to Costa-Hawkins being in Berkeley.”
The initiative’s main supporters are the Coalition for Affordable Housing, the AIDS Healthcare Foundation and the Alliance of Californians for Community Empowerment Action. It is opposed by the Californians for Responsible Housing, and the California Apartment Association is sponsoring the campaign.
Students are most affected by Costa-Hawkins because they move in and out of units often, according to City Councilmember Kriss Worthington. Under current law, tenants who have lived at units prior to Costa-Hawkins are not subject to rent increases.
“Every time a student moves out and a new group of students move in, the rent gets increased,” Worthington said. “So students are actually paying higher rents because of Costa-Hawkins than any other social group in the state of California.”
Opponents of the initiative say that repealing Costa-Hawkins will disincentivize new construction from being built. The Berkeley rent board, however, passed a recommendation exempting new construction from rent control for 12 to 15 years, according to Tregub.
A press release from the Californians for Responsible Housing called the initiative an attempt to push an “anti-housing agenda.” It added that the initiative may reduce funding for schools and infrastructure.
“This measure will not only deepen California’s housing crisis, but lower property values of rental properties and single-family homes,” the press release stated.
Worthington said he believed Costa-Hawkins has not been repealed before because of the influence the landlords’ lobbying has on Californian voters. Californians for Responsible Housing has raised about $6.76 million in its campaign against the initiative, while the initiative’s proponents have raised approximately $2.33 million.
Costa-Hawkins has been in effect since 1995. AB 1506 attempted to defeat the act in 2017 but failed by one vote, according to Tregub, prompting a response in which Californians met the minimum requirement of 365,880 signatures to put the California Rent Control Initiative on the ballot.
“It’s going to be a tough battle for sure — I expect lots of money to be spent against the Costa-Hawkins repeal by very well-financed interests,” Tregub said. “This is going to be a test to see how well the power of the people holds up and stands up to big money.”
Contact Alyssa Bernardino and Anisa Kundu at [email protected].