Two recent reports out of Berkeley further muddy the water for voters considering whether to vote for Proposition 10, the grassroots initiative that would repeal a state law limiting rent control. If Prop 10 passes, cities like Santa Monica could potentially expand rent control to newer buildings or once again cap rents for new tenants.
A new report from the Haas Institute at UC Berkeley said “rebalancing the dysfunctional housing market to restore fairness between renters and property owners” is in the public’s best interest. The report “Opening the door for rent control: toward a comprehensive approach to protecting California’s renters” estimated 54 percent of renters are overburdened by housing costs, and that 73 percent of all jobs in California pay too little to cover rent.
The report’s authors say the dual crisis of housing and homelessness are intertwined, as the state’s most vulnerable tenants routinely choose between making rent and making ends meet.
“When the housing market is as dysfunctional as it is in many parts of California, tenants are effectively subsidizing landlords with rent payments above what a fully competitive market would allow landlords to charge,” said the report’s co-author, Stephen Barton, a former housing director for the City of Berkeley.
Supporters of Prop 10 quickly emailed the report to their contacts, insisting the initiative would allow cities to create “thoughtful laws to address their local housing situations.”
Local officials recently declined to discuss potential changes to Santa Monica’s rent control rules should voters overturn Costa-Hawkins, the state law that prohibits rent control regulations on newer construction and ensures landlords can charge new tenants market rates. Before the state legislature passed Costa-Hawkins in 1994, the rate for apartments here was tied to a base rent ceiling established in 1978.
“We are not going to let anything rollback to 1978 for starters. The line has been drawn in the sand,” said Commissioner Todd Flora during the RCB’s Sept. 13 meeting. All five members of the Rent Control Board and four members of the City Council including Mayor Ted Winterer, Kevin McKeown, Sue Himmelrich and Tony Vazquez have endorsed Proposition 10.
Earlier this month, the Berkeley-based Rosen Consulting Group released its own report on the potential passage of Prop 10, warning it could “exacerbate the problem by significantly reducing the supply of rental housing, even as demand continues to rise.”
The report specifically mentioned Santa Monica, where the average amount of new rental construction increased after the passage of Costa Hawkins, resulting in an additional 50 units a year on average. Santa Monica now permits the construction of about 230 new apartments a year, according to the report.
“Despite the drawbacks of the current rent control system in California, it is clear that a removal of statewide limitations could drastically slow new construction activity, further exacerbating the critical housing shortage the state already faces,” said author Kenneth Rosen in the report.
Rosen cited statistics from the Rent Control Board’s annual report that more than 3,000 apartments have been withdrawn from the rental market since 1986, as property owners seek more lucrative uses for their property. During the same time, only 1,094 of the units were replaced by new construction.