The long campaign to bring rent control to California has been a brutal war of attrition, with multiple unsuccessful ballot initiatives in the past two years, the successful passage of a bill, and an enormous amount of money spent on either side of the issue. In one corner are landlords who want the ability to raise rents and take full advantage of real estate ownership in the most expensive markets in the U.S. In the other corner is a coalition of renters and progressives bankrolled by a nonprofit primarily devoted to fighting AIDS.
California politics can be seen as a conflict between renters and property owners, who have both been impacted by the state’s housing shortage—one that has reached crisis proportions lately, but has been ongoing for a half-century. Years ago, this shortage led to homes growing in value and accumulating hefty property tax bills, and owners responded by passing Proposition 13, a ballot initiative that limited the amount of property taxes governments could collect. This reduction in taxes, Prop 13 advocates promised, would allow landlords to charge cheaper rents—but rent continued to rise.
Tenants organized around rent control laws and succeeded in passing them in several cities. But owners got the upper hand for good in 1994, when a law known as Costa-Hawkins passed the state legislature. Costa-Hawkins bars local governments from instituting rent control on all single-family homes and any housing built after 1995; it also ensures that rent-controlled units lose that status once they become vacant.
These laws had far-reaching economic effects, some of them likely unforeseen (Prop 13’s cap on property tax rates somewhat perversely disincentivized local officials from supporting new development, since they would no longer get much tax revenue from it). But the combination of Prop 13 and Costa-Hawkins has protected property owners from taxes and progressive politicians who might want to limit landlords’ ability to profit.
The owners’ winning streak continued in 2018, when Proposition 10, which would have repealed Costa-Hawkins, failed dramatically at the ballot box, losing by double digits. The effort was almost entirely bankrolled by the AIDS Healthcare Foundation, a giant Los Angeles-based 501(c)(3) that clears $1 billion in revenue a year, thanks to its chain of pharmacies and thrift stores. AHF originally provided housing and other assistance to victims of the AIDS crisis in the 80s, and in 2017, pivoted back to housing as a core cause, creating an advocacy division called Housing Is a Human Right. The AHF invested more than $20 million in Prop 10, which was also boosted by labor union PACs, but it was outspent by more than three to one by landlord-backed groups.
But the next year’s legislative session brought a big victory for the AHF and tenants’ rights organizations when lawmakers in Sacramento passed AB1482, which limits all rent increases in the state on buildings older than 15 years to 5% per year, plus the local rate of inflation. It also protects tenants from eviction without cause. The landmark law passed largely because of grassroots organizing among tenants, in part because pro-development YIMBY groups supported it, and in part because rent hikes had become so unaffordable that even middle-class people were concerned about housing security.
That may have encouraged AHF and other housing advocates to try once again to repeal Costa-Hawkins in 2020, this time with a ballot measure called Prop 21. Once again, it was supported by the entire progressive coalition, including Sen. Bernie Sanders, activist Dolores Huerta, and unions. Once again, AHF spent over $20 million on the effort, and once again, business and real estate interests combined to outspend even that war chest.
And once again, it lost, this time by nearly 20 points. It was the same story as before: Though Prop 21 supporters spent over $40 million to back it, its opponents spent over $73 million. There doesn’t seem to be much of a path forward; Prop 21 Campaign Director René Moya told the Los Angeles Times he was “disappointed, although not completely surprised.”
If ballot initiatives can’t move the ball forward, advocates may have to turn to the California state legislature. That strategy has its limitations—lawmakers haven’t been close to repealing Costa-Hawkins—but it’s clear that relying on voters to transform housing policy is practically a dead end.
