What’s Next for Rent Control?
By Sophie Kasakove
Last night, more than 100 protesters occupied the downtown Santa Monica offices of The Blackstone Group, a real estate and private equity giant that spent millions of dollars to defeat a ballot measure on Tuesday to expand the ability of localities across California to enact rent control. Standing under a banner reading “Governor Newsom Don’t Let Blackstone Hijack Our Communities,” one tenant said she had to fight an unjust eviction by her landlord Invitation Homes, a subsidiary of Blackstone. “Prop 10 didn’t fail because the problem isn’t real or because voters don’t support rent control,” she said. Rather it failed because of harsh attacks by Blackstone and other landlord groups against renters, including threatening them with eviction.
On a mixed Election Night for progressives, the fight for rent control in California hit a roadblock when Proposition 10 lost by more than 20 percentage points. Prop 10 would have repealed the Costa-Hawkins Rental Housing Act, a state law prohibiting cities from enacting rent control on buildings constructed after 1995 (or earlier in some cities).
To those who have been watching the fight for Prop 10, the defeat came as little surprise. “The corporate landlord industry ran a campaign of lies and deception and put $80 million behind it,” said Amy Schur of the Alliance of Californians for Community Empowerment (ACCE), one of the organizations that led the “Yes” campaign on Prop 10. “A majority of voters in California support rent control but the opposition managed to sow tremendous confusion.”
As I reported in a previous piece for The New Republic, the opposition campaign was bankrolled directly by the biggest real estate groups in the country. By the end, these groups and their supporters doled out over $76 million, outspending the “Yes” campaign three to one. The landlord lobby’s massive ad campaign was accompanied, in the final weeks, by direct voter manipulation: Renters across the state received notification of rent hikes or eviction from landlords who explicitly cited Prop 10 as the reason, with some promising to drop the threats if the measure failed.
Big spending has long governed the ballot measure process in California. In 2005, a proposition to provide drug discounts to low-income Californians was defeated after pharmaceutical companies spent more than $118 million on opposition. The next year, a proposition to reduce petroleum consumption was defeated after energy producers funneled over $94 million into campaign efforts. Big money appears particularly dexterous at confusing voters facing ballot measures because those measures can be confusing to begin with—often designed to set the stage for future policymaking rather than to enact clear or immediate change.
The effect of the Prop 10 money was glaring: While only 38 percent of voters cast their votes in favor of Prop 10, a 2017 poll by the Institute of Governmental Studies at the University of California, Berkeley, found that 60 percent of likely voters in the state support rent control. “I can’t tell you how many times I heard people say, ‘You vote no on 10 if you like rent control right?’” said Shanti Singh of the California renters’ rights organization Tenants Together. Tony Samara of Urban Habitat, a grassroots advocacy organization for low-income communities of color in the Bay Area, said that, due to the real estate lobby’s deception, there isn’t “any way you can say that Prop 10 was a referendum on rent control.”
The election wasn’t a total loss for affordable housing in California: Proposition 1, which will dedicate $4 billion in state bonds towards existing affordable housing programs, including the construction of new units for low-income residents, veterans, and farmworkers, secured a definitive win. Proposition 2 also passed, funneling $2 billion in state revenue into homelessness prevention housing. While the fight over Prop 10 was intense, these two passed with little effort: Just over $4 million was spent to support them in the face of negligible opposition. According to Peter Cohen, co-director of San Francisco’s Council of Community Housing Organizations, campaigning for Props 1 and 2 in San Francisco“was like handing out candy. They are such low-hanging fruit you don’t even really need to talk about them.”
Indeed, Props 1 and 2 drew support from across the political spectrum. While landlord groups were busy pummeling Prop 10 with one hand, they supported the bond measures with the other. According to campaign filings, Essex Property Trust, one of the biggest funders of No On Prop 10, gave $150,000 to the two propositions. Another rent control assailant, Equity Residential, gave $75,000. Measures to support affordable housing bonds also passed overwhelmingly in Austin, Portland, and Charlotte, all with support from real estate groups, which benefit from the influx of new property: These bonds dip into state funds rather than relying on new taxes or regulations.
Affordable housing advocates agree that the bond measures are a necessary and positive step, but say that they’ll only go so far, since they largely serve to increase housing supply without protecting existing residents or long-term affordability. “Everybody’s so into this whole supply, supply, supply argument,” said Cohen. “We need it all, from more money for brick and mortar to protections for tenants.” And construction is too slow to make up for decades of insufficient building. Out of the 1,388 units planned for construction with $310 million from a housing bond passed by the City of San Francisco in 2015, only 33 units have been constructed so far, and many of the units are only 10-15 percent to completion.
In other words, if real estate groups continue to dictate solutions to an affordable housing crisis in cities across the country, there is little hope of solving it anytime soon. Tenant protections like Prop 10 “drive right at the heart of the failure of the for-profit market,” said Samara of Urban Habitat. “[Prop 10] is a direct intervention into that failure.”
Housing advocates say the very terms of the debate have to change, away from the industry’s emphasis on keeping the housing market free from onerous regulation. “There’s an idea that there’s this ‘unregulated housing market,’” explained Shamus Roller of the National Housing Law Project. “But this isn’t the housing market that Adam Smith imagined. We have zoning codes and building codes—it’s one of the most regulated in the country, and right now most of those regulations benefit people who already own homes and have wealth.”
Changing the conversation in this way is a big lift, and all the more so because it falls entirely on the shoulders of those at the state and local levels. Tenant protections have long been sidelined at the national level, even by the strongest affordable housing advocates. For example, Senator Elizabeth Warren’s housing plan, the most progressive housing plan proposed in the Senate in decades, makes no mention of rent control, instead focusing on subsidizing new affordable units.
Despite this, California voters know the market isn’t working for them: More than 54 percent of renters in the state spend more than 30 percent of their income on housing. A USC Dornsife/Los Angeles Times survey before the election found that just 13 percent of eligible California voters believe that too little home building is a primary contributor to the state’s affordability issues. Lack of rent control was at the top of the list, with 28 percent.
And that number would likely be higher in a follow-up survey, particularly now that a spotlight has been put on the manipulative role played by real estate groups in the referendum. In October, two weeks before the election, The Guardian reported that Blackstone was using money from real estate investments funded by California public employees and the state university system to pay for its Prop 10 opposition campaign. “This campaign has helped expose the growing role of Wall Street in our housing in California and the role of groups like Blackstone that had been under the radar,” said Schur of ACCE. “The housing justice movement has grown by leaps and bounds through this campaign.”
And even as the flaws of the ballot measure process were exposed, its history also offers a source of hope: Many significant measures passed through the ballot were defeated on their first try. An initiative to soften and repeal some parts of the state’s infamous three strikes law narrowly lost in 2004 but passed in 2012. Marijuana legalization was defeated in 2010 but passed in 2016. The first time it appeared on the ballot, according to Mark Baldassare, CEO of the Public Policy Institute of California, people were hearing “mixed messages” on marijuana legalization. “But the next time around, there were less questions about it, more trusted sources of support, and public opinion had shifted because of what was going on in other states,” he said. Marijuana legalization ultimately passed by nearly 15 percentage points.
As the housing crisis intensifies, and as the call for rent control spreads, a 2020 ballot might turn up different results. But rent control advocates aren’t waiting for 2020. They’re launching local fights in cities across the state. “Until three years ago, it was unheard of to put rent control on local ballots,” said Singh. In Oakland on Tuesday, voters approved a measure to close eviction loopholes, and in Alameda, voters defeated a real-estate industry measure to preempt local rent control efforts. Sacramento has already confirmed a spot on the 2020 ballot for a rent control measure. Singh says that these local measures are crucial for the success of the statewide movement: “When you pass local measures, you build crucial infrastructure, like tenants’ unions who know their rights.”
Perhaps equally important, passing local measures builds knowledge among tenants of the rights they don’t have. Under Costa-Hawkins, any rent-controlled units will be subject to “vacancy decontrol,” which permits landlords to raise rents on an apartment after the previous tenants leave. “When you pass more local rent control ordinances, more people are going to run into the brutal reality of Costa-Hawkins,” explained Singh.
Local rent control efforts are also mounting pressure on state officials, like Governor-elect Gavin Newsom, to push rent control through by more expedient means than a ballot initiative. When tenant advocates urged the state assembly to consider repealing Costa Hawkins this past January, it failed to get the votes necessary to move out of committee. But today, Schur said, there are dozens of elected officials who have come out in support of it.
And, in the weeks leading up to the election, Newsom pledged, despite his opposition to Prop 10, to “take responsibility to address the issue.” The meaning of this pledge remains ambiguous, and a bill passed through the Assembly might be weaker than Prop 10, but the pressure to take action is undeniable. “We forced decision-makers to take sides,” said Schur. “Are you standing with the 17 million renters of California or are you standing with big landlords?”