This article originally appeared on BUILDER's sister site, Multifamily Executive.
In the midst of a housing crisis in California leaving many people homeless or facing eviction, the rent control issue can easily be misunderstood. Many voters will confuse Proposition 10 as a mechanism to help them find and retain more affordable housing. However, that’s just not the case.
Proposition 10 will be on the ballot for voters on November 6, titled “Expands Local Governments’ Authority To Enact Rent Control On Residential Property. Initiative Statute.” It is further explained by the California Secretary of State as:
Repeals state law that currently restricts the scope of rent-control policies that cities and other local jurisdictions may impose on residential property. Fiscal Impact: Potential net reduction in state and local revenues of tens of millions of dollars per year in the long term. Depending on actions by local communities, revenue losses could be less or considerably more.
Many groups, like the National Multifamily Housing Council, have initiatives against the Proposition based on the harmful consequences that it could bring to housing.
A recent report from the UC Berkeley Fisher Center for Real Estate and Urban Economics and Rosen Consulting Group states that Proposition 10 will “significantly reduce property values and could take millions in tax revenue away from school districts and local communities.”
The report is part of an extensive review of the economic impact of rent control, and evaluates the potential, unintended negative consequences. The report outlines those impacts as: a drop in apartment property values; lower quality maintenance on existing properties leading to lower housing quality; less revenue supporting local business; and less state and local tax revenue.
Marcus & Millichap also put together this piece that outlines the following negative implications of Proposition 10:
- Open up all multifamily nits in California to rent control
- Make the housing shortage crisis worse.
- Benefit a very select number of tenants.
- Result in deteriorating quality of rental units for working class families.
- Apply rent control to single family homes and individually owned condominiums and townhomes.
- Force landlords to keep regulated rents in place even after a tenant moves out.
Advocates for Proposition 10 believe that the initiative will help local communities have a stronger voice in determining rent control protections.
Last week, the Sacramento Bee reported that due to massive spending and support against the initiative, more than 60% of California voters will vote against Proposition 10, leaving 25% voting for it, and 15% still undecided.
Here, Jim Lapides, vice president of strategic communications at NMHC, discusses NMHC’s history with rent control and the widespread implications of Proposition 10.
NMHC hosts a rent control resource center at www.nmhc.org/rentcontrol, where you can find many information sources on rent control, and you can sign up to stay informed with email updates.
Lapides also urges leaders in housing to use the resources available at https://noprop10.org/ to vote against Proposition 10.