Your guide to Proposition 33: Effort to expand rent control

Proposition 33 would give local jurisdictions in California vastly more power to regulate rents, allowing them to put price caps on homes and situations where they currently cannot.

At the moment, state law limits rent increases for tenants in apartments and corporate-owned single-family homes that are older than 15 years. The cap is set at 5% plus inflation, with a maximum increase of 10%.

Local jurisdictions can impose stricter caps, but with limits.

State law generally prohibits local governments from putting rent control on single-family homes, as well as apartments built after Feb. 1, 1995. In some cases, like the city of Los Angeles, that cut-off date is even earlier.

The law allows property owners to charge whatever they want when a unit becomes vacant. Once a new tenant moves in, the limitations take effect.

If Proposition 33 passes, it would repeal the state law known as Costa-Hawkins that bans localities from capping rent on vacant units, single-family homes and apartments built after Feb. 1, 1995, or earlier.

Local governments wouldn’t be required to regulate rents on such properties, but they could if they wanted to.

The measure is sponsored by the AIDS Healthcare Foundation, a Los Angeles nonprofit that has been active in housing and planning issues in recent years.

The group was behind two similar statewide rent control initiatives that failed in 2020 and 2018.

Other supporters include labor and tenant organizations such as Unite Here Local 11 and the Coalition for Economic Survival. The California Democratic Party and the ACLU of Southern California have also endorsed the measure.

Many in the real estate industry.

The California Apartment Assn. is organizing a campaign against the measure. The group says it has 13,000 members, and its board members include executives from major apartment owners including Equity Residential and the Irvine Co.

It’s no secret: Rent in California is sky-high. In 2022, more than 50% of tenant households in the state paid more than 30% of their income on rent and utilities, a level many experts say is a burden on finances.

More than a quarter of tenants shelled out over half their income on housing, according to the Joint Center for Housing Studies at Harvard University.

Supporters say Proposition 33 will give local governments tools to ease the affordability crisis for their residents. Opponents counter it will cause developers to build less, thus worsening California’s housing affordability.

What exactly would happen is unclear. In Los Angeles, some private developers willingly build new apartment buildings that are subject to rent control, but those rent caps are less strict than what could be imposed if Proposition 33 passes.

A 2019 study from Stanford researchers also found rent control in San Francisco kept people in their homes who otherwise would have been displaced. But rent caps also encouraged some landlords to turn units into condos or demolish their properties, which reduced supply and likely pushed up rents city-wide, according to the researchers.

Rent control supporters argue that the supply problem could be fixed by banning property owners from removing rentals from the market.

The AIDS Healthcare Foundation has contributed nearly $47 million in support. Los Angeles City Councilmember Kevin de León has formed a committee in support of this measure as well as Propositions 3 and 32. His $800,000 contribution is included in all three.

The opposition is backed by real estate investors, Realtors and property managers including investor Michael K. Hayde over $2.8 million. The California Apartment Assn. has contributed more than $88 million in opposition, and the California Assn. of Realtors has contributed $22 million.

Both sides have accused each other of misleading advertising.

One of the commercials at question is from the No on 33 campaign. In it, the speaker — identified as a renter and single mom — says that “33 repeals a hundred affordable housing laws, including the nation’s strongest rent control law” — a reference to the state rent cap law.

However, Prop. 33’s language does not repeal the state’s rent cap law or any affordable housing laws.

Instead, the measure only removes prohibitions that currently bar municipalities from expanding rent control to single-family houses, newer properties and vacant units and replaces those prohibitions with language that says, “the state may not limit the right of any city, county, or city and county to maintain, enact, or expand residential rent control.”

In a statement, the No on 33 campaign said “repeals” is an appropriate term. It argued that language that bars the state from limiting local rent control ordinances would allow local jurisdictions to override the state rent cap law and pass laws that provide less protection than the state cap currently gives, for example limiting rent increases to no more than 30% annually, instead of 10%.

Susie Shannon, a spokesperson for the Yes on 33 campaign, called that argument false and said the measure only allows local jurisdictions to establish rent control laws that are tougher — not weaker — than state rules and the campaign wrote its language explicitly to ensure that was the case.

In recent years, the state has also enacted numerous laws that encourage the development of market rate and income-restricted affordable housing, in part by limiting the ability of communities to block it.

Prop. 33 opponents said local jurisdictions that don’t like development would gain a new tool if the measure passes: They could enact rent control laws so restrictive that it doesn’t make economic sense to build new housing, including income-restricted units — thus effectively repealing state affordable housing laws.

“Whatever type of housing they don’t like they could create a law to stop it and call it rent control,” Nathan Click, a spokesperson for the No on 33 campaign, said.

Shannon said the fear that local municipalities would use Prop. 33 to stop development is unfounded, because they couldn’t pass any restriction they want since the state constitution guarantees landlords have the ability to earn a reasonable return. In the decades before Costa-Hawkins became law in the mid-1990s, when cities had the ability to put caps on vacant units and new construction, California also saw an apartment development boom.

Shannon accused the No on 33 campaign, funded by large real estate firms, of making up scenarios “designed to scare people.”

“Corporate landlords shouldn’t be saying what is in the best interest of renters when they have been the cause of our affordable housing crisis by raising rents to a level where people can no longer afford it,” Shannon said.

Another ad, this one from the Yes on 33 camp, uses video of Democratic presidential nominee Kamala Harris saying she will “take on corporate landlords and cap unfair rent increases.”

The ad says that “AHF and Kamala Harris are fighting back” and, with a photo of Harris as the background, it urges Californians to vote in favor of the rent control measure.

Harris, however, has not endorsed the measure.

According to Politico, the Yes on 33 campaign removed an original version of the ad after the publication inquired about it and then added the following disclaimer: “Use of Kamala Harris’ likeness and words does not imply endorsement.”

A spokesperson for the Harris campaign declined to say whether the vice president supports or opposes the measure, but said the campaign “did not authorize use of footage for this advertisement.”