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Costa-Hawkins Rental Housing Act reform: Difference between revisions
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[[File:AB1506-hearing-room.jpg|thumb|right|500px|California Assembly hearing for AB 1506 Costa Hawkins repeal]] In 2017 two efforts launched to repeal the [https://en.wikipedia.org/wiki/Costa-Hawkins_Rental_Housing_Act Costa-Hawkins Rental Housing Act] ("Costa-Hawkins"), a California state law enacted in 1995 which places limits on municipal [
*[http://www.yimby.wiki/wiki/Costa-Hawkins_Rental_Housing_Act_reform#AB_1506_bill_to_repeal_Costa_Hawkins '''AB 1506'''], a California State Assembly bill, and
*'''[http://www.yimby.wiki/wiki/Costa-Hawkins_Rental_Housing_Act_reform#2018_ballot_initiative_to_repeal_Costa-Hawkins California Local Rent Control Initiative], '''a ballot initiative
In California, rent control laws are enacted by municipalities, and as of 2018 about 15 of the 482 have done so.
▼
See [[California housing legislation 2018]] for all housing bills.
== Costa Hawkins Act terms ==
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== Issues / Concerns ==
=== General arguments for and against rent control ===
see: Wikipedia, "[https://en.wikipedia.org/wiki/Rent_control_in_the_United_States Rent control in the United States]"<br/> <br/> "The rental-accommodation market suffers from [https://en.wikipedia.org/wiki/Asymmetrical_information information asymmetries] and high [https://en.wikipedia.org/wiki/Transaction_costs transaction costs]. Typically, a landlord has more information about a home than a prospective tenant can reasonably detect. Moreover, once the tenant has moved in, the costs of moving again are very high. Unscrupulous landlords could conceal defects and, if the tenant complains, threaten to raise the rent at the end of the [https://en.wikipedia.org/wiki/Lease lease]. With rent control, tenants can request that hidden defects, if they exist, be repaired to comply with [https://en.wikipedia.org/wiki/Building_code building code] requirements, without fearing retaliatory rent increases. Rent control could thus compensate somewhat for inefficiencies of the housing market."
[NAR 2018].▼
By limiting the extent to which landlords can raise rent on purportedly depreciated property, rent control restores balance to tax benefits otherwise received primarily by homeowners and landlords.<br/> <br/> Rent control may reduce instability and associated [https://en.wikipedia.org/wiki/Externality external costs]. <br/> <br/> "Rent stabilization (for a current tenant) may be considered a basic form of [https://en.wikipedia.org/wiki/Consumer_protection consumer protection]: once tenants move into a vacant unit at market rents they can afford and establish lives in these homes, they won't have to renegotiate. Without rent regulation, landlords can demand any amount and tenants must either pay or move. Thus, tenants can become vulnerable to arbitrary and extortionate increases above market value."<br/> <br/> The [https://en.wikipedia.org/wiki/Socialist_International Socialist International] argues that housing is a [https://en.wikipedia.org/wiki/Positive_right positive human right]<sup id="cite_ref-34">[https://en.wikipedia.org/wiki/Rent_control_in_the_United_States#cite_note-34 [34]]</sup> that equals or exceeds the [https://en.wikipedia.org/wiki/Property_rights property rights] of landlords.
=== <br/> Should these rent-control aspects be determined by the state or local governments? ===▼
===
[LAO 2016]:<br/> "The state’s shortage of housing also presents challenges for expanding rent control policies. Proposals to expand rent control often focus on two broad changes: (1) expanding the number of housing units covered—by applying controls to newer properties or enacting controls in locations that currently lack them—and (2) prohibiting landlords from resetting rents to market rates for new tenants. Neither of these changes would increase the supply of housing and, in fact, likely would discourage new construction."
▲also [NAR 2018].
=== <br/> ===
=== Rent control encourages conversation of rental units to owned units (e.g. apartment to condos) ===
Kenneth Stahl @kookie13 1[https://twitter.com/kookie13/status/951549329675771904 2:20 PM - 11 Jan 2018]<br/> what's the point of repealing C-H if landlords can just convert to condos?<br/> Don't we need to amend the Ellis Act to limit condo conversion before repealing C-H?
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=== Rent control doesn't necessarily serve lower-income households ===
"Requiring landlords to charge new tenants below–market rents would not eliminate this competition. Households would have to compete based on factors other than how much they are willing to pay. Landlords might decide between tenants based on their income, creditworthiness, or socioeconomic status, likely to the benefit of more affluent renters." <br/> - [LAO 2016].
=== <br/> 'Lock-in effect': rent control incents people to stay in a home longer than they otherwise would<br/> ===
"Households residing in affordable housing (built via subsidized construction or inclusionary housing) or rent–controlled housing typically pay rents well below market rates. Because of this, households may be discouraged from moving from their existing unit to market–rate housing even when it may otherwise benefit them—for example, if the market–rate housing would be closer to a new job. This lock–in effect can cause households to stay longer in a particular location than is otherwise optimal for them."<br/> - [LAO 2016].
=== Rent control can disincent maintainance, repairs, and renovation ===
"Declining Quality of Housing. By depressing rents, rent control policies reduce the income received by owners of rental housing. In response, property owners may attempt to cut back their operating costs by forgoing maintenance and repairs. Over time, this can result in a decline in the overall quality of a community’s housing stock."
=== <br/> Costa Hawkins repeal could provide NIMBYs a New Tool to block housing ===
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also [https://caanet.org/caa-assembly-select-committee-nimbys-drive-costs-housing/. https://caanet.org/caa-assembly-select-committee-nimbys-drive-costs-housing/. ]
▲
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<br/> alon_levy @alon_levy [https://twitter.com/alon_levy/status/951575113471754240 2:02 PM - 11 Jan 2018]<br/> Replying to @IDoTheThinking<br/> "Alternative: tie SB 827 with a statewide ban on rent control. All of today's RC units become market-rate at an integer # of tenancy years."
Belmont Renters @BelmontRenters [https://twitter.com/BelmontRenters/status/951603247927631872 3:54 PM - 11 Jan 2018]<br/> Replying to @MarcSteinorth<br/> "What about rent control on buildings that are 20 years old? Payback period for new construction is rarely longer than 10 years."
<br/> matthewplan @matthewplan [https://twitter.com/matthewplan/status/951743231095537664 1:10 AM - 12 Jan 2018]<br/> Replying to @weel @VamonosLA<br/> "The argument is let different cities make their own policies and not let Costa Hawkins tie hands. Though there likely should be some year limit - 25 years after construction - to ensure new construction isn’t impacted."
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== See Also ==
*[[Rent_regulation|Rent regulation]] (covers rent control and related terms/issues)<br/>
== References ==
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*Dillon, Liam. “[http://www.latimes.com/politics/la-pol-ca-rent-control-expansion-bill-dies-20180111-story.html Proposal to expand rent control in California fails to advance.]” LA Times, 11 January 2018. <br/> [http://www.latimes.com/politics/la-pol-ca-rent-control-expansion-bill-dies-20180111-story.html http://www.latimes.com/politics/la-pol-ca-rent-control-expansion-bill-dies-20180111-story.html].<br/>
*Dillon, Liam. “[http://www.latimes.com/politics/essential/la-pol-ca-essential-politics-updates-rent-control-in-california-could-expand-1508785237-htmlstory.html Rent control in California could expand dramatically under a possible 2018 initiative.]” LA Times, 23 Oct 2017. [http://www.latimes.com/politics/essential/la-pol-ca-essential-politics-updates-rent-control-in-california-could-expand-1508785237-htmlstory.html http://www.latimes.com/politics/essential/la-pol-ca-essential-politics-updates-rent-control-in-california-could-expand-1508785237-htmlstory.html].<br/>
*Early, D. W. (2000). "Rent Control, Rental Housing Supply, and the Distribution of Tenant Benefits." ''Journal of Urban Economics'', 48(2), 185–204.<br/>
*East Bay For Everyone. "[https://www.scribd.com/document/350029454/Ab-1506-Support#from_embed RE: AB 1506 - Residential Rent Control: Costa-Hawkins Rental Housing Act.]" (letter). 2017. [https://www.scribd.com/document/350029454/Ab-1506-Support#from_embed https://www.scribd.com/document/350029454/Ab-1506-Support#from_embed].<br/>
*Glaeser, E. L., & Luttmer, E. F. (2003). "The Misallocation of Housing Under Rent Control." ''The American Economic Review'', 93(4).<br/>
*Glaze, Christopher. “[https://www.nytimes.com/2017/04/26/magazine/the-ceo-of-hiv.html The C.E.O. of H.I.V.: Michael Weinstein’s AIDS Healthcare Foundation treats an enormous number of patients — and makes an enormous amount of money. Is that why so many activists distrust him?]" ''The New York Times'', 26 April 2017.<br/> [https://www.nytimes.com/2017/04/26/magazine/the-ceo-of-hiv.html https://www.nytimes.com/2017/04/26/magazine/the-ceo-of-hiv.html].<br/>
*Gyourko, J., & Linneman, P. (1990). "''Rent Controls and Rental Housing Quality: A Note on the Effects of New York City’s Old Controls''." Journal of Urban Economics, 27(3), 398–409.<br/>
*Hart, Angela. “[http://www.sacbee.com/news/politics-government/capitol-alert/article194245939.html California lawmakers kill rent control bill. The battle could be headed to the voters.]” Sacramento Bee, January 11, 2018 [http://www.sacbee.com/news/politics-government/capitol-alert/article194245939.html http://www.sacbee.com/news/politics-government/capitol-alert/article194245939.html].<br/>
*Heskin, Allan D., Ned Levine & Mark Garrett. “The Effects of Vacancy Control: A Spatial Analysis of Four California Cities.” ''Journal of the American Planning Association'', Volume 66, 2000 - Issue 2, Pages 162-176. DOI: 10.1080/01944360008976096. <br/> [https://doi.org/10.1080/01944360008976096 https://doi.org/10.1080/01944360008976096]<br/> ''“Abstract: <br/> This article examines changes between 1980 and 1990 in the number of rental units and the demographic composition of tenants in four California cities that adopted rent control with vacancy control provisions. Six border areas within the four cities were compared to border areas of adjoining cities that did not have vacancy control. A spatial lag regression model was constructed to estimate the changes in regional and neighborhood components in addition to vacancy control policies. Vacancy control contributed to lower rents and longer tenure by tenants compared to non-vacancy-controlled areas. There were also fewer rental units in part because of a shift from rental housing to owner-occupied housing.”''<br/>
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*Initiative on Global Markets (at University of Chicago Booth School) [IGM 2012]. “[http://www.igmchicago.org/surveys/rent-control Rent Control]” [poll of economic experts]. <br/> February 7th, 2012. [http://www.igmchicago.org/surveys/rent-control. http://www.igmchicago.org/surveys/rent-control. ]<br/> ''Poll statement: “Local ordinances that limit rent increases for some rental housing units, such as in New York and San Francisco, have had a positive impact over the past three decades on the amount and quality of broadly affordable rental housing in cities that have used them.” <br/> 40 respondents. <br/> 0 Strongly Agree<br/> 2% Agree<br/> 7% Uncertain<br/> 49% Disagree<br/> 32% Strongly Disagree<br/> 2% No Opinion''<br/>
*KQED Forum. “[https://ww2.kqed.org/forum/2018/01/09/a-bill-to-repeal-longstanding-rent-control-limits-gets-a-public-hearing/ A Bill to Repeal California Rent Control Limits Gets A Public Hearing.]” (radio show, archived with Dean Preston, Tenants Together, and Debra Carlton, California Apartment Association). KQED, Jan 10, 2018.<br/> [https://ww2.kqed.org/forum/2018/01/09/a-bill-to-repeal-longstanding-rent-control-limits-gets-a-public-hearing/ https://ww2.kqed.org/forum/2018/01/09/a-bill-to-repeal-longstanding-rent-control-limits-gets-a-public-hearing/].<br/>
*Legislative Analysts Office,
*Legislative Analysts Office, California (LAO 2016). “[http://www.lao.ca.gov/Publications/Report/3345 Perspectives on Helping Low-Income Californians Afford Housing].” February 9, 2016. [http://www.lao.ca.gov/Publications/Report/3345. http://www.lao.ca.gov/Publications/Report/3345. ]<br/>
*Levin, Matt, and Liam Dillon. “[https://soundcloud.com/matt-levin-4/is-rent-control-good-or-bad-with-aids-healthcare-president-michael-weinstein Is Rent Control Good or Bad, with AIDS Healthcare Foundation President Michael Weinstein.]” Gimme Shelter: The California Housing Crisis Podcast, Nov 22, 2017.<br/> [https://soundcloud.com/matt-levin-4/is-rent-control-good-or-bad-with-aids-healthcare-president-michael-weinstein https://soundcloud.com/matt-levin-4/is-rent-control-good-or-bad-with-aids-healthcare-president-michael-weinstein].<br/>
*McFadden, Chuck. “[http://capitolweekly.net/rent-control-2018-ballot/ Rent control may roil 2018 ballot.]” ''Capitol Weekly.'' [http://capitolweekly.net/rent-control-2018-ballot/. http://capitolweekly.net/rent-control-2018-ballot/. ]<br/>
*McFarlane, Alastair. “Rent stabilization and the long-run supply of housing.” Regional Science and Urban Economics, Volume 33, Issue 3, May 2003, Pages 305-333. DOI: 10.1016/S0166-0462(02)00031-5<br/> [https://doi.org/10.1016/S0166-0462(02)00031-5 https://doi.org/10.1016/S0166-0462(02)00031-5].<br/> ''"Abstract: <br/> This paper examines the impact of moderate rent controls on the construction and replacement of urban housing. It studies a common form of rent regulation that limits rent growth to below-market increases but permits landlords to set the base rent at free market levels and allows them to re-set rents when the incumbent tenant vacates, after which rents are re-controlled (‘vacancy decontrol–recontrol’). '''One of the primary insights is that neither the timing nor the density of construction is affected by rent stabilization when base rents are perfectly flexible. Allowing landlords to set the initial contract rent lets them capture the benefits to the renter of rent stabilization. Perfect capitalization of rent stabilization into a higher base rent provides the landlord with a free market rate of return and thus does not distort development activity.''' However, redevelopment of land will be hastened because rent stabilization complemented by vacancy decontrol–recontrol increases the difference between rents before and after redevelopment, increasing the opportunity costs of postponing redevelopment. Extensions include an analysis of other common rent regulations and the impact of rent stabilization on the urban rent gradient."''<br/>
*Munch, J. R., & Svarer, M. (2002). "Rent control and tenancy duration." ''Journal of Urban Economics'', 52(3), 542–560.<br/>
*Murphy, Katy. “[https://www.mercurynews.com/2018/01/11/california-considers-repealing-rent-control-restrictions/ Committee kills proposal to lift rent control restrictions in California.]” Mercury News, 11 Jan 2018.<br/> [https://www.mercurynews.com/2018/01/11/california-considers-repealing-rent-control-restrictions/ https://www.mercurynews.com/2018/01/11/california-considers-repealing-rent-control-restrictions/].<br/>
*Murphy, Katy. “[https://www.mercurynews.com/2018/01/11/california-considers-repealing-rent-control-restrictions/ California considers repealing rent control restrictions.]” Mercury News. 11 January 2018. [https://www.mercurynews.com/2018/01/11/california-considers-repealing-rent-control-restrictions/. https://www.mercurynews.com/2018/01/11/california-considers-repealing-rent-control-restrictions/. ]<br/>
*Murphy, Katy. “[https://www.mercurynews.com/2017/11/02/rent-control-policy-likely-fueled-the-gentrification-of-san-francisco-study-finds/ Rent-control policy `likely fueled the gentrification of San Francisco,’ study finds.]” The Mercury News, 2 November 2017. [https://www.mercurynews.com/2017/11/02/rent-control-policy-likely-fueled-the-gentrification-of-san-francisco-study-finds/ https://www.mercurynews.com/2017/11/02/rent-control-policy-likely-fueled-the-gentrification-of-san-francisco-study-finds/].<br/> ''(referring to [Diamond et al 2017]). ''<br/>
*Reyes, Emily Alpert, and David Zahniser. “[http://www.latimes.com/local/lanow/la-me-ln-aids-foundation-political-spending-20170221-story.html http://www.latimes.com/local/lanow/la-me-ln-aids-foundation-political-spending-20170221-story.html][[So_why_is_an_AIDS_nonprofit_suing_to_halt_construction_and_pushing_for_Measure_S?|So why is an AIDS nonprofit suing to halt construction and pushing for Measure S?]]” ''LA Times,'' 24 February 2017. [http://www.latimes.com/local/lanow/la-me-ln-aids-foundation-political-spending-20170221-story.html http://www.latimes.com/local/lanow/la-me-ln-aids-foundation-political-spending-20170221-story.html].<br/>
*Shaw, Randy. "Will Voters Repeal Costa-Hawkins in 2018?" ''Beyond Chron. ''October 26, 2017. <br/> [http://www.beyondchron.org/will-voters-repeal-costa-hawkins-2018/ [1]].<br/> ''Argues that Costa Hawkins repeal by ballot initiative in 2018 will be quite difficult, because of controversy around the initiative's key backer, and competing for attention/support with housing bond issue to be on the same ballot. ''<br/>
*Sims, D. P. (2007). "Out of control: What can we learn from the end of Massachusetts rent control?" ''Journal of Urban Economics'', 61(1), 129–151.<br/>
*Socialist International. "Declaration of Principles." 1989. [http://www.socialistinternational.org/viewArticle.cfm?ArticleID=31. http://www.socialistinternational.org/viewArticle.cfm?ArticleID=31. ]<br/> ''Principle 57: "Human rights include economic and social rights; the right to form trade unions and to strike; the right to social security and welfare for all, including the protection of mothers and children; the right to education, training and leisure; the right to decent housing in a liveable environment."''<br/>
*Stern, Mark Joseph. “[http://www.slate.com/blogs/outward/2014/09/10/michael_weinstein_of_the_aids_healthcare_foundation_hates_truvada_don_t.html The Enfant Terrible of AIDS Activism Reaches a New Low.]” ''Slate'', 10 Sept 2014. [http://www.slate.com/blogs/outward/2014/09/10/michael_weinstein_of_the_aids_healthcare_foundation_hates_truvada_don_t.html. http://www.slate.com/blogs/outward/2014/09/10/michael_weinstein_of_the_aids_healthcare_foundation_hates_truvada_don_t.html. ]<br/> ''"opportunistic malfeasance for the sole purpose of 'gold-mining the press.'" says activist Peter Staley.''<br/>
*Weinstein, Michael, Elena Popp, and Christina Livington. “[https://oag.ca.gov/system/files/initiatives/pdfs/17-0041%20(Affordable%20Housing)_0.pdf Affordable Housing Act]” (filing letter). 20 October 2017<br/> [https://oag.ca.gov/system/files/initiatives/pdfs/17-0041%20(Affordable%20Housing)_0.pdf. https://oag.ca.gov/system/files/initiatives/pdfs/17-0041%20%28Affordable%20Housing%29_0.pdf. ]<br/>
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