Rent control is again hotly contested on the ballot. Here’s what Prop 33 would do

If you’ve spent any time in the San Diego region recently, chances are you’ve been inundated with ads about one particular issue on the November ballot: Proposition 33.

The initiative would give local governments more power to regulate local rents. Opponents have raised $92 million for the “No on 33” campaign, nearly twice that of supporters, according to finance records as of this week. They want voters to believe that it would overturn more than 100 state housing laws, eliminate homeowner protections, weaken renter protections and worsen the housing crisis.

Supporters, on the other hand, argue the proposition is narrow in scope, overturning only one law to give the power to regulate rents back to local officials. They say that change is necessary to help rent-burdened families and prevent displacement.

Top officials in the region are split on this issue. San Diego Mayor Todd Gloria opposes the initiative, saying it’s unnecessary and would have a chilling effect on home construction. 

“In San Diego, our housing policies are beginning to yield results, increasing housing supply and we’re starting to see nominal decreases in rents,” Gloria said in a statement. “This measure would undermine our efforts, stall home building, and reverse the progress we’ve worked so hard to achieve.”

City Council President Sean Elo-Rivera disagrees, saying local officials should have the tools to address the growing housing affordability crisis.

“I also believe that renters should be better protected from displacement that stems from economic factors completely out of their control,” Elo-Rivera said. “At the same time, I would not support a local rent control policy that hinders the creation of new homes.”

Rent control is an emergency tool to prevent displacement and homelessness, Elo-Rivera added, and communities should be able to use it. But he thinks there are more effective ways to address this crisis in San Diego, such as more investments in social housing.

This will be the third attempt to pass a rent control measure statewide — attempts in 2018 and 2020 both lost by majority.

It’s unknown how local governments would react if Prop 33 passes. But here’s what it means.

State of play

Right now, state law already limits how much landlords can raise the rent in a 12-month period. The California Tenant Protection Act, passed in 2019, set a 10% maximum cap on rent increases, or 5% plus the percentage change in the cost of living, whichever is lower. 

Inflation, or the rate that the cost of goods and services rises, is about 1-2% in a typical year. During and after the COVID-19 pandemic, however, inflation hit highs of 5% and 8% locally. So at the times when you’re paying more at the pump or grocery store, landlords can also charge more. 

Local governments can adopt stricter rent control rules, but they can only go so far because they are bound by another state law — known as the Costa Hawkins Rental Housing Act. This law prohibits local officials from adopting rent control for single-family homes and any housing built since 1995. It also allows landlords to charge whatever they want when a new renter moves in.

In comes Prop 33.

What would it accomplish?

The initiative itself would not change any existing local rent control laws.

Instead, it would overturn Costa-Hawkins, allowing local governments to pass rent control for any kind of housing and set limits on how much landlords can increase the rent for new tenants. It would also prevent the state from taking steps to limit local rent control in the future.

So, even if it passes, local governments would still have to act. But it gives them the ability to decide what’s right for their own community.

The impacts of rent control would likely extend to renters, landlords and even local governments.

A 2019 study published in the American Economic Review looked at the impacts of rent control in San Francisco. While researchers found tenants in rent-controlled units were more likely to remain in their home, landlords reacted by redeveloping properties to avoid regulation. Housing stock went down and that likely increased rents in the long run.

The California Legislative Analyst’s Office, a nonpartisan branch of state government that offers advice on legislation, says other likely impacts include:

• Lower rents for rent-controlled units, but higher rents for units not covered.
• Tenants staying in their homes longer.
• Fewer available rental properties because landlords might sell to new owners who would live in them instead of renting them out.
• Declining values of rental properties, leading to declining property tax revenues.

What’s driving the debate?

In the words of San Diego’s mayor: “The rent’s too damn high.”

This comes at a time when half of all housing units in San Diego County are occupied by renters, according to Census data. And more than half of all tenant households in the region pay more than 30% of their income on rent and utilities — an amount that experts and officials call “rent burdened.” Some households are paying more than half of their income on rent.

“There are more people rent burdened in California than anywhere else in the country,” said Susie Shannon, campaign manager for Yes on 33. “And we desperately need to pass Proposition 33 to reverse that.”

Right now, renters in San Diego County don’t have much protection from violation of existing law. inewsource reporting has uncovered tenants at all income levels facing rent increases that exceed the cap set by the Tenant Protection Act. And in San Diego County, the only recourse for tenants who feel they have been wronged is to hire an attorney. 

Tenants living in rent-controlled cities, such as Santa Monica or Berkeley, have a far different — and more affordable — option to fight rent increases they believe are illegal. Rather than hiring an attorney and going to court over a rent increase, tenants can file a petition with a third-party government agency that has the authority to adjust rents and award refunds.

But opponents argue Prop 33 would stifle new housing construction and reduce the supply of existing units.

Who’s supporting and opposing Prop 33?

Much of the real estate industry opposes Prop 33. 

The California Apartment Association, which represents thousands of landlords and property management companies across the state, has organized the No on 33 campaign and spent more than $56 million fighting the initiative. In total, the campaign has raised more than $92 million.

Opponents include editorial boards for some of California’s largest newspapers and some prominent Democrats. Some fear communities will use this as an opportunity to over-regulate rents and drive away willing builders.

Sen. Toni Atkins of San Diego, who has long championed pro-housing policies, says this is one “giant loophole that lets some select local governments off the hook for affordable housing and opens the door to erase every inch of progress we’ve made on housing over the last 20 years.

“All I can say is don’t be fooled.”

The proposition itself is being pushed by the AIDS Healthcare Foundation, an organization run by Michael Weinstein, who has been called a “slumlord.” The LA Times reports Weinstein has turned the foundation into one of the largest landlords in Skid Row, with housing units in squalid conditions. The Yes on 33 campaign has raised $50 million so far. 

The counties of Los Angeles and San Francisco have endorsed Prop 33 as well as dozens of tenants’ rights and affordable housing groups. One of them is the Alliance of Californians for Community Empowerment, known as ACCE, which has an office in San Diego. 

Barbara Pinto is a 78-year-old San Diego resident and tenant leader with ACCE.

“As a tenant of a single-family home, I pay more than 70% of my income on rent, making it hard for me, a senior on a fixed income, to keep a roof over my head,” Pinto said. “ACCE is supporting Prop. 33 because it will allow communities to protect renters like myself from unfair rent increases, keep housing costs stable, and prevent the displacement of families who can’t afford the high cost of market rate housing here in San Diego.”