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Rent Control Measure Returns, Legislative Analysis Says That’s Bad for State, CRE
The latest incarnation of California’s rent control measure that was defeated last November has returned. Proposition 10 2.0, Michael Weinstein’s Rental Affordability Act, is targeted to be back on the ballot in 2020.
The state’s Legislative Analyst’s Office (LAO) says the bill will result in a number of negative impacts, including California’s housing situation, the state’s finances as well as CRE market. The LAO says it would likely drive rental units from the market, decrease apartment property values, and possibly diminish annual tax revenues by tens of millions of dollars or more.
California voters turned down Proposition 10 last year, but the new version of the bill would allow cities and counties to impose rent control on buildings after they turn 15 years old. Under the Costa-Hawkins Rental Housing Act, local jurisdictions may not impose rent control on units built after 1995.
The proposed measure would also once again allow local governments to apply vacancy controls, meaning rents would remain regulated in rent-controlled jurisdictions even after changes in tenancy.
“The analysis clearly points to a reduction of available homes, as stricter rent control leads property owners to take units off the market, said Tom Bannon, CEO of the California Apartment Association. “Prop 10 2.0 would drive down property values and prompt an exodus from the rental housing market. California needs sensible housing policies that protect tenants and encourage the building of affordable homes for working families. This measure makes the crisis worse.”
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