Terner Center Blog: No Limits

Housing on the Ballot: How Californians Voted on Key Measures in 2020

Posted on by David Garcia

The November 2020 election has turned out to be one of the most consequential in recent memory, not just nationally, but also in California. While the state’s electoral college votes were never in doubt, voters also decided the fate of several hotly contested ballot measures. Hundreds of millions were spent in what ended up being the state’s most expensive election ever for proposition campaigns. This included a handful of statewide measures with important implications for housing, including measures to reform Proposition 13 and expand the ability of cities to enact rent control. Voters were also asked to weigh in on dozens of local measures relating to height limits, affordable housing dollars, and tenant protections. Against the backdrop of record breaking turnout—as well as a prolonged and growing housing crisis exacerbated by the COVID-19 pandemic—these local races have allowed us to take the pulse of communities across the state on housing-related issues. 

In the end, the results were mixed. Here’s a rundown of some of the more noteworthy races we’ve been tracking.

Statewide propositions offer split results on housing

Of the dozen California ballot initiatives, three had implications for housing. Two propositions directly addressed parts of the property tax legacy of Proposition 13, passed in 1978, albeit in very different ways. Proposition 15 would have created a “split roll” property tax system, uncoupling the state’s commercial property tax structure from the structure for residential properties, which would have resulted in billions of additional tax revenue for the state. While Proposition 15 garnered the most total votes of any statewide measure, with over 16.8 million votes cast as of this publication, it ultimately failed 48 to 52 percent. However, the relatively narrow defeat may signal that Proposition 13’s status as a “third rail” issue may be shifting. 

Proposition 19, which also addressed the state’s property tax structure, was approved by a vote of 51 to 49 percent. A key part of the measure is the elimination of the property tax break given to heirs of property used for investment purposes, which has been called the “Lebowski Loophole”. This change may have wide-ranging implications, as roughly 650,000 properties across the state have been inherited in the last decade, though not all are used as investments. Proposition 19 also expands an existing state program to allow homeowners who are 55 years or older to transfer their existing property tax basis to another property anywhere in the state, even if it is more expensive than the home they currently live in. 

Finally, voters rejected Proposition 21 by a vote of 40 to 60 percent. This measure would have expanded the ability of cities to enact more restrictive forms of rent control than currently allowed by California’s existing regulations enacted by the Costa-Hawkins Rental Housing Act of 1995. Specifically, cities would have been able to expand rent control to homes older than 15 years (as opposed to homes built before 1995), as well as to single-family rentals. The initiative would also have capped the amount that owners of rent-controlled units would be able to raise the rent upon vacancy of a unit to a total of 15 percent of the previous rent charged, as opposed to the unlimited amount that owners can currently charge a new tenant (known as “vacancy decontrol”). The loss of Proposition 21 echoes the result of Proposition 10 two years earlier which also would have also significantly altered the rent control landscape in California. 

Major cities see housing wins

In Los Angeles County, the success of Measure J, which redirects 10 percent of the county’s unrestricted general funds away from the criminal justice system, could result in significant new dollars for housing programs, as well as new investments in mental health, job training programs, and other initiatives to benefit communities disproportionately impacted by racial injustice. Measure J was proposed as a direct result of the renewed recognition of  the historic and current underinvestment in communities of color and the disproportionate city spending on law enforcement and incarceration. In addition to funding affordable housing, the measure specifically notes that other housing-related uses including rental assistance and housing vouchers may also be funded through this new authority. 

San Diego saw mixed results on two housing-specific initiatives. On the one hand, voters approved Measure E, which relaxes some specific area height restrictions in the “coastal zone” in order to accommodate new housing. Height limits in the “coastal zone” have been in place since 1972 and are generally viewed as sacrosanct, making any reduction in these regulations a significant shift. In addition to the passage of Measure E, Todd Gloria—a vocal pro-housing growth candidate—was elected mayor in a close race. However, the city’s $900 million affordable housing bond, Measure A, failed despite receiving 57 percent of the vote because it was shy of the two-thirds majority needed for the passage of restricted bond approvals.

San Francisco passed a significant increase in its transfer tax with Proposition I, doubling the existing levy from 2.25 to 5.5 percent on sales of property over $10 million, and 6 percent on property sold over $25 million. The new tax could raise around $100 million annually in new revenue, which the measure’s proponents have pledged to use for the creation of affordable housing as well as rental assistance

Smaller cities show continued tensions on local housing efforts

A handful of measures addressed zoning reforms in smaller communities, and the results demonstrated a continued reluctance to loosen restrictive regulatory barriers. In Alameda, voters soundly rejected a measure to rescind a decades-old ban on multifamily construction in some parts of the city. Measure Z, which failed 40 to 60 percent, was opposed by groups concerned that more growth would overwhelm the island city’s infrastructure.

Across the bay in San Mateo, the final votes are still being tallied for a measure that would extend the city’s existing height and density limits. Measure Y, winning by just 34 votes as of Thursday November 18th, would grant a ten-year extension for San Mateo’s long-standing limits on residential heights and units per acre. A compromise initiative—Measure R—would have also extended the city’s growth restrictions, though the downtown area would have been exempt. That measure failed 54 to 46 percent.

Tenant protections stall

Just as Proposition 21 suffered a significant defeat at the state level, the handful of local rent control measures on the ballot also fared poorly. In Sacramento, where the city recently implemented a modest form of rent control, disagreements between city leaders and tenant advocates resulted in Measure C going to the  ballot. The measure would have required the city to implement a more strict rent control program, capping rent increases at 5 percent (the city’s ordinance currently caps rent increases at 5 percent plus inflation) and requiring the creation of a rent board. Measure C was defeated, 39 to 61 percent. 

Similarly voters in Burbank rejected Measure RC, a proposal to create a new rent control ordinance that would have capped rent increases at 7 percent annually. The measure failed 36 to 64 percent. Culver City provided one bright spot for rent control proponents as voters rejected Measure B, which would have rolled back the city’s recently-adopted rent control policy. 

Measure C in Mountain View illustrates the tensions between efforts to assist individuals and families experiencing homelessness and the fears of property owners. Voters approved an ordinance banning RVs from parking on city streets, 57 to 43 percent.

There are few sweeping conclusions to be drawn from the 2020 election, other than that issues around land use and tenant protections in California continue to be contentious. One thing is certain however: California’s housing crisis will continue for the foreseeable future absent larger structural changes in how housing is permitted, financed, and built. Cities are limited in what they can do to create more housing, particularly affordable and moderate-income housing, due to limited sources of revenue and reluctance to change land use patterns. To that end, policymakers in Sacramento are faced with another important year in 2021, and we at the Terner Center will be tracking legislative efforts to alleviate the housing crisis and providing research and data to inform these conversations.

The Ongoing Housing Crisis: California Renters Still Struggle to Pay Rent Even as Counties Re-Open

Posted on by Carolina Reid and Meg Heisler

Authors: Carolina Reid, Faculty Research Advisor, and Meg Heisler, Graduate Student Researcher As we head into the seventh month of shelter-in-place orders related to the COVID-19 pandemic, the economic forecast and its implications for the housing market are decidedly murky. Gradual re-openings in many counties in California have led to a flattening of new unemployment claims and signs of economic recovery. However, the state’s unemployment rate remains in double digits (11.4 percent in August)1, and there are worrisome signs that the recovery is slowing.2  And in California’s supply-constrained housing market, the pandemic is leading to a widening of inequality, with…

2020 California Legislative Year in Review: A Frustrating End to a Disappointing Year for Housing

Posted on by David Garcia

On Monday, August 31st, the 2020 California legislative year ended in dramatic fashion, with a flurry of last-second votes and missed deadlines capping off the pandemic-shortened session. In the end, nearly all of the high-profile policies that were lucky enough to make it to the session’s final days fell just short of passage—to the great frustration of housing advocates and lawmakers alike. Now that the dust has settled, it is clear that this year’s housing efforts can only be summarized with one word: disappointment.  At the start of the year, many policymakers as well as the governor had declared 2020…

Trump is clinging to an outdated vision of America’s suburbs

Posted on by Elizabeth Kneebone

This piece was originally published in The Avenue by the Brookings Institution's Metropolitan Policy Program. Author: Elizabeth Knebone, Research Director at the Terner Center and Non-Resident Senior Fellow, Brookings Institution, Metropolitan Policy Program In a Wall Street Journal op-ed earlier this week, President Trump and Secretary of Housing and Urban Development Ben Carson vowed to protect America’s suburbs. But which suburbs are they protecting, exactly? Let’s concede that “the suburbs” is a roomy and imprecise term, one that researchers have defined in a number of different ways. By one definition often used in Brookings research, the suburbs are comprised of…

Furthering Fair Housing through the RHNA Process in California

Posted on by Annelise Osterberg

Author: Annelise Osterberg, MPP’20, Terner Center Graduate Student Researcher The dual crises currently facing the country have brought into sharp relief the enduring racial disparities faced by Black Americans that are rooted in decades of discriminatory housing policies. While the federal government has stepped back from its obligation to tackle the legacy of housing discrimination through the termination of HUD’s Affirmatively Furthering Fair Housing (AFFH) rule, California has doubled down in recent years on its commitment to promote fair housing. In 2018, the legislature passed several bills, including AB 1771 (Bloom) and SB 828 (Wiener), which require regions to affirmatively further…

COVID-19 and California’s Vulnerable Renters

Posted on by Elizabeth Kneebone and Carolina Reid

Authors: Elizabeth Kneebone, Research Director, and Carolina Reid, Faculty Research Advisor As the COVID-19 pandemic continues unabated, another rent day has come and gone. But August 1st marked a new chapter in the crisis—the first time rent has come due since Congress allowed key CARES Act provisions, including expanded unemployment insurance and a limited ban on evictions, to expire. Those CARES Act supports acted as a critical backstop for millions of renters who lost income as a result of efforts to slow the spread of the virus. The need for that backstop has arguably intensified as some shutdowns continue into…

Taking the Fairness Out of Fair Housing

Posted on by Carol Galante

Author: Carol Galante, Faculty Director and former Assistant Secretary for Housing at HUD President Trump’s recent tweets and his Administration’s abrupt withdrawal of vitally important fair housing regulations is a dangerous new low in elevating and normalizing racial hatred and divisiveness. The actions flout well-established administrative procedures in a manner that undermines democratic law and ideals. These actions should be condemned by every American who values our nation’s core principles and the rule of law. As the leader of the Terner Center for Housing Innovation and former Assistant Secretary for Housing at HUD, I have a healthy regard for how regulatory…

NAHREP and Terner Center Survey Highlights the Impact of COVID-19 Pandemic on Small Landlords

Posted on by Ben Metcalf

Author: Ben Metcalf, Managing Director While the U.S. faces a global pandemic the likes of which we have not seen in more than a century, thus far many Americans have been able to make rent payments, at rates much higher than perhaps anticipated. Indeed a recent National Multifamily Housing Council (NMHC) survey of its members indicated that July rent collections had only dipped 2% relative to the same month, one year prior. But that seeming stability may be more fragile than we realize: half of adults are reporting that their household has lost employment income since mid-March, and countless businesses,…

Four Tools for Stimulating Economic Recovery Through New Homebuilding

Posted on by Ben Metcalf, David Garcia, Sarah Karlinsky

By: Ben Metcalf and David Garcia, the Terner Center for Housing Innovation | Sarah Karlinsky, SPUR High housing prices threaten California’s future. Today, over three million California renters spend more than 30% of their income on rent, with an additional 1.7 million paying more than 50%. These cost burdens continue to push people, particularly people of color, out of neighborhoods, cities and, in many cases, out of California entirely. COVID-19 will make this situation even worse. 2.3 million households in California are likely to be impacted by the economic fallout from this new crisis, and half of those households were already struggling…

A Plan to Keep Renters Housed Through the COVID-19 Recovery

Posted on by Ben Metcalf and David Garcia

AUTHORS: BEN METCALF, MANAGING DIRECTOR, AND DAVID GARCIA, POLICY DIRECTOR With unemployment resulting from the economic fallout of the COVID-19 pandemic soaring and the $484 billion stimulus package passed last week focusing solely on small businesses and hospitals, a looming housing crisis is coming ever larger into view. Despite the passage of the $2 trillion CARES Act, more significant and longer-term federal intervention is necessary to keep renters in their homes now and for the foreseeable future. We believe the best solution is federally-supported emergency rental assistance directly to those who need it: the millions of households who are unable to make…