Leaders seeking to address California’s housing crisis are facing an important challenge: how to take meaningful and significant policy action to “stop the bleeding” of rising costs, eviction and displacement without generating new challenges that will only prolong the state’s deep affordability challenges.
Today’s debate over rent control, and particularly, the movement to repeal Costa-Hawkins Rental Housing Act (which places statewide limits on how jurisdictions implement rent control), has pushed this challenge to the fore. One side of the debate is working to qualify a measure on the November ballot that would fully repeal Costa-Hawkins, enabling localities to expand rent control in their jurisdictions, in an effort to protect tenants from rising rents and displacement. The other side is concerned that this repeal will disincentivize both ongoing investment in existing rental homes as well as much-needed new construction of new housing. Both sides are gearing up for a full-blown battle over the ballot measure.
The Terner Center believes these two choices represent problematic extremes, and that there needs to be an honest conversation about alternative paths that can meaningfully protect renters without inhibiting investment in existing homes or preventing new homes from getting financed and built. There are a growing number of leaders and stakeholders who agree that this conversation is needed and that an all-or-nothing fight over the current Costa-Hawkins law will be costly and highly politicized and that ultimately, whichever side wins, renters in California will lose.
To inform and stimulate this “third way” dialogue, we have been working to identify potential policy alternatives, engaging stakeholders on the ground, researching models in other states, and thinking through the pros and cons of multiple strategies. In a new brief, we present two ideas: one that provides real protections against egregious rent increases for all Californians via a statewide cap on rent increases, and a second that creates more affordable housing overall via a new incentive program for the creation and retention of Below Market Rate units.
These proposals are not intended to represent the solution to California’s housing crisis, and need not be thought of as in lieu of other renter protection policy efforts or other pushes to expand the supply of housing in the state. And while we believe they are more effective approaches than a full repeal of Costa-Hawkins, they also do not preclude reforms to the law. In the appendix of our brief, we explore a few such potential reforms, such as extending rent control to certain types of single family rental homes, or adopting a “rolling inclusion” to make more units eligible over time. But these proposals are intended to serve as a starting point for a much-needed and urgent dialogue about the true impact of current options on rent control, and ideas for a better path forward.
This dialogue is especially urgent in this moment. If the repeal initiative is not withdrawn from the ballot by late June, all the attention and focus on the repeal effort promises to distract policymakers and confuse voters about other important policy efforts to address the housing crisis in the state, such as the Veterans and Affordable Housing Bond Act of 2018.
We are calling on advocates, policymakers and thought leaders to come together for this dialogue, and help break through the noise of the current binary rent control debate to find a viable, more sustainable option. We need more thoughtful and effective solutions today and look forward to engaging with others to make that a reality.