Even the Wall Street Journal says California has a crises of housing: high-price housing “hurts economic productivity, increasing poverty rates, lowering homeownership, increasing crowding, and lengthening commute time….” The S.F. Examiner reports that California has the highest rate of poverty in the nation if the cost of housing is “taken into account” and more than 2.5 million people in the state “have been forced to leave” as they look for an affordable home. The state legislature should be considering bills to end the Ellis Act and Costa-Hawkins Act—two state laws passed for real estate interests that have enabled much affordable housing to be destroyed.
In August, 2017, Governor Brown and the state legislature are considering Senate Bills 2, 3 and 3 aimed at increasing funding for low income housing projects and easing development restrictions. Senate Bill 2 would have a $75 fee on mortgage refinancing and other real estate transactions having the fees going for building low-income housing. Senate Bill 3 if passed puts a $3-billion bond for building low-income housing on the state ballot in 2018. Both bills, if passed, would finance 14,000 new homes/year leaving a deficit of 65,000 homes statewide still needed. Senate Bill 35 would limit cities’ and counties’ environmental and planning regulations of low-cost housing—speeding building and lowering cost of building new housing. Still California cannot build enough new housing from these three bills if passed as a way to end the housing crises. The state would still need another $10 billon/year it won’t have to construct affordable housing to help those suffering from too high rents.
The Ellis Act, passed by the state legislature in 1985 to please the powerful real estate lobby, has caused 22,132 apartments of affordable housing to be destroyed in Los Angeles alone since 2001 or 1478 rentals/year every year. The real estate lobby got the state legislature to pass the Ellis Act to undermine rent control by letting landlords evict tenants if the landlords are destroying the building or changing to condos. The Huffington Post says speculators have “abused the Ellis Ac by demolishing older buildings in order to build newer, expensive market-rate projects.” Also some landlords illegally evict tenants under the Ellis Act only to rent the same apartments at higher rent or transform apartments into Air B and B. The only way to end the housing crises is for the state legislature to repeal the Ellis Act protecting the affordable housing it has.
The Coalition for Economic Survival (C.E.S.) created an Anti-Eviction Mapping Project showing in Los Angeles from April-June 2017 landlords have filed 638 Ellis Act eviction applications equivalent to losing 7 apartments/day or 212/month. Last year 1,400 units were taken away from LA housing market, and at this year’s rate Ellis Act evictions in LA alone will mean loss of close to 2,000 affordable apartments under rent control. Larry Gross, executive director of C.E.S., said, “Ellis Act has ravaged our city’s affordable rent controlled housing stock. Unfortunately, we are also able to see how evictions are increasing and spreading across LA ….”
The average rent for a 2-bedroom in Los Angeles is $2169/month. To be affordable, a family must spend not more than 30% of their income on rent, so a family needs to earn $38/hour or $86,760/year to afford L.A.’s average rents. The median renter household income in the city is $36,036, so renters’ double and triple up to afford the rent. One in three Californians play 50% or more of their income on rent, not having money for other necessities.
The Los Angeles City Council passed bill for small modifications in the Ellis Act, but small modifications will not change much. The quickest way to stop the affordable housing crises is for the state legislature to repeal the Ellis Ac since the repeal would stop encouraging developers from buying rent-controlled apartments and destroying them to build hugely expensive rental apartments or McMansions.
The state legislature should also repeal the Costa Hawkins Rental Housing Act, which was passed for real estate interests in 1995, that severely stops cities from passing “strict” rent control: 1) it prohibits cities’ from having rent control over single family dwellings and new construction; 2) it allows a rent increase on a subtenant when a tenant leaves; 3) it prohibits municipal “vacancy control” or stopping landlords from raising rents after a tenant leaves also called “strict” rent control. On February 17, 2017, California Assembly Members Chiu, Bonta and Bloom introduced AB 1506, a bill that would repeal the Costa-Hawkins Rental Housing Act.
Both the Ellis Act and Costa Hawkins Rental Housing Act have let speculators destroy a great deal of rental housing. At the same time as repealing the Ellis Act and the Costa Hawkins Act, California’s cities need stricter rent control laws and laws to keep rents from rising ever higher. A statewide coalition called Housing Now! California has formed that includes grass root groups, small landlords, labor unions, and community groups to repeal Costa Hawkins Act. Coalition for Economic Survival, Los Angeles’ leading tenants’ rights group, has asked for repeal of the Ellis Act. If California wants to stop more people leaving the state, the economy going downhill, more severe overcrowding housing, and more communities destroyed, the state needs to repeal both Ellis Act and Costa Hawkins Act as well as spend more than $3 billion/year for affordable housing.