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The Big Battle Over Rent Control

In California high rent has gotten ½ million low-income people to leave the state in the last 11 years and thousands to lose their homes to go live on the streets. According to U.S. Census Data, rent prices in California are so high they are the major factor so that 1 in 5 Californians live in poverty. Rent control has been getting increased support in California because middle- and working-class people face soaring rents.

Proposition 10 on the November, 2018, California ballot means ending the Costa-Hawkins Rental Housing Act, a pro-landlord passed in 1995 that limits rent control in the state. The Costa-Hawkins Act limits cities in two ways. First, the Costa-Hawkins Act stops cities from passing rent control on apartments built after February 1, 1995 or on single-family homes or condos. Some cities have dates that are earlier:  apartments need to be built before October 1, 1978 for the city of Los Angeles; April 10, 1979 for Santa Monica; and July 1, 1979 for West Hollywood.  Secondly, cities with rent-controlled apartments can now let landlords raise the rent as much as the want after a tenant leaves. Costa-Hawkins Act is a boon for landlords but harsh on renters. Proposition 10 doesn’t directly affect rent control laws at all but allows cities if they wish to pass stricter rent control measures.

Landlords and developers have spent $45.5 million to defeat Proposition 10 while pro-Proposition 10 forces have spent almost $24 million or $69 million has been spent on this proposition. During and after World War II when there was the last huge apartment shortage, cities passed very strict rent control laws. Stephen Barton, Berkeley’s former housing director, said that rent control wouldn’t make up for 40 years of too little building of rental housing but right now it is “pretty much the only thing on the table …. “According to UC Berkeley’s Hass Institute, rent control gives stability to tenants, helping them to live in and to invest in their communities in the long-term while “build[ing] savings that facilitate upward mobility.”

The anti-Proposition 10 ads have often been dishonest, often saying that renters, seniors, veterans, or the disabled will gain no protection from it. Yes on Proposition 10 doesn’t claim that it protects renters but says that if this proposition passes, cities if they wish can then past protective control laws. The Howard Jarvis Taxpayers Assn. in its No on 10 TV ads says that Proposition 10 allows unelected bureaucrats to raise government fees on housing—another untruth. Only elected governments officials and voters can raise fees, not unelected bureaucrats.

No on Proposition 10 gets its $45 million from corporate landlords and property developers such as Michael K. Hayde and Western National Group & Affiliated Entities who spent $3,761,840 while Essex Property Trust, Inc. and Affiliated Entities spent $2,267,330.No on 10 is endorsed by the California State Conference of the NAACP, California Apartment Association, California Building Industry Association, Los Angeles Latino Chamber of Commerce, and Los Angeles Area Chamber of Commerce.

Also Blackstone Group, the world’s largest real estate management firm, has contributed $6,859,747 to defeat Proposition 10. Blackstone group after the 2008 economic crises bought 13,000 single-family homes in California turning them into rentals. When a tenant leaves now, Blackstone can now jack up rent for the new tenant as much as they want, extracting huge profit from the homes they own. Blackstone Group owns $119 billion in real estate assets.

Labor unions representing public employee unions are Yes on 10 because members of these unions—public school teachers, city employees, university workers etc.—can no longer afford to live in San Francisco and other cities where they work. But Blackstone’s campaign contributions to No on 10 don’t come from the corporation’s executive or treasury but from investors including dozens of state, city, and public university pension funds–Cal STRS (California State Teacher’s Retirement System), the University of California pension etc. Blackstone has drawn from its investment funds that include government pensions from municipal workers, university employees, public-school teachers, fire fighters etc. to fight No on 10. Amy Schur, campaign director of Alliance of Californians for Community Empowerment which is Yes on 10 said, “It’s adding insult onto injury that they’re using the pension funds’ dollars of hard-working families to beat back an essential policy to provide relief to working families.”

Blackstone’s Invitation Homes is its residential property management subsidiary and also the industry’s the biggest owner of single-family rentals. Former tenants of Invitation Homes have had a class-action suit against the company for “stacking fees” charging $95 if the rent is one minute late and having an online payment portal that often doesn’t work, triggering the fees. Across the country other lawsuits have accused Invitation Homes of illegal eviction and being slow to do repairs. Many former tenants have said their rentals had defects like rats, black mold, raw sewage, huge numbers of spiders, air conditioning that doesn’t work etc. Former tenants in California say that because Invitation Homes owns so much properties in certain neighborhoods, tenants lack alternative rentals and can get threatened with ruined credit, an eviction, homelessness etc.

The pro-Proposition 10 forces include over 150 labor unions, housing advocacy, community, faith-based organizations, and the AIDs Health Care Foundation. Many of these groups have spent a year organizing within the Democratic Party, creating a California Democratic Renter Caucus chaired by Rick Hauptman. These activists within the Democratic Party got pro-renters’ resolutions passed, explicit pro-tenant language added to the platform, and got the Democratic Party to endorse Proposition 10 in July 2018. Other groups that support Yes on 10 are the Los Angeles City Council, Los Angeles County Board of Supervisors, Inner City Law Center, Western Center on Law and Poverty, Public Counsel,Democratic Socialists of America Los Angeles, the ACLU of California, and the League of Women Voters of California. Alex Caputo-Pearl, president of the United Teachers of Los Angeles, said that many teachers spend half of their salaries on rent. Lou Barberini, a former San Francisco police officer, learned his pension money is invested in Blackstone funds and had said that Blackstone’s use of these pension funds for No on 10 will set a precedent which is morally wrong to use pension money for “pet political causes.”

Meanwhile several California cities report that some landlords threaten tenants with rent increases and 60-day eviction notices of Proposition 10 passes. As of October 12, 2018, No on Proposition 10 seems to be winning as polls show they will get twice the votes as Yes on 10. Typically, in California when opposition to an initiative has the biggest financial investment, the initiative fails.

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