California Bill to Expand Rent Control Voted Down in Senate

Housing units in the city of Los Angeles on May 16, 2023. John Fredricks/The Epoch Times

Legislation to expand rent control and allow local jurisdictions to limit the amount that residential landlords can raise rent each year was rejected by the California Senate on May 30.

Senate Bill (SB) 466, sponsored by Sen. Aisha Wahab (D-Hayward), failed on the Senate floor when 16 senators voted against it. Wahab decided to table the bill after the vote and bring it back next year, a spokeswoman told The Epoch Times.

“The first vote didn’t garner sufficient votes to pass so the senator opted to make it a two-year bill,” spokeswoman Alicia Lawrence said. “We’re continuing to work on the bill.”

If passed, Wahab’s bill would have allowed cities to impose rent control measures on newer residential properties, but it wouldn’t mandate rent control in any local jurisdiction, according to a bill analysis.

Currently, the state’s Costa-Hawkins Rental Housing Act, passed in 1995, exempts certain kinds of housing units from rent control ordinances and allows landlords to reset the rental rates after units become vacant.

The California State Capitol building in Sacramento on April 18, 2022. John Fredricks/The Epoch Times

The exemptions cover single-family homes, condominiums, or residential properties built after 1995 or after the passage of a local rent control ordinance, whichever is earlier.

Wahab argued in a bill analysis that the rental housing act “undermines local efforts to address rent gouging and displacement of millions of California renters across the state.”

Her bill would be applicable to any dwelling or unit that was issued a certificate of occupancy within the past 28 years, which means that what qualifies as new housing for rent control would be automatically updated and expanded with the passage of time, according to a bill analysis.

Tenants Together, an affordable-housing advocacy group in California, supported the legislation.

“Cities deserve to choose the rent control they want,” the organization posted on Twitter following the vote. “Millions of your renting constituents deserve stability, not homelessness.”

Opposition From Property Owners’ Groups

The Apartment Association of Greater Los Angeles, the largest statewide rental housing trade organization in the United States, along with 24 other organizations and individuals, was glad to hear of the bill’s demise.

“That died today, so we’re very excited about that,” Dan Yukelson, executive director of the association, told The Epoch Times on May 30.

The association asserted in a bill analysis that several studies demonstrate the disastrous effect that rent control has on new construction.

Also, 71 percent of housing providers say rent control negatively impacts development or investment plans in major U.S. cities, according to the National Apartment Association of America (NAA).

“Housing providers absorb the cost of essential maintenance and reduce investments in improvements and nonessential work due to rent control,” researchers wrote.

More than half of the respondents in the study said they expect to sell properties as a result.

Researchers interviewed housing providers and developers in Santa Ana and Santa Barbara, California; St. Paul, Minnesota; and Portland and Eugene, Oregon.

According to a position statement by the NAA, rent control policies hurt communities by limiting accessibility and affordability.

“Rent control distorts the housing market by acting as a deterrent and disincentive to develop rental housing, and expedites the deterioration of existing housing stock,” the organization said.

Currently, 33 states have laws prohibiting local jurisdictions from adopting rent control laws whereas California, Washington, D.C., Maine, Maryland, Minnesota, New Jersey, New York, and Oregon have rent control policies at the state or local level, according to the NAA.

The Golden State is struggling with rampant homelessness and some of the highest housing costs in the nation. The average cost of rent in the state was $2,950 in May, according to the national real estate company Zillow.

The Los Angeles-based AIDS Healthcare Foundation (AHF), a global nonprofit group, is funding a movement to pass a Justice for Renters Act that would eliminate California’s restrictions on rent control. The group must collect about 547,000 valid signatures by August to place it on the November 2024 ballot.

This is the third attempt by the organization to repeal the Costa-Hawkins Rental Housing Act. Two prior initiatives in 2018 and 2020 were rejected by voters.