Why California Voters Rejected Prop 33 and the Push to Expand Local Rent Control Again
A Closer Look at California's Proposition 33
In the November elections, California’s Proposition 33, a measure aiming to repeal state-imposed restrictions on local rent control, was brought to the ballot but ultimately failed to pass. Prop 33 sought to repeal the Costa-Hawkins Rental Housing Act, a 1995 law that limits rent control policies, specifically for housing built after 1995, single-family homes, and vacant units. This measure represented the third attempt since 2018 to loosen rent control laws. However, the proposition only accumulated about 38% support, marking yet another setback for advocates.
The Role of the AIDS Healthcare Foundation in Prop 33
As per Knewz, The AIDS Healthcare Foundation, traditionally focused on healthcare, especially for HIV/AIDS patients has become a prominent advocate for tenant rights and affordable housing in California. Using profits from a federal drug discount program, AHF has funded three rent control-related initiatives since 2018. However, AHF’s role has drawn criticism. Many detractors, including landlord organizations and business groups, question why a healthcare organization would spend its resources on housing policies instead of healthcare.
Understanding the Costa-Hawkins Act and Why Prop 33 Targeted It
The Costa-Hawkins Rental Housing Act has been a cornerstone of California’s rental policy for nearly three decades, limiting how far cities can extend rent control. Specifically, the law restricts rent control on properties built after 1995 and exempts single-family homes and condos. It also allows landlords to adjust rent to market rates when a unit becomes vacant, a practice known as vacancy decontrol. Prop 33 aimed to repeal Costa-Hawkins entirely, allowing cities to impose rent controls on all rental properties, irrespective of the year they were built.
Potential Impact of Prop 33 on Housing Development and Urban Growth
Had Prop 33 passed, it would have enabled local governments to enact stricter rent control laws, potentially reshaping California’s urban development strategies. The measure could discourage new housing developments by eroding property owners' and developers’ incentives. Critics fear rent control policies would decrease rental property values, reduce property tax revenues, and discourage investment in new construction or property maintenance.
The Fierce Battle Over Proposition 33: Supporters
The Prop 33 campaign brought together a variety of interest groups on both sides. AHF led the campaign in favor, joined by tenant advocacy groups and more. Susie Shannon ( campaign manager of ‘Yes on 33’) remarked, "It just gives local communities the right to enact rent control in whatever way they think is best, and that could include excluding new construction,” as reported by CBS News.
Opponents of Proposition 33
On the other side, a coalition of real estate, business, and landlord groups opposed the measure. They argued that Prop 33 would impose heavy restrictions on property owners and could destabilize the housing market. Nathan Click ( spokesperson for ‘No on 33’) shared, "Prop. 33 would take the market out of the equation and put the government in charge of putting in place price caps and making it so developers and those who are building housing have no incentive to build that housing."
The Proposition’s Fiscal Implications
Prop 33 also had prominent fiscal implications. The nonpartisan Legislative Analyst’s Office (LAO) warned that passing Prop 33 could result in "tens of millions of dollars" in lost property tax revenues annually. This loss would stem from the expected decline in property value for rental properties under stricter rent control policies. Lower property values mean that cities would probably collect less in property taxes, potentially impacting funding for public services like schools, special districts, and infrastructure projects.
The Influence of Proposition 34 on AHF’s Future Advocacy
Prop 33’s failure could also affect AHF’s political strategy moving forward, particularly if Prop 34 passes. Prop 34 seeks to restrict AHF’s ability to use profits from federal drug discount programs for non-healthcare activities. Should Prop 34 pass, AHF would be required to allocate most of its revenues toward patient care, limiting its capacity to fund future political campaigns, including rent control advocacy.
