Local Government
The Governor Wants Rent Caps

The Governor Wants Rent Caps

By Joel Fox.

Calling for a rent cap bill for all California, Governor Gavin Newsom said such a measure is long overdue. While Newsom sees this as a temporary solution to the state’s housing crisis, his advocacy for a new law will renew the debate over rent control and set into motion some interesting political machinations.

Legislators have been batting around rent limitation measures this year after a rent control initiative was soundly defeated at the polls last November. Rent caps or limitations–the layman would probably consider any government imposed limitations as rent control–seemed to be stalled. However, the governor’s pronouncement ought to get the ball rolling. The probable vehicle is Assemblyman David Chiu’s AB 1482, which currently sits in a Senate Suspense File as legislators return from their summer break.

Chiu’s bill would establish a 7% yearly increase limit plus inflation. The measure is currently designed to be in effect for three years. It also creates the need for explanations from landlords when they evict tenants, something not required by current law.

The bill needs to be taken up a notch, the governor said. In other words, he wants the renter protections to be tougher.

Part of Newsom’s strategy is to convince the AIDS Healthcare Foundation to back off opposition to AB 1482 as the organization currently opposes the bill while gathering signatures for another ballot initiative aimed at the 2020 ballot.

The Foundation opposes the bill because because it believes the bill does not carry enough rental protections. It was the AIDS Foundation that sponsored the 2018 rent control initiative that went down to a nearly 20-point loss.

The same forces that opposed that initiative and intend to oppose any new rent control initiative believe the legislative bill would actually hurt California’s housing crisis.

The arguments haven’t changed from the November ballot battle. Organizations like the California Chamber of Commerce, the California Apartment Association, Apartment Association of Greater Los Angeles and many more acknowledge that there is a housing problem but say capping rents won’t help. They argue that the solution to the housing situation is more housing. Yet, with new limitations on rents, private investors would pull back from funding housing projects slowing the process to build new apartments as soon as possible.

Supporters of the bill, which include many unions, nonprofit groups and elected officials, also lean on the housing crisis as the reason AB 1482 needs to become law right away.

Newsom’s entry into the fray could result in some interesting political dynamics. If the bill is “notched up” as the governor wants there is a good chance the bill passes and becomes law.

If a tougher bill does become law, will that be enough for the AIDS Foundation to quit its initiative effort?

Pulling the initiative if the final bill is to the Foundation’s liking that leaves opponents of the measure an avenue to kill the bill through a referendum. In other words, Newsom will get the ballot battle he is trying to avoid.

Opponents of the 2018 rent control measure raised $75 million. These same forces have the resources to take on a bill that would hurt the building and apartment industries.

Dealing with a referendum is not the same as opposing an initiative and opponents would have to consider the political difficulties. However, they will employ the same arguments that were successful in 2018. And, in each case, on the rent control initiative and a possible referendum against a bill passed by the legislature, opponents would be seeking a No vote. Referendums are set up so that voters get to say yes or no on a bill that was passed, in this scenario, voters would give a thumbs up or thumbs down to AB 1482. Seeking a No vote is often easier to achieve on ballot questions.

If AB 1482 does become law and the AIDS Foundation proceeds to qualify its rent control measure, then opponents of rent limitations have to consider whether they can handle a dual campaign. They would be helped by the need to secure No votes on both measures.

The legislature can avoid a referendum if they pass the bill as an urgency measure. That appears difficult since an urgency measure requires a two-thirds vote. In the assembly, the bill fell far short of that standard, passing by 43-31. There is also the possibility classifying the bill as an urgency measure will bring to legal challenges.

As I said, interesting political chess.

Originally posted at Fox and Hounds.

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