Rent Control Defeated in Sacramento & A Brief History of Costa-Hawkins
Saturday, Jan 13, 2018 @ 12:55 AM

January 12, 2018- 

Welcome to 2018! This will be a challenging year in many ways. Our industry is under attack. The housing shortage, that is very real, was NOT created by landlords/Realtors/homeowners. It was created by local, State, and Federal government policies restricting development, and elected officials more interested in counting votes for reelection, then focus on resolving the most important issue of our time: The Lack of Housing Opportunities. 

Indeed, Los Angeles began life as a sleepy pueblo, and was able to grow, at ground level, until most of the vacant land has been consumed by development. That is great that our pueblo has been successful, attractive, and is now a BIG CITY. Look at any big city in the world and it is very apparent how they provide increased housing opportunities: HEIGHT & DENSITY. In addition an accessible, comprehensive public transportation system, that is NOW underway in the Los Angeles region, to provide the transportation infrastructure to support additional housing in the region. (Learn More about METRO in LA at our January 22nd Public Policy Meeting).

So, what is causing the lack of new housing opportunities? Neighborhood opposition (#1), CEQA (California Environmental Quality Act), local planning processes and excessive fees, and elected officials unwilling to buck the naysayers in their districts, risking the loss of votes for their next office. Next time you hear and elected official claim, “Well, the community didn’t want the project”, you’ll know they are hiding their own unwillingness to lead.

Here we are in 2018, with cranes dotting the Los Angeles skyline, building big buildings of MARKET RATE housing. Yes, there are housing opportunities for those that can afford rents of $5,000 (and much, much more) per month. From the objections stated above, and the negotiations that occur (lowering the height, reducing units, larger setbacks, increased parking), the costs to develop have skyrocketed such that most of the units being produced are market rate. We have left the entire workforce community out of this economic boom. Only by forcing our elected officials to hold true to the Zoning Ordinance, General Plan, and Regional Housing Needs Assessment (RHNA-housing goals for each city).

Now, for the November 2018 ballot, where we will be voting on Governor, US Senator, and scores of initiatives, an effort to REPEAL COSTA HAWKINS has begun gathering signatures. Sponsored by Michael Weinstein of the AIDS Healthcare Foundation, he will collect the required signatures and this initiative will be on the ballot.

What does the REPEAL OF COSTA HAWKINS mean to Realtors? I’ll give a little history lesson for those Realtors who weren’t around selling real estate before 1996. In rent controlled jurisdictions, such as Santa Monica, West Hollywood, and Los Angeles, even single-family homes and condominiums were subject to rent control. There was no “market rate”. Each property had a “base rent”, meaning that a homeowner could only rent their property for that base rent established by the city. This “base rent” issue created a disclosure issue for Sellers and Realtors, and financial burdens to homeowners.

Also, Costa Hawkins, restricted rent control ordinances to buildings built up to 1995 (1978 in LA, WH, & SM).

Vacancy Decontrol was the shining light of Costa Hawkins. When a unit is voluntarily vacated by a tenant, the property owner can rent the unit for Market Rate. Previous to Costa Hawkins, new rents could only be a percentage (10% in West Hollywood), above the old rent. (Example-A unit rented at $400 per month, could be rented for a maximum of $440 per month.)

The loss of Costa Hawkins would negatively affect YOUR business.

Assemblymember Richard Bloom’s second attempt to repeal Costa Hawkins statewide failed on January 11th, when it failed at the Housing Committee. A great success with kudos to the California Apartment Association for busing in hundreds of apartment owners to testify against his dreaded AB 1506.

The battle is before us. Costa Hawkins is under attack, now by a statewide initiative that all voters will get to weigh in on. Without a robust (read that “expensive”) opposition campaign, the repeal effort will easily pass.

Since all Realtors don’t read my column, I ask each of you to educate your Realtor colleagues, and homeowners who will all be affected.

The repeal of Costa Hawkins will not produce one single new unit of housing. It will only protect those who are already safely housed.

James Ward Litz

Government Affairs Director

Beverly Hills/Greater Los Angeles Association of REALTORS®

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