Senate Standing Committee on Judiciary
- Thomas Umberg
Legislator
Proposition 33. The agenda is posted on the Committee website. The hearing will proceed in the following way. Members of the Committee will be given an opportunity to make brief opening remarks. We will then hear from Brian Uhler from Legislative Analyst Office. Members of the Committee will have an opportunity to ask Mister Uhler questions.
- Thomas Umberg
Legislator
The Legislative Analyst's Office will walk us through the initiative. They are not in a position to give an opinion on the initiative, but rather can describe the initiative, including the fiscal impacts.
- Thomas Umberg
Legislator
We will then hear from a panel of four organizations that are in support of the initiative, and after that we will hear from a panel of four organizations who are in opposition to the initiative. Committee Members will have an opportunity to ask questions of both panels. We will then move to public comments. The public may state their name, their affiliation, their place of residence, and whether it they are in support or opposition to the initiative.
- Thomas Umberg
Legislator
I want to be clear that this is a Policy Committee hearing, and that's what we're going to be about, is we're going to be about the policy as is contained within the language of Proposition 33 and the Costa Hawkins current law and other things that are squarely within the jurisdiction of this Committee.
- Thomas Umberg
Legislator
Anyone wish to make opening statement? All right, thank you for being here. We look forward to this conversation, this discussion, just to put a frame around it. This is an informational hearing for those of you who are watching. We will not vote. We will not take a position.
- Thomas Umberg
Legislator
Individual Members may take a position on whatever propositions they may choose to, but the Committee will not take a position on this Proposition. You may also submit written comments if you like. If you go to the State Senate Judiciary Committee's website, you'll see that there's a portal to submit written comments.
- Thomas Umberg
Legislator
Once again, I know this is a surprise to many folks, but all of us on the Committee can't actually read. So having said that, let me first introduce Deputy Legislative Analyst Uhler to give an overview. Thank you. Thank you Senator Roth, for being here as well. Senator Roth, did you want to make any opening comment? All right.
- Brian Uhler
Person
Thank you, Mister chair. I'm Brian Uhler with the Legislative Analyst Office, and I'm here to provide an overview of Prop 33 and also summarize our office's analysis of the fiscal effects of the measure. Before I go into my presentation, I just wanted to reiterate the chair's comments that our statutory task as it relates to ballot measures limits our analysis to only considering the fiscal elements of the measure and explicitly prevents us from talking about the policy merits of the proposed change.
- Brian Uhler
Person
And that's a little bit of a different role, or it is a different role than you're used to of us taking in the budget process, where we do weigh in both on the policy and fiscal considerations of proposals. So to move into the presentation, Prop 33 is essentially a question about the scope of authority that local governments in California have to enact rent control policies state law currently allows cities and counties to enact local rent control, but within certain limitations.
- Brian Uhler
Person
Around 30 municipalities in the state have some form of rent control now, and those are within the limits of state law, which are set out in the Costa Hawkins Rental Housing act. That act creates three primary limitations. The first is that local rent control laws cannot apply to any single family housing.
- Brian Uhler
Person
The second is that it can only apply to older housing stock. It can't apply to anything built after February 1, 1995. And the final limitation is that local warrant control laws must allow for so called vacancy decontrol. And this means that they can't tell a landlord how much they can increase rent when the new renter is moving in. They're limited only to restricting rent increases for existing tenants. So, simply put, Prop 33 would repeal Costa Hawkins in its entirety.
- Brian Uhler
Person
So this would mean there would no longer be any state limitations on the type and scope of rent control that cities and counties in the state could enact. The measure itself wouldn't make any changes to local rent control rules. Those changes would mostly be dependent on future actions of local elected officials and local voters.
- Brian Uhler
Person
That being said, we think based on historical experience, it's likely that some local governments would expand the scope of local ring control to at least some extent over time. So that leads to our analysis of the measures. Fiscal effects economic research suggests that an expansion of local rent control would have a collection of potential economic effects.
- Brian Uhler
Person
We can't give a certain quantification of those effects because much of it depends on how many local governments take action in response to 33. What's the scope of those changes? But we can discuss in General, kind of qualitatively, what those potential effects may be, and I'll highlight four of them.
- Brian Uhler
Person
Two of them apply to renters and two apply to rental properties. The first for renters is that some could face a change in the cost they pay for rent. On the one hand, some renters, specifically those who live in rentals that are newly covered by an expanded rent control rule, likely would pay less for rent than they otherwise would. On the other hand, other renters could end up paying more for rent. An example.
- Brian Uhler
Person
This could be a rentere that is living in a neighboring municipality to one that just expanded rent control, but where there is not rent control in the municipality that they're living. The second potential effect on renters is that they would tend to move less often, and this can be for a few reasons.
- Brian Uhler
Person
One, some renters may be less likely to essentially be sort of forced to move because they can't afford a rent increase. Also, you could have some renters who simply choose not to move because they are receiving a good deal on their rent control department and do not want to pay more to move to a new rental.
- Brian Uhler
Person
So those are kind of the key effects on renters moving to rental properties themselves. The first key effect is a likely reduction in the supply of rental housing. And there's a few potential mechanisms for this.
- Brian Uhler
Person
The one for which there's the most evidence is that landlords would, some landlords would essentially get out of the business of being a landlord. They would sell the rental to someone, an owner who would live there, they would convert it to a condo, etcetera. And this would reduce the number of rentals that are available for renters.
- Brian Uhler
Person
The final effect is that rental housing would likely become less profitable, and this would reduce the amount that potential landlords are willing to pay for rental properties, reducing the value of those properties.
- Brian Uhler
Person
So narrowing in from these economic effects, we can talk about a few kind of specific effects that the measure could have on the finances of state and local governments. And I'll highlight two key kind of fiscal effects. The first and most significant is a likely reduction in property tax revenues for local governments and schools.
- Brian Uhler
Person
And this kind of flows directly from the economic impact I mentioned a minute ago about a reduction in the value of rental properties. We think that that reduction in property taxes over time could reach at least tens of millions of dollars per year.
- Brian Uhler
Person
The other fiscal effect is a likely increase in administrative costs for local governments to carry out expanded rent control rules. Those costs could be in the millions of dollars a year, up to tens of millions of dollars. And traditionally those costs are paid by fees that are levied on landlords. So with that, I will be happy to take any questions.
- Thomas Umberg
Legislator
Thank you very much for that overview. Members, questions? Yes, Senator Durazo, go ahead.
- María Elena Durazo
Legislator
Thank you for your report. When you said that there would, in terms of the fiscal impact on local governments or anywhere in the state, like they would be less profitable, landlords would sell properties. What are you basing that on?
- María Elena Durazo
Legislator
And did you base it on actually looking at a particular city or the cities whose, the quarter of Californians who live in those communities with rent control otherwise, it sounds like you're just sort of throwing it all. Well, millions, tens of millions.
- Brian Uhler
Person
Yes. Thank you. I appreciate the question, because I neglected to mention this in my comments, which I did mean to cover. Our analysis focuses on effects that there is some rigorous empirical evidence supporting. So obviously there's a number of potential effects that you could make sort of theoretical or hypothetical arguments in favor of.
- Brian Uhler
Person
We limited our scope to where there is essentially academic research looking at historical experience in places where rent control is put in place and what effects can be measured. A lot of that research is not California specific. Some of it is from around the country, some of it is from around the world.
- Brian Uhler
Person
But there are a number of studies looking at these sort of various effects, and the four that I listed are ones where the significant majority of those studies have found that effect to be the case. And so that's sort of the basis for the effects that we call out and which ones we do and which ones we don't talk about in our analysis.
- María Elena Durazo
Legislator
And then just one more question. In terms of the increase in local government financially having to put out more for the different reasons that you cited, did you look at what the governments could save? Local governments could save as a result of having, you know, like the issue of homelessness or, you know, the cost to local government. Now, on those. On those issues that could be impacted by people paying less for the rent?
- Brian Uhler
Person
Yeah. So those are definitely factors that we considered. I think that, as I mentioned just a second ago, with what economic effects we decided to highlight in our analysis.
- Brian Uhler
Person
I think some of those other questions, again, potential effects on homelessness or demand for social services or things like that, are areas where our review of the research has not provided enough of an evidentiary base for us to feel like we could make a clear statement on the effects on those kinds of costs for local governments.
- Brian Uhler
Person
The one that we do highlight kind of the cost to administer these is sort of a, there's sort of a direct nexus there. So I think we feel comfortable calling that out as a potential cost.
- María Elena Durazo
Legislator
That's it for me.
- Thomas Umberg
Legislator
All right. Thank you very much, Senator Durazo. Other questions. All right, Mister Euler, thank you so much. Let's bring up the first panel. Just by way of housekeeping, each panel will have 40 minutes, which, if you break it down by witnesses, that means that each witness would have 10 minutes. You're not required to actually take 10 minutes.
- Thomas Umberg
Legislator
If you can get your point across in less than 10 minutes, we'd welcome that. So the first panel consists. Go ahead. And we're going to have. Unlike our normal format, panelists can come forward and go ahead and sit at the table. So the first panel would come forward.
- Thomas Umberg
Legislator
It's Shanti Singh, Legislative and Communications Director for Tenants Together Adam Briseno, co President of Unite Here Local 11 Michelle Gutierrez Vo, President of California Nurses Association and Suzy Shannon, Director, Housing is a human right, the division of AIDS Healthcare Foundation. All right, let's go ahead and do it in the order in which I've announced.
- Thomas Umberg
Legislator
So first, Shanti Singh, is this working?
- Shanti Singh
Person
Zero, perfect.
- Thomas Umberg
Legislator
Yep, I think they're all working.
- Shanti Singh
Person
I always get nervous. Thank you to chair Emberg Committee staff and Members for inviting me here today. My name is Shanti Singh and I am the legislative and commons Director for tenants together. We're California's statewide coalition for Tenants Rights.
- Shanti Singh
Person
I myself have been a tenant of rent controlled housing for almost a decade, living with long term neighbors on fixed incomes and new neighbors who also need economic stability. Our 60 Member organizations across the state are led by tenants living in all types of housing.
- Shanti Singh
Person
And since our founding in 2008, we've supported many local campaigns for tenant protections, including rent control in every part of the state, as well as state level initiatives to repeal or amend Costa Hawkins. Our coalition is unanimous in our support for Prop 33.
- Shanti Singh
Person
1st off the bat, although I think LAO just did a wonderful job critical to clarify what Prop 33 does and doesn't do. It does two things. It deletes the language of Costa Hawkins from state law, and it puts the responsibility for deciding rent stabilization policy back into the hands of city and county officials and the voters themselves.
- Shanti Singh
Person
It does not affect in any way the land use authority of local jurisdictions or state governments. What we call rent control in the US today and in California is second generation rent control, which affects increases in rents. It allows landlords to set base rents on new properties to whatever the market will bear.
- Shanti Singh
Person
Decades of case law have tested this in our courts, allowing landlords to adjust above rent control when they need to make major and critical improvements, and guaranteeing them a fair return on their investment.
- Shanti Singh
Person
So rent control simply prevents massive windfall gains and puts money back into renters pockets to spend on their families and circulate those dollars back into the communities and small businesses near where they live. In the past three years alone, we have gone from about 20 to about 30.
- Shanti Singh
Person
So 10 California jurisdictions have passed their own rent control laws since COVID started for the very first time. Three have strengthened their rent control laws. On top of that, we see new cities going to their voters and city councils every year.
- Shanti Singh
Person
Rent control has now been initiated in cities in Orange, Ventura, Kern, Mammarin, and Monterey counties for the first time ever, and a number of those initiatives have passed, we see that Californians are increasingly turning to rent control as one of one of several critical tools to mitigate displacement, prevent homelessness, and put dollars back in the pockets of tenants, all while guaranteeing a fair and profitable return.
- Shanti Singh
Person
This also means that more and more Californians are bumping into the arbitrary and poorly designed limits that Costa Hawkins has placed on them, and more Californians will continue to bump into those limits in the future as rent control expands.
- Shanti Singh
Person
We believe that the status quo that Costa Hawkins has created is untenable for California's 17 million tenants, including those who do not currently benefit from rent control but could very much do so in the future. It is a 1994 law that is not equipped to respond to the challenges the California of 2024 faces.
- Shanti Singh
Person
That same year, in 1994, the State of Massachusetts banned all rent control, repealing several local ordinances. There was no massive flourishing of supply or housing construction enabled by doing that.
- Shanti Singh
Person
To make matters worse, studies about Massachusetts showed that not only did the statewide ban raise rents and reduce tenant stability, but it also raised rents in homes in the same areas that were not subject to rent controls in the first place.
- Shanti Singh
Person
Many of the talking points that we've seen about rent control woefully misinterpret the results of available empirical research, which indicate clearly that loopholes around rent control create adverse effects on supply, while rent control itself simply stabilizes communities.
- Shanti Singh
Person
And as we often put it, that is like blaming a firefighter for the existence of a fire in cities where Costa Hawkins bans rent control after the late 1970s or early 1980s. So San Francisco, Oakland, Los Angeles.
- Shanti Singh
Person
We've heard from disabled tenants on fixed incomes who are unable to access Ada compliant rent controlled housing because very little accessible housing was built before the now 45 year old cutoff date.
- Shanti Singh
Person
In other cities where Costa Hawkins allows rent control to be implemented up to housing built before 1995 but not single family homes, we've seen misinformation targeting voters who rent homes that can't be covered by rent control because of Costa Hawkins to discourage them from supporting rent control at all.
- Shanti Singh
Person
And this particular challenge has been growing ever since the 2008 housing crisis led to large scale investors purchasing tens of thousands of foreclosed single family homes and imposing unsustainable overnight rent increases and often bogus fees on their tenants. There's just a lawsuit about this from the AG.
- Shanti Singh
Person
We have seen lawsuits filed by tenants in rent controlled housing reporting harassment in difficult conditions because many corporate actors who are buying up rent controlled housing because it's still profitable have weaponized Costa Hawkins in an attempt to force tenants out to reset base rents to market or flip units via misuses of the Ellis act that are beyond the intended purpose of that law.
- Shanti Singh
Person
When we as impacted tenants are told that the loss of our very homes to speculative conversion is somehow the fault of the protection that kept us in our homes in the first place, we are compelled to reject that framing, knowing full well that the research points out quite clearly that speculative loopholes are the culprit as well.
- Shanti Singh
Person
Most California cities, we believe, want to achieve housing affordability even when they choose different paths to get there.
- Shanti Singh
Person
Most California cities understand that they have urgent state mandates to do so that none of us or them can ignore mandates that include significant expansion of the part of the housing stock that is specifically available to Low and middle income people whose wages cannot hope to cover market rents.
- Shanti Singh
Person
We are presently losing affordable housing accessible to millions of Californians who cannot afford market rates or home ownership far faster than we can Fund and build it.
- Shanti Singh
Person
Because we're allowing perverse incentives created by laws like outdated laws like Costa Hawkins to persist, I invite the Committee and the public to consider that the devastation of this critical segment of the housing market is as urgent a supply crisis as any other.
- Shanti Singh
Person
Rent control has been a bulwark against an even more acute crisis in the cities in which it has been enacted, even in its limited form, which is why more and more Californians are pursuing it in places that it hasn't been pursued before, and why it has even now become a policy issue in our upcoming presidential election.
- Shanti Singh
Person
I will just conclude with some words from JW Mason, incredible economist who's part of a growing group of economists calling at the federal level for revisiting of rent control policy, much in the same way that we've revisited our prior orthodoxy on minimum wage laws, he says. There is a social interest in income diversity in stable neighborhoods.
- Shanti Singh
Person
In the absence of rent control or other measures to control housing costs, an area that sees rising productivity or improved amenities may see a sharp rise in rents and become affordable only for higher income households.
- Shanti Singh
Person
Besides the questions of equity that this raises, there are economic costs here as it becomes difficult for people holding lower paid jobs to live within commuting distance. An area that becomes more homogenous may also lose the social and cultural dynamism that caused the improvement in the first place.
- Shanti Singh
Person
Similarly, the evidence seems clear that in the absence of rent regulation, turnover among tenants will be higher, leading to less stable communities and discouraging investment by renters in their neighborhoods. The absence of rent regulation may also create political obstacles to efforts to increase housing supply, attract new employers, or otherwise improve urban areas.
- Shanti Singh
Person
Since current residents correctly perceive that the result of any improvement may be higher rents and displacement, rent regulation removes these conflicts between the social interest in thriving high wage cities and the interests of current residents. This makes it an important component of any broader urban development program.
- Shanti Singh
Person
We believe in taking a both and approach to housing construction and tenant protection. And nearly every domain expert working on the front lines of displacement and homelessness in California, not just tenant advocates, but including many affordable housing producers, builders and providers, join us in supporting Prop 33 for this reason. Thank you again very much for your time.
- Thomas Umberg
Legislator
Thank you. Thank you very much. All right, let's go with Miss Briseno next.
- Anna Briseno
Person
Good morning. Thank you so much, chair Umberg and Committee Members, for hearing our voices on behalf of Unite Here, Local 11. Representing 32,000 hotel and food service workers in Southern California and Arizona, we strongly support Proposition 33. Local 11 represents hospitality workers who are disproportionately rent burden and pay well over 30% of their monthly income towards rent.
- Anna Briseno
Person
In this state. We have Members who have been pushed out of their communities, the communities that they've built, the communities that they've raised their children, the communities that they've called home for a long period of time because of the rent gouging. And people have to commute two or 3 hours sometimes to make their way to work.
- Anna Briseno
Person
They're forced to live in rvs or couchsurf just to get by. Proposition 33 would allow communities to determine rent stabilization policies that fit their community best. And, you know, if there's any adjustments that they deem necessary at all. Rent control takes many forms, and it depends on what local communities are dealing with.
- Anna Briseno
Person
We know that housing is essential, that housing is a human right, as declared by the United Nations Declaration of Human Rights that was passed on December 10 of 1948. And Article 25 states that everyone has a right to a decent standard of living, including food, housing, and medical care and social services.
- Anna Briseno
Person
And we here have an affordable housing crisis. In fact, there are more rent burden people in California than anywhere else in the country. As you know, increases in wages have definitely not kept up with the rise in rents, and many people are seeing their quality of life deteriorate as a result.
- Anna Briseno
Person
We see a starting teacher or a police officer or even a firefighter that is paying at least half of their wages in order to rent. And that is throughout California. For many Low wage workers, like hotel workers or caregivers, sometimes it could be 100% of their wages to rent.
- Anna Briseno
Person
And, you know, all the while that corporate landlords are driving up rent with really no end in sight. There's more gentrification, tenant displacement, and more evictions. The situation has become so dire that our workers are stressed every single month just to figure out if they can pay their rent.
- Anna Briseno
Person
And we believe local 11 has an obligation not only to unionized workers in the hotel industry, but also nonunion workers across the state to make sure that we are helping pass Proposition 33. I have an example of Brenda Mendoza, who lived in Los Angeles Koreatown, just 10 minute drive from her upscale JW Marriott hotel.
- Anna Briseno
Person
She had been working there for 14 years, but she got priced out of her downtown area where she grew up. And now she travels almost 100 miles to Apple Valley. And she commutes. Her commute is about two or 3 hours.
- Anna Briseno
Person
This takes a toll in her body, in her mind, the time that she spends with her family, the gas that she spends. And it's really hard to make ends meet. 68% of California's greenhouse gas emissions are directly related to individual cars and trucks emission.
- Anna Briseno
Person
And, you know, and that's part of why, you know, we care for our environment, and that's part of why we're here to talk about Proposition 33. We will not be able to meet our greenhouse gas emissions goals by 2045 if we don't address this issue.
- Anna Briseno
Person
Skyrocketing rents, housing costs, and evictions, and the resulting displacement has caused tremendous sufferings. As I said, I have another example of Leticia Ortega De Cevallos, who sleeps in her car so she can pay her house that's more than 100 miles away. Again, another person. She has two jobs, cleaning hallways and lobbies at hotels.
- Anna Briseno
Person
And she only gets to go home three days a week to see her family. Working families deserve better. And we feel that we can't ignore this. We are taking part in, you know, the people have said, well, you know, have you, were you focused on this in prior years?
- Anna Briseno
Person
Well, maybe not to the extent that we are today, because we are hearing more and more from our Members, more than ever, how rent burdened they are. So in November, local 11 wants to do its part by supporting Proposition 33. And thank you for listening to our voices.
- Thomas Umberg
Legislator
Thank you, Miss Briseno. All right, Miss Gutierrez, thank you, chair.
- Michelle Gutierrez-Vo
Person
Umberg and Committee Members, for holding this hearing today. My name is Michelle Gutierrez-Vo. I've been a registered nurse for about 2627 years, and I'm a President of the California Nurses Association, which represents over 100,000 nurses across California.
- Michelle Gutierrez-Vo
Person
For decades, our union has proudly supported measures that would ensure affordable housing for our patients, including robust rent controls laws and the repeal of the Costa Hawkins Rental Housing act. Today, I want to talk about the link between high rent housing instability and poor health outcomes for Low income Californians.
- Michelle Gutierrez-Vo
Person
As nurses, we see how the lack of quality affordable housing and housing instability can negatively impact the health of working families in our communities. And as somebody who has worked in adult primary care for about 2627 years, I have seen. I have seen across the lifespan how devastating these effects are.
- Michelle Gutierrez-Vo
Person
And the priority should really be on stabilizing the health and welfare of Californians and not stabilizing the rent. You should see how when we look in our patients eyes, and their children and their young adults and their mothers and fathers and their grandparents, they can't even stay home because they have to work two jobs.
- Michelle Gutierrez-Vo
Person
It is completely devastating as a nurse to witness this happen day in and day out. And over the 2627 years I've been a nurse, it just gotten a lot worse. About 44% of California households are renters, and the average renter spends over half their income on rent. About 1 million renters in California are behind on rent.
- Michelle Gutierrez-Vo
Person
And once again, our patients tell us, our patients tell us these devastating situations, and they're always almost a paycheck away from being unhoused with their children. But when rents increase, our patients health suffers. Larger and larger portions of paychecks are going towards rent, leaving less money for healthcare.
- Michelle Gutierrez-Vo
Person
As rent rises uncontrollably, families cannot afford to see the Doctor when they are sick or go to the dentist for a toothache. They are less likely to be able to manage chronic illnesses or get preventive care when rents are too high. Parents struggle to afford nutritious food for their children.
- Michelle Gutierrez-Vo
Person
This is why nurses stand in solidarity with working families who advocate for rent stability and stronger local rent control loss. Expanding local government's authority to enact rent control measures on all residential property is an important piece in the puzzle.
- Michelle Gutierrez-Vo
Person
To ensure that all Californians have safe and affordable housing, rent control laws are powerful tools that local government can use to stop rent gouging and to stop landlords from displacing Low income people from their homes through rent increases.
- Michelle Gutierrez-Vo
Person
To strengthen rent stability and eviction protection laws in our communities, California must repeal the Costa Hawkins and its limits on local rent control laws. For decades, landlords have used Costa Hawkins rent control exemptions to price out tenants and to circumvent local eviction protection laws. Instead of evicting tenants, landlords increase rent to force Low income tenants.
- Michelle Gutierrez-Vo
Person
Nurses support the repeal to repeal Costa Hawkins and support Proposition 33 because no family should have to choose between paying for healthcare or keeping a roof over their heads.
- Michelle Gutierrez-Vo
Person
I have seen patients who won't go to the emergency room even if they're having a heart attack or stroke because they cannot afford to pay their copay because they have to pay the rent. So they're having to choose to be housed or to save their life. That's unconscionable.
- Michelle Gutierrez-Vo
Person
Rent instability has itself become a health hazard for communities across the state. When our patients have to worry about rents skyrocketing without warning, their health suffers year after year. Working families stress over whether their landlord will raise rents to unaffordable levels. Unaffordable housing makes working families sicker in multiple ways.
- Michelle Gutierrez-Vo
Person
The link between unaffordable housing and negative health outcomes compounds upon itself. The Los Angeles County Department of Public Health has taken a number of surveys that demonstrated the link between high rents and housing instability and negative health outcomes.
- Michelle Gutierrez-Vo
Person
They found that people who have trouble paying their rent report having significantly more unhealthy days, either physically or mentally, when compared to those who did not report housing affordability problems. Over one third of adults in Los Angeles reported that when rents were unaffordable, they could not afford to see a Doctor for a health problem.
- Michelle Gutierrez-Vo
Person
And we know that lack of stable quality and affordable housing can negatively impact our mental health. It can lead to our psychological stress and depression for families, particularly for our children. A 2021 policy linked survey of rental assistance providers found that 83% of their clients reported mental health concerns. This, too, I see every day.
- Michelle Gutierrez-Vo
Person
To stop the negative health outcomes from rent and housing stability, our cities and counties need to have the full range of tools available to stabilize rent. Researchers at the University of Southern California conducted a literature review on rent regulation studies in 2018.
- Michelle Gutierrez-Vo
Person
Nearly every academic study they looked at found that rent stabilization increases housing stability for residents in rent controlled units. They also found that housing stability is associated with social, mental, and physical health, as well as better education outcomes.
- Michelle Gutierrez-Vo
Person
Importantly, rent control regulation is more likely to benefit lower income people and people of color, who are more likely to have housing instability, face eviction or forced to relocate due to cost. The USC paper also finds that unbalanced rent regulation does not impact new housing construction.
- Michelle Gutierrez-Vo
Person
But in contrast, the authors report that when rent regulations allow landlords to convert housing units into rent control exempt units, those units are taken off the rental market. This is precisely what Costa Hawkins does.
- Michelle Gutierrez-Vo
Person
While nurses support protections for tenants like eviction protections, as well as other affordable housing programs, rent control remains an important tool that will help stabilize housing for Low income families in California. For CNA nurses, rent stabilization and housing stabilization help ensure that we can build healthy and socioeconomically diverse communities for generations to come.
- Michelle Gutierrez-Vo
Person
This is why our union supports Proposition 33 and why we support to end arbitrary limits of local rent control loss. Why must local government. We must give local government the flexibility to craft rent control tools in ways that fit their local communities.
- Michelle Gutierrez-Vo
Person
This will help ensure that all of our patients, particularly Low income families of color, are not priced out. I hope you heard me. For all of the sake of all of our patients, thank you again for your time.
- Thomas Umberg
Legislator
Thank you very much, Madam President. All right, next, Miss Susie Shannon, Director of housing as a human right from AIDS Healthcare Foundation. Thank you.
- Susie Shannon
Person
Hi. Thank you. I'd like to thank the chair and the Committee Members for having this hearing and for inviting me to speak. Hello, I'm Susie Shannon. I'm the policy Director for housing as a human right and also the campaign manager for Proposition 33. Proposition 33 is only 23 words. It's very easy to understand.
- Susie Shannon
Person
It says the state may not limit the right of any city, county, or city and county to maintain, enact or expand residential rent control. It basically allows local communities to expand rent control and repeals cost of Hawkins.
- Susie Shannon
Person
Costa Hawkins passed in 1995, and the California Apartment Association tried for years to get something similar passed to quell tenant organizing around rent control at the local level. They were finally successful in 1995. They won the Legislature by only one vote, and Costa Hawkins was signed into law by a Republican Governor.
- Susie Shannon
Person
Before 1995 and Costa Hawkins passage, rents were down and homelessness was down. Construction was booming in the 1980s and early 1990s. We know what California looks like without Costa Hawkins. On January 281994 Deborah Vrana from the LA Times wrote, developers building up momentum.
- Susie Shannon
Person
It's no eighties type boom, but significant numbers of new homes and retail centers are in the works across the country for 1994. One year later, Costa Hawkins was passed Prop 33 and rent control does not have an impact on new construction. This is substantiated by study after study that shows rent control has no impact on new construction.
- Susie Shannon
Person
A USC study from 2018 states, and I quote, evidence suggests there is little negative impact on new construction. A Berkeley study states, claims that rent control has negative effects on development of new housing are generally not supported by research.
- Susie Shannon
Person
And in 202332 economists from Rutgers University, UC Santa Barbara, MIT, the University of Massachusetts, Columbia University, and many more wrote a letter to President Biden asking him to enact national rent control, which, of course, he supports a 5% red cap, along with Vice President Kamala Harris.
- Susie Shannon
Person
But they wrote in their paper, there is substantial empirical evidence that rent regulation policies do not limit new construction nor the overall supply of housing. And then those salient point in addition to that, when rent control was repealed in Massachusetts, there was no corresponding increase in housing.
- Susie Shannon
Person
Costa Hawkins, however, has been used by corporate landlords to stop affordable housing. In 2004, did the City of Los Angeles pass an inclusionary zoning law requiring a certain percentage of units be affordable?
- Susie Shannon
Person
Billionaire Jeffrey Palmer sued the City of Los Angeles, saying that his units in his 350 unit building didn't need to be affordable because of Costa Hawkins.
- Susie Shannon
Person
The courts agreed with him, the judge wrote, forcing Palmer to provide affordable housing units at regulated rents in order to obtain project approval is clearly hostile to the right afforded under the Costa Hawkins act to establish the initial rental rate for a dwelling unit.
- Susie Shannon
Person
So between 2009 and that court decision, until the Legislature was able to fix this with a law that went into effect in January 2018, it was passed in November 2017. For eight years, we couldn't get affordable housing in any of our new buildings. So where are we today in California, rents are up and homelessness is up.
- Susie Shannon
Person
There are more people rent burdened in California than anywhere in the entire country. This Legislature really needs to focus on the fact that we have more people rent burden now anywhere in the United States. Over half of the 17 million renters in California are paying over 30% of their income in rent.
- Susie Shannon
Person
We can talk about studies all day. It doesn't change the fact that the cost for a two bedroom apartment as of September 2024 in Los Angeles is $3,742 a month. Now, can a senior on a fixed income afford that? No. Can your Starbucks barista afford that? No. Can our hotel workers afford that? No.
- Susie Shannon
Person
Can a lot of patients afford that? No. People are abandoning public schools to get away because they can't afford the rent. My daughter goes to a public school. I can't tell you how many families have left for other states because they can't afford it here.
- Susie Shannon
Person
Or they know that their children won't be able to stay here, and they may never see their grandchildren because they won't be able to stay here. This is separating families. In addition, a Zillow study showed that for every 5% increase in rent, 2000 more people become homeless.
- Susie Shannon
Person
We have more people homeless in the State of California now than anywhere in the country. It just went up again a couple months ago to 186,000 people now who are homeless. I have worked with our unhoused communities since 2005.
- Susie Shannon
Person
I have never, ever gotten anyone from the streets or someone living in a car or someone couch surfing with their family into a market rate unit. And I guarantee you that they're not getting into a $3,700 a month, two bedroom apartment. So something's got to give here. Costa Hawkins is an experiment for California that has failed.
- Susie Shannon
Person
People have said time and time again, and I know that all of you have heard from your constituents, they cannot afford to live here anymore. Our corporate landlords have had their way with California for a very long time. The government needs to fix this. The people need to fix this.
- Susie Shannon
Person
Corporate landlords are doing their job in amassing billions of dollars in profit. Really? Trillions. I don't even say that because people don't believe it, so I just say billions. And they're now using that to confuse renters and to say that rent control somehow isn't in their interest. My family, when I was younger, was unhoused.
- Susie Shannon
Person
We got into a rent control Department that helped my family. We have to make sure that our City Council Members and our county supervisors have the right, the ability, another tool in their toolbox, whatever we want to call it, to help their constituents. I'm just pleading with you to please support Proposition 33.
- Susie Shannon
Person
It will be on your November ballot as individuals and to please do something in the Legislature. I'm hoping that this passes for the sake of my daughter and the next generation there. It's like a Gen Z for Prop 33 group now, because they're looking at where they can.
- Susie Shannon
Person
My daughter is going to be going off to college in a year and a half, and you know what she's looking at? What she's going to have to pay in rent if she goes to UC Santa Cruz, if she goes somewhere, you know, anywhere in California for college.
- Susie Shannon
Person
We should not be putting this burden on the next generation. So I will leave it at that. I will tell you, too, that the California Democratic Party supports this Southern California Association of nonprofit housing that represents affordable housing builders. Almost every tenant group up and down the State of California.
- Susie Shannon
Person
You've heard from tenants together housing now, Ace Burbank, tenants union, San Francisco Tenants Union, all pleading with you guys to please support this. And let's have a California that actually cares about its renters. Also, the counties of LA, County of San Francisco has endorsed this.
- Susie Shannon
Person
Congresswoman Maxine Waters, who used to be the head of the Financial Services Committee. Jimmy Gomez, who started the congressional renters caucus, supports this. Many, many of your legislators support this.
- Susie Shannon
Person
You know, President Biden and Kamala Harris came out for 5% national cap on rents because they see that this is a national issue now that people can't afford to live any longer in these apartments.
- Susie Shannon
Person
And then once you even get into an apartment to look at these like exorbitant rent increases, then not to be able to appeal to your local elected official, I think is unconscionable. So I could go on and on, but I'll just leave it there. Thank you.
- Thomas Umberg
Legislator
All right. Thank you, Shannon. Appreciate it. Questions by panel Members. Senator Durazo? Yes, go ahead.
- María Elena Durazo
Legislator
Thank you, Mister chair. Thank you for all of you, for the work that you do every day, in addition for being here and speaking to us. I have a, I live in a community called El Sereno.
- María Elena Durazo
Legislator
We have a number of state owned properties that we're finally able to get housing to be built or rehabilitated at an affordable rate, the condition that it has to be affordable. So Habitat for Humanity partnered up with the state. They got 13 properties and they're fixing them up and open the waitlist for a lottery.
- María Elena Durazo
Legislator
And 650 people put their names on that list. So I'm sure we all have, everybody in the room has examples of the need for affordable housing in addition to market rate. I do not oppose market rate, but I think the emphasis has to be on affordable. So let me ask you this.
- María Elena Durazo
Legislator
If you have specific information or examples, but especially specific information on the opposition arguments that have been made of.
- María Elena Durazo
Legislator
You can pick the ones that you want that you think are the most important ones to counter here, but what would your response be to the two most important arguments being made by the opposition?
- Thomas Umberg
Legislator
Senator Durazo, are you addressing it to one of the panel or each of the panel members?
- María Elena Durazo
Legislator
Why don't I limit it to two people in response to the panel? Whichever two.
- Thomas Umberg
Legislator
All right. So whichever two wish to speak up first.
- Susie Shannon
Person
Okay. So there are, I think, two main claims. One is that it will impede new construction, which I addressed in my testimony because when you have UC Berkeley and a UC study and then 32 recognized economists from across the United States all saying there's substantial empirical evidence that rent regulation policies do not limit new construction nor the overall supply of housing, and that when rent control was repealed in Massachusetts there was no corresponding increase in housing supply, what that tells you is there is no consensus among economists that rent control impacts new housing.
- Susie Shannon
Person
By the way, we have had rent control since 1919 in this country. Are we really saying that that's impeded construction in our country since 1919? I mean, it's--I mean, for me, it's ludicrous, but I've been following these issues.
- Susie Shannon
Person
The second is that it hurts renters, and it obviously doesn't. Tenant rights organizations--you know, their entire mission is about helping tenants, and they're supporting Prop 33. Our congressional representatives who support tenants are supporting Prop 33. Our state legislators who are supporting tenants are also supporting Prop 33.
- Susie Shannon
Person
We know that rent control actually helps tenants, which is why tenant advocates and the elected officials that support tenants are supporting Proposition 33. I can't imagine how corporate landlords, who are amassing billions of dollars off of rent and are basically doing their job, which is to get as much profit as they can, can speak for what's right for tenants. The very tenants that they're price gouging, the very tenants that they're price fixing with.
- Susie Shannon
Person
You know, RealPage is a platform where landlords are price fixing. They have been called out. Even the Justice Department has gone in and raided headquarters of corporate landlords because of RealPage--
- Thomas Umberg
Legislator
I'm not sure exactly what this has to do with the benefits or the detriments of Costa-Hawkins.
- Susie Shannon
Person
Well, she asked me about the two main arguments. And so, number one: it doesn't hurt renters. Number one: it doesn't affect new development. It actually helps renters, which is why we're all supporting it.
- María Elena Durazo
Legislator
Okay. Thank you.
- Shanti Singh
Person
Does anyone else want to go?
- María Elena Durazo
Legislator
Did you want to respond to that as well?
- Shanti Singh
Person
Yeah, I'll be quick too. I mean, it--it's kind of similar, but a little bit different to what Susie said, but, yeah, in terms of the supply argument, I mean, I'm, I'm sometimes doubly affected by this argument as a rent control tenant and someone with an economics degree where, like, there's sort of a misrepresentation of what the research actually says, right? And particularly, like, I already touched on this in my testimony, so I'll keep it quick.
- Shanti Singh
Person
But just want to reemphasize, you know, the idea that, for example, if I, as a rent controlled tenant, am harassed out of my home, which I have--so we work with tenants in rent-controlled housing who have been harassed out of their homes in order to reset rents to market or convert to condos.
- Shanti Singh
Person
If a speculator weaponizes the Ellis Act, which was meant to exit the market, right, but has actually been used for purposes well beyond that--if I am kicked out of my home because of that, then that is what people are talking about when they are saying there is a supply reduction, but there isn't actually a reduction in the actual supply of housing.
- Shanti Singh
Person
My home has been converted into a condo and I have nowhere to go, right? That's what, when you hear all of these critiques, if you read the papers, even the papers that seem critical of rent control in some way, that's actually what they're describing. They're describing the loopholes around it.
- Shanti Singh
Person
They are not describing the benefits of the policy itself. And to use that as an argument, I think, to not confer that benefit to more people, especially when we have plenty of proof in California that rent control housing remains a very profitable and lucrative investment, I think is really disingenuous. So that's that.
- Thomas Umberg
Legislator
All right, thank you. Other questions, Senator--whoops. Senator Durazo?
- María Elena Durazo
Legislator
Thank you. Just one more. I'm not exactly sure the question I'm asking, but I read this morning in the LA Times about discrimination against more than 200 California landlords and the representatives on Section Eight. Discrimination. Is there any impact between availability of Section Eight, affordable housing, you know, which makes it affordable with this rent control?
- María Elena Durazo
Legislator
It's kind of a broad question. If there's no answer, then I'm fine. But it just sort of struck me. It has to do with housing, it has to do with poor people, has to do with available affordable housing. Is there any connection here?
- Susie Shannon
Person
Yeah, I mean, there's different types of Section Eight, but I'll respond regarding people who have vouchers. So if you have a voucher, the federal government will give you a maximum amount that you can pay for rent.
- Susie Shannon
Person
And so as these rents go up, if you can't get a waiver even as an individual tenant from the Housing Authority, this does impact where you can go to get housing. So it absolutely does affect this. As rents go up, there's only going to be a maximum amount that that voucher is going to pay for.
- Susie Shannon
Person
Even though the tenant pays 30% of their income, they still have to stay within the maximum rate that the federal government gives to them, and so Housing Authorities have had to scramble. It also lowers the number of vouchers that can be given because if you get those waivers, those vouchers are still only worth so much.
- Susie Shannon
Person
And so you're getting these waivers from the federal government to increase that amount. But it's not like there's like a bigger pot in the federal budget for that. And so, yeah, so, I mean, you know, there are a lot of people that you've heard of who have Section Eight vouchers that can't find a landlord to take them. And part of it is that the landlord may not want to take less money by having a Section Eight tenant come in.
- Susie Shannon
Person
And I think the federal government, definitely under the Biden/Harris Administration, has done a good job in terms of making sure that there are waivers and making sure that they increase that, but it's costing taxpayers a lot of money to have these rent increases because a lot of money is going to Section Eight vouchers.
- Shanti Singh
Person
Very, very, very quickly, I'll just add too, that while--I think it was SB 329 passed a few years ago--that it's nominally--Section Eight discrimination is nominally banned thanks to the work of the State Senate. But we're still finding that on the ground very difficult to enforce. So there are impacts related to that too.
- Thomas Umberg
Legislator
All righty. Thank you, Senator Durazo. Senator Roth.
- Richard Roth
Person
You know, I think we all would agree that the rental situation, rental housing situation, worker housing is at a critical point in the state for a variety of reasons. As a state--and all this is balancing of state policy--as a state, we incentivize business growth and expansion in the urban coastal areas of the state without requiring those jurisdictions to certify that they have, either have, or will build worker housing and make worker housing available to the workers there, which then pushes the housing situation out to the more affordable areas, which drives our housing policy through the RHNA allocation and SCAG and whatever else it's called up here, where jurisdictions in the inland portions of the state are required to plan for additional housing.
- Richard Roth
Person
And as we've recently seen with this Governor and the Administration, some jurisdictions are spanked when they don't plan appropriately or announce the fact that they're not going to plan appropriately for worker housing.
- Richard Roth
Person
So it's a critical, it's at a critical state, and areas of the state that were once known as the affordable housing capitals of our state are no longer so affordable. So we're going to need to do something about that.
- Richard Roth
Person
So that's a state policy, but we're also sort of setting a state policy here with this proposition, not that we've passed it, but that the voters may. And my concern, or at least my inquiry--because I'm curious as to the impact on new construction, and I know you've said it has no impact--so with regard to those studies where the studies of states where rent control applied to new construction and there was no vacancy decontrol?
- Susie Shannon
Person
So these studies from USC and UC Berkeley were connected here in California.
- Richard Roth
Person
Where there were local jurisdictions that applied rent control from top to bottom, soup to nuts, new construction, existing rentals, no vacancy decontrol? You were restricted when you had a vacancy. You were restricted from the first day you opened for business as an apartment complex?
- Susie Shannon
Person
I think they took into account all of California, not just--
- Richard Roth
Person
Well, I mean, I'm just curious. You've cited the studies. So were the studies of local jurisdictions where the local jurisdiction, whether it was county wide or within the bounds of a city, had imposed rent control on the new construction the first day you opened for businesses in apartment complex and existing apartment complexes where vacancies existed but rent control applied at that point as well?
- Susie Shannon
Person
Yeah. So I did kind of address that just a little bit in my testimony that in the 1980s--okay, so Los Angeles passed rent control in 1978. So you need to live in a building that was built in 1978 or earlier in order to be under rent control. But the 1980s were booming in construction.
- Susie Shannon
Person
It was a construction boom all through the 1980s. There was no cost of Hawkins. There was no restriction on the City Council of Los Angeles or the county supervisors, and we saw booming construction--
- Richard Roth
Person
But there was no rent control--
- Susie Shannon
Person
All the way up to 94. There was no rent control there.
- Richard Roth
Person
But rent control applied to 1978 and before, right?
- Susie Shannon
Person
Yeah.
- Richard Roth
Person
So there was no rent control in 1978 going forward during the time that construction boomed. I mean, my question goes to, you know, most businesses need return on investment. And so that's my question, and if they can figure it out and we can put rent control on from the first day the apartment complex opens, that's fine with me, if it works. Well, let me get to how it works.
- Richard Roth
Person
So how would a developer--because we're forcing cities to plan and we're really sort of forcing cities to figure out a way to pressure developers to build more housing, because I don't care whether you live in Riverside County, where I come from, or urban coastal areas--everybody needs more housing.
- Richard Roth
Person
And the market rate stuff that's being put up today is $2,600, $3,200 for relatively small apartments. You need something less. So how would this proposition in its application work for new construction? I'm a developer coming in with a project. Will I know what my rental rates are going to be so I can figure out if the lines cross and I'm going to be able to service the debt that I've taken out or however else I'm funding the project?
- Susie Shannon
Person
In a way you will because the State Constitution provides a fair rate of return on rental property for every landlord, so yes. And this does not supersede that in any way and it hasn't in any rent-controlled city.
- Richard Roth
Person
But fair rate return, fair rate of return is in the eye of the beholder, right?
- Susie Shannon
Person
No, I believe that there's actually a formula which, you know, I'm not in the, I don't work for the State of California, so I can't tell you what that formula is, but there is a fair rate of return for every landlord. Yes. So in other words, municipality couldn't say that for new construction, rents could be set at $30. That would be against the law. So it has to be a fair rate of return. I also, I think--
- Richard Roth
Person
Is there a board? I mean, I know that's true in mobile and manufactured homes. Is there some commission or board that you go to as a developer in advance as you're moving your project through the permitting and entitlement procedure that can, you can determine in advance what your rental rate is going to be under--in a particular jurisdiction that adopts the Prop 33 architecture?
- Susie Shannon
Person
Yeah. So different cities obviously would have different either board or commission that you could go to or you could appeal to the City Council. And so landlords are doing this now. Landlords are appealing to local government.
- Richard Roth
Person
Well, they're not doing it on new construction because it doesn't apply to new construction yet.
- Susie Shannon
Person
Right. But landlords who have rent-controlled buildings--
- Richard Roth
Person
Right. I understand.
- Susie Shannon
Person
Can appeal, yeah. And that would be the case if rent control were extended to more buildings, you know, past, like in LA, past 1978 and past 1995 for other cities that adopted it after 1995. And then I think it's really important that you brought up RHNA goals because this has no impact on that. Every city has RHNA goals and they should be meeting those.
- Richard Roth
Person
No, no, I understand that. Those are planning goals. What we're talking about is actual construction of apartment building--and mostly apartments less than single family. And whether this proposition, whether we guess wrong, and if we guess wrong on whether it impacts the construction of new apartment buildings or not, what we do about it?
- Susie Shannon
Person
But we're not guessing wrong. I would say that right now we're going in the wrong direction. So we have RHNA goals for the City of Los Angeles, and developers have overbuilt 72,000 units in the last seven years from our last housing element study.
- Susie Shannon
Person
The previous seven years, they overbuilt 72,000 units above the RHNA goal in the City of Los Angeles. But they underbuilt for moderate, low, and very low-income units by almost 35,000 units in the City of Los Angeles. So right now, the market's not working for very low, low, and moderate-income folks, and that's why people are, you know, living farther away from where they work or having to leave California and not being able to afford it.
- Richard Roth
Person
But this doesn't address that.
- Susie Shannon
Person
We need something that works for--but we need something that works for the whole community, and this is why for affordable housing--because I'm a big advocate for affordable housing--the Southern California Association of Nonprofit Housing that represents those affordable housing builders is supporting Proposition 33.
- Richard Roth
Person
But, I mean, Prop 33 doesn't address the situation you've just spoken to where low to moderate is being underbuilt. Because there's no rent control right now.
- Susie Shannon
Person
It addresses affordability and tenants being able to live in their communities and not be forced out through gentrification and high rents. That's right.
- Richard Roth
Person
Well, I mean, I wanted to be clear. Listen, we've got to do something about the cost of housing and particularly the cost of rental housing in the state. I just am wondering, I'm questioning the studies and what was actually considered in the studies when we talk about applying rent control to new construction and exactly how that works and how we incentivize, as opposed to disincentivize developers to put money at risk and build apartment complexes and how those initial rents are set.
- Richard Roth
Person
We can probably figure out how to deal with vacancy, decontrol, and how you recover increases in operating expenses, such as insurance and utilities and--that are not built--and all the rest, but the initial cost element of new construction is something that I think we probably need a closer look. I don't want to monopolize, but--
- Susie Shannon
Person
And I would say, if I could, the inverse is true that Costa-Hawkins has done nothing to increase the supply of affordable housing, which is why we don't have it now. We don't have enough.
- Richard Roth
Person
Well, I should have said, obviously, there's some things in Costa-Hawkins, clearly the 1995 threshold that need to be updated and should have been updated, but we'll see how this all works out. Thank you, Mr. Chair.
- Thomas Umberg
Legislator
All right. Thank you, Senator Roth. Other questions? Comments? Senator Wahab.
- Aisha Wahab
Legislator
Thank you. Apologies. I was in another committee hearing. So I know that the LAO spoke, but I just kind of want to go over this. In their report, you know, they have fiscal effects stating some renters who live in properties covered by rent control would spend less on rent.
- Aisha Wahab
Legislator
Some who live in properties not covered by rent control would spend more on rent. Some renters would move less often. Fewer homes would be available to rent. One reason for this would be landlords would sell their properties to new owners who live there instead of renting it out.
- Aisha Wahab
Legislator
You know, all of the reasons that were given, especially even in the first paragraph, I do want to highlight that it basically echoes the concept of housing stability. When people move less and less--and I want to highlight this because I think a lot of people talk about rent control and rent issues in a way that's just about money.
- Aisha Wahab
Legislator
And the reality is that when families move from home to home to home to home every single year trying to find the cheapest rental spot that they can to still be close to work or so forth, they may move one city over, two cities over, three cities over, in the Bay Area, for example, where I come from.
- Aisha Wahab
Legislator
And the honest truth is that it creates instability in society because you're also, if they have a child, moving the kid from school to school to school. You know, they are potentially impacting future generations in a negative way without any community involvement or even closeness, if you will.
- Aisha Wahab
Legislator
So I do want to highlight a couple of things on top of that. First off, there's only so many cities that have rent control in the State of California. It's actually quite few, right? Rent control is very limited because of Costa-Hawkins. Many cities' rent control is for multifamily units prior to 1979, 1978, 1980, all years before I was even born.
- Aisha Wahab
Legislator
These properties are older, and I want to highlight that rent control does not cover single family homes, condos, townhomes, duplexes, triplexes, and up to about fourplexes. I state this because, you know, this is, you know, who we try to protect the most is the small mom and pop landlord that made an investment for their retirement or their future or their kids or whatever the case may be.
- Aisha Wahab
Legislator
However, rent control and the concept of Prop 33 and much more is for the multifamily large complexes. This is for the people that literally will never--and let's be honest about this--purchase a home in the State of California. Right? In my district alone, a single family home goes for about 1.4 million dollars.
- Aisha Wahab
Legislator
Tell me a teacher that can pay for that or a carpenter or an average worker that doesn't even have the benefit of being unionized. Right? So I highlight that because these are things, as policymakers, that we need to push and protect folks and also protect the industry in the best benefit of the average person.
- Aisha Wahab
Legislator
The fact that we have roughly a little under 50%--I think even more than 50% of the population as renters because this ballot measure in this form or another form has come in pretty much every election for the last three elections. And the amount of money that is being spent to support one argument over the other is very skewed as well. I will also highlight to some of the commentary, this does not prevent new development. Right?
- Aisha Wahab
Legislator
The trend of new development has been the single family homes, the townhomes, the condos, and so forth, because they are more profitable. Period. Right? Those that are considered starter homes are still unaffordable to the average person. The cities and serving on local City Council do not implement the price of any of these developments.
- Aisha Wahab
Legislator
It is the developer's sole responsibility to see how much money they can get out of each individual unit, how much they're going to spend on cost of material, on labor, on much more. So it is absolutely incorrect to say that this would impact new development.
- Aisha Wahab
Legislator
And I will highlight this because the cities that have rent control, like LA, has enacted rent control in 1978, and they have had new construction roughly in 2010 to 2020--and I've pulled it all up here for this hearing--about 50,000 new multifamily units, all not under rent control.
- Aisha Wahab
Legislator
Rent control also--and I want to be very specific--rent control, rent stabilization, and so forth--there is always a right of return on investment for that property owner. Right? It could be 3%, 5%, and the state's cap of, across the board, 10%. Right?
- Aisha Wahab
Legislator
San Francisco has developed a number of different units, literally, you know, over 25,000 in the last 20 years. Berkeley, you know, even Hayward, a smaller city that I come from, has been developing nonstop. So I highlight all of these things because the rhetoric and the narrative and the data is always utilized in a negative way.
- Aisha Wahab
Legislator
So I want to highlight to the panelists here--and if you guys, if any one of you guys can answer this question, without Costa-Hawkins and with Costa-Hawkins, can a landlord still raise rents?
- Susie Shannon
Person
Yeah. A landlord can still raise rents, and they also are guaranteed in the state constitution a fair rate of return.
- Aisha Wahab
Legislator
Okay. And when a particular renter leaves a unit, is the landlord able to increase the rent to market rate?
- Shanti Singh
Person
Yes, that's happening literally in my building. So.
- Aisha Wahab
Legislator
Okay. And so the argument that we constantly hear that it restricts so significantly. And, you know, my big question is also, why are we not focused on just making sure that we have safeguards for poor people more so than focused on the profits of landlords? Do you have any commentary on that?
- Susie Shannon
Person
Yeah, I think it's a shame that the narrative is set on profits over people again and again and again, you know, in the media, in the state legislature. Unfortunately, when you have constituents, and we know that the market typically doesn't work for lower income people, and they rely on their elected officials to help them, it's really distressing that we are constantly talking about profits, and we're not talking about people, actual people. A waitress with two kids.
- Aisha Wahab
Legislator
So we have seen a rise in our homeless population, more specifically amongst seniors on fixed incomes. Do you believe increased units that have some type of rent control, rent stabilization, would help our senior population?
- Susie Shannon
Person
Absolutely.
- Shanti Singh
Person
100%.
- Susie Shannon
Person
Rent control gives predictability of rent. A lot of homeowners have predictability of rent. And if you told the homeowner, hey, your mortgage is going to go up 10% every single year, I mean, they would come at you and be like, we're not going to pay 10% more in mortgage. But somehow that's okay for, for people who... I mean, you know, the statistics show that renters make half of what landlords make, and they really can't afford it. I mean, they just can't afford it. It's really that simple.
- Aisha Wahab
Legislator
And currently, renters, do they not pay for their parking, their utilities, even a monthly pet fee?
- Susie Shannon
Person
Yes. I have a client that actually is paying dollar 25 pet rent, and she is a senior citizen, and she's in her eighties, and her rent goes up about 8% every year because I know, because every year when she gets that rent increase, I hear from her, and then she always tells me about the pet rent because she has a cat.
- Aisha Wahab
Legislator
Okay. And, you know, in my district, for the most part, it averages over $100. And here, even in Sacramento, I pay over $175 for a non-guaranteed parking space. So as a renter, I also want to highlight when construction, or let's say an improvement to a unit or so forth is done by the landlord, is that cost to some degree extended over to the renter?
- Shanti Singh
Person
Yes. You can pass through that cost. And that's actually a lot of upward adjustments beyond rent control that are approved by rent boards.
- Aisha Wahab
Legislator
Is there any data as to the developer making their return on investment? Is there a number of years after that development is created that the developer gets their, let's say, fair rate of return?
- Susie Shannon
Person
You mean their investments? Yeah, it's about 15 years, which is why for Prop 21, we had a 15 year rolling start date. But our opposition now for Prop 33 also opposed that as well. So we even carved out new development for 15 years, and that apparently wasn't good enough.
- Aisha Wahab
Legislator
Definitely. And I was a part of USC's program for developers and so forth, and I want to highlight that developments are actually sold even sooner than the 15 years, so they make their profit and their return a lot faster, even under rent controlled units in these particular cities. Because rent control does not apply to literally not a single development after 1995. Right. So I appreciate that. I just really want to highlight, if you guys have any commentary in regards to who this, you know, would help Prop 33, what is the goal overall?
- Shanti Singh
Person
Yeah, real quick, just one addition to repealing Costa–Hawkins is not going to stop you from setting what the base rent is when you are first issuing your security of occupancy. You can set that to whatever you want as a developer. But no, I mean, in terms of who this is going to help.
- Shanti Singh
Person
This is going to help people whose incomes are not, a lot of people, not just low income tenants, but also middle income tenants as well, who are also completely shut out of the homeownership market at this point, as you said. But anyone whose income is not, my income is not going up 10% year over year.
- Shanti Singh
Person
If anyone else is here is, congratulations. I'm happy for you. But, yeah, I mean, it's because, I think because rent control also doesn't, you don't need a lottery to get in there. You don't need to do all these income verifications and applications and wait lists, etcetera. Right. It's just stabilizing the rate of increase on your rent.
- Shanti Singh
Person
So you move in there, you could pay a certain rent. Like, if your salary goes up, you know, a little bit, or if, you know, if you just have a little bit of a downturn in your life or you need to pay for your kid's education or you need to pay for your healthcare costs, et cetera. Most people, we have upturns and downturns in our lives, especially working low income and middle income people. And rent control is for you.
- Aisha Wahab
Legislator
Right, and rent control, so for example, when people talk about the housing market and so forth, we do have a high demand. It's California. Everyone wants to move here, and obviously population growth as a whole. But as far as the restrictions on, okay, why development is not happening, does rent control really apply to that in any concept? If single family homes, condos, townhomes, duplexes, and any property after 1995 is created is exempted from rent control.
- Susie Shannon
Person
That would be up to the local community, so it would be up to the city council and the county supervisors. And I think there's another issue, which you kind of touched on, too, which is that if someone is rent burdened, it's very hard for them to save up for that elusive down payment to buy a home.
- Susie Shannon
Person
And even if they do save up, it's the same landlords who are raising rents on these multifamily buildings who are also competing against those families a lot of times to actually purchase a home because we're seeing corporate landlords, and we have since 2008, buying up a lot of the single family home stock as well.
- Aisha Wahab
Legislator
And the LAO's report states that renters in California typically pay about 50% more for housing than renters in other states.
- Susie Shannon
Person
That's right. We have more people rent burdened in California than anywhere in the entire country.
- Aisha Wahab
Legislator
All right, thank you.
- Thomas Umberg
Legislator
Senator Ashby.
- Angelique Ashby
Legislator
First of all, it does my heart good to see an all female panel, so thank you for being here and, you know, fighting for more housing. I definitely think we all agree on that. It's always just about how, right. And I guess I just wanted to chime in because every chance I get, I want to say this. I personally believe that part of the housing crisis that we're experiencing now comes from the loss of redevelopment at the state level.
- Angelique Ashby
Legislator
And to deny that is, I think, shows a certain level of being uninformed about how local governments build low and very low income housing. Because losing that source in 2011 and then flash forward to now, and we have this crisis, and it really is rooted at the very beginning of housing.
- Angelique Ashby
Legislator
So people who need wraparound services or additional care or support, that's the housing we're lacking the most of all. And it's so clogged that, in the continuum of housing, we can't transfer people out of it and into the next and then onto Independence because we don't have enough spacing at that very beginning.
- Angelique Ashby
Legislator
And while I am a big proponent of housing anywhere on the spectrum helps housing everywhere on the spectrum, we have an undeniable problem on the front end. And, you know, I have mixed feelings about rent control. I do. I've seen it. I've seen some rent solutions work.
- Angelique Ashby
Legislator
But I also worry deeply about developers not being able to build because they don't have assurity. I think Senator Roth went down this lane with you, but it's hard for developers. They will tell you, if I don't know how much revenue I can count on, I can't enter into the project.
- Angelique Ashby
Legislator
And so if we can't make it very clear and very certain for developers that their margin is going to be enough for them to finance housing, we're going to see a different kind of problem that we'll then have to solve for. So I just like to take this opportunity and maybe let each of you, if you want to, chime in on it. But, you know, Senator Wahab and I are fairly new here. We're both hyper-local electeds. We so understand this from our city's perspective.
- Angelique Ashby
Legislator
We've got a little time on the clock, and we really want to do something about housing. And I tend to focus on the redevelopment piece, and she focuses on that other areas, too. So tell us what you would do if you were Senators. How would you bring back some form of redevelopment to help offset this issue so that we could deal with the funding component, and also the piece where our housing and redevelopment agencies or our nonprofits out in our communities, depends on which city, you know, whoever's doing that work, how they have the resources they need to provide services to those families.
- Angelique Ashby
Legislator
And let me caveat this by saying I lived in low income housing for a big chunk of my life as a young single mom in this city where I am now the Senator. And I used food stamps, and I had to move a lot to keep rent at an attainable rate for myself and my little boy while I worked full time and put myself through UC Davis and then McGeorge Law School at night.
- Angelique Ashby
Legislator
So I am not unfamiliar with navigating those resources. I am not unfamiliar with what stabilizing somebody's life can mean to their future. I think I'm a pretty good example of it, actually. But I lived in housing, sometimes it was subsidized, sometimes it wasn't.
- Angelique Ashby
Legislator
Sometimes it was just a good deal or a layout that seemed like a one bedroom but had a loft so I could turn it into a kid's room. But you get creative when you don't have a lot of money. So you tell me what you would do, how you would balance those two things and how you think redevelopment plays into it. Because I think that is such a missing component moving forward.
- Thomas Umberg
Legislator
Senator Ashby, are you asking each panel member to respond to that?
- Angelique Ashby
Legislator
Whichever one wants to, they don't all have to.
- Thomas Umberg
Legislator
So why don't we start with Ms. Singh, and then we can proceed.
- Shanti Singh
Person
Thank you. I can try to take a stab at that. That's a very ambitious question, Senator Ashby. There's so many things that were, like, circulating in my mind. But, you know, I mean, one thing that we're thinking of redevelopment, or let me, let me put it this way. The localities, when we're talking to local folks who are trying to build affordable housing or permanent supportive housing or fund things like community land trust, I sit on the board of a community land trust of San Francisco, CLT.
- Shanti Singh
Person
So I actually do have to look at, like, financing spreadsheets and stuff. I'm, like, kind of a landlord myself. Not really. But to that point, you know, the loss of redevelopment means that the state... Whether you're building traditional low income housing, tax credit housing, whether you're exploring forms of social housing, whether you're trying to keep what existing public housing exists funded or well maintained, you're trying to get funding for community land trusts or whatever to take housing off the speculative market and add to the stock of permanently affordable housing.
- Shanti Singh
Person
Everybody is really, really struggling right now because they don't feel, no offense to anybody, that they're being adequately resourced by the state. And since what, I think, I forget. It's 2018 or 2019, but since then, 1% of our total General Fund budget has been allocated to all housing and homelessness programs combined, which means that it creates a lot of, unfortunately, like, not competition in the fun sense, competition, you know, between scarce resources. Because everybody who's trying to build any form of affordable housing is often being pitted against each other and looking to the state for resources.
- Shanti Singh
Person
And additionally, I mean, a great example is we passed the, I thought, was it 2-3 years ago, the Foreclosure Intervention Housing Preservation Program, FIHPP. And I work with FIHPP recipients. I'm on the board of one that could have been one. And that program was very carefully designed and implemented, and people fought over the money, and the money was granted, and then all of a sudden, just as it was, the rubber was finally about to hit the road, that money got clawed back.
- Shanti Singh
Person
So I think that's also, that's an example of, like, you know, we put all of this work into, we win a proposal. The Legislature signs on, the Governor signs on, the implementation is underway, or it's about to happen, and all of a sudden it's gone. So that's an example of something I would hope to be fixed.
- Thomas Umberg
Legislator
Thank you. Senator Durazo, did you want to make a comment?
- María Elena Durazo
Legislator
Yes. Thank you. Just before I leave, I just want to be clear. There's so many issues related to housing, but today is about Prop 33, and Prop 33 is not about a particular version of rent control. It is strictly about putting it in the hands of local entities that they put it, if they want to, on the ballot. They don't want to, they don't have to. What it's going to be, what it's going to cover, what it's not. Because otherwise, I think we could try to. So I just want to thank you.
- Thomas Umberg
Legislator
Alrighty. Thank you, Senator Durazo. Okay, back to Senator Ashby's question. So. All right.
- Susie Shannon
Person
So for me, the first thing that I would do is stabilize rents for existing tenants because I think that they deserve some predictability in their housing costs, which is very similar to what a homeowner has. I also went to UC Davis. I had no problem finding housing then.
- Susie Shannon
Person
I'm not sure that would be the case now, that was affordable. The other thing is the Southern California Association of Nonprofit Housing that represents the builders of affordable housing actually support Prop 33. So they don't see this as in any way of stopping new construction of affordable housing.
- Susie Shannon
Person
What we're really talking about is construction and market rate housing, and it doesn't stop that either. So the question is, do we believe that the rents that are set right now are something that people can afford in the community or not? Is the market actually working for moderate, low, and very low income folks?
- Susie Shannon
Person
Are we building for those people? In Los Angeles, we're not. I mean, we have over 70,000 vacant units in Los Angeles. We have homeless encampments in the shadows of vacant buildings, which is a strong indication. If we heard about this in another country, we would say something's very, very wrong.
- Susie Shannon
Person
And that's because housing is being used as a commodity. Housing is something that exists on a balance sheet. Housing is something that is increasing in value year after year. Even if you have a vacant building. No one says that someone who owns a building or builds a building or whatever has to rent up 100% of their units.
- Susie Shannon
Person
We have no control on vacancy right now on vacant units, with the exception of San Francisco. There may be a couple other cities, I'm not sure. But the landlords can do whatever they want. They can have... I had a landlord tell me that they make enough of a profit having their building half full in Los Angeles.
- Susie Shannon
Person
And they would rather do that than bring in low income element to their building. So we're acting like, you know, this market is the same as tennis balls. It's not tennis balls. This is property that is increasing in value year after year. It's being bought by hedge funds, by investment companies, and they have it on their balance sheets. It's not always going to be rental housing.
- Thomas Umberg
Legislator
Ms. Briceño.
- Ada Briceño
Person
Thank you. I'll just quickly say that, you know, I don't know how to legislate. I don't have any intentions of wanting to be a Senator. All I know that, you know, what I can contribute is figuring out how to help pass this measure. I don't know what the response is.
- Ada Briceño
Person
I just know that, for example, my son, I have a 25 year old son who sits on the Council in Stanton, and he would like the opportunity to figure out if Stanton can have rent control. All I know is that he gets blamed for people not being able to, you know, live in the places where they can.
- Ada Briceño
Person
All I know is that I hear that, as legislators, whether you're in the city council level or a Senator, that we've got some responsibility. And so I now know that we have in the hands of, you know, California voters the ability to pass rent control. And that's what I can contribute, you know, as a Californian. Just to get the word out. But I would love to hear, I'm just fascinated to hear what others have to say about how to try to move that forward.
- Thomas Umberg
Legislator
So, Ms. President Gutierrez-Vo, one second. Senator Roth needs to leave, so he... No, no. We have one more person to comment on your question, and then we'll turn to Senator Roth. All right.
- Michelle Gutierrez-Vo
Person
Yeah, I appreciate the question. I'm a nurse. I am clearly not a housing expert. I'm not an economist, and I would never be on that side, to want to be a Senator. I love taking care of people, and I appreciate your history. But this I can tell you. As a patient advocate and as a mother, it is distressing to me to hear that what we have to contend with is actually logistics of profit growth versus the mental health and welfare of our Californians.
- Michelle Gutierrez-Vo
Person
I am a mother of a almost 30 year old and 35 years old, and I have a lot of nurses who have older kids. And I can tell you most of them, and they have good jobs. They are living with us because they cannot afford this rent. And so beyond the tragic realities of what I described earlier of prioritizing profits over the present and the future of this country, I also, you know, want to say, no matter... In just logistics and commonsensical terms, you can invest in developers all you want and they can build as much as they want.
- Michelle Gutierrez-Vo
Person
But if nobody can afford it, then what are we doing? We're just investing in these developers, but we are actually killing our future. To me, as a Californian, as a woman, as a mother, and as a nurse, this is what I want you guys to come away with today. And I am depending on you, and so are all the nurses and patients in this state, to truly focus on what really matters. Our kids need you to make those good decisions.
- Thomas Umberg
Legislator
All right. Thank you very much.
- Angelique Ashby
Legislator
Yeah. Thank you for your perspective.
- Thomas Umberg
Legislator
We'll come back to you, Senator Ashby, but let Senator Roth ask his question.
- Richard Roth
Person
I just want to ask one clarifying question for me, because I, too, am not in the housing business. I'm not a contractor, and I'm not a developer. So I'm pretty sure I don't know what I'm talking about. But if I decide to develop an apartment building, and I actually constructed under Prop 33.
- Richard Roth
Person
And I understand this is local control, so we don't know what they're going to do, but is it your intent that I would then set the initial rate for my market rate apartments and then that initial rate would be subject to whatever local control, what local rent control the jurisdiction adopts? Is that your, is that the intent you all the intent of Prop 33?
- Susie Shannon
Person
So Prop 21, we actually had a 15 year rolling start date, and almost every city that I know that I know of has adopted a 15 year rolling start date. The intent really is just to allow local communities to pass something that makes sense for their community. This won't be a statewide, you know, one size fits all.
- Susie Shannon
Person
You know, what's good for Los Angeles isn't necessarily what Fresno would adopt and what's good for their constituents. And that's kind of the point of it, which is just to put that, you know, one more tool in the toolbox. There are some communities that won't adopt anything.
- Susie Shannon
Person
There are others that, you know, have low income renters or moderate income renters where rents are super, super high, where they'll need that. And so the whole point is to allow the local communities to make those decisions as opposed to saying there's any intent or trying to impose some statewide blueprint on every single community.
- Richard Roth
Person
But I'm just... Since you're the architect of Prop 33, I gather what you're saying is, if I build the apartment complex based on cost of construction, which varies up until the time you actually get the occupancy and open the door, I can set the market rate for the units, but then any rent control that a local jurisdiction would adopt would apply at that point to the new construction. So any increase would be governed by whatever the rent control parameters are, right?
- Susie Shannon
Person
No. So, first of all, it would take the local community actually taking a vote, and that local community could enact a 15 year starting point.
- Thomas Umberg
Legislator
Let's assume a rent control ordinance has been passed.
- Richard Roth
Person
So I get to set the market rate, and then the rent control ordinance would apply to that market rate for any future increases. Right?
- Shanti Singh
Person
In the... Do you want me to? In the scenario, that is basically the mechanism for what we call second generation rent control, which is rent control in the United States over the last 40 or 50 years, including California. If the local jurisdiction decided to do that. This is all about just letting them decide.
- Richard Roth
Person
It just wasn't clear to me. When you say it applies to new construction, which is what's been said, right?
- Susie Shannon
Person
No, that hasn't been said. I'm sorry. In order for it to apply to new construction, and I don't know what your definition of new construction is. Typically, it's 15 years for most cities. It absolutely would not necessarily apply to new construction because the city council could have a 15 year ruling start date. Because, yes, it's true. We're the architects of Prop 33. We're also the architects of Prop 21, which had a 15 year rolling start date.
- Thomas Umberg
Legislator
But here's... Let me.
- Richard Roth
Person
This may be the problem with Prop 33.
- Thomas Umberg
Legislator
Let me just ask this question before Senator Roth leaves. The question is that if a city enacts an ordinance that says you may only charge $1,000 rent for any development, is that, do you believe that that is within the parameters of revoking, repealing Costa–Hawkins, that a city could do that?
- Susie Shannon
Person
Actually, I believe that the state constitution giving landlords a constitutional right to a fair return is what would decide or help decide what that starting rent is. $1,000 where? Where are we talking about? But...
- Thomas Umberg
Legislator
That answers my question.
- Susie Shannon
Person
Yeah, it's guided by the state constitution.
- Thomas Umberg
Legislator
That applies to even the initial rate, even the initial rental rate, so long as it is, If somebody believes that it provides for a fair return, in your view would be legal?
- Susie Shannon
Person
It's only legal if it's constitutional.
- Thomas Umberg
Legislator
Okay. All right. I don't know, Senator Roth, if this just confuses things more or not, but go ahead, before you go.
- Richard Roth
Person
No, I just think that would be good. I mean, as the architects of the Proposition, I think it would be good to clarify that with some certainty, and you all would be in the driver's seat since you drafted it to clarify how that applies to new construction. Because it's a little bit unclear to me, and while I'm not a housing person or developer, I have been a lawyer for 50 years, and words matter and clarity is important. And it might be critical to some people with the ballot box.
- Richard Roth
Person
I would think that the developer, if they could set a reasonable rate for the, they do the construction, they set the market rate, and then whatever the local jurisdiction has adopted applies to that rent for any future increases would make sense to me. Vacancy decontrol out the door.
- Richard Roth
Person
So I assume, so if there's a vacancy and somebody comes in, the rental, the rent restriction applies at that point. But I think we need some clarity on that. But you're absolutely right. We do need some work on worker housing. We need to control rents for people.
- Richard Roth
Person
However, we try to drive the incomes up in the State of California, like everything else, the incomes don't keep pace with the cost of housing, and we have to work on that. But I do need to leave. But I do commend you all for the effort, and I apologize to my folks in the folks in the seats that I won't be able to hear them, but maybe I can listen from upstairs before I have to take off. Thank you, Mr. Chair.
- Thomas Umberg
Legislator
All right, thank you, Senator Roth. Senator Wahab.
- Aisha Wahab
Legislator
Thank you. You know, just from a local city perspective, and I just want to highlight this for the larger public. Obviously, as we talked about, this Proposition would allow for local control. That is the ultimate goal of this, right. Is that local cities have been so restricted that they cannot even do their job in regards to land use decisions.
- Aisha Wahab
Legislator
Right. And that is a big frustration from a local city perspective. The other perspective is that the majority of cities do want market rate housing. They do also want to ensure that the developer and the landlord has some flexibility. So oftentimes a pure rent control policy is not enacted. It's a rent stabilization policy that gives far more flexibility to landlords.
- Aisha Wahab
Legislator
I state this because rent control basically says that if you want to, to the questions earlier, if you want to charge, you know, $1,000, $2,000, which, let's be honest, $1,000 is never going to happen in this market throughout the State of California, regardless of whether you're in rural California or not.
- Aisha Wahab
Legislator
But rent stabilization would state, and most cities are leaning this way, is that, hey, if your unit right now is $2,000, and you could set it, the landlord sets it, it would just be increased year over year that that particular resident stays there by 5%, 7%, 3% CPI.
- Aisha Wahab
Legislator
Whatever the case may be. Far more flexibility. In all of the conversations overall for most cities is that they do want to be fair to these corporate landlords, and I want to be very clear about that. And that they also get a fair rate of return to not only upkeep the units, but then also, let's be honest, they will benefit in any type of tax that's there, the increase there. So it would be counterintuitive for a city to be so restrictive. So this fantasy that it would happen is non-existent. Right?
- Aisha Wahab
Legislator
Whereas cities want to be fair. And to the comment that you made earlier, most cities know what's best for their own community. Most cities know if their demographic is lower income, struggling. Let's say, in the rural communities, if a big business, tanked and failed and is leaving the city. You know, what are we doing for residents? And this is what this Proposition really highlights and hopefully empowers local cities and local jurisdictions to make the decision best for their constituents. So thank you.
- Thomas Umberg
Legislator
Alrighty. Thank you very much. Thank you. Let's bring forth the next panel. Ms. Carlton, Mr. Curtin, Mr. Oneto, and Sanjay Wagle.
- Thomas Umberg
Legislator
All right. Whoever sits down first gets to go first. Looks like Miss Carlton, so. Okay. Floor is yours.
- Debra Carlton
Person
Good morning, Mister Chairman and Member. My name is Debra Carleton. I'm the Executive Vice President of State Government Affairs for the California Apartment Association. We represent over 60,000 rental property owners and managers, who collectively are responsible for more than 2 million rental units throughout the State of California. The largest percentage of our membership are small owners.
- Debra Carlton
Person
They own less than five units and most of those are single family homeowners. Of course, I'm here to speak in opposition to Proposition 33. Californias are now facing the third attempt by Michael Weinstein and the AIDS Healthcare foundation to dismantle California's law on rent control. Propositions 10 and 21 were soundly defeated by 20 points.
- Debra Carlton
Person
The voters have already spoken. And yet here we are again with the third attempt, Proposition 33. Costa-Hawkins doesn't prevent local governments from passing rent control. Instead, it provides guardrails, as you heard from the previous speakers. Strict rent control is a blunt instrument that fails to target the individuals and families most in need.
- Debra Carlton
Person
Research has shown that the wealthier tenants benefit from rent control. While lower income tenants face challenges finding housing at all. A targeted approach, such as building more housing and reducing regulatory barriers to new construction, is far more effective than rent control. Studies have demonstrated that rent control does not achieve its intended goals.
- Debra Carlton
Person
The impacts of rent control have been extensively studied by urban and real estate economists for decades. Across political lines, the conclusion is overwhelming. Rent control policies are ultimately not effective at achieving its stated goals. It does more harm than good.
- Debra Carlton
Person
In fact, in March 2024, the Journal of Housing of Economics published the largest meta study on rent control. Rent control is called Rent Control Effects through the Lens of Empirical Research. The study reviewed 206 different academic articles on rent control in the US and around the globe and was published between 1967 and 2023.
- Debra Carlton
Person
Of these, 112 were empirical studies and 96 were qualitative studies on the impacts of rent control. The review found that rent control results in a deterioration of the quality of housing and as a whole, rent control generates higher rents for neighboring market rate rental units.
- Debra Carlton
Person
And more importantly, it creates a significant decrease in the supply and quality of rental housing. By disincentivizing new construction and encouraging property owners to remove units from the market, Proposition 33 will worsen California's housing crisis. In fact, the League of California cities did not agree to support Proposition 33 because they know it's not ultimately, their decision.
- Debra Carlton
Person
While, they have been, it has been argued that it's about local control, out of towners like Michael Weinstein and the AIDS Healthcare Foundation can come to your city and impose rent control through the ballot.
- Debra Carlton
Person
As we saw in cities like Berkeley and Santa Monica prior to Costa-Hawkin, strict rent control led to a decrease in rental units and harmed the very people it was intended to protect. This is the very reason that the California Legislature passed Costa-Hawkins.
- Debra Carlton
Person
Studies at the time demonstrated that strict rent control cities like Berkeley and Santa Monica had lost certain types of populations. Both the young and elderly populations had declined in those cities.
- Debra Carlton
Person
The population for which rent control was designed to address was receiving minimal benefits from the policy, and the populations appeared to have migrated out of the cities to neighboring cities without rent control.
- Debra Carlton
Person
And in fact, ignoring these studies, the Board of Supervisors of San Francisco recently announced that if Proposition 33 passes, it will impose rent control on all properties new construction up to November 2024. There's no doubt that housing construction will come to a halt in San Francisco.
- Debra Carlton
Person
And if Proposition 33 passes, numerous local ordinances are currently written in such a way that they will automatically expand their local rent control to include single family homes and newer construction, including vacancy control. I would say that California is unique from other states.
- Debra Carlton
Person
Over 60% of our rental housing are small, meaning less than 10 units, and half of those rental units are in single family homes. These are the easiest to take off the market, unfortunately. This happened prior to Costa-Hawkins in the cities of Santa Monica and Berkeley.
- Debra Carlton
Person
Under Berkeley's rent control, the city had lost over 3500 units in the first years of its local rent control. And it was only after Costa-Hawkins that the rental units came back online and building permits increased. California's affordable housing crisis comes from a lack of affordable housing, not a lack of rent control.
- Debra Carlton
Person
And it's important to note that we already have rent caps with AB 1482, which impose rent caps on newer construction, as well as single family homes owned by larger owners. It includes just cause eviction as well, and allows local governments to continue to impose just cause eviction at a more stringent level.
- Debra Carlton
Person
We don't need more stringent rent control in California. The answer to our housing crisis is not punitive regulatory actions on rental property owners, but policies that incentivize construction of affordable housing. Proposition 33 does nothing to build new housing or encourage it. It does not protect low-income renters or address our homelessness population.
- Debra Carlton
Person
Instead, it would exacerbate the very problems it claims to solve. That's the reason why we oppose Proposition 33. Thank you.
- Thomas Umberg
Legislator
Thank you very much. All right, next we'll go to Mister Curtin.
- Danny Curtin
Person
Thank you, Mister Chairman, Senator Wahab. Pleasure. I'll speak to the viewing public as well, if you don't mind. My name is Danny Curtin. I'm with the California Conference of Carpenters. And literally every conversation, hearing testimony, I've started with the same sort of phrase, and I'm going to read it to you.
- Danny Curtin
Person
Basically, lack of affordable housing and the crisis of homelessness is the single most destabilizing economic, social, and political issue in California. There's no question about the anger that we're seeing. I'm going to get into a little bit about that.
- Danny Curtin
Person
But what I realized today, listening to this debate, this is why you're getting paid the big bucks to try to sort this out. Just a little minor problem among many you face. Californians spend the second highest percentage of their income on rent, second only to Hawaii.
- Danny Curtin
Person
I can recall driving home from work one day, four blocks away, I was a little confused. I saw a single woman with a pile of clothes in the back of her car park. Until the two kids ran, little kids ran into her car. I realized she was living in her car with the little children on top of that.
- Danny Curtin
Person
Working class families, even unionized carpenters, they're in fear that they are one paycheck away from losing their home. They are afraid for their kids. I have two adult children, 35 years old about. I don't know how they're going to survive in this housing market. It is really complicated making people angry.
- Danny Curtin
Person
Homes are out of the reach for all but the wealthiest. Poverty is no longer invisible. It's in our face. And the housing crisis is what makes it that way. In the richest state in the richest country in the world, it can no longer be ignored. It hasn't been ignored, by the way. It's tragic and it's shameful.
- Danny Curtin
Person
And in my heart, I would have preferred to be on the first panel. If I thought it would work, I would have been on the first panel, but I don't believe it will. This profound human crisis has been a major focus of the Legislature. So the implications were that you all weren't trying to do your job.
- Danny Curtin
Person
And I've watched it over the years. You are doing more than you possibly can. I mean, you're trying everything you can because you got to go home to your constituents. Not just in the last few years, but for decades. Costa-Hawkins has been referenced numerous times. Hundreds of bills just in this session, probably 70-50 bills.
- Danny Curtin
Person
Hundreds and hundreds of hearings. Stakeholders conversations. That's not what's happening in Proposition 33. It's not to fix it, as I think Senator Ashby Washington indicating, or Senator Roth, that it could be fixed. No, it's on the ballot the way it is.
- Danny Curtin
Person
The bills, such as the one you mentioned, Assemblyman Hsu, now city attorney, AB 2011, Senator Razzo, which we co sponsored 2243 this year, which we co sponsored, Senator Weiner's SB 35 and his 423 this year, which we cosponsored. Senator Atkins, I think it was SB 9.
- Danny Curtin
Person
This has been a struggle and a complicated conversation around all these bills to solve the issues that you've been so, I think, eloquently outlining. After all that, one entity, the California AIDS Foundation, has found the magic formula, the 23 words that were read earlier today. It's so simple. The real question is, how did we all miss this?
- Danny Curtin
Person
How did you all miss this? In the hundreds of hearings you've had, the bills you've dealt with.
- Danny Curtin
Person
I want to personalize it for a minute, because a close friend of mine, who I consider very smart and politically a very strategic person, told me he supports Prop 33 because it sends a strong message and sticks it to the greedy developers because housing costs are out of control. Don't listen for a second.
- Danny Curtin
Person
I truly sympathize with that completely, that sentiment. So why am I here? Why am I at this table, and why are the carpenters in this coalition? By the way, Senator Umberg, if you have a cell phone, could you take a snap of this? It really is an interesting thing to be seen at a hearing. Forgive me.
- Thomas Umberg
Legislator
Mister Curtin, you've been at this too long.
- Danny Curtin
Person
All right, thank you. This particular testimony?
- Thomas Umberg
Legislator
No, no, just this.
- Danny Curtin
Person
So because Prop 33, in spite of how appealing it sounds, it can be used to undermine virtually all the work that this Legislature and this Governor have done, particularly in the last few years, to cajole, to convince, to demand that local governments build more affordable housing.
- Danny Curtin
Person
If people could make money building affordable housing, we wouldn't be here talking about it. They can make money on market housing. Go have it if you want to talk about. Well, anyway, I'm going to quote a few things. The promise of aggressive rent control alleviating the pressure of California's housing crisis is seductive.
- Danny Curtin
Person
I love that. Prop 33 promises a solution to the housing crisis. It would almost certainly make things worse, San Francisco Chronicle. And I have young adults living at home, and it really is seductive. What's wrong with this? Quote again, rent control discourages investment in new housing, constraining supply and driving up overall housing costs, Mercury News.
- Danny Curtin
Person
Quote, studies show that robust housing supply, not rent control, is the most essential factor in keeping housing prices down. And then examples of cities and different places where it actually has succeeded. I'm not saying it's completely the answer. That's Chronicle editorial two.
- Danny Curtin
Person
As much as I want to believe that Prop 33's 23 word prescription, it's obvious to me, unfortunately, either by design or a sincere carelessness, it's a classic bait and switch. Local, now that was a quote. Local governments could, more likely will, exploit that simple Prop 33 Language to make it nearly impossible to build new housing, not all, select.
- Danny Curtin
Person
Quote, Huntington Beach has already announced its intentions to use the language in Prop 33 to impose steep affordability requirements on projects, effectively making it impossible for them to pencil out and halting new development.
- Danny Curtin
Person
Another quote, statewide rent control is a ludicrous idea, but the measures language goes further, Tony Strickland, Huntington Beach Council Member, said at a council meeting in March. I'm sure you all remember, Tony. Quote, it gives local governments ironclad protections from the state's housing policy.
- Danny Curtin
Person
Strickland said Weinstein's rent control measure would block the state's ability to sue our city because Huntington Beach could slap steep affordability requirements on new multi unit apartment projects that are now exempt from rent control. Such requirements, he argued, could stop development that would destroy the fabric of the town's, quote, quaint Surf City vibe.
- Danny Curtin
Person
Assuming everybody wants these housing units in the low-income area, yeah, that might work, but they don't. That's been the problem for decades and decades and decades. On paper, this is another quote, it would be illegal to build new homes.
- Danny Curtin
Person
It would be illegal, largely speaking, to make money doing so, said Luis Morante, Vice President of Public Policy at the Bay Area Council, a pro business advocacy group that opposes the measure. That was from Politico.
- Danny Curtin
Person
It's not hard to imagine that Proposition 33 will be used in the most cynical fashion by communities that want to stop affordable and low-income housing development. Proposition 33 will give them the tool to do it, in spite of all the good intentions that I completely agree with that we heard about.
- Danny Curtin
Person
The carpenters union is essentially a jobs organization. That's why we are at this table in this unusual alliance. We believe we can address this issue by building more affordable housing. But we are also aware that wages and working conditions for construction industry workers in the housing industry are the worst in the industry. Bear with me, my partners.
- Danny Curtin
Person
California's median construction pay ranks 46th in the United States, the result of a decades long freefall in the housing construction industry. Sounds a little odd considering we have a healthy, unionized construction industry as well, but we are ranked 46th in wages. That sounds incredibly low.
- Danny Curtin
Person
Here's why, about half of California's construction workforce, almost 400,000 workers, is classified as low, very low, or extremely low income. That's the Census Bureau in 2017. 400,000 workers families in California are enrolled in safety programs, safety support programs, costing over $3 billion. This annual public subsidy is due to the low wage, often exploitative residential construction sector, UC Berkeley 2021
- Danny Curtin
Person
One in six construction workers in California are in the underground economy, either underreported or misclassified, Sinking Underground report 2014. That's 10 years ago. Wage theft in the housing construction industry was reported as rampant, California Bureau of Field Enforcement 2018. One third of the labor Commissioner's positions are vacant, 900 more are needed, a DIR, Department of Industrial Relations, audit reported in the LA Times, in LA Times, June 24.
- Danny Curtin
Person
It is a major crisis. It is complicated. I personally want to thank this Legislature and the Governor for understanding the connection that the housing crisis and the low wage conditions, not just in the construction industry, but definitely in the construction industry, are the flip side of the same coin. Low wage workers in the construction industry cannot afford the low wage units they're actually building.
- Danny Curtin
Person
When you talked about stability is what's really needed. That's another way of saying affordability. If you have money, you are stable. You can afford to live places. If you don't have money.
- Danny Curtin
Person
Thank you, Mister Curtin, 1 minute. We'll give you one sentence, okay? All right.
- Danny Curtin
Person
With this coalition with the Legislature, we can build our way out of the housing crisis if we work together.
- Thomas Umberg
Legislator
Thank you very much.
- Danny Curtin
Person
Governor supports it. Tony Atkins supports it. I mean, opposes. Senator Wiener opposes it. Remember, Wicks opposes Prop 33. These are all the people who are pro housing and have pushed the agenda.
- Thomas Umberg
Legislator
All right, thank you very much, Mister Curtin. All right, Mister Wagle, so.
- Sanjay Wagle
Person
Thank you. Good morning, Chair and Members, my name is Sanjay Wagle. I'm Senior Vice President of Government Affairs for the California Association of Realtors.
- Sanjay Wagle
Person
I come here today to speak in opposition to Proposition 33, which, by allowing for permitting for the enactment of extreme forms of rent control without restriction, would have a devastating effect on our housing market and on both housing providers and tenants.
- Sanjay Wagle
Person
As a result, CAR has consistently been supporting state legislation which would alleviate our housing crisis by making it easier to build more housing, both rental and homeownership housing. We need housing of every kind, at every level.
- Sanjay Wagle
Person
State legislation being necessary in part because it's a recognition of the fact that many local jurisdictions, unfortunately resist the development of new housing of all kinds. Again, market rate or affordable housing, local areas resist housing.
- Sanjay Wagle
Person
Extreme rent control of the kind that could and would likely go forward if Costa-Hawkins was repealed would be devastating to the construction of new housing. Rent control under Costa-Hawkins cannot currently apply to new construction.
- Sanjay Wagle
Person
A recent example out of the St. Paul area, in 2021, it passed one of the strictest rent control ordinances in the nation with no exemption for new construction, as well as other forms of extreme rent control which would be permissible under if Costa-Hawkins was repealed. Development permits fell by 48% in St. Paul.
- Sanjay Wagle
Person
Contrasting by its twin city, Minneapolis saw an increase in building permits around the same time. St. Paul subsequently needed to then amend their rent control law. This extreme rent control power that would be now available to cities if Costa-Hawkins was repealed could also be used easily by those who wish to thwart development.
- Sanjay Wagle
Person
My co-presenter from the Carpenters mentioned the City of Huntington Beach, where a City Council Member expressly mentioned initially his support for this measure because of the way it could be used to thwart development. Straight repeal will also likely further limit the supply of homes for rent.
- Sanjay Wagle
Person
As has been pointed out, California has a significant percentage of small owners of property and single family homes as rentals. Prop 33 would now permit local jurisdictions to impose a rent control on all single family homes, not just corporate owned, but all single family homes, as well as imposing vacancy decontrol.
- Sanjay Wagle
Person
This results in many owners opting not to rent their properties as they do not have a large portfolio of properties to spread risks or costs around resulting in selling them to either persons who would occupy those property or possibly to large corporate owners.
- Sanjay Wagle
Person
And regarding the issue of the rate of return, the Constitution does have a requirement that does mandate a rate of return, but it does not mandate a specific formula, that is a formula which has been litigated in the past.
- Sanjay Wagle
Person
While large corporate entities might be able to make that litigation decision if rent control board opted to institute a rate of return that was not favorable, the process of litigation and the timeframe that that could involve in contesting that would for a small landlord be almost impossible and would likely result in the sale of their property.
- Sanjay Wagle
Person
There have been studies out of San Francisco with San Francisco's rent control that was published by the American Economic Review in 2019, which did state that rent control does appear to help the affordability in the short run for the current tenants.
- Sanjay Wagle
Person
However, over time it resulted in a decrease in overall affordability and fuel gentrification, and anyone who's familiar with our rent control cities has seen consistently increasing rents as well as decreasing affordability and changes in the composition of neighborhoods, regardless of existing rent control.
- Sanjay Wagle
Person
The results based on this study suggest that these types of measures, these types of rent control measures, are counterproductive in the long run, and that there might be better ways if government wishes to help protect tenants, such as vouchers, other types of subsidies, directly to tenants, rather than using the rent control as a measure that would also ensure that rent control measures that have economic effects which are broader than protecting those tenants who are vulnerable would be targeted toward those vulnerable tenants, as opposed to the one third of California renters who do in fact earn over $100,000.
- Sanjay Wagle
Person
While groups such as ours do oppose rent control, we and CAA back in 1995 did support Costa-Hawkins, which allows, which allows local jurisdictions to actually enact rent control ordinances, but tries to prevent local rent control and rent controls from having the types of devastating effects which could happen from more extreme forms of rent control.
- Sanjay Wagle
Person
Prop 33 is the opposite of a considered measure. It opens the floodgates to extreme measures that could devastate housing development in California. And for this reason, we oppose it. Thank you.
- Thomas Umberg
Legislator
Thank you. All right, Mister Oneto.
- Kurt Oneto
Person
Good afternoon, Mister Chairman and Members. My name is Kurt Oneto, and I'm a board Member of, and counsel to the California Chamber of Commerce.
- Kurt Oneto
Person
The California Chamber of Commerce has more than 13,000 Members, both individual and corporate, representing 25% of the state's private workforce in virtually every economic interest in the State of California. While Cal Chamber represents several of the largest corporations in California, 70% of its members have fewer than 100 employees.
- Kurt Oneto
Person
Cal Chamber believes that a balance between jobs and housing is vital to California's economy. Cal Chamber opposes Proposition 33 due to the devastating effects it would have on housing in California and our state economy as a whole. The negative impacts of rent control are well known.
- Kurt Oneto
Person
As other witnesses here have ably explained, rent control measures accelerate attrition of the existing housing stock of rental units in the marketplace. And numerous studies have found that local jurisdictions with stringent rent control policy have lost large numbers of rental units. That's the last thing we need for California.
- Kurt Oneto
Person
However, the damage that Prop 33 would cause would go much deeper than that. I think we've had a lot of discussion today about the repeal of Costa-Hawkins. It's important to remember that in those 23 words that others have referenced, there's actually an affirmative new section enacted by Proposition 33.
- Kurt Oneto
Person
It's section 1954.40 of the Civil Code. And it says that the state may not limit the right of any city, county, or city and county to maintain, enact or expand residential rent control.
- Kurt Oneto
Person
So not only does Prop 33 repeal Costa Hawkins, it also repeals the right of this Legislature to limit rent control policies in the future in perpetuity. There's no ability to amend this measure without going back to the voters.
- Kurt Oneto
Person
I'd like to focus on that and expand upon a few of the points that have been made here, and also respond to some of Senator Roth's comments and some of the exchange about the fair rate of return. In recent years, the Legislature has taken major steps to address our housing supply crisis through the document.
- Kurt Oneto
Person
A number of statutes which have been mentioned here, those including SB 9, the the ADU Bill, SB 423 by Wiener, SB 91 by the Chairman Umberg, AB 2011 by Assemblymember Wicks.
- Kurt Oneto
Person
We've also talked about how AB 1485 and AB 434 give the Attorney General and the Department of the Housing and Community Development Department more authority to enforce those new state laws, those housing laws on Nibi local governments, and make sure they're held accountable. Unfortunately, Prop 33 would unravel all of those efforts.
- Kurt Oneto
Person
This is due to the fact that, at its core, from a legal perspective, Proposition 33 has released a NIMBY sneak attack on the State of California's ability to dictate housing policies to local governments.
- Kurt Oneto
Person
And as I mentioned, because Prop 33 grants local governments an unqualified right to impose any and every type of rent control policy through the repeal of the Costa-Hawkins law, and then expressly prohibits the state from even imposing a limit on the types of rent control policies that locals can enact, NIMBY local governments can simply impose rent control limits on unwanted projects that are so severe it becomes financially impossible to complete the project.
- Kurt Oneto
Person
This will worsen California's housing crisis and effectively put the State of California, its Executive branch and its Legislative Branch out of the business of regulating housing at the local level, even if state law mandates that a certain type of development is legal or permissible, because Prop 33 allows local governments to make the realization of that development economically impossible.
- Kurt Oneto
Person
And this is not just a theoretical threat. We've heard about the City of Huntington Beach and their intentions going forward. This is actually already happening right now. The cities of Camarillo, Dana Point, and Temple City all impose rent control policies after the enactment of SB 9 just on ADU's in those jurisdictions.
- Kurt Oneto
Person
And luckily, the HCD currently has authority to regulate local rent control policies to make sure they don't interfere with the laws and policies enacted by this body to expand the amount of affordable housing in California.
- Kurt Oneto
Person
And here's the letter from HCD to the City of Dana Point, and it tells them that under state law, they are interfering with SB 9 and the ADU law because their rent control policy, which they only impose on SB 9 ADU's, makes the construction of those units and the implementation of SB 9, I quote, economically infeasible.
- Kurt Oneto
Person
So what the city did was they imposed a rent control loss so onerous on those adus that it made it economically unviable to build those units, making sure that the SB 9 policy in their jurisdictions essentially wouldn't apply. It applies legally. They can make sure that it wouldn't apply economically.
- Kurt Oneto
Person
That ability to do that will spread to every city and county in the State of California under Prop 33, and HCD will no longer be able to send out these letters because these limit the authority of a local government to impose rent control expressly limited Dana Point, Camarillo and Temple City.
- Kurt Oneto
Person
This will no longer happen if Prop 33 passes. Nor can it be credibly claimed that this consequence of Prop 33 is accidental or unintentional. The chief financial backer of Prop 33, the AIDS Healthcare Foundation, has a long history of supporting NIMBY policies and attacking pro-housing laws. I'll hit a couple of the highlights.
- Kurt Oneto
Person
In 2022, AHF filed a lawsuit seeking to prohibit the City of Los Angeles from amending its zoning laws to allow for more affordable housing. In 2021, AHF filed a lawsuit against Senator Weiner's SB 10, which also allowed for more single family housing to be built near transit and jobs in urban infill areas.
- Kurt Oneto
Person
In 2021, AHF supported a constitutional amendment that was that did not make the ballot, but which sought to take away this Legislature's ability to set to override local zoning laws. In 2019, AHF led the effort to kill Senator Weiner's SB 50, which would have legalized more housing near public transportation.
- Thomas Umberg
Legislator
Let's focus on Prop 33.
- Kurt Oneto
Person
Sure. Okay, I'll close with a quote from Senator Wiener that AHF is California's NIMBY in chief.
- Thomas Umberg
Legislator
Okay, wait a minute. Let's focus on Prop 33.
- Kurt Oneto
Person
So what Prop 33 does is it allows local governments to strangle the economic viability of affordable housing that they don't want on a project by project basis. How can they do that? And how does that interplay with the right of fair return?
- Kurt Oneto
Person
The right of fair return does not guarantee the right to make money from any particular use of the property. It's part of the takings doctrine and you just the state the government has to allow property owners to make a reasonable right of return, but it does not guarantee any specific use.
- Kurt Oneto
Person
So let's think about AB 2011 that allows for conversion of commercial properties into residential properties. So if you have a strip mall and you want to convert it into a housing development, a local government can impose a severe rent control policy on any residential units built on that plot.
- Kurt Oneto
Person
There's no recourse under the takings document of the right of fair return because the owner can still use the property productively as a commercial property, as a strip mall, or as an office building. So there is no way out legally.
- Kurt Oneto
Person
The idea that there is somehow going to be protection from these outcomes to the fair rate of return is just legally purely false. If you want to build an ADU on your property and there's extreme rent control imposed on it, like they did in Dana point, that doesn't destroy all viable use of the property.
- Kurt Oneto
Person
You still have a house on the property. That's kind of the precursor to building an ADU. That's still a viable economic use of the property. So there's no ability to object on that ground, that there's not an ability to get a fair rate of return and to send a raspoint for a developer.
- Kurt Oneto
Person
If there's no building constructed, you don't have a right to fair return from that apartment building. There can be. That's what zoning does. It can allow for other uses of the property. It doesn't have to allow for all uses of the property.
- Kurt Oneto
Person
So if a city imposes severe rent control, harsh rent control on a particular use of the property, to discourage that use, so long as there's other uses of the property, there's no legal claim that you've been denied a right of fair return. The last thing and I can, two quick points.
- Kurt Oneto
Person
There will also be no ability of the Legislature to punish local governments who flout state housing laws by manipulative rent control.
- Kurt Oneto
Person
And this is because just last year in 2023, the California Court of Appeal held that when a local government has a legal right to enact a law, this Legislature cannot impose punishments on it for exercising that right. And the third district said that an intentional penalty on a city's lawful exercise of its powers, quote, cannot stand.
- Kurt Oneto
Person
So under Prop. 33, every city and county will have the legal right to enact rent control policy free from oversight by the Legislature or the Executive branch.
- Kurt Oneto
Person
Once it acquires that power, Article 11 of the Constitution, which was at in play in this case, will protect it from any financial penalties that the Legislature seeks to impose for trying to sidestep state laws. So there's really no way out of the NIMBY trap for the State of California that Proposition 33 would set.
- Kurt Oneto
Person
And one final point about Prop 33 that I think is fair to mention. The proponents mentioned that this is a rent control as something that President Biden and Vice President Harris support. They've used that in their campaign materials.
- Kurt Oneto
Person
Vice President Harris's presidential campaign actually sent a cease and desist letter, which we can share with the Committee, to the YSON 33 campaign, stating clearly that the Vice President has not endorsed Prop 33 and that the yes on 33 campaign is violating the Vice President's publicity rights and asked them to immediately stop circulating that misleading notion.
- Thomas Umberg
Legislator
Thank you very much. Okay. All right, let's now turn to Members. Questions, comments, questions, comments? Senator Wahab?
- Aisha Wahab
Legislator
Thank you. So, I appreciate you guys presenting. And I know that on a foundational and fundamental basis, we're probably going to disagree. So I just want to preface that. Know I've worked with some of you guys, and I know that you guys are trying to do what's in the best interest for your members.
- Aisha Wahab
Legislator
I do want to highlight that a lot of what has been said about Prop 33, and I want to be very clear to the public, is that this ballot measure allows for local control.
- Aisha Wahab
Legislator
At the end of the day, you know, we can argue and do long monologues about fear mongering and the detriment of building more buildings and so forth. And it's largely inaccurate.
- Aisha Wahab
Legislator
And the reason why I say that is because even the letter that was referenced regarding Dana Point, the deed restriction that they found incorrect, was the fact that the city was trying to prohibit the sale of the ADU separate to the actual thing.
- Aisha Wahab
Legislator
So I have not seen that everything else, and point by point, I don't need to go through it because I read it, talks about fire restriction, talk about solar, talk about everything else.
- Aisha Wahab
Legislator
And again, first and foremost, just based on the last panel that we talked about, is that local cities know what is in the best interest of their constituency, number one, and we should empower them. We constantly talk about local control on every other issue, including other ballot measures regarding public safety and much more.
- Aisha Wahab
Legislator
And this particular law has been enacted for more than two decades at this point, right? And clearly, we have gone from, you know, the nineties and so forth and even, you know, units that were affordable prior to the nineties and stuff like that based on rent control and so forth. It is time to, number one, update laws that are out of date and out of touch with society today.
- Aisha Wahab
Legislator
The mere fact that more than 50% of Californians that are renters cannot afford rents or are overburdened by housing costs, the mere fact that even if you belong to a union, you will not get a 5% increase year over year in your pay, yet you can get a five to 10% increase in rental units, those rental units in particular being the most easily affordable housing that a person who cannot afford to buy a home has to compete in.
- Aisha Wahab
Legislator
Right? As far as what I said about local cities, and I speak from a city perspective as a local Council Member, is that most cities will do a balanced act in regards to ensuring that the landlord is protected, especially the single family landlords.
- Aisha Wahab
Legislator
But those that are corporate landlords with multifamily units should have safeguards that protect the residents that are largely immigrant, largely lower income, largely struggling, and cannot afford legal representation. Right? There's still plenty of reasons to evict people. There's still plenty of reasons, including failure to pay.
- Aisha Wahab
Legislator
There are still plenty of other benefits to local rent stabilization and rent control. We keep talking about it, but most cities are moving to rent stabilization, giving some autonomy to the landlord. So I really want to stress that.
- Aisha Wahab
Legislator
And right now, you know, we talk about multiple panelists have stated that their 30 something year old children live with them, right? 100%.
- Aisha Wahab
Legislator
And the reality is that even with good jobs, as our last panelist stated, they cannot even afford to rent, because most people, most landlords have been utilizing this as a tax scheme, too, to keep their vacant unit take a loss if they need to, right. Rather than lowering the rents. We talked about manipulation. I heard that.
- Aisha Wahab
Legislator
Rent manipulation, and let's be honest, that if a landlord owns, you know, 100 units, 60 plus units, multiple properties in a single city, which in my city, there are landlords that own multiple properties, they manipulate the rents if they just increase the price on just their units alone. Right.
- Aisha Wahab
Legislator
I want to highlight that the whole point of this Proposition is to give local cities the authority to do what they see is going on in their cities. Every single city is different.
- Aisha Wahab
Legislator
You referenced Huntington Beach, and I'm gonna be honest, there's plenty of policies that they've tried to enact that is anti poor and restricts and punishes people for being poor. So take that city and then take a city like Hayward that has been producing 100% brand new, affordable units.
- Aisha Wahab
Legislator
Every single state policy is more focused on development than it is on the, you know, safeguards for renters currently. And so for me, there is a disconnect between the state Legislature and local city councils, and I think local city councils.
- Aisha Wahab
Legislator
The fact that average people can go to their local City Council every Tuesday night or Wednesday night or Monday night or whenever they have City Council and complain directly to their stakeholders and their representatives is far more influential than, you know, having a number of lobbyists that really, you know, dominate this building. And that's my frustration.
- Aisha Wahab
Legislator
The measure that was mentioned about Assemblymember David Chu's Bill 1482 that has a rent ceiling of about 10%, right. 5% plus CPI, but no more than 10%. We all know the details. I want to highlight that we received.
- Aisha Wahab
Legislator
Obviously, there was a letter, and I want to highlight it because the letter specifically from the Apartment Association at the time in support of this was housing that has been issued a certificate of occupancy within the previous 20 years is exempt from the provisions of the Bill.
- Aisha Wahab
Legislator
Make clear that the provisions within the Bill occupy the field for the housing specified within the Bill and clarify that the vacancy decontrol provisions and provide clarifying language relating to cause rent and lease provisions. Right?
- Aisha Wahab
Legislator
And in its final form, with the support of the California Department Association, it was only exempted to new construction within the past 15 years. Right? Most cities would support something like that. The California Department Association supported something like that. I had a Bill last year that adjusted Costa-Hawkins. Right?
- Aisha Wahab
Legislator
Just did a reform that says the last 15 to 20 years, the buildings, if they're older than 15 or 20 years old, should be under some type of rent control or rent stabilization based on whatever the local council deems necessary for their city Department Association was opposed.
- Aisha Wahab
Legislator
I sometimes wonder why they're opposed sometimes and not opposed other times. Right? When the context and the merit of the discussion is the same. And we are in a more dire situation. Day after day, we see the cost of everything go up. Most landlords transfer over those costs to their tenants. Utilities? We as tenants pay.
- Aisha Wahab
Legislator
Parking? We as tenants pay. Water? We as tenants pay. Security deposit? We as tenants pay, literally, we pay for everything.
- Aisha Wahab
Legislator
There is no way that an average resident in California can afford to compete in my district and buy a home for $1.4 million, union worker or not, let alone seniors on fixed income, on Social Security that are not going to get an increase.
- Aisha Wahab
Legislator
So I see this, but I want to also highlight that the state law genuinely restricts cities so much that it has strangled what cities can do to provide for their residents on affordable housing.
- Aisha Wahab
Legislator
And this Proposition, I understand your viewpoint, but I will say would allow cities to have a little bit more clarity and autonomy on what they are elected to do. And I think that's fair. Thank you.
- Thomas Umberg
Legislator
All righty. Who would like to respond? We're all like, we'll start with Kurt, and then we'll turn to miss Carlton. And I assume you'll probably cover all the ground that we missed.
- Danny Curtin
Person
I just want to make a couple of comments because clearly I don't want to get into debate with you.
- Daniel Curtin
Person
Send me out the door. But the local control question, which is what SB 33 is all about, it's a very. It has a charm, very seductive, as it said in one of those editorials. But local control is not the answer to the society as a whole's problems.
- Daniel Curtin
Person
And in housing, it's clear that local control was the cause over the 40 or 50 years that we've been watching California grow. So I really caution you to say that every city has its own. It does. It has its own people, their welfare in mind, but they don't care necessarily about the rest of the people.
- Daniel Curtin
Person
And that's why the state has to come in and say, well, that's fine for your people, but you are discriminating against a disadvantaged group of one sort or another. You cannot do that with Prop 33, I think, has been made clear that the city now has authority to actually discriminate in a very clever way.
- Daniel Curtin
Person
So I would leave you with that. But one Jerry Brown quote, if you'll forgive me, he said, and I think he quoted somebody else, consistency is the hobgoblin of small minds. I think he said that. But no, really, it's the local control issue. I am not saying that the laws we have now are really adequate. We wouldn't be here. But you can continue to poke them, push them, prod them.
- Daniel Curtin
Person
The whole affordable housing issue of where you have a carrot and a stick and you can build market rate housing, and you'll get breaks on CEQA and zoning if you bring in inclusionary housing to a degree of 20%, 30%, which you all talk about and argue over. But if you do this, you don't have that ability. And for the rest of it, I defer to you.
- Thomas Umberg
Legislator
All right, thank you, Miss Carlton.
- Debra Carlton
Person
Yes. I would add in my presentation to the League of California Cities, they voted not to take a position on 33. In the comments of league Members, they said, this is not about local control, even though they love local control. Right. That's what local cities love.
- Debra Carlton
Person
But it allows for out of towners to come to our city and put something on the ballot, pay for something on the ballot, to impose rent control in a more extreme way than they would ever agree to. So they didn't believe, and that's why they voted not to take a position on 33.
- Debra Carlton
Person
They didn't believe it was about local control. I agree with you about kids. My kids won't be able to find a place to live. And it's not about rent control. It's about the inability to find a place to live.
- Debra Carlton
Person
If you want to outsmart smart the market, I always say, then build more housing, more affordable housing going forward. And 1482 versus cost of Hawkins is very different. As you know, 1482 does have a rolling date and the caps are different. Right. Under Costa Hawkins, some cities are 60% of the consumer price index.
- Debra Carlton
Person
In those cities, construction is hampered by that kind and would be hampered by that kind of rent cap. San Francisco already said that if 33 passes, they will impose rent caps on new construction through November 2024 and beyond. So to say that cities would be reasonable, I disagree and developers disagree. They don't trust that.
- Debra Carlton
Person
And some local ordinances already have built in. If Costa Hawkins goes away, they will impose rent control on single family homes, on Adus and other housing that's not currently allowed.
- Aisha Wahab
Legislator
And I would like to respond to that one. I think, again, taking one city like San Francisco or Huntington Beach is the extremes of both ends of the spectrum. I'm just gonna say that, right. I'm in the Bay Area, and San Francisco does not necessarily represent me. Right.
- Aisha Wahab
Legislator
With that said, AB 1482 is referenced, but when we're talking about this valid measure, we're talking about, you know, what I'm hearing from you all is extreme cases. Right? And that's not at all accurate that the majority of cities are doing. Number one, most of the state laws that have been enacted was primarily focused on development.
- Aisha Wahab
Legislator
Let's streamline development. We had a colleague here that referenced redevelopment funds. We have heard, myself included in my own city, the mayor referenced, we need more redevelopment funds. Right. And I agree we should be funding development. But the entire argument from this panel, as well as in General regarding housing, is build, build, build.
- Aisha Wahab
Legislator
And that is not going to save anybody, especially those struggling today. Our job as a state Legislature, as well as in General, when we're talking about representing the community, is also putting in safeguards to protect residents against greed. At the end of the day, that is what it is.
- Aisha Wahab
Legislator
I find it fascinating that people have a 100% right to get a return on their investment. When you invest in the stock, you potentially could lose. When you invest in anything else, you could potentially lose. Yet, on housing, which people deserve. Right. People are struggling. Families are struggling.
- Aisha Wahab
Legislator
They are willing to pay their fair share, but they literally cannot stay in the city that they grew up in. We have seniors that cannot afford to live where they are. We have young students that can't come back to their city. We have grown adults still living with their parents. Not by choice, I'm sure of that. Right.
- Aisha Wahab
Legislator
And the reality is that local cities deserve the right to be able to say, hey, the 1995 language of Costa Hawkins is very out of touch and out of date. That should have been updated on a rolling basis. And I've said that I tried that again with opposition from many Members here. Right.
- Aisha Wahab
Legislator
And so I say that there doesn't seem to be another solution. There doesn't seem to be a solution that can come through this Legislature. And I'm very honest about this because I've experienced this. Literally every Bill that is about renters dies. Right. Unless it benefits somehow landlords in some capacity.
- Aisha Wahab
Legislator
And I'm going to say that that, again, is the reason why so many community Members who can't afford to come to Sacramento and lobby Senators and Assembly Members still struggle and still need help. We are being biased, as the discrimination comment that was made earlier.
- Aisha Wahab
Legislator
We're discriminating against the lowest income residents that cannot afford to pay a lobbyist to come to this building and enact state law to actually help them. So their local city councils, in my opinion, has the most benefit to being able to represent properly.
- Thomas Umberg
Legislator
All righty. Thank you. Senator Durazo, do you have a question?
- María Elena Durazo
Legislator
Sure. And thank you to my colleague. I think she wrapped it up in the best way. But we can't just. People have entrusted in government to do something about what they're facing in their livelihoods, what they're facing in their families, and we haven't done it.
- María Elena Durazo
Legislator
So it's up to putting something on the ballot in order to address it. It's so shameful that in this state, it's okay to make tons of money and profits and not worry about what the impact is on the people that are getting evicted. Not worry about what it takes for 23 families to live together.
- María Elena Durazo
Legislator
It's like, why are we putting that kind of, that kind of power in the hands of people against the power, the powerlessness, powerless people who can't afford it. That's why we're facing this, because people, owners, landlords, corporations are getting far more than what they should.
- María Elena Durazo
Legislator
The fact that there's so not enough housing for everybody should not give somebody the right, the owner, the right to charge the maximum, to charge five times more than what they need. Why would we defend that? You know, so I'm just. I just think these arguments that have been presented don't. Don't take into account what people need and poor people and working people. It's really shameful on the state.
- Thomas Umberg
Legislator
All right, does anybody care to respond? We're going to wrap it up here in just a second. All right. Sure. Go ahead.
- Kurt Oneto
Person
Quickly. I don't think that Huntington Beach and Dana Point would probably agree with Senator Wahab that they think locals know best who the problem is that they have a much different perspective than what's probably best for the state overall.
- Kurt Oneto
Person
What we get under Prop 33 is right now we can, this Legislature here in state government, we can enact a statewide housing policy under Prop . 33. That's no longer possible. We'll have 482 local housing policies at the city level. We'll have 58 housing policies at the county level.
- Kurt Oneto
Person
And the Legislature's ability to sort of manage this statewide crisis on a statewide level is permanently revoked. And that's the real concern that Cal Chamber has about this measure. There are a lot of legitimate problems with housing in California. I don't think we need to debate that this solution is absolutely the wrong way to go because it empowers NIMBY's to basically exclude types of housing that they don't want to the detriment of the state as a whole.
- Thomas Umberg
Legislator
All righty. Thank you very much.
- Kurt Oneto
Person
All right.
- Daniel Curtin
Person
Can I.
- Thomas Umberg
Legislator
1 second.
- Daniel Curtin
Person
I'm sorry.
- Thomas Umberg
Legislator
1 second. We'll give you 1 second.
- Daniel Curtin
Person
I can't get into the economic arguments, but as a child of the sixties, essentially the civil rights movement was basically a local control debate, states rights. And I can remember talking to people and arguing with people 20 years later that it was states rights to be discriminatory. Both in those cases was racial, but fundamentally it's economic.
- Daniel Curtin
Person
And you know where I'm coming from on this. This is class and racial discrimination by the manipulation of the market. And I agree with everything you've said except the fact that you give it to local control and angry voters.
- Daniel Curtin
Person
You don't know what's going to come out and you see what's going on politically now, any outcome, we could continue this debate, but.
- Thomas Umberg
Legislator
All right, well, thank you. So let's turn now to public comment.
- Aisha Wahab
Legislator
Oh, I just want to say that I appreciate that, and I hope that the California Apartment Association as well as everybody on this panel would actually, let's say in the new year, bring in a Bill that actually helps renters in particular with these extreme increases of prices. So I agree.
- Aisha Wahab
Legislator
I will say also from the Prop 33, that language that is concerning to you is in several of the ballot measures this year. And I don't think that the chamber took the same position on those ballot measures based on that language. So thank you.
- Thomas Umberg
Legislator
All right, let's turn to public comment now. If you'd like to provide public comment. Yes, the panel, you may stay or you may be excused, whatever you choose. All right. If you wish to provide comment, please approach the microphone. Give us your name, your affiliation and your position.
- María Elena Durazo
Legislator
Good afternoon. Marina Espinoza with the California Housing Consortium. We're in opposition to Prop 33.
- Thomas Umberg
Legislator
Thank you. Thank you very much. Anyone else? Anyone else would provide public comment? Going once, going twice. All right. Well, thank you. Thank you to the panelists, both panels. I appreciate it. Quite an animated, vigorous discussion. Thank you to the Members of the Senate that were here today. And with that, we're adjourned. Thank you.
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