California’s Rent Control Initiative Fails at Ballot Box

A California ballot measure aimed at bolstering apartment rent control was rejected by voters Tuesday.

Proposition 33 would have allowed counties and cities to enact more sweeping rent control laws, effectively repealing the Costa-Hawkins Rental Housing Act of 1995 which placed limits on the kinds of rent control ordinances localities could enact. Yet the initiative was rejected by about 62 percent of the state’s voters as of Wednesday afternoon, with 95 percent of precincts reporting, according to SFGate.

The proposition was put forth by the nonprofit AIDS Healthcare Foundation (AHF), which spent millions campaigning for the measure ahead of Tuesday’s referendum, according to the California Secretary of State’s office. AHF had previously funded two similar rent control efforts which were also defeated at the ballot box in recent years — 2018’s Proposition 10, and 2020’s Proposition 21 — among its many activist campaigns. 

Opponents of Proposition 33, which include the California Chamber of Commerce, California Apartment Association, San Diego Mayor Todd Gloria and even Gov. Gavin Newsom, said that the ordinance would actually hurt housing affordability by creating a chilling effect on housing construction and could effectively overturn dozens of state housing laws. 

“Rent control measures accelerate attrition of the existing stock of rental units in California’s marketplace,” the Chamber said in late September. “Numerous studies have found that local jurisdictions with stringent rent control have lost large numbers of rental units in their markets.”

AHF President Michael Weinstein placed most of the blame for Prop 33’s defeat on Newsom, saying in a statement Wednesday that polling showed success for the initiative before the governor voiced his opposition.

“Big real estate gave [Newsom] millions over the years, and they called in their chits,” Weinstein said.

“Housing is and will remain a human rights issue,” Weinstein added. “The result of our loss is that billionaire corporate landlords will pile up more billions while renters will have to choose between paying their rent and buying food or ending up on the sidewalk.”

Here the plot thickens: The state apartment association bankrolled its own ballot referendum this cycle, Proposition 34, which would require certain health care providers to spend the vast majority of revenue from federal drug discount programs directly on patient care, effectively closing a loophole that allows providers to use those revenues for unrelated expenditures. 

The vote for Proposition 34 was still too close to call Wednesday afternoon.

Proposition 34 is said to be a thinly veiled dig at AHF, as its rules would only apply to health care providers using the federal drug discount program, called 340B, that have spent more than $100 million on “purposes that do not quality as direct patient care,” and that also own residential dwellings that have been cited for at least 500 “high-severity” health and safety violations. 

Indeed, AHF has spent tens of millions of dollars on ballot initiatives in recent years (including more than $15 million opposing Prop 34, according to the Secretary of State’s office), and has faced controversy due to foul living conditions at its housing along Los Angeles’ Skid Row neighborhood.

Nick Trombola can be reached at ntrombola@commercialobserver.com.