Costa Hawkins, California’s rent control law, explained

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An attempt by California lawmakers to repeal the 1995 Costa Hawkins Rental Housing Act died in a contentious committee hearing Thursday attended by hundreds of supporters and opponents.

But debate over the bill—which sets limits on cities’ rent control policies—continues to rage, and voters across the state may soon have the opportunity to weigh in on the issue directly.

A coalition of Los Angeles tenant advocates, along with the Aids Healthcare Foundation, proposed a ballot initiative in October that would repeal the law without the intervention of state officials.

Given the new level of scrutiny over the bill, here’s a short explainer of what it actually means for California residents.

What is Costa Hawkins?

Costa Hawkins is a state law that sets some requirements for the 15 cities in California with rent control—Los Angeles included.

There are two main provisions:

  • It protects a landlord’s right to raise the rent to market rate on a unit once a tenant moves out.
  • It prevents cities from establishingrent control—or capping rent—on units constructed after February 1995.

LA’s main rent control law is the Rent Stabilization Ordinance, or RSO. It restricts rent control to units built prior to October 1978, even earlier than the 1995 cutoff imposed by Costa Hawkins.

Under the RSO, yearly increases are capped at 3 to 8 percent for these properties, but landlords of buildings constructed after 1978 can set their own rental rates and change them at any time.

Costa Hawkins does not affect caps on annual rent increases in Los Angeles or other California cities with rent control.

The bill was adopted in 1995 to reign in rent control in five California cities, including Santa Monica and West Hollywood. Those five cities had what’s called vacancy control, which is when a unit’s rent is capped even after a tenant moves out.

Costa Hawkins was also a key part of a 2009 court decision that struck down LA’s requirement that developers include affordable units in many new apartment buildings. The courts said that Los Angeles’s rules violated Costa Hawkins by mandating lower rents for newly constructed units. A bill signed by Governor Jerry Brown in September, however, restores the ability of California cities to make developers include affordable units in new rental projects.

What would happen if it were repealed?

In the short term, not much. Assemblymember Richard Bloom, who introduced the repeal bill, has said that getting rid of Costa Hawkins would only give cities greater flexibility when setting rent control policies. Cities would still need to go through the process of passing new legislation before the repeal would have any effect.

With new options available, some cities might expand rent control regulations to prevent landlords from raising rent on a unit to market rate once a tenant moves out as an effort to preserve affordable housing. Other cities might choose to leave their current rent control laws intact.

Why not repeal it and see what happens?

Opponents of a repeal argue that Costa Hawkins puts sensible restrictions on local policies that affect the state’s overall housing market.

A 2016 report from the Legislative Analyst’s Office found that expanding rent control “likely would discourage new construction” by limiting the profitability of new rental housing.

Opponents say this could exacerbate a statewide housing shortage and scare off developers worried about sudden policy changes in cities with rent control.

The report also predicts that stricter rent control rules would encourage discriminatory behavior on the part of landlords when selecting tenants.

What do those in favor of repeal say?

Supporters say that city leaders should be given the tools to protect tenants in the midst of a severe affordable housing crisis (a recent report from the California Housing Partnership Corporation found a shortfall of more than 500,000 affordable units in Los Angeles alone).

They also say policies at both the state and federal level already exist to ensure rent control regulations don’t prevent landlords from receiving a “fair return” on their properties. Protections for tenants facing stiff rent increases, on the other hand, remain slim in most of the state (only 15 cities have rent control policies at all).

At Thursday’s hearing, Bloom and Assemblymember David Chiu, who co-authored the bill, argued that new construction alone would not be enough to make housing affordable to tenants now being priced out of expensive cities like San Francisco and Los Angeles.

What’s next?

With enormous opposition from landlord advocates, a full Costa Hawkins repeal through the state legislature seems unlikely—though Chiu promised in a Facebook post Thursday that his work to protect tenants “is just beginning.”

Now, those in favor of repeal (and those opposed) will likely turn their attention to the above-mentioned ballot initiative. To qualify for the November ballot, supporters of the measure will need to gather 365,880 valid voter signatures by April 24.

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