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Prop 10 Brings Rent Control Debate Boiling To The Surface

Affordable housing tenant Fannie Morgan leans against the wall in her one-bedroom apartment, Oct. 19, 2018.
Tarryn Mento
Affordable housing tenant Fannie Morgan leans against the wall in her one-bedroom apartment, Oct. 19, 2018.
Prop 10 Brings Rent Control Debate Boiling To The Surface
Prop 10 Brings Rent Control Debate Boiling To The Surface GUEST: Tarryn Mento, Speak City Heights reporter, KPBS News

This KPBS midday edition. I'm Maureen Cavanaugh. California's Proposition 10 would help clear the way for local jurisdictions to expand or implement rent control. PBS reporter Tarryn Mento examines both sides of the hotly contested ballot measure. Fanny Morgan shuffles through a folder papers she's looking for monthly increase notices she unexpectedly received in April. I think they are just saying that you know just because someone right now. The petite 64 year old is on a fixed income after a brain aneurysm left her unable to work. Her spouse who later passed away founder when it happened I was getting ready to go to church because I had this saying. My deceased husband feels safe that are hollered out. And that's all I remember. The 2005 incident put her on disability. She now resides at an affordable housing complex but says the cost of her one bedroom is rising. Documents show and her complex confirmed her rent increased 25 percent to nine hundred sixteen dollars in just seven months. Vago are having 960 at the. We. Have. You. Rafael Bautista of San tenants United says rent control will cap annual increases to keep people like Morgan in their homes amid the housing affordability crisis. The only thing that we can do to fight this policeman at this moment. Is implement rent control at 2 percent. Since San Diego San Diego doesn't have rent control and it's unclear whether it would impact subsidized housing. But he says the way to get there is Proposition 10 it doesn't implement rent control but it lifts the cost to Hawkin's law that limits how cities can craft policies. Bautista says Prop 10 will force San Diego officials to act on rent control though we've already been fighting for it for the last three years. It will be more of a pressing them because now they can say oh well this costs the Hawkin's that limits it but Prop 10 opponents say rent control causes more problems than it solves. That includes Ian Gibson who spends his days renovating his rental units in normal life. A lot of paintings lately. He says he lives with his parents while fixing up and selling properties that he hopes will pay off over the long term. The renovations to a studio he's working on will cost him eighty five hundred and also had cast iron plumbing that was rotted out. It'll take more than a year to make that back. Even when he bumps rent from 13 50 to 9300 which he says the market will bear. It's different as National City complex that had cockroaches and lacked outdoor lighting when he bought it. He says he invested thousands per unit and raised rent there by about 400 dollars. He says rent control will stymie improvements like this in low income areas in need of investments will remain that way. What are you getting for that less rental are you getting an unsafe place to live and you're getting a place that is not going to be well maintained and you're gonna get an absentee landlord that's not going to maintain their building. Instead of restricting property managers like him who help improve communities he proposed increasing housing subsidies so low wage earners can benefit from the development. He says he'd even contribute to it. This is everyone's problem. This isn't all we're going to we're going to find one. One person in the group we're going to say landlords is the issue with the landlords. You know this is a larger issue so everyone needs to contribute. San Diego County Apartment Association spokeswoman Molly Kirkland argues lifting state rent control limits that exempt properties built after 1995 will exacerbate the housing problem. That's because developers won't want to build new units and landlords will take existing ones off the market. We need to stay focused on supply and the market will naturally work itself out. She also says rent control brings other regulations besides the annual caps. The nonpartisan Legislative Analyst's Office warned rent control may also impact housing supply and could affect property in income taxes paid by landlords. But it also says housing stability could increase tenants buying power and therefore sales tax revenue. Studies funded by opposing sides of the rent control debate both found it does provide housing stability but it causes other issues from lack of maintenance to last housing supply. But neither side found enough evidence to determine whether it affects new construction. Kirkland says The Apartment Association will work with tenant advocates to find a real solution. If Prop 10 fails I'll follow up with you guys. Heck yeah. Taren mountain Cape UBS news. Joining me is Speak City Heights reporter Taryn mento Taren welcome. Thank you. Tell us more about the person you first introduced us to Fannie Morgan. She says she won't have all the rent at the first of the month. So did she tell you how she is paying for the increase. Well she kept using the phrase that she's taking from Peter to pay Paul. So she was kind of pulling from some areas to cover the others where she needed it and she was keeping meticulous log of how she spends her money when we first got there she was actually writing down a receipt in her hand on this clipboard of where all the money goes. But because her security payment arrives and two checks at separate times she was paying partial rent in the beginning of the month. Then the rest later with a late fee. But she did receive a notice earlier this month that she's no longer she can't do that any longer. Now advocates of Prop 10 say that because of uncontrolled rent increases people are losing their apartments and becoming homeless. What do you know about that claim. Well there is a report by UCLA that found a correlation between high housing costs and high rates of homelessness. But it also found that housing supply and median income were factors as well. And last year a data analysis by Zillow found a strong connection between rising rent and homelessness in some big cities like L.A. but not in others. Now Proposition 10 if approved would repeal the Costa Hawkins Act. How does that state law restrict rent control. So there are three main things. Rent control doesn't apply to single family homes so exempt single family homes and units built after 1995 in also cities that already have policies in place that exempted some units built after for example 1978 which is the policy and seven in L.A. that law the cost to Hawkin's law blocks you from updating that cost. Hawkins also doesn't allow a cap on how much a landlord can increase a units rent after a tenant moves out and under Prop 10. Each city would be able to tailor its own version of Rent control is that right. Right. If Prop 10 passes it would repeal the cost of Hawkins local law and so that means these restrictions go away and cities can expand like in L.A. if they want to increase the you know if they want to make it so that rent control doesn't apply to units. After 1995 or even later. And so you can just tailor it to however you want it. The man fixing his property Ian Gibson that we heard in your report told you he'd support increasing subsidies to low wage renters to keep them in their homes. Is there any kind of organized move to do that. Well right now it seems like the focus is on the debate over Prop 10 but the Apartment Association did say it would bring both landlord and tenants to the table. If Prop 10 fails so we'll see what happens after that we'll be following up with them. Now that people opposed to Prop 10 say it will impact housing supply. How would you do that. Right. So there were a couple of studies that I looked at that showed that yes when you talk about adding regulations landlords don't necessarily want to deal with that. So some actually convert their rental property to a condo and then sell that off and it becomes an owner occupied unit instead of a rental unit available. Right. And that removes more rental units from the market. Approving Proposition 10 doesn't automatically mean San Diego would have rent control does it right. No there would be a battle in San Diego after Prop 10 which just means it just removes restrictions on how cities can create policies. And so therefore then one actually has to be crafted and passed in the city of San Diego and one of my sources the housing advocate Rafael Bautista's said if Prop 10 does pass and the city officials still don't want to implement rent control he would fight to get that on the ballot direct control in San Diego on the ballot in the future. But there is a rent control measure in one of the cities in San Diego County on the ballot coming up in November right. That's it. Measure W and National City. Now that does actually implement rent control but because Pratten hasn't passed so we'd still do have cost the Hawkins in place it has to work within the limitations of that state law. What would measure w actually do. So it would provide annual rent increases that are set by a Rent Control Board and that will be no higher than 5 percent each year. And it creates a Rent Control Board which would be of five people in three of those seats would automatically be filled by tenants who are in one of these rent controlled units. And the board would be funded by fees that landlords would have to pay. And it would also protect tenants from being evicted unless in specific situations. I've been speaking with KPBS reporter Tarryn Mento terrine. Thank you Maureen. Thanks.

Fannie Morgan shuffled through a folder of rental documents to find the monthly increase notices she unexpectedly received in April. The petite 64-year-old is on a fixed income after a brain aneurysm in 2005 left her unable to work. The incident put her on disability. She now resides in an affordable housing complex in San Diego's City Heights neighborhood, but her rent increased 25 percent over seven months.

That means now more than 60 percent of her monthly social security payment — which comes in two checks at different times of the month — goes toward her $916 rent.

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"I ain’t going to have 916 at the first (of the month)," she said. "I will have it, but it won’t be on the first."

Housing advocates say rent control could bring the state's struggling tenants some relief and keep them in their homes amid the region's rising rents, but opponents claim it'll bring more problems than it solves and could make the housing crisis worse. This is the debate raging over Proposition 10, which wouldn't actually implement rent control but would lift state limitations on policies and give jurisdictions more freedom to craft or expand local ordinances.

Rafael Bautista of San Diego Tenants United wants a policy that would cap annual increases at 2 percent to help rent-burdened tenants like Morgan, although it's unclear whether a policy would impact subsidized housing.

Bautista said Prop. 10 would eliminate legislation he claims local officials use as an excuse against implementing rent control. The ballot measure would repeal the Costa-Hawkins law that includes rent control exemptions for single-family homes and units built after 1995.

"Though we’ve already been fighting for it for the last three years, it’ll be more of a pressing item because they can’t say, 'Oh, well Costa-Hawkins limits it,'" Bautista said.

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Landlord Ian Gibson is hoping the measure will fail. He said he lives with his parents while fixing up and selling properties that he hopes will pay off over the long term.

Landlord Ian Gibson paints the fence at his rental property in San Diego's Normal Heights neighborhood, Oct. 22, 2018.
Tarryn Mento
Landlord Ian Gibson paints the fence at his rental property in San Diego's Normal Heights neighborhood, Oct. 22, 2018.

The renovations to a Normal Heights studio he’s working on will cost him $8,500, which will take him more than a year to recoup even after he increases rent from $1,350 to $1,900 or possibly a bit more. It’s different at his other property in a National City complex that had cockroaches and lacked outdoor lighting when he bought it. He said he invested thousands per unit and raised rent by about $400 there.

Gibson said rent control will stymie improvements like this, and low-income areas in need of investments will remain that way.

"What are you getting for that less rent? Well you’re getting an unsafe place to live and you’re getting a place that is not going to be well-maintained," Gibson said.

Instead of restricting property managers like him who help improve communities, he proposed increasing subsidies so low-wage earners can benefit from the development and said he’d even contribute to it.

San Diego County Apartment Association spokeswoman Molly Kirkland argues repealing Costa-Hawkins will exacerbate the housing problem because developers won’t want to build new units and landlords will take existing ones off the market.

"We need to stay focused on supply, and the market will naturally work itself out," Kirkland said.

The nonpartisan Legislative Analyst’s Office also warned rent control could impact housing supply, plus it may affect property and income taxes paid by landlords, although the long-term impact on the latter was unclear. The office also noted, however, housing stability could increase tenants’ buying power and therefore sales tax revenue.

Studies funded by opposing sides of the rent control debate both found it does provide housing stability, but causes other issues. A research review by the National Multifamily Housing Council, which represents the apartment industry, reached similar conclusions as a University of Southern California paper that was funded by the California Community Foundation, which works to address inequity.

Where the reports slightly differed was in their findings on how well needy residents benefited over those more well-off. They also agreed maintenance was a problem at rent-controlled complexes and cities lost housing supply due to condo conversion, but the USC report argued policies could be tailored to address these consequences. And both said there wasn’t a clear determination regarding the impact on new construction.

If Proposition 10 passes, advocate Bautista said he'll push local elected officials to implement rent control and even work to get it on the next ballot if they don't. If it fails, Kirkland said the apartment association would facilitate conversations with both sides to find a real solution.

In the meantime, affordable housing tenant Morgan is still struggling to afford the home she's lived in since 2015, but a representative for the complex told KPBS the company would work with her on the problem.

"We agree that this resident is faced with a big increase in a short period of time, and to look back and say but over the three years it's not quite that bad, but I agree that effectively a 25 percent increase in a short period of time is rough," said Charles Schmid, chief operating officer at Chelsea Investment Corporation.

He said units are priced at 50 to 60 percent of the area median income and as that increases, as it did over the last few years after remaining relatively flat, so does rent.

"We have to pay our bills, so in order to do that we have got to collect the rent and unfortunately in some cases, even the rents restricted as they are, are still not affordable to all people," Schmid said.

In a follow-up email, Schmid said Morgan was unavailable when the property management company contacted her Tuesday but that it would continue to reach out.

Prop 10 Brings Rent Control Debate Boiling To The Surface
California’s Proposition 10 would help clear the way for local jurisdictions to expand or implement rent control, but opponents think it would further harm the housing affordability crisis.

VIDEO: Prop 10 Brings Rent Control Debate Boiling To The Surface q

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