Prop 10 Brings Rent Control Debate Boiling To The Surface
Wednesday, October 24, 2018
Photo by Tarryn Mento
Tarryn Mento, Speak City Heights reporter, KPBS News
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.
"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.
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.
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.
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.
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