Proposition 10 lost big. Now what?

This update follows an earlier post discussing Proposition 10’s potential impacts and pre-election prospects, available here.

What happened on Election Day
Despite California’s sky-high rents, voters just rejected a ballot measure that would have allowed cities to expand rent control. With 100% of precincts reporting, 61.7% of voters opposed Prop 10, while 38.3% voted to approve the measure. The ballot measure only achieved a majority in one of California’s fifty-eight counties, San Francisco. In Los Angeles County, 47.2% of voters supported the proposition. However, the ballot measure fared substantially worse in Sacramento, San Diego, Fresno and Orange counties. These results highlight the measure’s widespread unpopularity.

Opponents seized on the uncertainty surrounding Prop. 10. The measure was a blank slate: “repeal Costa-Hawkins.” This allowed opponents to project a wide array of negative impacts, like decreasing housing construction, declining home values, and reducing investment in affordable housing.

All in, both campaigns surpassed $100 million, making Prop. 10 one of the most expensive initiative battles in California history. The “No” campaign out-raised the “Yes” campaign 3-to-1.

Tom Bannon, Chief Executive Officer for the California Apartment Association declared: “The stunning margin of victory shows California voters clearly understood the negative impacts Prop. 10 would have on the availability of affordable and middle-class housing in our state.”

Michael Weinstein, president of the AIDS Healthcare Foundation, which was Prop. 10’s primary sponsor, said the result revealed the influence that corporate landlords have over the state’s housing market. “They may be enjoying their victory at the polls tonight,” Weinstein said, “But this campaign exposed who they are and what they represent.”

Looking forward
After Prop. 10’s failure, the same challenges remain. Nearly one in three California renters spend more than half of their income on rent, which leaves many families extremely vulnerable to eviction.

Although the next governor Gavin Newsom opposed Prop. 10, he told the Sacramento Bee that “I will take responsibility to address the issue [of rent control] if it does get defeated.”

Is there any room for compromise?

Before Prop. 10 qualified for the ballot, Assemblyman Richard Bloom of Santa Monica, had introduced an identical bill, in the hopes of reaching a legislative compromise between property owners and tenants’ rights activists. Negotiations failed under intense opposition from the same groups that opposed Prop. 10. The legislation died in the Assembly Housing Committee.

Damien Goodmon, director of the “Yes on 10” campaign, has publicly stated that he does not trust Gavin Newsom enough to negotiate. He added, “The reality is the [Newsom], like so many politicians in the Democratic party, has been bought and paid for by the landlords and the realtor lobby and the developer lobby.”

Tenants’ rights groups can push for new local rent control laws that fit within the current Costa-Hawkins framework. A measure to cap rent increases in Sacramento has already qualified for the 2020 local ballot. Activists have also considered putting a more aggressive initiative on the 2020 statewide ballot, with the hopes that presidential turnout and better ballot language might yield a different result. This provides rent control activists with some leverage.

But do landlords have enough incentive to negotiate, let alone compromise? Very unlikely. Nearly two-thirds of Californian voters just resoundingly rejected Prop. 10. In spite of California’s deepening housing crisis, landlords appear to be in a stronger position than they were before the Prop. 10 campaign began in early 2018.

For Governor Newsom, a middle-of-the-road first step might be to propose amending Costa-Hawkins to create a rolling rent cap. Instead of pegging rent control to 1995, an arbitrary year, cities could be allowed to apply rent control to apartment buildings as soon as they reach a certain age (e.g., 30 years old). Newsom understands the severity of California’s housing problem, but time will tell whether he can build any consensus on the issue of rent control.