Proposition 10 Would Only Inflame California Housing Crisis

house-constructionThis November, Californians will see several taxpayer threats on the ballot, not the least of which is Proposition 10, titled “Local Rent Control Initiative.” This measure would open the floodgates to big government bureaucracies, burdensome regulations and a loss of property rights. The word must be getting out, because a poll released last week by the Public Policy Institute of California shows Proposition 10 lagging.

Proposition 10 would repeal the 1995 Costa-Hawkins Rental Housing Act, a law that was enacted after a compromise was worked out between dozens of different interest groups. Costa-Hawkins stopped local governments in California from enacting a hodge-podge of different rent control laws, each with its own big bureaucracy. The law prohibited rent control on newly constructed buildings, single-family homes and condominium units. It also guaranteed the owners of existing rent-controlled buildings the right to raise the rent on a unit to market value for new tenants when the former tenants moved out.

Proposition 10 would allow cities to enact any type of new rent-control law. New bureaucracies could impose new rules, fees and price controls on old buildings, new buildings, small buildings, garage apartments, granny flats and even single-family homes and condos. Proposition 10 would make California’s well-documented housing crisis even worse by discouraging investment in rental housing and incentivizing conversions or even demolition of existing rental property.

The nonpartisan Legislative Analyst’s Office warns this measure could hurt California taxpayers, predicting a loss of hundreds of millions of dollars in state tax revenue. That would mean less money for schools, roads and emergency services. …

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Prop. 10 May Cost the State, Communities Millions While Freezing Housing Construction

urban-housing-sprawl-366c0Anyone concerned about the future of the state and local budgets should pay particular attention to what the state’s non-partisan legislative analyst had to say about Proposition 10, the ballot measure that repeals the Costa-Hawkins Rental Housing Act, including protections for tenants and single-family home owners.

The Legislative Analysts Office (LA) noted Prop 10 could cost local governments up to “tens of millions of dollars per year” in new costs and the state could lose up to “hundreds of millions of dollars per year” in revenues. 

In the analysis, the LAO also noted that the value of rental housing would decline and that rental units also would likely be sold and no longer be available for rentals.

This, say experts, would work California’s affordable housing crisis even worse.

In addition, the LAO predicts that “If many localities enacted strong rent control legislation, other economic effects (such as impacts on housing construction) also could occur.”

What does all this mean? For one thing, less money for key government services from healthcare to childcare to transportation. Proposition 10 would create scarcity, not just in California’s already broken housing market, but in state and local coffers. That will set the stage for a new round of budget battles in Sacramento and in cities and counties across California.

Proposition 10 also will cost our state and our communities millions of dollars, reduce the number of available apartments and homes available for rental and could result in a housing freeze – which is the last thing California needs right now.

We all agree that the state needs to take steps to address the chronic housing shortage, and out-of-control housing costs in communities across the state. But Proposition 10 is the wrong solution. It will only make California’s affordable housing crisis worse.

ice president of Public Policy, Los Angeles Chamber of Commerce.

This article was originally published by Fox and Hounds Daily

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