As we first reported earlier this year:

If adopted by voters in November, California Proposition 10 would overturn the state’s Costa-Hawkins Rental Housing Act which prevents rent control from applying to single-family homes, condos or any multifamily building which received a certificate of occupancy after January of 1995 (or earlier if a city had already adopted a rent control ordinance, which is the case for San Francisco which adopted rent control in 1979).

While the passage of Proposition 10 wouldn’t directly change the existing rent control laws in San Francisco, it would allow the laws to be amended and expanded to all property types without the above prohibitions. It would also allow for the potential adoption of vacancy control, which would limit the amount a landlord could increase the rent on a newly vacant unit.

And while not binding, a formal resolution in support of Proposition 10, “reaffirming the City and County of San Francisco’s support for repeal of the Costa-Hawkins Rental Housing Act,” has been drafted by Supervisors Peskin and Fewer and will be presented to San Francisco’s full Board of Supervisors for potential adoption next week.

Yesterday, San Francisco’s Board of Supervisors formally approved the resolution and the City’s official support for Proposition 10 by a vote of 9-2, with Supervisors Stefani and Tang having voted in dissent.

Recent Articles

Comments from “Plugged-In” Readers

  1. Posted by Orland

    Most certainly, an issue which should be returned to local control. The current statute is a gross overreach.

    • Posted by bender

      It was gross local overreach that led to the 1995 state law.

      Looks like this is just more grandstanding by the SF supervisors. A resolution of support means nothing at all. Polls show prop 10 losing pretty badly. Even a majority of renters are against it in the polls. And the anti-10 groups still have a ton of money to spend while the pro-10 backers are pretty much tapped out. Odds look long for this one.

      • Posted by sfdragonboy

        Well, it still makes sense that every owner needs to go out and vote it down. Tell your friends and family to do the same. Let’s not have a repeat of the last presidential election….

    • Posted by Karl

      “Orland”,

      Yours is an absurd statement.

      The truth is the exact opposite — as it is Prop 10 that is the “gross over-reach”.

      If the past 40+ years of failed, locally-controlled, NIMBY-driven (anti) housing regulation has shown us anything, it has clearly demonstrated that housing production is far too important an issue to be left to the vicissitudes of 480 balkanized localities.

      Accordingly, we need pro-housing policies that are set at the State level to ensure that every jurisdiction does its fair share of housing creation rather than letting local NIMBYs continue to run the show.

      The passage of Proposition 10 (Costa Hawkins repeal) would be a huge mistake as it represents precisely the opposite of what we should be doing to address the housing shortage.

      The passage of Prop 10 will massively exacerbate the housing crisis as no sensible developer is going to create rental housing under unknown/uncertain regulatory circumstances that could very well result in the defacto taking of their property by local governments.

      For the better part of 40+ years, thanks to ever more onerous NIMBY-driven anti-housing regulations, we have been discouraging housing creation. That is why we have a chronic housing shortage and skyrocketing housing prices.

      We need to start encouraging substantial housing creation — especially critically-needed rental housing — not discouraging it.

      Come election day, step up and Vote for More Housing, Vote to End the Housing Shortage — Vote NO on 10!

      • Posted by Orland

        Whether any of your screed has an ounce of logic, it is an argument to be made locally to gain acceptance.

  2. Posted by Helmut Schmidt

    If rent control worked, then why does San Francisco have the highest rents in the nation?

    • Posted by Dave

      The high rents in SF are driven by the non-controlled apartments built after 1976 (is it) when rent control went into effect with an exception for new construction. $3500 for a one bedroom does not reflect what folks in rent controlled units who have been there for 7, 8 or more years are paying. Personally I know several renters with nice units paying 1600/month. But they have been in the unit a decade. I know of people who retired from my company who have been in their units for 30 years and are paying 90o/month for a very, very nice units. The issue there is these folks live in the city part-time now and have homes in other states which they own. One of the many ways rent control can be and is abused.

      • Posted by SomeCallMeE

        Dave your reasoning is completely backwards. Non-controlled apartments don’t CAUSE the market rate to be higher, it’s a lack of supply that does. This is basic supply and demand at work. Prop 10 and subsequent tightening of rent control will decrease developer incentive to build.

        • Posted by Dave

          It’s actually both – too few non-controlled apartments. As in not enough new product being built. Despite the boom new housing units (apartments and condos) have only once or twice exceeded 3K/year in SF.That is partly compared to other places doing 5K/year on a sustained basis.

      • Posted by Charles

        While the units may be “nice”, the buildings themselves are almost certainly in disrepair. Walking around this city and seeing all the shabby condition of the housing stock here is depressing.

        I think passage of Prop 10 and vacancy control will lead to a lot of gimmicks like TICs with owner-finances sales agreements that escalate over time and give property owners a sufficient return. Good business for lawyers and higher rents for new comers – yay!

    • Posted by SFRealist

      Rent Control doesn’t work. I think this is something about which virtually all economists agree.

      • Posted by anon2.5

        Agreed, but we don’t live in an economist bubble. Rent control makes for bad economics but good politics, much like most policy prescriptions in our society. Rent control is popular because a large and economically diverse set of the electorate benefit from it, like social security or roads. If you take rent control away, and you don’t replace it with some alternate form of affordable housing, SF will turn into Palo Alto or Atherton. That’s not a bad thing, but it just wont be SF anymore, and some of us don’t like living in economically or racially homogeneous cities. There’s plenty of room in the country for both types of cities.

        • Posted by anon2.5 needs to get out more

          May be good politics, but as usual, bad policy.

          “some of us don’t like living in economically or racially homogeneous cities.”

          San Francisco is diverse? That’s hilarious. Now that the African Americans were booted to Oakland, it’s the old white renters that benefit mostly from rent control. Texas is more racially diverse than San Francisco.

      • Posted by Brahma (incensed renter)

        Please post a link to a paper, published in a refereed journal, where an economist said rent control “doesn’t work”. I’ve read a whole lot of papers on the subject, and my conclusion, based on an admittedly non-comprehensive reading of the literature is that economists have a different definition of “work” than most laypeople, so their opinion is irrelevant at best. Most people couldn’t give a rat’s rear about Pareto efficiency; economists think that’s the most important thing in life.

    • Posted by anon2.5

      facepalm. Look up causation fallacy.

    • Posted by Ohlone Californio

      It works to keep some demographics in San Francisco. These folks are renters who will always vote for anyone who is pro rent control. Many of them buy property in other areas as they pay their 1980s, 1990s, early 2000s or 2008-2011 rent bases. They are a large group and they need rent control so they vote the way they do, reliably.

  3. Posted by Sue Yu

    If passed, I predict mass evictions. Terrible policy for the majority of Californians. everyone has to move at some point.

  4. Posted by SFLandlord

    Of course they did. SF politicians never saw a piece of property they didn’t want to control.

  5. Posted by denis

    I will vote NO, of course. The suggestion of vacancy control seems like it would end up in court if enacted. So if a person pays 600 a month for 45 years, the landlord can’t raise the rent to market rate once the person moves out or dies? It would be really interesting to see how that statute would be written.

    Just another anecdote… Some acquaintances recently bought an RC building (formerly a SFR), and bought out the remaining tenants and just live in it as a house. That’s another 4 units off the rental market indefinitely.

    • Posted by Amewsed

      The vacancy control is what really kills the proposition. There would be no economic incentive to fix up old, not to code, dilapidated buildings if an owner is stuck with forever low rents. Probably worth more if you simply let the building fall down and collapse.

      Let’s say you run a burrito shop and you are required to charge $3 for each burrito in perpetuity regardless of your rents, payroll expenses, insurance premiums, costs of ingredients, water, electricity, garbage bills. How many people will want to open a burrito shop? And what kind of ingredients do you expect in the burrito from existing burrito shops?

      This is why progressive democrats have no place in the business world.

      • Posted by NO ON 10

        Great (and completely apt) analogy.

      • Posted by Mark A

        You mean like how Europe caps bread prices while putting a higher quality product on the shelves than we get?

        • Posted by Ohlone Californio

          No, not like how a trade bloc caps prices and devotes economists to adjusting prices annually, bi-annually. Not like that whatsoever. Rather, a municipality that is already overburdened with entitlements being saddled with a vast new responsibility and no means testing. Even some of the big tenant lawyers in town have said that vacancy control is a pipe dream that’s completely unrealistic for San Francisco to ever pull off. That said I have no doubt whatsoever that SF City Council will posture as if that’s what they’re after, all with the full knowledge that it’s impossible.

        • Posted by no_on_10

          Europe caps bread prices? Where do you get this idea from? Utter nonsense!

        • Posted by Vote NO on 10

          Government subsidies which are paid for from taxes make capped pricing possible @Mark A.
          So to follow your bread desire, you are suggesting government needs to subsidize landlords? BS policy leads to bigger BS solutions!

      • Posted by Freeloader

        Who wouldn’t vote yes for $3 burritos?

  6. Posted by Jeremy

    Yeah, the first poll out on this is pretty surprising. About 1,800 voters polled (about 900 “likely” voters). 36% yes, 48% no, 16% undecided. Statewide, among renters, 43% yes, 51% no.

    Apparently the simple slogan of “The rent is too damned high!” isn’t good enough to gain traction. I was expecting more of a simple voter response of “yes” – especially among renters. Perhaps they’re smarter than I thought, and can see how repealing Costa Hawkins would actually be against their own interest, as it would really dampen new rental construction, and spur owners to sell their rental properties off to owner-occupants.

    • Posted by jenofla

      I was thinking it was because many renters do aspire to home ownership eventually and don’t want the restrictions on them down the line. It kind of evens out, though, because there might be more units available for sale for occupancy if it goes through.

  7. Posted by sigfreida

    I will vote no on 10. I rent out a few SFRs and condos in CA. The cap rates are pretty terrible, even if I raised to market rents. I like my tenants but I won’t hesitate to vacate the units and sell them all (very likely to owner occupants) if 10 passes, and that will be several fewer rental units in San Jose and LA. And why not? I can cash out at market highs, and buy rentals in other states where I doubt rent control will ever happen. An apartment building can only ever be an apartment building that you rent out (ignoring condo conversions), but an SFR or condo can be a rental or owner-occupant. Mark my words, tons of SFR/condo rentals will change hands and become owner occupied if 10 passes.

  8. Posted by Danny D

    “I can cash out at market highs…”

    It’s more like you will cash out on the market swamped with SFR’s if Prop 10 passes. So I would vote yes on 10.

  9. Posted by Philip

    This is a tax on rental property. Tax something, you get less of it. Perfect Peskin logic.

  10. Posted by Dave

    Being a landlord and, in particular, a small landlord in SF/the Bay Areas is hard. You are the bad person, guilty until proven innocent and all that. The toxic atmosphere in SF is fueled by an incompetent regime at City Hall. One that looks at landlords as a gravy train – you are bad as you worked too hard and have too much property. Prop 10 would – hopefully polls are correct and it loses – only aggravate the situation. Being a small landlord in SF/Bay Area is problematic. I got out of the BA and state more than 5 years ago.

    That said, the adversarial relationship that has developed in SF re: tenant/landlord and really everything is an aberration. Just today I received an e-mail from one of my out-of-state property mangers. It’s soon to be holiday time and do I want to send a Holiday card or a gift card or nada – one does not need to bite – to my tenants. Can you imagine anything like that in SF? BTW, I’m sending gift cards to my tenants.

    • Posted by Jeremy

      Try sending holiday cards to tenants in SF, and any of them could easily sue you for harassment – and win!

    • Posted by Amewsed

      My tenants get a monthly email with a request for payment of their share of the water bill and an annual email of the rent increase and their share of the Rent Board fee less any accrued interest on their security deposit.

      • Posted by Dave

        So glad I don’t have to put up with a rent board on any of my properties. Guess some choose to on the promise of big appreciation for their SF rental units – even though the ROIs are generally anemic. .

        • Posted by Amewsed

          I have family owned properties since the 1970s so the ROI is fine, but appreciation values much higher. My job is to develop each property to its highest and best use, protect my interests, and position the property for the highest possible resale price. My endgame is to sell, not re-rent as the opportunity arises.

    • Posted by Brahma (incensed renter)

      The adversarial relationship between tenants and landlords is intrinsic to the situation where one person’s business revolves around making a profit at the expense of other people who have a basic need to a place to live, usually just in order to work. And that tension is not at all specific to SF or The Bay Area.

      Some landlords may be sending a gift card, while others tell tenants that they will rollback a recently-imposed rent increase only if Proposition 10 fails in November:

      “What this means is that although you don’t want higher rent and we did not plan on charging you higher rent, we may lose our ability to raise rents in the future as this becomes another government control on rents,” the Aug. 24 letter said. “Therefore, in preparation for the passage of this ballot initiative we must pass along a rent increase today.”

      The rent increase was for over 45%. I have to say that’s a great way to show uppity, entitled renters that landlords are not “the bad person” and not “guilty until proven innocent”. What a guiding light Rampart Property Management must be for all the hardworking landlords in California!

      • Posted by bachman_erlich_overdrive

        I think you miss the point of the rent increase.

        If new legislation could potentially limit your ability to ever increase your salary again in your lifetime, and you could ask for a raise before the legislation passed, you would do it, wouldn’t you? Or would you just be satisfied with the salary you are already receiving? (since by definition, you are living on it.)

        We had the same situation in Sacramento when the SEIU proposed a Costa-Hawkins-compliant RC measure earlier this year. They failed to qualify for the ballot and of course by now, the reaction has been to raise everyone’s rents further.

        What would rational SF landlords have done in ’79 or whenever had they known laws would convert their tenants to life-estate-holders?

        We should be applying an equal wealth tax on investment assets that are held by city residents – I mean shouldn’t the people who have the money pay to keep the city going? I have a $2mm building, you have $2mm of Apple stock. Why don’t you share some burden?

      • Posted by Danny D

        That’s considered voter intimidation and is illegal. That is why Prop 10 is good. Europe has way stricter rules for landlords, of course, Cap rates are not that great there, but landlords still doing fine.

        • Posted by FP

          Sources? I don’t think Europe has stricter rules. Evictions are also tough, but rent increases are usually not. Some cities like Berlin are implementing something akin to rent control – but that’s just happening over the last year.

  11. Posted by Ruby

    As a small property owner in SF, I’ve seen my Recology bill go up 7%, my water bill about 10%, and the allowed rental increase go up a little above 1%. And the word “greedy” placed in front of the word landlord in countless articles. I think that the “progressives” at City Hall see landlords as convenient whipping boys to cover up their own incompetence and lack of solutions to the homeless problem….yes, you, Aaron and Kim. Punishing housing providers doesn’t create affordable rental units, just maintains the existing lack of political will and prevents the kind of bold thinking required to solve these very real societal problems.

    • Posted by Small Property Owner

      7% increase in Recology bill? You mean every year, right? My Recology bill has more than tripled over roughly 15 years. Anyway, I agree with you completely, but it’s even worse than you say.

      • Posted by Amewsed

        Don’t include water and garbage services for your tenants, where possible. I made the policy change over 7 years ago to create less waste by tenants (takes away the all you can eat buffet style mindset,) they can see and control their own expenses, and you don’t have to fume everytime there is an utility hike. Water bills are in my name as the building owner but tenants have their own accounts for garbage and cable t.v. services.

        For those who own larger multi-unit buildings with just one water meter. There are small sub-meters you can buy at a plumbing supply house, and a plumber can install at the incoming water pipe to each unit. You will still have to apportion the sewage waste amounts based on the formula used by the water dept. Bit of a hassle but worth it, especially when I had my mixed use building with a combo of retail and residential tenants.

Add a Comment

Your email address will not be published. Required fields are marked *