Voters Reject California’s Proposition 21

Once again, California voters have decided not expanded rent control in the state. In Tuesday’s election, voters rejected Proposition 21. Had it passed, the measure would have allowed local jurisdictions to expand rent control or create new rent control laws on almost all housing types. It was widely opposed by the commercial real estate community as well as Governor Gavin Newsom. According to data from The Associated Press, the proposition received only 40% of the votes, although ballots are still being counted.

The National Multifamily Housing Council called the defeat “a victory for hardworking Californians who deserve real housing solutions that increase supply and bring costs down.” The organization also noted that the defeat is a sign that voters understand rent control is not the pathway to solving the housing crisis. NMHC went on to underscore the importance of collaborative efforts between the housing industry and government that will make affordability a priority in the solution to the housing crisis.

While Prop 15 was the headline-grabbing measure this year, Proposition 21 was also a major concern for multifamily owners. A panel in October at a CREW San Diego event discussed all of the real estate-related propositions on the ballot, and said that Prop 21 would distort rental markets and hurt landlords by instilling a rent increase tax of 5%+CPI.

The panelists also noted that rent control measures are usually brought to the ballot by the same group, which is led by Michael Weinstein and his AIDS Healthcare Foundation. In 2018, the same group fueled efforts to get Proposition 10 on the ballot. The measure would have overturned the Costa-Hawkins Rental Housing Act, which would have allowed local governments to adopt any type of rent control for any housing type, a very similar proposal to Prop 21. In 2017, the group was integral in getting Measure S, also called the Neighborhood Integrity Initiative, on the ballot. A local Los Angeles initiative, the measure would have limited housing development in Los Angeles and required a revision of the city’s general plan. Both of the measures failed to make it past the voters.

Supporters of the measure argued that drastic actions are needed to tackle California’s severe housing crisis, which has left many rent burdened and contributed to the homeless population. Opponents agreed that the housing situation in California is dire, but instead argued that housing affordability is an issue of supply and demand, calling for more development of housing properties. In addition, the State of California passed a rent increase cap of 5% per year, which already gives some legislative relief to rent-burdened residents. The voters agreed with the latter argument.