Laws which limit rent increases are common in Canada and Europe. However, only 5 U.S. states have any sort of rent control law at either the state or local level. And only one state, California, has both.
In 1995, worried about overreaching local rental control laws, state legislators passed the Costa Hawkins Act, a compromise which, while it allowed local rent controls to stand, prohibited them from applying these laws to any housing constructed after 1995, on the theory that this would incentivize building new housing. Unfortunately, 25 years later, the housing shortage has only become more dire, and localities that wish to keep residents housed are still limited to regulating a dwindling “rent controlled housing stock” of older buildings.
The main thing Prop 21 does is replace the 1995 cut-off date with a rolling window; rather than limiting local rent control to units built sometime in the distant past, Prop 21 says that local rent control ordinances can only apply to buildings at least 15 years old. That is, if Prop 21 passes, and a city passes the strongest rent ordinance it can, anyone who builds new housing will still have 15 years to profit from market-rate rents before local rent control laws apply.
Part of what bothers us so much about the No on 15 campaign is that despite the very clear way Prop 21 maintains a strong market incentive for building new housing and relatively weak appetite for new local rent control laws in most parts of California, opponents still claim that passing Prop 21 will limit housing production in California by interfering with the free market. While it’s possible to get away with these kinds of zombie economic arguments in American politics, we hope Californians will apply common sense here.
Ironically, Californians’ housing woes can be largely traced to two distinctly American myths about housing. First, that there is something virtuous about zoning large swaths of land for nothing but single-family homes. And second, that there is always more land to build on (yes, but in California, that land catches on fire).
Californians can have nice things: stable rents and abundant housing both. But we should stop pretending that we can somehow fix the housing crisis by restricting rent control. Instead, we need to take a hard look at our own zoning laws, and make it much, much easier to build housing closer to where Californians live. We recommend a yes vote on Prop 21.