Costa–Hawkins Rental Housing Act

As prices rose for rental housing properties, return on investment and cash flow motivated new landlords with mortgages to raise rents.

Yet CHC attempts to partially 'preempt' rent control were thwarted by Democrats, led by State Senator David Roberti, until term limits forced his retirement in 1995.

Especially it sought to organize the opposition, to "piece together a coalition" of scattered local groups (tenants, senior citizens, religion affiliated), together with the California cities with rent control.

[41] It situates government contracts with owners about rent charged (e.g., provisions for low income housing), and the effects of a notice of violation, e.g., about health or safety.

Usually rent control is a city-made law (a municipal ordinance) aimed at mitigating the disruptive effect, on neighborhoods and on individual renters, of escalating or fluctuating prices in the residential rental market.

"[70][71][72][73][74][75] In the 1997 Kavanau case,[76] a rental property owner challenged the City of Santa Monica's rent control law as a form of "taking" or inverse condemnation prohibited by the federal Constitution.

and Frances C. Berger Foundation case,[77] the California Court of Appeal upheld an ordinance which provided that the city council sitting as a rent board would determine what was fair, just, and reasonable regarding an owner's comparable return on investment.

Alternatively, rent raise limits may be directly keyed to changes in the cost of living, as measured by the Consumer Price Index (CPI).

[102][103][104] Owners claim these laws limit their ability to deal with problem tenants who disturb their neighbors, e.g., by nuisance, domestic violence, criminal activity.

A city ordinance may require the owner to pay the departing tenant an allowance for moving and similar expenses, e.g., in event of no-fault termination.

Most economists believe rent control reduces the supply of housing over time, and students of economics are taught this analysis early on in their instruction.

[113] Housing industry advocates rely on this analysis to justify laws like Costa-Hawkins, which restrict the ability of municipalities to enact rent control.

[119] For this reason, renter's rights groups have advocated for expansion of rent control, resulting in the unsuccessful 2018 ballot referendum Proposition 10 which would have directly repealed Costa-Hawkins.

Prior to the enactment of Costa–Hawkins, such strict vacancy control had existed in five cities: Berkeley, Santa Monica, Cotati, East Palo Alto and West Hollywood.

In this case, a Los Angeles housing ordinance in effect mandated that sixty rentals for low-income tenants be included in Geoff Palmer's 350-unit development west of downtown.

Yet there were alternatives that avoided the exemption for new construction under Costa–Hawkins: "the builder receives either financial assistance" or other valuable consideration such as a density bonus, and "agrees by contract with the city to restrict rents.

[205][206] This bill restores to local governments the ability to require inclusionary rental housing for low income households, hence in effect setting their rent amount.

[209] In Burien, LCC v. James A. Wiley the Landlord contended that this Costa–Hawkins exemption applies to buildings converted from apartments to condominiums (both residential uses), when a new certificate is issued for the latter.

[214] The Mosser rule was then expanded in July 2015 by the First District Court of Appeals, in T & A Drolapas v. San Francisco Residential Rent Stabilization and Arb.

Its 2016 version states: "(a) The legislature finds and declares all of the following: ¶(1) The lack of housing, including emergency shelters, is a critical problem that threatens the economic, environmental, and social quality of life in California.

[234][235] On February 17, 2017, in the California Assembly, Democratic members Richard Bloom, Rob Bonta, and David Chiu introduced AB 1506, a bill that if passed would simply repeal wholesale the Costa–Hawkins Rental Housing Act of 1995.

Given the vacancy decontrol and exclusions of Costa–Hawkins, its repeal would leave local governments free to control much of the residential rental pricing regulations, their reach, and similar issues.

Democrats Ed Chau (Arcadia) and Jim Wood (Healdsburg) abstained, and commented that rent control would do nothing to increase the supply of housing and may discourage new construction at a time the state needs it the most.

[242][243] On October 23, 2017, the Alliance of Californians for Community Empowerment (ACCE) filed papers with the state Attorney General for a ballot measure which would repeal wholesale the 1995 Costa–Hawkins Act.

[252] Carol Galante, a professor of urban policy at UC Berkeley's Terner Center for Housing Innovation postulated that Prop 10 may have been defeated because it would have opened the door for government regulation of rents on single-family homes; because 40% of the rental housing stock nationwide consists of single-family homes (predominantly owned by private individuals), this resulted in a large number of owners with the ability to vote against this proposition.

[253] The same activists who advocated for Proposition 10 (both financially backed by the AIDS Healthcare Foundation), in the wake of the failure to attract majority support, decided to put another initiative to amend the Costa-Hawkins Act on the ballot in the 2020 California elections.

A 1990 study of Santa Monica, CA showed that vacancy control in that city protected existing tenants (lower increases in rent and longer stability).

[258] The measures (both rent control and growth management) helped displace new construction from the metropolitan areas to the interiors of the state with low income and minority populations being particularly impacted.

In 1994, San Francisco voters passed a ballot initiative which expanded the city's existing rent control laws to include small multi-unit apartments with four or less units, built prior to 1980.

[259]: 1,44 [260] [261]: 1 [262][263] The authors stated that "This substitution toward owner occupied and high-end new construction rental housing likely fueled the gentrification of San Francisco, as these types of properties cater to higher income individuals."