"Justice for Renters Act" Seeks to Repeal Costa-Hawkins Rental Housing Act

Michael Weinstein, through his AIDS Healthcare Foundation, is leading the “Justice for Renters Act,” the most recent attempt to repeal the Costa-Hawkins Rental Housing Act. Costa-Hawkins is a state law that places strict limits on a city’s ability to impose rent control on housing.

What is the Costa-Hawkins Rental Housing Act?

The Costa-Hawkins Rental Housing Act was enacted in California in 1995 to address cities’ exercise of strict rent control ordinances, which imposed what is known as “vacancy control” on empty units even after a tenant voluntarily vacated. In 1995, State Assembly Member Hawkins introduced AB 1164 (with State Senate Member Costa as a co-author), advancing what they saw as a “moderate approach to overturn extreme vacancy control ordinances [that] unduly and unfairly interfere with the free market”.

Costa-Hawkins established statewide guidelines for rent control policies, allowing local governments in California to implement rent control measures while also imposing certain limitations. For example, under Costa-Hawkins, cities cannot impose rent control on single-family homes, condominiums, or any housing built after February 1, 1995. These provisions aimed to strike a balance between tenant protections and property rights while promoting the overall health of the rental housing market in California. Moreover, Costa-Hawkins restricts vacancy control by prohibiting cities from setting prices on vacant units and allows landlords to impose market-rate increases on subsequent occupants once the last "original occupant" has vacated.

Costa-Hawkins encourages investment in housing by limiting the scope of rent control, and incentivizing property owners to invest in the maintenance and development of rental housing, thus addressing concerns about the quality and quantity of rental housing. Costa-Hawkins also provides more flexibility in the rental housing market by allowing landlords to adjust rents to market rates when units become vacant, thereby encouraging turnover, and potentially improving housing availability.

Despite the benefits of Costa-Hawkins, several attempts to repeal it have occurred, two of which were also spearheaded by Michael Weinstein. These included AB 1506, Proposition 10, and Proposition 21.

AB 1506, introduced in 2017, sought to repeal Costa-Hawkins entirely, allowing local governments to expand rent control measures to include properties built after 1995, single-family homes, and condominiums. The bill was proposed in response to concerns about rising rents and housing affordability issues, particularly in cities with high housing costs such as San Francisco, Los Angeles, and Oakland. However, AB 1506 ultimately failed. It faced opposition from various groups who argued that repealing Costa-Hawkins would stifle housing construction and investment, thereby potentially exacerbating the state's housing crisis.

Proposition 10, a 2018 ballot initiative, also aimed to repeal Costa-Hawkins, citing concerns about rising rents. However, it was defeated by California voters, with approximately 62% voting against it. Supporters believed that local governments should have more authority to address housing affordability within their jurisdictions. Whereas opponents of Proposition 10 argued that repealing Costa-Hawkins would discourage investment in rental housing and exacerbate the state’s housing crisis. As a result, Costa-Hawkins remained intact, and the limitations on rent control established by the act remained in place.

In 2020, Proposition 21 sought to expand local governments’ authority to enact rent control policies by amending Costa-Hawkins to allow local governments to implement rent control on properties built more than 15 years ago, including single-family homes and condominiums. But Prop 21 was also defeated, with approximately 59% voting against it.

The most recent initiative to repeal Costa-Hawkins, the “Justice for Renters Act,” if successful, would add language to the California Civil Code prohibiting the state from limiting “the right of any city, county, or city and county to maintain, enact or expand residential rent control.” The implementation of such legislation would fundamentally alter the operational dynamics of housing law within the state of California. The initiative would likely signify a return of strict rent control measures that were enacted in cities like Berkeley, West Hollywood, East Palo Alto, Cotati, and Santa Monica prior to Costa-Hawkins.

Without Costa-Hawkins’ regulations to restrain the authority of local governments, there will likely be a decline in both the availability and quality of rental properties. Existing landlords will face less incentivization to upgrade existing units, and developers will be discouraged from developing new rental housing.

Renters are increasingly likely to face difficulties in securing high-quality housing as landlords may lack the financial resources to upgrade their properties. We will likely see a rise in rental prices for new developments as a means to counterbalance the effects of stricter rent control. Moreover, reduced turnover in rent-controlled properties may impede housing mobility, complicating renters’ efforts to find suitable homes. The repeal of Costa-Hawkins may also have unintended consequences, where landlords rush to invoke the Ellis Act, which allows its own form of vacancy decontrol if a property goes back onto the rental market.

Contact a Real Estate Litigation Lawyer Today

If you have questions about the Costa-Hawkins Rental Act or how it might apply to your property, or are interested in learning more about the battle to resist Costa-Hawkins, contact us at your convenience.

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