A version of the following was written by housing provider and attorney Michael Millman.
In 2018, Michael Weinstein, President of the AIDS Health Care Foundation, promoted Proposition 10 to extreme rent control to approximately 540 cities throughout California. It was defeated by almost 70% of the voters.
Proposition 21, of course, is the “son” of Proposition 10 and Mr. Weinstein probably thought if he could seduce and deceive homeowners into believing that “rent control” would not be extended to their property, he might be able to get their vote. The following represents an appropriate evaluation and analysis of the very dangerous, radical and deceivingly misnamed “Affordable Housing Act” (Proposition 21):
ATTACK ON SINGLE FAMILY HOMES
Extreme, radical rent control shall be extended to every house, condominium or auxiliary dwelling unit (ADU) unless you hold title to the property as a “natural person.” It appears to exempt two or fewer single family homes from rent control; however, if you hold those properties in a traditional family trust, limited liability company or even a small corporation, then Berkeley, Santa Monica or West Hollywood-types of rent control will govern your property. California is a very litigious state. Most persons insulate themselves from liability by maintaining title to their property in an LLC in the overwhelming, vast majority of families to avoid “estate taxes” and hold the property as a family trust. Accordingly, these property owners would be under rent control and thereby responsible for more tenant welfare.
THE MOST DANGEROUS OF ALL PROPOSALS
Vacancy Decontrol: Presently, when a rental unit becomes vacant, you may offer the unit to the new rental candidate at prevailing market rates. You’re free to negotiate that the tenant pays for water, sewage and trash, parcel taxes and bonds. However, under this Initiative, the right of re-renting is severely restricted to an additional 15%, amortized over three years. You are allowed to increase the rent by a factor of 5% per year. Can you imagine some of the rental units in Venice, Santa Monica and San Francisco that have been occupied for the last 25 years wherein the tenant was paying $700 to $900 per month for a super-large unit overlooking the Pacific Ocean that you’d be restricted to increasing the rent by only a factor of merely 5%? Owners will hold it off the market. Even worse is in year number four, after the “artificial cap” expires, then your local rent control authority has the jurisdiction to set the new rent. Perhaps they’ll decide that the rents be rolled back to 1960 prices. Perhaps they’ll adopt a formula where the increase will be subject to 75% of the CPI. They certainly will reject the Governor’s rent control formula which is 5% plus an additional CPI factor.
BUREACRACY AND COSTS EXPLODE
If this initiative passes, there will be approximately 540 rent control authorities throughout the state with different protocols and procedures.
It will expand the authority of “local rent control bureaus” which could adopt a protocol wherein apartment owners or landlords pay for registration fees, an increased business license tax, waiver of security deposits and will set the rents at some formula that resembles 1960 prices. Radical, extreme tenant welfare, (i.e. rent control), will allow a bureaucracy to balloon to $8,000,000 to $10,000,000 per year, in which hundreds of unqualified bureaucrats and inspectors will be all over you. Teams of investigators will go out into the community harassing property owners alleging that there have been building code violations and then confiscating the properties. Yes, confiscating properties! They are already doing that now by forcing us to provide free rent via no evictions.
VOTE NO ON PROPOSITION 21!
In the final analysis, even though there is an exemption on new construction for the first 15 years, this proposition allows tenant welfare authorities to also extend jurisdiction to all rental units built prior to 2005.
Our best argument against Prop 21, of course, is their obvious effort to bring single family homes under the jurisdiction of rent control. Next, the rent control authority will want to reappraise every apartment building and increase property taxes – not allowing a pass-through of the increase to the tenants.
Finally, I remind you that if your private residence, condominium or your ADU is not registered in your name as a natural person, you will be subject to rent control. Be careful.
In 2019, the building industry, realtors and the apartment industry agreed with Governor Newsom and adopted AB 1482, a comprehensive, universal statewide rent control. Let’s allow AB 1482 to be implemented and get rid of all of the other city and county rental laws that have been forced upon housing providers.
WHAT CAN YOU DO NOW?
- Go to www.aoausa.com and sign petition numbers one and two.
- Use the bumper sticker that was enclosed in last month’s magazine and put up a “NO ON
PROP 21” yard sign. Call 800-827-4262 or email your name and mailing address to: firstname.lastname@example.org if you would like one or the other.
- Join the industry and do your part by donating at least $100 per unit of housing that you want
protected. Make your check payable to AOA PAC and send it to 6445 Sepulveda Blvd., Van
Nuys, CA 91411 or donate online when you sign the petitions.
- VOTE in November!!
Thank you for joining the fight to protect our property rights! We can and will win it when we all join together.
[Editor’s Note: AOA DID NOT approve of AB 1482, Governor Newsom’s statewide tenant welfare program, i.e. rent control. Other major apartment industry groups did agree.]