• Costa-Hawkins: Assemblyman Ed Chau Sides with 1% (Photos - Hzmonte, California State Assembly).

      Costa-Hawkins: Assemblyman Ed Chau Sides with 1% (Photos – Hzmonte, California State Assembly).

      On January 11, 2018, the Assembly Housing and Community Development Committee voted 3-2 against AB 1506, a bill that would have repealed the 1995 Costa-Hawkins Rental Housing Act. Costa Hawkins prevents California cities from imposing rent controls as they see fit.

      By Sean McMorris

      Repealing the bill would have granted cities a tenant-friendly tool to address California’s housing crisis other than the current developer-friendly options like state legislation and subsidies that incentivize building, zoning variances, General and Specific Plan Amendments, and granting the use of MNDs for projects rather than more comprehensive EIRs—most of which motivate building but don’t address the immediate problem of affordability.

      Thus, Costa Hawkins prevents a city from using all the tools in its arsenal to address the housing crisis. Worse, it essentially mandates that the only way for a California city to address the housing crisis is for it to build its way out of the crisis by saturating the city with so much housing that market forces will eventually pressure landlords to lower rents to affordable rates. Never mind all of the negative consequences of overdevelopment and deregulation that come with this approach. And never mind all the instances in which developers and landlords were given incentives like tax breaks, subsidies, and relaxed regulation in the past to pass on savings to consumers and did not.

      [Chau] abstention
      …a lame attempt
      at damage control
      with the
      middle-class
      voters who
      put him
      in office

      Those in the real estate business are not altruistic. Like most of us, they want to make as much money as they can. If they can exploit the market they will. They are not going to do what is right by the rest of us unless the market forces them to. But the problem with relying on the free-hand of the market to save us from a housing crisis is that the “free-hand” is not really free, nor is it selfless or rational. So many variables have to align over a long period of time, some sensible, some not so sensible, some controllable, some not controllable, that there is no guarantee that market forces will coerce real estate interests  to provide affordable housing if we just get out of developers and landlords way.

      Yet, that is essentially what proponents of Costa-Hawkins are forcing Californians to do. They are forcing us to trust that landlords and developers will do the right thing… eventually… if they are unregulated… and when the market forces them to. In the meantime, millions suffer.

      Ed Chau’s troubling abstention vote

      That is why my Assemblyman (49th District), Ed Chau’s abstention vote is so troubling to me. For one, it is dishonest. It is clear that if Chau had voted, he would have voted “no” on AB 1506. To be clear, Chau did not abstain because he could not attend the vote. His abstention was a lame attempt at damage control with the middle-class voters who put him in office. By not voting, Chau consciously allowed the repeal of Costa-Hawkins to fail. His reasoning? Rent control would disincentivize investment in new housing. In other words, Chau sided with the 1% and is pushing their extortionist argument: “if you don’t give us (developers and landlords) free rein to do as we please then life will get worse for everyone.”

      To be sure, the repeal of Costa-Hawkins alone will not fix California’s housing crisis. Rent control will not address the lack of housing units on the market. And, yes, most economists agree that rent control is not a long-term solution to affordable housing. There is no silver bullet here, including a hands-off approach that allows real estate interests to build and charge without mitigation. But what is lost in the economic arguments are the social and moral arguments. And that is why Chau’s abstention is so upsetting to me.

      Disallowing residents and locally elected leaders to make up their own minds about rent control, and the socioeconomic makeup of their cities, is morally bankrupt. Rent control, while not an end-all solution to a lack of affordable housing, can at a minimum provide some temporary relief to a significant portion of society. The alternatives for residents are to either uproot, scrape by, or become homeless while real estate interests rake in record profits and we all wait and hope for the market to correct itself.

      Take a look
      at his campaign
      finance reports
      and come to
      your own
      conclusions

      And let’s be honest, most cities are not going to impose strong rent controls if Costa-Hawkins is repealed. Costa-Hawkins still allows cities to impose some types of rent control on most housing built before 1995. There were 14 cities in California that were considered rent controlled (just 5 with strong rent controls) when Costa-Hawkins passed in 1995. There are 15 cities listed as rent controlled by the state of California today.

      Yet, Costa-Hawkins advocates, like Assemblyman Chau, would have you believe the housing crisis would get worse if the law is repealed. In reality, most cities would continue to address the housing crisis in ways they are addressing it now. If cities imposed rent control measures, they would most likely be temporary controls (rent freezes) or area specific and only on housing built before a certain time period and of a certain type. Sure, some cities may opt to impose stronger controls but the vast majority of California cities will likely not adopt any controls at all. The cities that advocate rent control already have it, and developers have not fled those cities.

      And finally, we need to disabuse ourselves of the notions that rent control 1) is tantamount to Section 8 Housing, 2) induces slums, 3) and prevents real estate interests from making a profit. None of these things are true. Rent for controlled units is allowed to rise based on a fair percentage determined by city ordinance and/or it adjusts with the Consumer Price Index, and the majority of people who occupy these units belong to the middle-class.

      Throwing 99% under the bus

      So why is Assemblyman Chau hamstring cities and short changing the 99%? Well, take a look at his campaign finance reports and come to your own conclusions. It surely couldn’t be because Assemblyman Chau took $9,200 from the California Real Estate PAC during his last re-election campaign. Or:

      • $1,000 from the Apartment Association of Greater Los Angeles PAC.
      • $3,000 from the State Building and Construction Trades Council of California PAC.
      • $1,000 from the California Mobilehome Parkowners Alliance PAC.
      • And tens of thousands of dollars more from other real estate interests and banks.

      But don’t take my word for it. Have a look for yourself.

      Recipient Committee Campaign Statements:
      (Click to open individual statements below)
      1 - 2 - 3 - 4 - 5 - 6 - 7 - 8

      Assemblyman Chau makes over $100,000 a year as a California legislator. That puts him in a higher income bracket than most of us. He may not need immediate relief from inflated rents, but many Californians do. Please take off your blinders Assemblyman Chau and do what is right by a majority of Californians. Vote to repeal Costa Hawkins so that residents and local governments can make up their own minds about how to address the housing crisis in their cities.


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