California Can’t Afford Proposition 10

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This November, Californians will have the chance to go to the polls and vote on a whole slew of issues, including who will be selected as our next Governor, whether to keep or repeal a recently enacted gas tax, or if it makes sense to eliminate daylight savings time. Unfortunately, there is another measure on the ballot, Proposition 10, that if passed will have profoundly negative effects on California’s economy, our housing industry, renters, and apartment owners large and small.

Proposition 10, the so-called “affordable housing act”, is anything but affordable. It is a flawed initiative that will reduce the construction of new housing and in the process result in the loss of thousands of good paying construction jobs across our state. At the same time, Proposition 10 stands to cost California and its cities and counties millions of dollars in lost revenue, which means less money for schools and emergency services.

Despite the proponents’ arguments, Proposition 10 will not provide any immediate relief for renters facing higher housing costs, will not increase funding for affordable housing, and will not result in any new housing. Frankly, passage of Proposition 10 will significantly reduce the construction of new housing, which will lead to higher prices up and down the state. And that’s important for builders and renters alike in Long Beach and surrounding Southern California cities.

Take Long Beach for example. Last year Long Beach adopted a set of recommendations in a near 100-page report that detailed, after much discussion, proposals aimed at increasing afford able housing. Under Proposition 10, all this work could easily get tossed aside because of increased costs. What good are proposals that no one can afford to implement?

Proposition 10 is opposed by a broad coalition of hundreds of organizations, elected officials, businesses, housing advocates and individuals. It is even opposed by numerous social justice organizations like the California State Conference of the NAACP, Latino organizations, veterans groups and affordable housing advocates. Why? Because they all know that Prop 10 is bad for the economy, bad for renters, and bad for businesses large and small.

For those who live in, manage or own apartments, Proposition 10 could end up being a significant disruption. Proposition 10 calls for the creation of as many as 539 rental boards that will be in charge of housing. It will give government agencies unlimited power to add fees on housing that will ultimately be passed onto tenants in the form of higher rents, resulting in more expensive apartments.

Additionally, many businesses rely on landlord investments to keep their facilities attractive for new customers. But Proposition 10 will reduce property values and, in turn, reduce landlord improvements. California’s non-partisan legislative analyst, along with significant economic research, shows that the market value of non-rent controlled properties in the vicinity of rent controlled properties also declines. This suggests if a business is in the vicinity of rent-controlled properties, it could see a decline in property values. The legislative analyst also found that Prop 10 will likely result in tens of millions of dollars in lost revenue for state and local government, which means less money for schools and emergency services, reduced new home construction, and a loss of thousands of good paying construction jobs.

Ironically, Prop 10 gives apartment owners a huge financial incentive to convert rental properties into more profitable uses like shortterm vacation rentals and condos, making it harder for renters to find affordable housing in the future, even forcing seniors and others living on fixed incomes out of their apartments and communities. At the same time the authors of Prop 10 put language into the initiative that would require California taxpayers to pay the legal bills of the initiative’s supporters if homeowners, tenants or voters challenge the law in court. Crazy as this sounds, even if the initiative’s supporters lose in court, taxpayers will still be on the hook to pay their legal bills.

Faced then with all of these potentially terrible impacts, why are proponents pushing for its passage? That’s a curious question that is difficult to answer. Its primary funder is LA activist Michael Weinstein and his non-profit AIDS Healthcare Foundation (AHF), which has bankrolled a slew of ballot measures aimed at impacting prescription drug pricing and significantly curtailing, and in some cases elim i nating, LA area real estate development, including some affordable housing projects.

According to the LA Times, Weinstein’s AHF poured millions of dollars into numerous failed campaigns, including one which would have imposed a moratorium lasting up to two years on any new development, essentially putting a choke hold on construction.

Weinstein and his non-profit were even at odds with groups wanting to build affordable housing—AHF opposed a state bill requiring cities and counties to limit environmental, planning and other reviews for some development, which was recently signed into law by Governor Jerry Brown. He even tried to block construction of two residential buildings next to his offices because it would block his view. Thankfully a judge rejected Weinstein’s efforts.

Like the judge in the aforementioned case, California voters are shrewd enough to see past power grabs and vanity projects. Proposition 10 just has too many flaws. Nameless faceless government bureaucrats should not dictate pricing for tenants and property owners, put taxpayers at risk for millions in legal costs, or take tens of millions away from state and local government.

Proposition 10 is not the right answer to resolve California’s housing crisis.

 

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