The San Francisco Board of Supervisors frequently endorses state legislation and ballot proposals, and their endorsements often are routine and largely symbolic.
But on June 18, the board’s bid to bless a rent control proposition slated for November’s ballot suddenly imploded.
Judging by the San Francisco vote for previous state measures to expand renter protection, the issue is narrowly popular in the city. Like those previous measures, the upcoming Justice For Renters Act aims to repeal a 30-year-old California law that stifles local rent control.
Supervisors are supposed to continue today where they left off two weeks ago, when the debate devolved into an angry back-and-forth despite board president Aaron Peskin’s attempts to shelve the item and move on.
At that hearing, Sup. Catherine Stefani, who represents the Marina, Pacific Heights, and other northern neighborhoods, called the prospective measure “a Trojan horse” backed by “a coalition of the most regressive Republicans in the state” and other “conservative ideologues.” (A GOP city councilmember in Orange County has lauded the act. Stefani did not respond to questions about other Republicans who might also be supporting it.)
Echoing the opposition of two top state lawmakers and trade unions, Stefani predicted that the act would “freeze the creation of critically needed homes” across the state. Sup. Matt Dorsey, whose district includes South of Market, echoed Stefani’s comments and said he would not endorse the measure.
Sup. Dean Preston, the resolution’s sponsor, fired back that Stefani’s comments were reminiscent of scare tactics from landlord lobbies, which consistently oppose rent control. Sup. Hillary Ronen called criticism of the act “distortions” and recalled her own experience growing up in a rent-controlled Los Angeles home.
Meanwhile, Peskin, who is running for mayor, held up a print-out of the act and said he could find nothing in it to provoke such dire predictions.
Indeed, the entire measure is just one sentence long. How could interpretations be so wildly divergent?
Polls don’t equal votes
The Justice for Renters Act is the product of the Los Angeles-based AIDS Healthcare Foundation, a nonprofit that operates health clinics and sells prescription drugs in more than 40 countries.
Founded in 1987 and still run by 71-year-old cofounder Michael Weinstein, AHF has grown its revenues to $2.5 billion a year, thanks to its pharmacy sales, according to the Los Angeles Times.
About $100 million of that money has also poured into several ballot initiatives, according to the Times, including two previous bids to repeal the Costa-Hawkins Rental Housing Act, the 1995 law that limits rent control throughout California.
AHF funded repeal efforts in 2018 and 2020, both times losing handily, with only about 40 percent of state voters in favor. These are the measures that San Francisco voters went for, and it’s somewhat odd the rest of the state didn’t.
When pollsters ask, Californians express broad support for rent control as a concept. “Rent control is super popular, except in the hands of Michael Weinstein,” says UC Davis land use professor Chris Elmendorf. “It’s a complete mystery that rent control polls well” but voters never pass it.
“Rent control” refers to a variety of municipal laws that limit how much landlords can raise rents. California cities began passing statutes in the 1970s in response to soaring inflation, rents, and home values. In San Francisco, the 1979 Residential Rent Stabilization and Arbitration Ordinance added protection to apartments built before that year. (The permissible rent hike for those buildings is less than 2 percent this year.)
Under the state’s Costa-Hawkins law (named for Fresno Democrat Jim Costa and LA county Republican Phil Hawkins), apartments that were subject to rent control in 1995 could remain so, but cities could not mandate rent control for new buildings.
Rent control is super popular, except in the hands of Michael Weinstein.
UC Davis land use professor Chris Elmendorf
Despite Costa-Hawkins, rent control got a modest statewide boost in 2019, when then-state Assemblymember David Chiu, now SF’s city attorney, successfully authored a rent cap for homes more than 15 years old. It is not as aggressive as rent control in cities like SF.
Today, roughly 70 percent of SF renters still live in rent-stabilized units, according to the city’s Housing Element, thanks to a housing stock that’s some of the oldest west of the Mississippi. According to data from the SF Rent Board, some residents under rent control pay as little as $250 a month. Meanwhile, market-rate rental platforms like SF-based ApartmentList report that newer homes can rent for thousands of dollars monthly.
New rent-controlled homes in SF are rare. Developers must agree to create them, presumably as part of a deal with the city. The lack of new rent-controlled stock stokes fears that the aging supply is dwindling. (Amid the board’s June 18 arguments, Sup. Myrna Melgar said SF’s protected apartments are “falling into decay.”)
“Costa-Hawkins has frozen San Francisco rent control to the point that 45-year-old buildings are exempted as ‘new construction,’” says Shanti Singh, spokesperson for the renters advocacy Tenants Together.
There are protections. For example, a state law says a development that demolishes a rent-controlled home must include at least as many rent-controlled units in the new building, and renters displaced by the construction get first dibs on those new apartments. Those displaced are also entitled to relocation costs.
San Francisco has had low eviction rates compared with other major cities. And since 2019, residents facing eviction have been entitled to free legal help.
The paradox is that in San Francisco, with its limited housing options and high cost of living, research shows rent control is a critical anti-displacement tool. Yet some evidence also shows, as we’ll see, that it might suppress the construction of new apartments, which SF desperately needs.
One sentence, 23 words
The Justice For Renters Act is all of one sentence: “The state may not limit the right of any city, county, or city and county to maintain, enact or expand residential rent control.”
Critics warn that those 23 words will give anti-development cities and towns a way to stave off new housing that California regulators are demanding.
Under recent state rules, Bay Area cities must make room for more than 440,000 new units this decade via blueprints known as Housing Elements. San Francisco’s element calls for more than 82,000 new homes, and more than half must be below market rate. Some cities have been more compliant than others.
“I’ve reviewed a lot of Housing Elements and I’ve read a lot of acts, and I am very familiar with ways that anti-housing suburbs can weaponize lefty-sounding policy to block new housing,” SF-based urban planner Max Dubler tells The Frisc. The policy manager for California YIMBY, Dubler penned a blog earlier this year urging voters to reject the Justice for Renters Act.
Dubler, who says he supports rent control expansion generally, warns about the vagueness of Justice for Renters: “Because this ballot measure has that [may] not limit’ in it, it will enable rent control laws so bad [that] no one will build.”
The state may not limit the right of any city, county, or city and county to maintain, enact or expand residential rent control.
The entire text of the justice for renters act
Sup. Preston, who ran the advocacy Tenants Together for years, dismisses the criticism and tells The Frisc via email that “repealing Costa-Hawkins, and ensuring that those protections can last, has been a priority for tenant advocates for decades. The Justice for Renters Act does that.”
“The measure is 23 words and does not institute rent control anywhere in California,” AIDS Healthcare Foundation spokesperson Ged Kenslea says via email. “It merely overrides the state’s one-size-fits-all prohibition.”
As Stefani noted on June 18, the measure has attracted some Republican support. A GOP lawmaker in Huntington Beach, south of Los Angeles, highlighted its appeal to locals who chafe at the state’s demands for new housing. “It gives local governments ironclad protections from the state’s housing policy,” said city councilmember Tony Strickland at a March meeting.
California Republicans aren’t known for their support of renter protections, but Strickland has encouraged his peers to back it. His argument hasn’t convinced the state GOP, which officially opposes the repeal.
Many progressive Democrats across the state are also bristling at the state’s demands. Peskin voted for SF’s Housing Element in early 2023 but immediately denounced it, and he has spent his mayoral campaign playing to fears of new housing, especially on the west side, while promising a “Marshall Plan” for affordable homes for middle-income residents.
Six of 11 supervisor seats are up for a vote this November, and San Franciscans will either re-elect Mayor London Breed or replace her with one of four challengers. If voters repeal Costa-Hawkins, San Francisco could craft new rent control measures.
Asking what those might look like is no speculative exercise: Peskin tried two years ago to strengthen SF’s rent control laws with a charter amendment. His bill cited two reports, claiming they showed rent control doesn’t stymie new housing. The authors of those studies told The Frisc, however, that Peskin had taken their work out of context. One speculated that the supervisor hadn’t even read his paper.
Peskin withdrew the proposal after The Frisc published its story.
Peskin’s staff and campaign did not respond to questions for this story. Neither did representatives for Breed or candidate Mark Farrell. Daniel Lurie’s campaign emailed a comment promoting affordable housing and eviction protection, but did not address rent control directly.
When asked about a worst-case scenario for a rent control law that could suppress housing, UC Davis professor Elmendorf, who frequently affirms YIMBY perspectives, imagined that housing-phobic cities could cap rents on new buildings as low as $1, making new development all but impossible, with the state powerless to intervene.
Surely such a policy would face litigation? Elmendorf agrees: “A court would have to interpret, what do we think ordinary voters meant ‘rent control’ to mean? You can imagine courts imposing some standards, but who knows?”
Nobody can predict how such challenges would break down. The SF city attorney’s office declined to comment, citing attorney-client privilege.
Does rent control stifle new housing?
Peskin’s claims that rent control and new development go hand-in-hand weren’t substantiated by the papers he cited back in 2022. What do studies really say?
A widely cited 2017 paper by Stanford economists concluded that SF rent laws drive up rents in non-protected buildings, but also that “absent rent control […] all of those incentivized to stay in their [rent-controlled] apartments would have otherwise moved out of San Francisco,” as there’s simply nowhere else for a huge chunk of renters to go.
A 2022 study from the University of Georgia and Northwestern University found that SF landlords are more likely to try to evict tenants in rent-controlled units, including illegally. Rent control laws are supposed to protect tenants from eviction, but some landlords try to do an end-run around those protections.
Brigham Young University economist David Sims – one of the researchers who said Peskin’s 2022 bill misconstrued his work – says the body of rent-control research varies by law and city. While a recent study in Barcelona revealed no significant negative effect on housing supply, some German studies concluded the opposite.
One brave researcher, trying to summarize all empirical studies in a 2023 paper, concluded that “rent control appears to be very effective in […] its primary goal” of protecting low-income renters but also has “undesired effects” such as reduced construction: “The overall impact of rent control policy on the welfare of society is not clear.”
Traditionally, economists have criticized rent control, yet as these German researchers note, their skepticism is frequently ignored. But not in California, the bluest of blue states, and now advocates will soon challenge that skepticism for the third time in less than a decade.
Update, 7/5/24: The story has been updated to clarify the amount of known Republican support for the Justice for Renters Act and to note that the California Republican party is opposing the act.