What is Proposition 33?

Just the Facts

If you're a California voter, Proposition 33 will be on your ballot this November 5.

• It asks you to decide whether local governments should have the power to control rents for new tenants.
• On the plus side, a “yes” vote on Prop 33 could help keep rents at more stable levels.
• On the con side, a “yes” vote on Prop 33 could lead to a diminished supply of affordable housing units, exacerbating Los Angeles County’s housing shortage.

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Our Take

LA County needs more housing, not less, and that tends to happen when there is less regulation, not more. It’s a matter of basic supply and demand. If there is more housing supply, there will be lower costs. Anything that restricts supply, like mandating what developers can charge for rent, deters them from building new residential units and raises costs on existing supply.

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We would support reinstating limits on annual rent increases, but Proposition 33 goes far beyond that, and the broad scope creates fear and uncertainty for prospective real estate developers and investors.

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THE DEEP DIVE

Ask Californians what their biggest financial burden is, and they’re likely to say housing costs. In a recent Public Policy Institute of California survey, 68% of Californians cited the lack of affordable housing—and the resulting epidemic of homelessness—as a major problem. And nearly 30% of California renters spend more than half their income on rent.

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With housing shortages and wages lagging behind the rising costs of living, homeownership has become an unattainable dream for many Californians. No wonder the Golden State has the second-highest percentage of renters nationwide. Particularly affected are young people and communities of color, who are more likely to be renters and, thus, are disproportionately impacted by high rental rates.

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Proposition 33 would attempt to reduce this burden for all renters by giving local jurisdictions more power to limit rents. Local governments wouldn’t be required to regulate rents, but they could if they wanted to. Many communities struggling to shelter their unhoused populations certainly would take advantage of it, as a way to prevent even more residents from falling into homelessness. Is it the right move? Let’s take a look.

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Who Is Behind It?

Proposition 33 was spearheaded as a citizen initiative process by the Justice for Renters campaign, which gathered enough valid signatures to have the measure certified by the Secretary of State and placed on the ballot. Justice for Renters is sponsored by the AIDS Healthcare Foundation (AHF), a nonprofit that advocates for healthcare access and affordable housing (read on for more about the AHF). Other major supporters include UNITE HERE Local 11, the California Nurses Association, and ACLU Southern California. 

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A Little History Is in Order

These organizations, as well as the state Democratic Party, back Prop 33 for its potential to alleviate California's housing crisis by repealing the Costa-Hawkins Rental Housing Act. The Act prohibits local ordinances from limiting initial residential rental rates for new tenants (or rent increases for existing tenants in some situations).

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Costa-Hawkins was passed in 1995 to encourage the construction of new housing by prohibiting rent control on single-family homes, apartments, and vacant units built after Feb. 1, 1995. (In Los Angeles, the cut-off date is a bit earlier.) The law also includes a provision banning "vacancy control," which means property owners can charge whatever they want when a unit becomes vacant.

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Costa-Hawkins has faced criticism for limiting tenant protections as housing prices have surged in California, and there have been multiple efforts to repeal or reform it. Prop 33 is just the latest of these.

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Prop 33: Pros

Proponents of Prop 33 say Costa-Hawkins should be repealed because it reduces the ability of cities to protect tenants from rising rents. It also causes rapid rent increases by allowing landlords to raise rents to market rates when a tenant moves out, and exacerbates California's housing crisis by limiting local governments' ability to address issues related to rising rental costs.

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Here’s what they promise Prop 33 would do:

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• Allow local governments to implement or expand rent control on single-family homes and newer buildings, protecting more tenants from drastic rent hikes.
• Limit landlords’ ability to raise rents between tenants, offering greater stability and affordability for renters.
• Increase flexibility for cities and counties to address their unique housing challenges and affordability crises, particularly in high-cost areas like Los Angeles and San Francisco.
• Help put an end to predatory corporate landlords charging unfair and unaffordable rents.

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Prop 33: Cons

Prop 33 would repeal the Costa-Hawkins Rental Housing Act, which, of course, was passed for a reason. Prior to its passage in 1995, a period of strict rent control measures led to a noticeable reduction in the availability of rental housing. Proponents of Costa-Hawkins say it created balance in the housing market and has helped prevent stagnation.

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Opponents of Prop 33, who include the California Chamber of Commerce, California YIMBY, and, unsurprisingly, the California Apartment Association, point out a number of problems with it:

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• Strict rent control across all housing types would deter investment in new housing construction, reducing the housing supply and exacerbating California’s housing shortage​​​​.
• Landlords would lose the flexibility to set market-rate rents in response to inflation and property maintenance costs.
• Landlords would see a decrease in property values, leading them to convert properties for other uses or driving them out of the market altogether. Either way, it would diminish the rental housing stock​​. 
• It fails to increase funding for affordable housing, compel local governments to build more affordable housing, or provide immediate relief to those facing homelessness​​.
• It would reduce local property tax revenues by tens of millions of dollars annually due to likely expansion of rent control in some communities.
• It is similar to Measure ULA, a 2022 ballot initiative that imposed a tax on properties sold or transferred at $5 million or $10 million thresholds, to raise funds for homelessness prevention programs. That measure put a damper on all real estate development, resulting in less development of affordable housing projects.

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Opponents also point out that voters have shot down similar measures twice already—Proposition 21 in 2020 and Proposition 10 in 2018.

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Here is the full text of the ballot measure:

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Voters are being asked: “Shall the Costa-Hawkins Rental Housing Act (1995), which prohibits rent control on single-family homes and houses completed after February 1, 1995, be repealed, thereby (1) allowing cities and counties to limit rents on any housing and limit rents for first-time tenants, and (2) prohibiting the state from limiting the right of any city, county, or city and county to maintain, enact, or expand residential rent control?”

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For voters, a "yes" vote on Prop 33 means you support repealing the Costa-Hawkins Rental Housing Act to allow local rent controls. A "no" vote means you do not support repealing the Costa-Hawkins Rental Housing Act.

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So, Is There a Plan B to Proposition 33?

Sort of. Proposition 34, which is also on the November ballot, would require that healthcare providers who spent more than $100 million on anything other than direct patient care over a decade and operated housing with more than 500 high-severity health and safety violations spend at least 98% of their revenue from the federal discount prescription program on patients. Those parameters might apply to more than one organization in California, but, according to Capitol Weekly, they are aimed specifically at Michael Weinstein.

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What does this have to do with Prop 33? Weinstein is the head of the aforementioned AIDS Healthcare Foundation, which is sponsoring Prop 33. The AHF buys prescription drugs for HIV and AIDS patients at a federally endorsed discount then bills insurers at full price, generating millions for the foundation. Weinstein has used some of that money to fund his vanity project: ballot measures, including Prop 33 and its two previous failed iterations. Most people and organizations publicly opposing Prop 33 are supporting Prop 34—-and rejecting Weinstein’s serial funding of ballot measures.

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Is the third time the charm for Prop 33? It’s all up to the voters of California. Don’t forget to vote on Nov. 5.

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