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California voters reject Proposition 10, halting effort to expand rent control

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Voters cast their ballots at the Venice Beach Lifeguard Operations polling location near the Venice Pier on Tuesday morning, Nov. 6, 2018. (Al Seib/Los Angeles Times/TNS)

SACRAMENTO, Calif. — California’s Proposition 10, a ballot measure to expand rent control in the state, was decisively rejected by voters Tuesday in a victory for the state’s top landlords who spent millions to defeat it.

The campaign was one of the most expensive initiative battles in California history with more than $104 million in total fundraising. With Proposition 10’s failure, a statewide ban on most new forms of rent control remains in effect.

The campaign to expand rent control was pitched to voters as housing has become less affordable in the state. About 9.5 million renters — more than half of California’s tenant population — are burdened by high rents, spending at least 30 percent of their income on housing costs, according to a University of California, Berkeley study.

To address the issue, tenant advocates decided to go after the Costa-Hawkins Rental Housing Act, a state law passed 23 years ago that blocks cities and counties from imposing rent control on single-family homes and apartments built after 1995, among other prohibitions. After a bill to repeal Costa-Hawkins failed in a legislative committee in January, groups turned in signatures for a ballot measure, Proposition 10, that would have done the same thing. Had the initiative passed, local governments would have been free to add new restrictions on rents, something Los Angeles, Berkeley and other cities were considering.

But polling showed Proposition 10 never really caught on with voters. A September survey from the nonpartisan Public Policy Institute of California revealed just 36 percent of likely voters backed the initiative. A month later a poll from the same organization showed support had decreased to 25 percent.

That drop came amid a blitz of TV advertisements from opponents who, as of Friday, had raised nearly $80 million to defeat Proposition 10. They argued that expanding rent control would increase the state’s housing shortage, exacerbate overall affordability issues and hurt the investments of single-family homeowners. Much of the funding for the No on 10 campaign came from national real estate investors with large apartment portfolios in California.

The Proposition 10 campaign was watched beyond California’s borders. Market analysts have paid close attention to the campaign, which could have the potential to spur similar rent control measures across the country. The National Multifamily Housing Council, an apartment industry group, called Proposition 10 an “existential threat to the industry.”

Supporters of Proposition 10 raised $24.6 million, 94 percent of it coming from Los Angeles-based nonprofit AIDS Healthcare Foundation. Backers contended the initiative offered the quickest and cheapest way to provide housing cost relief for renters, and that cities and counties should be allowed to tailor rent stabilization rules to their communities.

The AIDS Healthcare Foundation, which has argued that housing stability is critical to its mission of serving low-income AIDS patients, now has lost four high-profile California and Los Angeles ballot measures it has bankrolled since 2016. Voters have also rejected statewide efforts to limit prescription drug prices and mandate the use of condoms in adult films and a Los Angeles measure to slow growth in the city.

Despite Proposition 10’s defeat, rent control is likely to remain in the spotlight. Residents in Sacramento, the state’s sixth largest city, have qualified a 2020 initiative that would implement rent controls on the city’s older apartment buildings. Democrat Gavin Newsom, who was elected governor on Tuesday, opposed Proposition 10, but has said the state should have stronger protections for tenants.

Damien Goodmon, the campaign director for the AIDS Healthcare Foundation’s housing efforts, said last week that if Proposition 10 didn’t pass, the nonprofit would immediately begin discussing whether to push a stronger rent control measure for the 2020 statewide ballot.

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