Prop. 21 will make California’s housing crisis even worse

California’s housing crisis has moved to centerstage during the COVID-19 pandemic, and California voters are being asked this election if they want to make it even worse. How? By slamming the door on affordable housing – which is exactly what Proposition 21 would do. 

 It’s no secret: building more affordable housing is already a difficult challenge in California. But Prop. 21 would make it near impossible. It will ensure that new construction won’t pencil out financially. And it will result in forcing millions of existing rental units to be pulled off the market.

Because of the uncertainty it would create in rental markets, Prop. 21 would strike particularly hard on people like me, a small property owner who has just a few apartments that I rent. It may come as a surprise to some that, according to the most recent Census survey, nearly half the nation’s rental units are owned by individuals. 

For us, the funds we receive from rents is our primary source of income. We are able to establish relationships with our tenants, often offer rents below what the big guys charge and make improvements to our properties. 

Prop. 21 would change all that. It would permanently penalize any owner who isn’t now charging top dollar for rent. It would likely result in less maintenance and upgrading to older buildings, because it would not make any economic sense under the radical provisions of this ballot measure.

Everyone – including property owners like me – recognize that a wave of evictions stemming from COVID-19 would create a humanitarian disaster. But there is not a single word in Prop. 21 about dealing with evictions or homelessness. Not one.

Fortunately, the governor and the Legislature have acted to deal with those issues with comprehensive legislation to prevent what might have been a tsunami of evictions. They also passed Assembly Bill 1482, which prevents rent gouging and is widely considered the strongest statewide tenant protection law in the nation.

Beyond that, responding to market forces, property owners are already modifying rents. They have gone down this year in much of the state – in some areas, significantly down. For example, in San Francisco, rents have plummeted by a whopping 20.4%. 

Over the longer term, however, California will be forced to confront even more aggressively a housing crisis that is plainly evident in cities across the state. But Prop. 21 could stand in the way.

It would dry up investment in new apartment buildings by creating uncertain financial risks. It would trigger a wave of conversion of rental homes and multi-unit rental housing into owner-occupied housing or AirBnBs. 

Prop. 21 also would further empower NIMBY activists who have already succeeded in blocking affordable housing developments in communities up and down California. 

The proponent of Prop. 21 – Michael Weinstein and his AIDS Healthcare Foundation – put a similar ballot initiative before voters two years ago. It was overwhelmingly rejected.

It’s a bad idea now for the same reasons it was a bad idea then. Weinstein, it should be noted, has been a persistent and vocal critic of new affordable housing developments and of proposed laws designed to spur new affordable housing. 

According to the nonpartisan Legislative Analyst, Prop. 21 also would result in a drop in property values. That, in turn, would result in less revenue for our state and our cities. The consequence of that – which the LAO estimates could be in the “high tens of millions” of dollars – would mean more cuts to schools, firefighting and other government programs at a time when we can least afford it.

No surprise then that Prop. 21 is opposed by a broad coalition. Gov. Gavin Newsom opposes it, as does the California Republican Party. Veterans, senior, affordable housing and labor also is opposed.

Nearly all of the state’s major newspapers have also harshly editorialized against it with banner headlines like “Proposition 21 will make the housing crisis worse.” 

It’s hard to imagine how anything could make a looming housing apocalypse worse, but that’s what Prop. 21 would do. Vote No.

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CalMatters Guide to the propositions: Proposition 21: Rent control