Why “Justice for Renters Act” is a Bad Idea for Landlords

Opposing this poorly thought-out ballot initiative is crucial for a multitude of reasons that extend beyond mere economic concerns. First and foremost, the consensus among economists is that rent control stifles growth and significantly hampers the construction of new housing. The past rejections of similar propositions, Proposition 10 in 2018 and Proposition 21 in 2020, by both California’s Legislative Analyst’s Office and Governor Newsom, underline the consensus against measures like these.

An inherent flaw in this initiative lies in its potential to adversely affect small businesses, particularly those in the construction industry. Investors would be dissuaded from engaging in new construction, and companies providing goods and services to the rental housing sector would face negative repercussions. The resulting ripple effect would lead to job losses and the loss of billions of dollars in tax revenue, further straining the economy.

Moreover, the initiative grants significant power to unelected rent boards and commissions to impose rent control regulations and fees on rental housing without the direct consent of the local populace or elected officials. The absence of a cap on the fees these unelected bodies could impose raises concerns about housing becoming even more unaffordable.

Past initiatives, Propositions 10 and 21, demonstrated that rent control reduces property values not just for the properties directly under its influence but also for neighboring properties. This has a domino effect, impacting small businesses involved in construction, maintenance, and supply industries.

The potential consequences extend beyond the economic sphere. Passage of the initiative could lead to a decrease in state tax revenue, affecting funding for crucial services such as schools, roads, and emergency services. This reduction in property tax revenues might prompt state and local governments to consider tax hikes to compensate for the shortfall.

Additionally, the initiative opens the door to price controls on single-family homes and condominiums, restricting property owners’ rights and decisions about renting their spaces in the future. Once passed, the initiative becomes rigid, requiring another vote of the people for any amendments, thereby limiting the flexibility of the State Legislature to adapt to changing circumstances.

Encouragingly, the initiative lacks provisions that would address the core issues it claims to tackle. It won’t increase funding for affordable housing, force local communities to execute approved housing plans, or provide immediate relief to those facing higher housing costs. Instead, it poses a tangible threat to income and property values, potentially causing harm to individuals across California.

In summary, the “Justice for Renters Act” is misleading in its nomenclature and detrimental in its potential consequences. Voting against it in November 2024 is crucial to protect the interests of both housing providers and renters and to safeguard the already strained housing supply in California. Spreading awareness and encouraging others to vote against the initiative is essential for a more informed and resilient community.