Rent Bent
California’s Proposition 33 is an attempt to grab the horns of a bull raging through California residential housing. It pulls in the state’s authority to interfere with local rent control regulations.
One of the assumptions is that unregulated municipalities would impose local rent controls to stabilize their communities and, through this, limit landlord’s (and developer’s) ability to shoot the moon on rents under the rubric of “what the market will bear.”
I believe getting the State out of the equation is a good thing. Since the dispersion of work habitats after Covid has balkanized California’s idea of “communities,” the State is probably less tuned in administratively to local community needs and profiles.
Some of us can choose where we live and work—others are more limited in their options (“essential workers” come to mind…). Residential properties—especially in scenic and desirable destinations such as Marin County—are increasingly appropriated as “assets” for private equity and venture capital firms, which have only one objective: Make. More. Money. They can use many instruments to leverage this tendency. Unlike local landlords, they can write off un-rented assets, allowing them to launder excessive taxable income in local “failing” real estate.
How might we solve this problem? If Prop. 33 prevails, local governments could (freed from State constraints) impose a stiff local “property use tax rate” on non-local businesses while easing the property taxes on local landlords with an interest in stabilizing our local neighborhood economies while making a reasonable ROI.
As such, Prop. 33 is a mediocre effort (with predictable pro and con arguments), but could head us on better, locally administered rental ordinances.
Perhaps 33 is not the best strategy, but the 1995 State’s hold on local rental policies has outlived its usefulness.
Michael Stocker
Forest Knolls
