May 15, 2008

Rent control in the state under attack

By Tom Elias

The official titles of both say they are about "Government acquisition" and "eminent domain."

But there's much more to this. Yes, Proposition 98 is a direct response to the U.S. Supreme Court's 2005 decision in a case from New London, Conn., which now allows governments to take property from one private owner and turn it over to another.

This is most often done when a developer seeks to build a shopping mall, stadium or other venue likely to produce vastly more property tax revenue than whatever currently occupies the property. Local redevelopment agencies often borrow money to make these purchases, then recoup it via the higher tax levies in a process called incremental financing.

Proposition 98 is actually the second attempt to make the New London decision irrelevant in California. Proposition 90, more sweeping in some ways and less restrictive in others, failed two years ago when voters concluded it would keep governments from taking private property for critical purposes like road building, public schools or abating nuisances.

This time, though, cities and counties around the state joined to put the rival Proposition 99 on the ballot with 98 in an effort to let them continue their current practices. Unlike 98, which forbids taking any private property for transfer to another private entity, 99 protects only owner-occupied properties.

Since most structures in the areas likely to be taken are multi-unit apartment buildings or commercial properties, 99 would pretty much allow redevelopment agencies (whose boards are often made up of the same people as local city councils) to continue business as usual.

But Proposition 98 aims far beyond simply negating California effects of the New London case. It would also amend the state Constitution to prohibit "limiting the price a private owner may charge another person to purchase, occupy or use his or her real property."

Pass that and all rent control will eventually end. This would not happen instantly, but controls on a unit would end whenever a tenant moves out or is evicted. From that moment on, rent on the unit involved could never again be controlled by anything other than a private contract or lease.

Ironically, this effort at purity of private control over private property - done partly in the name of American tradition - is co-sponsored by former Republican state Sen. Jim Nielsen. Nielsen now seeks the Republican state Assembly nomination in the 2nd District, which includes all or parts of six counties. The problem, opponents say, is that Nielsen doesn't live in any of those counties, but rather in Woodland, county seat of Yolo County, rather than in a double-wide mobile home in the Tehama County town of Gerber, as he now claims. So, they say, this stickler for the American tradition of private property flouts another American tradition, the one that reviles carpetbaggers.

Opponents of Proposition 98 also maintain Nielsen; fellow proponent Jon Coupal, head of the anti-tax Howard Jarvis Taxpayers Association, and the landlords who help finance his organization don't care what happens to the renters who make up almost half California's populace.

Rent control, of course, is no longer what it was in the 1970s and '80s, when rents in cities like San Francisco, Santa Monica and Cotati could not rise even when longtime tenants left and new ones moved in. State law now demands "vacancy decontrol" in the 12 locales that have any controls at all. This is patterned after the longtime Los Angeles system where rents can rise to whatever level the market will bear when a tenant moves out, with further increases limited until the place again changes occupants.

The same rules apply in many mobile home parks.

"[Proposition] 98 is an attack on renters, not just an attack on rent control," opponents contend. They argue its tough language would not just end rent control, but also allow mass evictions by landlords bent on increasing rents.

Meanwhile, apartment owners see this as a basic property rights issue, with them fighting governments that want to keep neighborhoods stable and housing affordable - at their expense.

The dueling propositions - if both pass, the one with the most votes becomes law - will mark the first time voters statewide have ever expressed themselves on rent control.

Which makes this a landmark opportunity for Californians to decide not only how the state will look in the future, but also how much it will cost to live in many places for years to come.


Tom Elias is a syndicated columnist who writes on state affairs. E-mail him at tdelias@aol.com.