What's Next, Los Angeles? with Mike Bonin
Los Angeles is at a turning point. We are living in a defining moment. What happens next is up to us. Over the past few years, problems and challenges have shaken this city -- and tremendous opportunities for change have presented themselves. How do we rise to this moment and emerge a better place to live? What will it take to create a more just and a more equitable community? Working together, how are we going to create a stronger, forward-thinking Los Angeles? Mike Bonin, writer, teacher, progressive activist and former City Councilmember, looks at the issues and problems facing Los Angeles, examines ideas, and talks with the people who will lead us to a brighter future.
Produced in partnership with LA Forward.
What's Next, Los Angeles? with Mike Bonin
Prop 33: The Battle Over Rent Control
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Proposition 33 is one of the hottest items on the California state ballot. If approved, it would allow cities and counties to establish, increase or expand rent control. Proponents say it is necessary to keep rents affordable and prevent families from falling into homelessness. Opponents say it will hurt small "mom and pop" landlords, and stop development of much-needed multi-family housing.
In this episode, Mike talks with Susie Shannon, campaign manager of Yes on 33, and with Daniel Yukelson, executive director of the Apartment Association of Greater Los Angeles, a landlord group.
Yes on 33: https://yeson33.org/
No on Prop 33: https://noonprop33.com/
Ballotpedia on Prop 33: https://ballotpedia.org/California_Proposition_33,_Prohibit_State_Limitations_on_Local_Rent_Control_Initiative_(2024)
CalMatters on Prop 33: https://calmatters.org/california-voter-guide-2024/propositions/prop-33-rent-control/
Prop 33 - Official Ballot Arguments: https://voterguide.sos.ca.gov/propositions/33/
Legislative Analyst report on Prop 33: https://lao.ca.gov/BallotAnalysis/Proposition?number=33&year=2024
What's Next, Los Angeles? is produced and hosted by Mike Bonin, in partnership with LA Forward.
Should California cities have the authority to impose or expand rent control? That is the question before voters with Proposition 33. We will hear from both sides of the debate on this episode of What's Next Los Angeles? Hi everybody and welcome. This is Mike Bonin. Thank you so much for joining me. Proposition 33 is short and simple, just 23 words. But it is wildly controversial, one of the hottest issues on the November ballot. Advocates say it is a necessary measure to protect tenants from skyrocketing rents and the risk of homelessness. Opponents say it robs property owners of their rights, it hurts landlords, and it discourages housing production. We will get into all of that in a couple minutes. First with Susie Shannon, the campaign manager of the Yes on thirty three campaign. And then with Daniel Euklsen, the Executive Director of the Apartment Association of Greater Los Angeles. But first, let me define a few terms and provide a little bit of context. Rent control is an umbrella term for a range of government policies that impact how much a landlord can charge for rent. Sometimes it's a rent freeze or rent cap, other times it is rent stabilization, which limits how much rent can increase during a given period of time. In nineteen ninety five, the state of California passed the Costa Hawkins Rental Housing Act. You'll hear that referenced a lot. It restricted the ability of local governments to enact or expand rent control laws. If a city didn't have any rent control in place in 1995, Costahawkins forbids those cities or counties from imposing any rent control on any units built since 1995, and it also allows landlords in those jurisdictions to set rents as high as they'd like when a unit becomes vacant. In cities that did have rent control prior to passage of Costahawkins, the same rules apply, but the cutoff is different. In Los Angeles, the city cannot impose new restrictions on units built since 1978. LA's law allows rents to be increased in older rental units based on a formula tied to the consumer price index. This year, for instance, landlords can raise rents in between four and five percent. Now, let me put an asterisk right here. As any landlord or tenant knows, during the COVID crisis, the usual rules were suspended, allowing governments to impose rent freezes and eviction moratoriums. Most of those have expired. Also, the state has capped rents everywhere to 10% annually in a temporary law that expires in 2030. Now, as you might imagine, tenant advocates hate Costa Hawkins. Property owners, on the other hand, consider it sacrosanct. Tenant groups tried to repeal Costa Hawkins with state ballot measures in 2018 and in 2020 and failed both times. This is their third time at bat, which brings us to Prop 33. A yes vote on Prop 33 would repeal Costa Hawkins and add language to state law to prohibit the state from limiting the right of any city, county, or city and county to maintain, enact, or expand residential rent control. End of quote. Under that, cities and counties could impose rent control on any housing unit, regardless of when it was built, and they could include single-family homes and condos that are being rented out. It would also allow cities to regulate how much a landlord can increase rents when a unit becomes vacant. Currently, when a unit becomes vacant, landlords can charge whatever rent they want. It's called vacancy decontrol. Now, this is important to note a yes vote on 33 does not itself impose or expand rent control anywhere. That would be up to each city and county. On the other hand, a no vote on Prop 33 would keep Costa Hawkins and current rules in place, just as they are. Now just a little more context. Because this is a very controversial measure, there is a lot of big money being spent on ads and mailers and such. Prop 33 is funded almost entirely by the AIDS Healthcare Foundation. That's an organization that is constantly under fire for using its funds to wage housing battles instead of spending it on healthcare. AIDS Healthcare Foundation is itself a landlord and just settled a class action suit over squalid living conditions in some of its buildings. The No on 33 campaign is funded by a PAC created by the California Apartment Owners Association. Two of its largest owners are Essex Property Trust and Equity Residential. They are two of the nation's largest corporate landlords, and both of them are facing allegations of illegal rent price fixing. Now, if you watch local or cable television, beware, because you are going to be inundated with ads from both sides of 33 up until Election Day. So, with that 101 out of the way, let's get to our guests. My first interview is with the Yes Side, and I spoke with Susie Shannon, the campaign manager for Yes on 33. And joining me to talk in favor of this proposition is Suzy Shannon, who is the campaign manager for the Yes on 33 campaign. Susie, thanks for joining me.
SPEAKER_00Thank you so much, Mike. And thank you for inviting me on your podcast and for being such a champion for renters over the years. Um, when you were on the city council, um, we just want to thank you for that legacy and for helping renters for however many years.
SPEAKER_01Oh, well, it's it's been my pleasure, and it's been so freaking exciting to uh see how far we have come in the past few years. It it it really is something else. And now we're on the verge, perhaps, depending on on how this goes, with the potential for uh further steps all all around the state. So uh let me start by asking what I ask anybody who is backing a proposition on the California or the county or the city ballot, which is what problem are you trying to solve with this proposition?
SPEAKER_00Sure. So California is in an affordable housing crisis. There are more people rent-burdened in California than anywhere in the United States, and the rent is just too damn high. So people just can't afford it, and it's going up higher and higher. In addition to that, we have 181,000 people in California who are unhoused. And there was a Zillow study that showed that for every 5% increase in rent, 2,000 more people become homeless. And so we're trying to help renters have more predictability in terms of how much they're paying in rent every single month. In addition, the high rents are leading to gentrification, they're leading to renters being displaced out of their neighborhoods. And we know that in the past five years, a million people have left California, and many have cited the high cost of housing and the fact that they just can't afford to live here anymore. And so we've asked the legislature to fix this many, many times, um, and they have refused. And so we're forced to go to the ballot and to go to the voters so that they can fix this problem.
SPEAKER_01And so how does this fix the problem? What are if someone goes to the ballot and they vote yes, what is it they are voting in favor of?
SPEAKER_00So they're voting in favor of allowing local communities to expand rent control. Um and so it's it's a very simple initiative. It's only 23 words. Um, so it's very simple to understand, and all it does is allow local communities to expand rent control. Um, there was a law put on the books in 1995 called Costa Hawkins. It actually prevents your city council members and county supervisors or even a local initiative ballot to lower increases in rent. And so this is why we've seen skyrocketing rents in California since 1995, um, and it's uh opposed by the California Apartment Association, which represents corporate developers and landlords. Um so if you are on the side of tenants and an advocate of tenants, if you think that rising homelessness in California is um unconscionable, and if you believe that we should be making sure that people who are lower income workers, like your Starbucks barista or someone who works at Target or hotel workers or caregivers, um, then we would hope that you would vote for this for yes on 33 so that we can actually keep the cost of rent um at a reasonable rate.
SPEAKER_01And and currently everything differs from city to city. That wouldn't change under the cities could all do what they wanted. But right now we've got a a crazy patchwork, not just of local regulations, but a patchwork of what ability which cities have to impact rent control, right?
SPEAKER_00Yeah. And so everyone um across the state is capped at 1995. So that means if you're in a building built after 1995, you are not under rent control because of Costa Hawkins at all. Um now, if you um were in a city that already had rent control in 1995, you were kind of penalized and you were stuck at whatever year you enacted rent control. So in the city of Los Angeles, for instance, um, Los Angeles had enacted rent control in 1978, so they are stuck at buildings that were built in 1978 or before for rent control. So you as a tenant in LA may not even know if you're under rent control or not. Um you would have to look up and see if your building was built in 1978 or before. And then you're afforded a lot of rights, renters' rights, if you are under rent control, including a limit on how much your landlord can raise your rent every single year. And so we just want this across the board, across California, and we want our local elected officials to be able to expand rent control where it's needed. Um, a lot of times, as you know, having been a council member, it's really the council members who get the blame for the high cost of rent. And it's hard to explain to constituents, like, hey, you know, the state is preventing me from helping you, um, which we think is, you know, fairly outrageous, right? Um, especially, I mean, if you if you are a council member and you have a lot of seniors on a fixed income or people who are, you know, a middle income and they're not building a lot of housing for that particular group of folks, and their rent is going up, you know, 10%, like uh end over end every single year, um, and wages are stagnant, just can't keep up.
SPEAKER_01So if this passes, the city of Los Angeles could theoretically say we are gonna have rent control cover uh everything up until the year 2005 or 1995 or 2020. What they could pick whatever, right?
SPEAKER_00That's right. And for each locality, it's gonna be different, right? So it you know, and that and that create that, you know, you have to do an analysis. And you know, as a council member, you usually know your districts and you know if people are hurting because you'll get that call, you know, at your office basically saying, hey, I don't know what to do, I can't afford the rent, or I'm behind on the rent, um, and where can I go for help? Um, and that's usually where it starts. And then after that, we see people moving in with family members. We have very overcrowded conditions here in Los Angeles because people are doubling up or tripling up. Um, and then typically, you know, if they can't stay with family or friends anymore, they will become unhoused.
SPEAKER_01And one of the key things this addresses is the the limit that cities have on uh keeping rents low when someone moves out of an apartment. Currently, in in in jurisdictions, because of the Costa Hawkins Law, if I'm in a rent control unit and I've been there a while, I move out, all of a sudden the rents can go up to market rate, which could be enormous. And so a unit that was once an affordable unit is for the next tenant at an entirely different income and rent level, right?
SPEAKER_00Yeah, exactly. And that drives up then the costs for rent all across the neighborhood, right? Um and really across the city, and really what we're seeing now is across the state. Um and so, yes, so let's say that I lived in an apartment and it was fifteen hundred dollars a month, and I leave that apartment for whatever reason, um, and I'm under rent control currently because of the Costa Hawkins law that that yes on 33 would repeal. Um the the landlord could raise that rent to $4,000, $4,500, and then all of a sudden you see in your neighborhood that like all the apartments now are $4,500. And then we know what that leads to, which is gentrification, displacement of tenants, people moving out of the city, then people moving out of the state. Yep.
SPEAKER_01So let me ask about some of the uh criticisms from opponents of this. Uh some of them argue that you know the state has already done enough to uh cap rents that uh in addition to the local rent control laws, the the state recently uh passed a law that prevents most landlords from increasing a tenant's rent by more than five percent plus inflation until I think twenty thirty. And they say, isn't that enough? How do you respond?
SPEAKER_00Yeah, that isn't enough. Um and it's not like um we have to theorize about this. We know this because um this um law has been in place now and it hasn't worked, and it actually got to a point where people were paying 10%, um, uh had a 10% increase in rent every single month. So you can imagine if you were paying $3,000 in rent, and then the next time, you know, the next year you're getting a $300 increase in rent with that 10%, so you're paying $3,300, and then the following year you're paying $3,600 or more. Um, you can see that that's far outpacing any kind of wage increases. And in fact, wage increases um have been wages have been stagnant now for over a decade. And so people have not been able to keep up with the cost of these rent increases, and then their standard of living goes down, what they can afford goes down. It affects the local economy as well because they don't have as much money maybe to go to the movies or to do anything that's actually um, you know, something that benefits the community. And also they can't save up to put down that like elusive down payment for a house. And so there's this huge kind of trickle-down effect to having rents raised and people just not being able to afford the rent anymore. And it's also separating families. So, you know, if you have um, you know, parents that may own a home, and then you know, the children either can't move out because the rent is too high, or if they do move out, they have to move, you know, to other states or other areas.
SPEAKER_01So opponents of of this measure would say the same things about the financial burden on small landlords that you just said about the financial burdens on renters. Uh they would say that inflation is going up and they need to be providing utilities, uh, they need to be uh putting in maintenance and repair to keep the place habitable, and that with limited rent, they're unable to make a return on their investment and even afford some of those things. Um there's there's really two different types of landlords, right? There's the big corporate landlords, then there's the small landlords. Um how do you respond to the small landlords?
SPEAKER_00Sure. So any locality could carve out small landlords. And in fact, um in um 2020, when we put the last um iteration of this to expand rent control, we actually carved out um both single family homes and small landlords, and our opposition was still opposing it. Um so I don't know what they're looking for, but we gave them everything they wanted, apparently, but they just don't want any rent control, it seems. Um, and so any locality could carve out um small mom and pops. Um, small mom and pops also have a right to a fair return. So in rent-controlled cities, they can go to the rent board and say, you know, this is what I need because we need these repairs or whatever, and they typically would get that. And so there is um a way for small landlords um to be able to, if they're kind of in, you know, a situation where they do get hit with this, you know, the utilities or whatever, um, you know, extra fees or they have to fix a roof or whatever. There is a way for them to appeal in order to make sure that they're getting a fair rate of return. Um, and normally, I mean, to be completely honest, we don't have as much of a problem with small mom and pops. This is really about um corporate landlords who have been price gouging and price fixing um for years. And they've been using a platform called RealPage, um, which now is, you know, the Justice Department now has even raided the headquarters of a corporate landlord because they were using RealPage and encouraging um other corporate landlords to use real page to basically raise rents to a certain level in all these different neighborhoods.
SPEAKER_01And people always will argue when I was on council anyway, they would say, you know, there's more small landlords than there are corporate landlords. True, but people in Los Angeles, more of them live in units owned by corporate landlords than by small landlords. The bulk of the folks live in corporate owned real estate at this point.
SPEAKER_00That's right. And we do have small landlords who are actually supporting Nissan 33 because they don't raise their rent more than what would be like that increase with rent control.
SPEAKER_01Uh the other chief argument that you hear made by the opponents of Prop 33 is another economic one. Uh, and they will say that their argument is backed up by economist after economist who claim that rent control is ultimately a disincentive to affordable housing. It it causes people not to invest in the apartment stock, and and it eventually just creates a a limited number of units and drives prices up.
SPEAKER_00Right. So, I mean, we know what cities look like in the state of California before Casa Hawkins passed. Um, and there was um a lot of building going on. Um, and so so it's like I keep saying like we don't need to theorize. We kind of know what the state of California looked like before Casa Hawkins passed in 1995, and there was a lot of building going on, uh, and it wasn't a disincentive um for anyone to build. Um, and so I mean, we hear this on a number of things, like even with tenant rights, um, they use the same argument. Um, and the argument to me isn't really an argument, it's more of a threat. Um, and so they're trying to scare us into, you know, not voting for this. Um, it's similar to me to like a restaurant that wants to come into a community and the owner is saying, you know, I don't want to adhere uh to the minimum wage because that's gonna cut into my profits. And you're saying, well, that is a the cost of doing business, right? This is a business that you own, number one. And number two, you are part of this community. And what we're doing is setting the parameters for what works for the community, and we have a right to do that. Um, and I would add too that as rents go up and homelessness goes up and there's displacement, um, the people left holding the bag for the cost of homelessness is not the corporate landlords and it's not the small mom and pop landers, it's the taxpayers, it's the council members, it's the staff that you have to put on that. And so there is a cost to not having rent control, and that cost is huge. You know, we're seeing a lot of uh, you know, increasing encampments. We're we know what the cost of homelessness is, and I know that in 2016 it was you know $35,000 to $45,000 per person that's chronically homeless in the state of California. And that is basically because landlords have been left unregulated like this, that cost then has gone to taxpayers.
SPEAKER_01Um you went to the ballot twice before on this. I think it was it 2018 and and and 2020. And voters said no to this initiative those two times. What's different about this time?
SPEAKER_00Yeah. I mean, it wasn't rocket science in terms of why we lost. Um we were outspent three to one. Um rent control is exceedingly popular in California pulled very high in the 70s. And so obviously if you are an opponent to um to an initiative, what you have to do is convince people that that rent control is bad for renters. And so we were outspent three to one on Prop 21 in 2020. I don't know how much we were outspent with Prop 10, but for Prop 21 outspent three to one, they spent over $100 million convincing renters that this was bad for them. Now this is the third time and so I think you know for this campaign we started much earlier and we were you know letting renters know and doing kind of an inoculation campaign hey look this is this is what this initiative does which is allows local communities to expand rent control. This is why rent control is good for renters. And the California Department Association, which is very conservative and even has like mega Republicans on their board, is going to tell you this is not good for you. So who do you believe? You know, do you believe the California Democratic Party and Dolores Huerta and all these labor unions and all these tenant rights groups or do you believe Steven Schwartzman and Jeffrey Palmer and the California Apartment Association. So I think you know we have been able to you know kind of separate out you know who we are right as a coalition as this big growing coalition and who they are as you know people who are giving money to Trump. It's like for me it's a pretty easy easy decision to make. Who else is part of the coalition Yeah so Unite Your Local so we have over 60 organizations I won't list all of them but we have um Unite Your Local 11, United Auto Workers, California Nurses Association, United Teachers Los Angeles, California Alliance for Retired Americans, Social Security Works, Veterans Voices, ACE, Housing Now, and the list goes on and on and on Coalition for Economic Survival, which is one of our leading and oldest tenant rights organizations in California, and also was responsible for us getting rent control in Los Angeles. And so we just we have this growing um group of organizations, the Democratic Party, and we have over a hundred elected officials, we have over 22 um current and former mayors. And so we're we're getting a lot of momentum.
SPEAKER_01Anything else you'd like voters to know or to consider about the proposition?
SPEAKER_00Well it's only 23 words and it's very simple to understand. It just allows local government to expand rent control. Anything else you hear about it is wrong. It won't enact rent control even for your city you'll actually be able to weigh in on how how that looks and when it's implemented and um you know whether it affects you know just corporate landlords or also includes mom and pop landlords. So you know if you believe in democracy and you believe your local community should have a say in what the rents are in your area to help people, then I would say please vote yes on Prop 33.
SPEAKER_01And where can people find out more?
SPEAKER_00They can go to yeson33.org very simple just yeson33.org.
SPEAKER_01All right Susie Shannon campaign manager for yes on33 the Justice for Renters Act. Thanks so much for joining me.
SPEAKER_00Thank you.
SPEAKER_01Thank you for having me so no surprise here, I support Prop33 just as I supported the 2018 and 2020 rent control campaigns. But on this program I want to present both sides of the propositions and let you hear both arguments and make an informed choice. I invited representatives of the California Apartment Owners Association to join me and they declined. But that gave me the opportunity to invite Daniel Eukelsen, the executive director of the Apartment Association of Greater Los Angeles. Daniel Eukelson from Agla, thanks for joining me on What's Next Los Angeles? Well thanks for having me on uh it it's great to have you here we we we spent some time over the years sparring a little bit and it's it's great to have you here and and have a thoughtful civil uh conversation about uh a really important measure on on the state ballot. So um we're talking about uh Prop 33 and uh just to sort of contextualize things for the listeners talk a little bit about uh what AGLA is and who you represent and what your role is.
SPEAKER_02Sure. Well the Apartment Association of Greater Los Angeles or AGLA as we know it has been around since 1917. And we're like most trade associations, what we try to do is provide education to our members through our publications and through our seminars. We also provide operational support to rental housing providers throughout Southern California. We have advisors that they could call we also have a library of forms virtually every form and notice that you need to be in the rental housing business. And then one of the most important things that we do it's actually become more and more important in the last I would say five or 10 years is we are advocates. We have a local government affairs team that covers nearly 200 local jurisdictions here in Southern California. And then we also have lobby state level that work directly for us and we're also affiliated with the National Apartment Association. We have representation in Washington DC as well and how many members do you have we currently have about 10,000 members that own or manage about 3500 apartment units or rental housing units could be a condominium or a single family home that they rent or an accessory dwelling unit. It doesn't have to necessarily be a multifamily building and most of them are concentrated in LA County because that's where we were first founded.
SPEAKER_01Is your membership uh just sort of the the smaller mom and pop landlords or does it also include like the the the the big dogs like IMCO and the ones that own a lot?
SPEAKER_02Yeah we have a mix of both if you take a look at just uh member households by far the majority I would say 80% are the independent moms and pops that may uh on average, typically on average they own about four or five units, but we do have some of the larger national members that own thousands of units.
SPEAKER_01Okay. Well let's get into talking about Prop 33. I just got my my ballot book in the mail yesterday. It says proposition 33 and the ballot title is Expands Local Government's authority to enact rent control on residential property an initiative statute. I spoke in the first segment with uh Susie Shannon who's one of the advocates for the measure and the first question I asked her is define what the problem is you're trying to solve. And she put it this way she said California is an affordable housing crisis. There are more people rent burdened in California than anywhere in the U.S. The rent is just too damn high and without rent control homelessness will continue to increase and people will continue leaving California. Do you agree on their definition of the problem and just disagree on the solution or do you have a different diagnosis of what ails California?
SPEAKER_02Well no I definitely agree with the issue certainly affordability is a problem for many people here in California. Look we haven't kept up with the demand we have here in this state and we need to build more housing units. It's unfortunate I mean after World War II somehow we built all this workforce housing and we were able to uh have enough places for our troops coming home to live and we just don't have that anymore it's very challenging to construct anything here in California particularly in the city of Los Angeles and I I know firsthand I'm a former planning commissioner in a small city and I know how difficult and expensive it is just to get a project entitled even before you stick a shovel in the ground. And so there's a lot of things that we need to fix, but adding more price controls and expanding rent control, which we've had in place now in the city of LA for over five decades, and you know look where it's gotten us. We have severe housing shortages. These shortages cause what little housing we do have available to increase rapidly and we have the largest homelessness problem here in the state of California, let alone in Los Angeles.
SPEAKER_01So what we have on the books today just isn't working and to ratchet down more on a bad policy is not going to help anybody so um their their ballot proposition is 23 words I believe and it it it says that the state shot shall not prohibit local jurisdictions from sort of setting or regulating their own rent control.
SPEAKER_02Why shouldn't individual cities have the authority to do what they think is best well local cities have a lot of latitude to impose all types of rent controls and tenant protections and they have um what this does is you know the one major aspect besides allowing local jurisdictions to place single family homes, condominiums, single bedrooms inside your house, accessory dwelling units, new construction under rent control. The one thing it does is it allows local jurisdictions to impose what's called vacancy controls. And we've seen the effects of that in cities like New York which has vacancy control uh owners are told how much they could increase the rent when they have the vacancy uh it doesn't allow owners to keep up with costs today in New York City there's 100,000 units that just go empty and aren't being rented because it doesn't make sense there's no incentives for property owners to want to re-rent those because having after having a tenant in place for what could have been 30 even 40 years and being far below market and um not never being able to catch up it it doesn't pay to rehab rehabilitate those units. And we've seen property values drop and it's a it's an environment uh it's an economic environment now in the city of New York that you know people really don't want to construct new housing. We need to construct far more housing we are way behind here in the state of California and we've seen what other states have been able to do like Texas or Sydney Australia Argentina just outlawed rent control and they have building booms uh years ago in the 70s when Cambridge uh outlawed rent control they suddenly had a building boom and they were able to create enough housing and when you have more supply then prices are able to drop this is just completely the wrong direction. Prop 33 would cause huge problems and it would probably wipe out you know who the property owners who are the majority of rental housing providers in the state of California and those are the independent moms and pops who depend on this rental income for their retirements. They're just not going to be able to be afford to stay in business. We already have many local jurisdictions and the city of LA is contemplating the same thing. Many local jurisdictions don't even allow property owners to keep up with inflation they're only allowed increases each year that are a percentage of the CPI, let alone the CPI.
SPEAKER_01So you mentioned vacancy decontrol I think we should just sort of explain that and contextualize it a little bit uh right now under most rent control in in in California or at least in Los Angeles uh where there is a uh a uh an annual cap on rents when the unit becomes vacant the landlord can then go up to to market rate and then be subject that's then subject to rent control in other jurisdictions like New York that you mentioned and under Prop 33 the local government could then choose to continue to keep that rent capped and it doesn't automatically go up to to market market that's correct. So um you you made your point against that I understand that is um is Prop 33 a case of an attempt at renter control that goes too far or is the the concept of of rent control itself a problem?
SPEAKER_02Prop 33 does go way too far uh because it you know it wipes out a 1995 bipartisan law called Costa Hawkins. So it doesn't provide any types of uh belts and suspenders on on local rent control. The problem with rent control is it's far too much of a blanketed approach. It benefits everybody you know there's a lot of people out there who just choose to rent. You know they can afford to buy their own property but you know they don't want to hassle with plumbing issues or electrical issues. And so you know they're wealthy upwardly mobile people and they still want to rent. There are people of course out there who are you know challenged every month to pay their rent. There's people who run into financial problems because they may have a major car repair or a medical issue or temporary job loss. And you know under rent control all those issues there's people who don't understand how to budget their money all those issues become the problem of the landlord when we have to deal with somebody who suddenly can't pay their rent and we have to go through this elongated eviction process. You know somehow we need to create solutions and LA City is guilty of this infraction. We need to create solutions that are far more targeted. People who are experiencing temporary financial issues then you know that's a societal issue and the government needs to come up with ways to help people pay their rent. We've seen success stories time and time again there's several charities out there Jewish Free Loan Service there's another one called something angels that are providing these short-term no interest loans that don't need to be paid back for three years. And oftentimes it takes as little as two or three thousand dollars just to help somebody keep their housing. This one new charity that we just came across said that they've deployed over a million dollars in literally amounts of $3,000 and they have a 97% success rate helping people keep their housing because it just provides that temporary bridge and it keeps people from getting behind the eight ball and then having to decide do I pay rent this month? Do I pay for my car repairs so I can get to work this month. And oftentimes when you miss a rent payment it just creates this snowball effect and people may find themselves facing losing their housing in those cases. But you know rent control applies to everybody. And so owners are having to give these rent control rebates to even people who don't need them and don't really deserve them because they have enough money. And it also creates housing shortages because people stay in their rental housing much longer than they need to oftentimes if they had a three bedroom unit and their family has now moved out and they may be divorced or may have lost a spouse and you have a single person in a three bedroom unit that's not available now to the next family that needs to find some type of housing. So there's there's there's all kinds of issues and there's been studies that show that rent control uh just isn't the right solution. It was always meant to be a temporary solution yet cities like LA keep these in place for five decades without ever trying to figure out a fair balance between housing providers and and residents in these rental properties.
SPEAKER_01You make a point about all these societal problems and and and raise the question of really who should be responsible for for carrying the burden of solving those. Basically that's what so many public policy discussions come down to uh in this one you're you're saying that the the the landlord shouldn't be the one to to bear the burden for broader societal problems. Every time we had a discussion when I was in office about renter protections that was always sort of the the the the conversation and um when I talked to other elected officials I always heard two competing sentiments. One is yeah really we shouldn't be uh uh punishing the the small mom and pop landlord on the other hand a lot of the elected officials said you know why the hell shouldn't you know these the the these big huge corporate landlords that own units around the country that you know maybe uh big hedge funds or whatever backing it why shouldn't they bear more of the costs?
SPEAKER_02Um is is there a way to sort of square that circle and and and and sort of divide the burden between the corporate landlords and have them pay and the smaller mom and pops and and have them not well there's always been a question of how you define the large corporate landlords versus the small mom and pops is it based on unit is it based on you know financial wherewithal uh it it's it's always been a difficult um definition um you know part of the problem though Mike is you know when you try to define these corporate landlords I don't know if you happen to catch a recent LA Times article but a lot of these corporate landlords are you know pension holders um they're being funded by you know these retired government retirees or other types of retirees who are coming in and buying these buildings and rehabbing them and you know giving renters their payday to to move out so they could substantially remodel their units but you know you got to really be careful of you know where the money's coming from because it's not necessarily coming from Wall Street. And uh you know what what we really need to do and again you know I was a planning commissioner and I understand this and I was involved in a construction of a hotel as I mentioned before we started we need to somehow streamline the entitlement process. In my experience it takes about a third of a construction budget just to get through entitlements and put a shovel in the ground. And we even have uh nonprofit housing uh providers and developers screaming that you know it takes eight years to build uh you know several uh dozen units here in the city of Los Angeles. And there are solutions out there I've seen them there's one group near in South Central Los Angeles they have this big complex called the Beehive and they've got a model down where they've been building uh one bedroom units for all for Section 8 voucher holders that cost them $250,000 a unit. And you know they have a certain model and they just plug it in, they get some property and they're able to construct pretty quickly and much more cheaply and they're trying to get that $250,000 down to $225,000 not the $6000 or $800,000 that former controller Galperin had uh come up with with um in constructing some of the housing through the bond money that has been floated over the years. So there are solutions out there, but it needs to be a government private approach there needs to be the right incentives there. The approach taken by government and you know both local and state has always been to use a stick rather than the carrot. And we need the right incentives we need more housing to go up and we need to get real with our zoning and we need to change some of the zoning around the area to create more housing.
SPEAKER_01Couldn't agree more uh on the I'm I'm still in favor of the rent control, but I also agree we need to be building a hell of a lot more housing and I actually think we need to be building a hell of a lot more in in the area that that uh that that I represented which tends to be consistent to it.
SPEAKER_02You know uh I I'm sorry you still agree with rent control. I know I'll never convince you Mike but let me let me just say you know we've obviously lived with rent control uh for a very long time uh I'm a realistic person I know it's not going away but somehow we need to balance some of these regulations because you know I I see it every day uh rental property owners and you know particularly ones that I deal with at our association many of them are elderly many of them retirees you know retired police officers teachers and so forth and and you know they feel like they're getting abused every day and we need to somehow kind of clean the slate and try to balance out some of these regulations. For instance, tenant anti-harassment ordinances I I hear about our members being harassed all the time and they have nowhere to go. And there's really not much that they could do about it. When you know most of these owners of these apartment buildings are elderly and they have younger tenants. Well who's actually the ones getting harassed and so um tenants are often much stronger and younger than than Housing providers. And so I would just love some kind of summit to take a look at all of these different rules and regulations. They're very confusing. We have different playbooks and different jurisdictions and somehow come up with something that's a little more equitable. Because people are otherwise aren't going to stay in the business. I see money, I see owners selling and leaving the state. And their small apartments are being bought by corporate owners and they're being redeveloped. And you're going to get maybe some rental, more other rental housing, but what you're going to get is much more expensive rental housing, or you're going to get condominiums. Because who wants to be in this business when there's no incentives and you're taking on so much legal risk in this business? You know, just a simple infraction can draw a lawsuit that you have to settle out of court, or it could cause some kind of fees and penalties. And you know, it's such it's such complicated regulation, not everybody could keep up with it.
SPEAKER_01A lot of different topics there that I really should do a separate show on. I will definitely do one. Invite me back, Mike. Come on. I I will because I want to do one on the tenant anti-harassment because I know that's coming back at City Hall with renewed discussions.
SPEAKER_02I don't know if I ever really talked to you in person, Mike, but I think I like you. You're a nice guy.
SPEAKER_01This is more civil than Twitter for sure.
SPEAKER_02Yeah, exactly.
SPEAKER_01Um who is the coalition that is opposed to uh 33?
SPEAKER_02Well, it's a group of uh different associations around the state. There's our uh state umbrella, which is the California Rental Housing Association, we have the California Business Roundtable, we have the California Association of Realtors and all of their different associations. And of course, there's the California Apartment Association is involved with this. The NAACP um has signed on to our coalition, a number of affordable housing groups have signed on to our coalition as well. We have well over 300 in our co 300 groups in our coalition.
SPEAKER_01Okay, so a voter is sitting down as as this is being broadcast. Voters will be receiving their ballots in the mail. They're sitting down and they're thinking about how to vote on this. Uh, they think rent's too high. The intuitively rent control makes sense to them. What is your your your three-minute pitch to them to convince them not to vote for it?
SPEAKER_02Well, the only way we're going to decrease rents is to provide incentives to create more housing here. Uh, rent control has been a solution that's been in place for well over five decades and it's not working. It's got us to the place where we are today, where we have huge housing shortages. Uh, we have rents that are always increasing because there's so many shortages in housing. And we have the highest homelessness population here in the state. So we need to figure out solutions that provide incentives to make more people want to go into the rental housing business. And we've seen it done in other cities, in other states, in Texas and Cambridge, Massachusetts, in Argentina, in Sydney, Australia, where there are these incentives to construct more housing. And we also need to streamline the process and make it much easier to develop housing much more quickly. Right now, it takes a very long process to get through the entitlements and the construction. Uh, we need on the state level, we need to reform the California Environmental Quality Act, because that is a major roadblock to getting projects developed. And we need to rezone certain areas to create more residential, mixed use. We need alternative types of housing, but adding more controls on pricing rent is just not going to do it. Uh, I don't know if you're as old as I am, Mike, but in the 70s, I remember the Carter administration capped gasoline prices and we had major shortages. We can only buy gas on every other day. And a lot of times stations ran out of gasoline. And, you know, we've been doing the same thing for five decades to our housing. And that's the reason it's gotten so bad here in California.
SPEAKER_01Uh, and if folks want to find out uh more about No 133 or about the apartment association of Greater Los Angeles, or they just want to follow you, how do they do so?
SPEAKER_02Just go to A-A-G-L-A.org and um there's a ton of information. Sign up for our emails. If you're a property owner out there and you're not a member, you should definitely join. It's a tough world out there, it's very complicated and will help educate you. All right, Daniel, thanks so much for joining me.
SPEAKER_01Thanks, Mike. Have a great weekend. All right, and that does it for this episode of What's Next Los Angeles. Thank you for joining me. Thanks to my friend Marta Ivry for sound editing, and thanks to LA Forward for partnering with me on this program. Until next time, thank you. Take good care and peace.