Demystifying the Costa-Hawkins Rental Housing Act
DEMYSTIFYING is a new regular feature of Kapitbahay Times that aims to simplify complex measures, proposals, and regulations relating to land use, urban planning and housing, with a particular interest in how these subjects might affect the lives of immigrant and working class people in the South of Market. If there are any relevant concepts or terminologies that you would like DEMYSTIFIED, email your suggestions to dwoo@somcan.org.
What is it?
The Costa-Hawkins Housing Rental Act (or “Costa-Hawkins” for short) is a California state law which limits local rent control laws in two major ways: first, it prevents cities from creating rent control for newly-constructed housing and for single-family homes; second, it prevents “vacancy control” which keeps rents at the same rate once a unit is no longer occupied, preventing the unit (and future tenants) from having to a pay higher, market-rate rent.
Why does it matter?
In practice, Costa-Hawkins is rental loophole and tool that allows for speculative landlords to impose huge rent increases and price out existing tenants in situations where tenants do not qualify to be under the protection of rent control. As a state law enacted in 1995, it is impossible for city governments to create protections against the Act. In SoMa, many residents who live in buildings built after 1995 have experienced notices of unaffordable rent increases, in efforts to pressure tenants out. While a few lucky tenants have benefitted from the City paying the landlord’s ransom by buying the building, and other tenants survive through the support and pressure of the housing rights community, many SOMA residents have been forced out due to the Costa-Hawkins loophole. Currently the court case of a 350% rent increase ($1,900 to $6,700) imposed by the new owner of a single-family rental in the Outer Sunset is under appeal by the tenants, after the court ruled in favor of the landlord in the first ruling.
Costa-Hawkins also allows landlords to raise the rent to market rate when the master tenant moves out. This is known as “vacancy decontrol”, since it rewards landlords that pressure tenants out. Affordable housing advocates are also interested in limiting this capability.
What living situations are subject to Costa-Hawkins unprotected rental increases?
There are only two circumstances:
Any rental that qualifies as a “single-family dwelling,” defined as any property with a single source of rental income.
Any building built after 1995.
Why was it created?
Costa-Hawkins was created with the notion of protecting “mom-and-pop” owners of properties that only have one paying tenant. The idea was the “mom-and-pop” owners don’t own multiple rental properties and have one source of property income, maybe two. With that only source of income locked in with rent control, there was assumed to be the imbalance of a below market “life sentence,” with the landlord getting less and less value compared to the market over time. Again, it has proven to be outdated since it has been abused to price out long standing tenants. Within the context of the current housing crisis, housing advocates trying to repeal the Act also point to over 15,000 single family homes scooped up by speculative real estate investors from Wall Street in the Bay Area during the 2008 financial crisis, and 50,000+ homes bought up in the Sacramento area. By using Costa-Hawkins, investors can continue to drive the rental rates up and smaller property owners will follow.
What is and can be done about the Costa-Hawkins Housing Rental Act?
In February of this year a bill was introduced to repeal Costa-Hawkins but was pulled two months later labeled a “two-year bill” in terms of cultivating the legislative will to overcome special interest. In October 2017, a November 2018 ballot initiative to repeal Costa Hawkins and strengthen rent control was filed by the ACCE Action and Eviction Defense Network & the AIDS Healthcare Foundation in case the legislature can’t find the political will to overturn it, but a the initiative will require 365,880 registered voter signatures to get on the ballot.
On Thursday, January 11th, join the caravan from the Bay Area to Sacramento in support of AB 1506, a state measure that would repeal Costa-Hawkins and allow local municipalities to strengthen rent control laws. For more information, contact Raymond Castillo at tenantorganizer@somcan.org or 415-255-7693. If you are unable to attend, please consider signing this letter in support of AB 1506 and circulating it among your networks.