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SF approves rent control for more apartments — if Prop. 33 passes

Peskin ordinance would move city’s cutoff date to 1994

President of the San Francisco Board of Supervisors Aaron Peskin (Photo Illustration by Steven Dilakian for The Real Deal with Getty)
President of the San Francisco Board of Supervisors Aaron Peskin (Photo Illustration by Steven Dilakian for The Real Deal with Getty)

San Francisco would control rents for 16,000 additional apartments built before 1994 under a new law to go into effect if the statewide Proposition 33 rent control measure passes.

The city passed an ordinance by Supervisor Aaron Peskin to move the city’s rent control cutoff date to 1994, from 1979, if a majority of voters approve Prop. 33 next month, the San Francisco Standard reported. The expansion would affect 16,000 units built between those years.

The San Francisco rent control expansion can’t go into effect unless the Costa-Hawkins Rental Housing Act, a 1995 state law that governs rent control, is repealed by voters through the rent control ballot measure opposed by Realtors and landlords.

“Like it or not, rent control is on the ballot,” Peskin told the supervisors. “And this is a chance for us, who say we are advocates for renters, to commit to expand protections.” 

Peskin, who is running for mayor, initially proposed expanding rent control to all buildings built through November of this year.

But under pressure from housing activists, labor groups and developers, he scaled back the bill at the eleventh hour to a cut-off date in 1994.

In a letter delivered to the board ahead of the vote, a coalition of pro-housing interests argued the initial proposal would put San Francisco at a competitive disadvantage for rental construction compared to the surrounding Bay Area.

“This legislation denies the builders of recently constructed housing the ability to recover construction costs and jeopardizes their ability to repay their loans,” the coalition said.

Statewide ballot measures meant to overturn Costa-Hawkins failed at the ballot box in 2018 and 2020. 

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State law prohibits local governments from amending rent control ordinances on units constructed after February 1995 or back-dated to when the locality passed its ordinance — 1979, in the case of San Francisco, according to the Standard.

Prop. 33 wouldn’t force cities and counties to regulate rents, but would allow them the option.

Backers and opponents of Prop. 33 both contend their position supports affordable housing. Proponents say the measure would allow for more affordable rents. Critics, including property owners across the state, say it would stymie construction of affordable housing. 

Supporters of Prop. 33 have spent $38.5 million of the $40 million raised thus far, according to state campaign finance information through Sept. 26. 

All but $600,000 of that amount came from the AIDS Healthcare Foundation, a Los Angeles-based nonprofit that provides low-cost prescriptions while being a major owner/operator of affordable housing in L.A. 

A second measure, Proposition 34, would require the foundation to spend 98 percent of its revenues on direct patient care, cutting off the funding spigot for future attempts to undo Costa Hawkins. Prop. 33 is AHF’s third ballot push to repeal statewide rent control law.

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Those against Prop. 33 had spent $37 million of the $66 million raised by Sept. 26, with $34.45 million coming from the California Apartment Association, $22 million from the California Association of Realtors and $5 million from the National Association of Realtors, according to campaign finance figures.

Apartment industry leaders say they would need to spend $150 million for the best shot at defeating the rent control measure, a goal that by last week seemed out of reach.

— Dana Bartholomew

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