Prop 10 – Everything You Need To Know

First off, what is Proposition 10?

Its full, formal name is the Local Rent Control Initiative, and it’s going to be on the ballot this November 2018. It’s an initiative that seeks to repeal a current act (Costa-Hawkins). The repealing of this act will allow local governments to take on rent control “ordinances” which are rules that dictate the amount that landlords can charge their tenants for renting their apartments or houses.

A “Yes” vote would repeal the Costa-Hawkins Rental Housing Act, and a “No” vote stops the initiative, allowing for the continuing to stop local governments from enforcing rent control on certain buildings or locations.
Your next question is most likely: “okay, so what is the Costa-Hawkins Act?” Let me break it down for you!
This act was passed back in 1995, and in basic terms, it limits the use of rent control in California. With this act, landlords were given the right to increase rent prices (on housing built after 1995) as the market rates rose whenever a tenant moved out, resulting in the new tenant paying more than the previous, often for the exact same apartment or house. Before this, rent control was enacted and landlords would receive “just and reasonable returns” on all of their properties – ultimately eliminating the need to increase rent at all. And what exactly is a “just and reasonable return?” Well, according to California’s Court of Appeals, they are defined as returns that are “(a) are comparable to the returns in other sectors having similar risks, (b) are high enough to encourage good management, (c) reward efficient practices, (c) enable operators to maintain their credit, and (d) discourage disinvestment.”

The Politics

Naturally, this proposition is being highly debated by both major parties. The California Democratic Party endorses Prop 10, while The California Republican party isn’t for it.

The most prominent arguments against Prop 10 state that it would simply repeal the Costa-Hawkins Act without providing any real solution, it will discourage new construction of more housing and end up making it even harder than it already is for many to even find housing, and could reduce home values. Arguments in favor of Prop 10 concern struggling families, stating that a “Yes” vote will prevent homelessness for the many Californians that are barely making ends meet due to high rent prices, along with keeping the steady flow of Californians moving out of state, thus hurting our economy in the long run.

While each side has their lists of reasons to vote for or against Prop 10, I believe that regardless of your opinion, it’s important to have that opinion backed by facts. Click here for the government official ballot measure and text, and don’t forget to vote this November 6th!

By | 2018-10-05T07:32:12+00:00 October 5th, 2018|A Note From Sergio, Real Estate|0 Comments

About the Author:

Sergio Angulo is a proud, first generation Mexican-American from Downey, California. His father is from Guadalajara, Jalisco, and his mother is from Villa Victoria, Michoacan. Coming from humble beginnings, Sergio values his work ethic and morals above all else. A graduate from the esteemed Woodbury University, Sergio graduated in 2016 with a bachelor’s degree in Business Management. Sergio is now an accomplished entrepreneur and an advocate for the empowerment of young people through entrepreneurship in the local community. Sergio belongs to associations including the Downey Association of Realtors, the California Association of Realtors, and the Apartment Owners Association and is based out of Downey, California.

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