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Local Ballot Measures Underscore California’s Housing Crisis

Taxes on mansions and vacant properties, rent control policies, and record-breaking housing bonds: Californians are throwing everything at the wall this November.

Aerial view of “The One,” a Bel Air mansion in California.
An aerial view of “The One,” a Bel Air mansion that sold at auction last year for $141 million. In November, residents of Los Angeles will decide whether to raise the real estate transfer tax on the city’s most expensive homes and redirect the proceeds to affordable housing and homelessness prevention.
(Allen J. Schaben/Los Angeles Times/TNS)
When it comes to the housing crisis, California is through the looking glass. In May, the median cost of a single-family house was recorded at nearly $900,000. A quarter of the state’s renters spend more than half their monthly income on housing. There are more people experiencing homelessness in California than in every other state west of the Mississippi River combined.

Increasingly, housing is one of the main organizing principles in California politics, showing up at the forefront of the Legislature’s annual budget battle and in the deep fault lines between tenants, homeowners, developers and lawmakers in big cities. A sampling of local ballot initiatives this fall gives a sense of how salient the issue is in California cities — and how varied the proposed solutions are for addressing it.

A ‘Mansion Tax’ in Los Angeles 

Los Angeles is a city with more than its share of opulent houses, including the 100,000-square-foot Bel Air mansion known as “The One,” which sold at auction for $141 million earlier this year. In November, residents of Los Angeles will decide whether to raise the real estate transfer tax on the city’s most expensive homes and redirect the proceeds to affordable housing and homelessness prevention.

Backers of the initiative ordinance, known as Measure ULA, say it’s a long-overdue effort to create sustained local funding for critical housing measures, and that it’s targeted at the people who can afford it most easily. The so-called “mansion tax” would be set at 4 percent for sales above $5 million and 5.5 percent for sales above $10 million.

“That is the population that is benefiting the most from the housing market as it is right now,” says Laura Raymond, director of the Alliance for Community Transit, one of many local advocacy groups that’s supporting the initiative. “We believe that millionaires and billionaires have the ability to pay this tax.”

If passed, the initiative could raise more than $900 million a year, according to an analysis by a group of researchers at the University of California, Los Angeles; Occidental College; University of Southern California; and the Southern California Association of Non-Profit Housing. That’s up from just over $200 million raised by transfer taxes in a typical year, and it would only affect around 3 percent of sales, according to the analysis. The funds raised would be spent according to an expenditure plan included in the ordinance, with 70 percent dedicated to programs aimed at building and acquiring affordable housing and 30 percent dedicated to homelessness prevention programs like emergency rental assistance and eviction prevention.

Some business groups, associations of apartment owners and taxpayers associations have lined up against Measure ULA. But the initiative is also backed by a coalition that includes more than 200 local organizations. Raymond says she thinks it will get the more than 50 percent of voter support it needs to pass.

“This is the top issue for voters — we know that through polling,” she says. “People are looking for solutions. They’ve been frustrated that we’ve been addressing the issue at the edges and not really taking it on at the scale needed … I’ve been working on housing for many years and I have not seen a coalition like this come together before.”

A Vacant Property Tax in San Francisco

In San Francisco, they’re considering a tax on vacant properties. Proposition M, spurred by San Francisco Supervisor Dean Preston, a progressive Democrat and founder of the group Tenants Together, would impose fees on units that are kept empty for more than half the year. The fees would steadily increase over time to as high as $20,000 a year, with the revenue going to rental assistance and other programs.

Backers say the initiative is more about creating a disincentive for owners to let units go empty than it is about bringing in money. There are an estimated 40,000 vacant units in San Francisco, according to a report from the Board of Supervisors Budget and Legislative Analyst. Proposition M was modeled on a vacant homes tax in Vancouver, which was passed in an attempt to reduce housing speculation by investors.

“The potential for placing even a significant fraction of these units back into circulation will mean that there will be more competition, more places for people to live and more access to housing in a city which has an extreme housing crisis,” says Ora Prochovnick, director of litigation and policy at the Eviction Defense Collaborative. “Hoarding vacant units when you have people on the street doesn’t make sense.”

The proposal hasn’t fallen neatly along the battle lines in the long-simmering fight between the city’s established housing factions. Namely, those are the YIMBYs (Yes in My Back Yard), who promote the expansion of all types of housing supply, and a coalition of tenant organizers and anti-displacement activists who oppose much new market-rate housing development. (Currently, those groups are fighting over a separate set of competing measures, Proposition D and Proposition E, which deal with streamlining the approval process for building affordable housing. The sticking point in that fight is over what income levels should qualify for faster approvals.) The vacant property tax so far hasn’t generated much organized opposition at all, says Prochovnick, as evidenced by the small number of paid arguments against it in the official voter guide.

Sarah “Fred” Sherburn-Zimmer, executive director of the Housing Rights Committee of San Francisco, says Prop M should get a lot of popular support, because if it works, it could quickly increase housing supply and cut down on speculation.

“Everyone goes on and on about how any housing is good for us — i.e., these big luxury buildings — but then they sit empty,” she says. “A unit that is used as a bank account for a corporation is not housing … If the only demand for housing is people who want to live in it, we’re having a different conversation.”

Rent Control in Pasadena 

California limits how broadly cities can apply rent controls, including through a law known as the Costa-Hawkins Rental Housing Act, which prohibits rent control for single-family homes and condos and buildings built after 1995. But new rent control policies pop up perennially in different forms. Voters faced statewide referendums aimed at expanding rent control in 2018 and 2020 — and rejected them both times. But state legislators passed a form of rent stabilization in 2019, setting statewide limits on how much landlords can increase rent every year.

This year, residents of Pasadena, in Los Angeles County, will vote on Measure H, which would establish a local rent control policy, require landlords to provide a “just cause” when they seek to evict tenants and create a local registry of rented units to track rental housing costs. The policy would set the maximum yearly rent increase at 75 percent of inflation — which would typically mean between a 2 and 3 percent increase per year, according to the measure’s supporters.

In a published argument against the measure, a group of residents and former officials, including a Pasadena mayor, said Measure H would be overly burdensome, expensive to administer and unnecessary because of statewide protections adopted in 2019. A rebuttal to that argument, signed by another group of residents — including a different former Pasadena mayor — says statewide protections aren’t enough. “Pasadena renters need protection against unfair evictions and rent hikes,” they wrote. “Opponents cite a temporary state law that allows rent to go up by as much as 10 percent per year. That’s too much!”

Record-Breaking Bond Proposal in Berkeley

Voters in Berkeley will decide whether to support a $650 million bond sale backed by Mayor Jesse Arreguín, which would fund a range of improvements to streets and dedicate $200 million to affordable housing programs. Arreguín has pitched the bond measure, the biggest in the city’s history, as a supplement to Measure O, a $135 million housing bond approved by voters in 2018. That measure dedicates local funds to help create some 900 new affordable housing units.

Arreguín, whose office didn’t respond to a request for an interview, wrote in an op-ed in Berkeleyside that Measure L would help support 1,700 new housing units, calling it “a transformational investment to help fulfill our commitment to a diverse and inclusive community.”

California cities have been floating larger and larger bond measures, with mixed success. In 2018, San Jose — a city nearly 10 times the size of Berkeley — passed its own record-setting $650 million bond measure. But a separate housing bond of $450 million failed the same year. A group in San Diego organized a $900 million housing bond in 2020. But while a majority of voters pulled the lever in favor of the measure, it didn’t meet the necessary two-thirds threshold to pass. L.A. voters approved a $1.2 billion housing bond in 2016, but as Bloomberg reported earlier this year, about half the bonds have yet to be sold.

Pre-Approving Housing in Sacramento

In Sacramento, voters will be asked to approve Measure D, which would authorize the government to build low-income housing units equivalent to 1 percent of the city’s overall housing stock each year. The measure wouldn’t pay for the units or determine where they’d be built. Proponents of Measure D wrote in an official argument that it “simply continues to allow the County and cities to access funding streams and partner with local non-profits to provide sorely needed affordable housing for families, seniors, and people with disabilities.” No argument against the measure was published.

Ballot questions like Measure D exist because, in California, cities need official sanction from their residents just to be legally allowed to build publicly funded “low-rent housing projects.” That’s because of Article 34, a provision of the state constitution that was added in the middle of the 20th century and used for decades afterwards to prevent the construction of affordable housing. Article 34 is deeply entwined with a history of racial segregation in California cities, and advocates have been trying to get rid of it for years. California voters could get a chance to repeal Article 34 in 2024 — by a statewide ballot referendum.
Jared Brey is a senior staff writer for Governing. He can be found on Twitter at @jaredbrey.
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