California’s Prop 10 Fails, Rent Control Checked at Cost of $100 Million

2018: In November’s election, California landlords defeated a rent control ballot initiative, Proposition 10, by a vote of 60% against to 40% in favor of expansion.

Cynthia Davis and Michael Weinstein of the AIDS Health Foundation.

Similar to current initiatives in Massachusetts, California’s Proposition 10 ballot initiative would have repealed their state-wide Costa-Hawkins Rental Housing Act, a law enacted one year after Massachusetts’ state-wide ban, in 1995.

Costa-Hawkins bans rent control from taking effect on buildings constructed after 1995. It also requires vacancy de-control and forbids rent control on all single-family rentals.

Proponents led by, surprisingly, the AIDS Healthcare Foundation, spent $26 million. Opponents led by the California Apartment Association spent $74 million. The measure did not pass (rent control still exists in California but will not expand).

The Wikipedia article on “Rent Regulation” cites a number of serious economic studies from opposing political views, all of which say rent control does not work.

A 1992 survey of 464 US economists found that 93% agree that “A ceiling on rents reduces the quantity and quality of housing available.” A 2013 analysis of all economic research then available concluded, “Rent stabilization doesn’t do a good job of protecting its intended beneficiaries. There seems to be little one can say in favor of rent control.”

Michael Weinstein, President of the AIDS Healthcare Foundation, stated “The greed of these billionaire corporate landlords is causing widescale misery for millions of Californians, and the scourge of homelessness will get much worse because the rent is too damned high.”

Weinstein was paid $424,102 and controlled $1.3 billion in revenue in 2016.

The AIDS Healthcare Foundation’s mission is to “rid the world of AIDS.” Their 2016 tax return says, “The foundation provides medical care for those affected by HIV or AIDS.”

Cynthia Davis, Chair of the AHF Board of Directors, said, ““The Board of Directors of AIDS Healthcare Foundation is fully behind AHF’s $10 million contribution to the Yes on 10 campaign.”

It is not expected that the IRS or the California Attorney General will take action against the AHF for diverting resources from the exempt purpose of the organization.

For comparison, the California Apartment Association had $7,244,918 in revenue in 2016. Their CEO was paid $352,274.

Under current models, over 265 people could have been given a lifetime supply of AIDS medication, or 65,000 people experiencing homelessness could have had their rental applications guaranteed, for the cost of this rent control argument.