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Last updateTue, 18 Sep 2018 1pm

It wouldn’t be election season without a bunch of big-money interests trying to tell you how to vote—and with hundreds of millions of dollars rolling into initiative campaigns over housing and health care, California hit a new record this year.

The $111 million campaign against Proposition 8 on kidney-dialysis clinics amounts to the most money poured into a single side of a ballot measure in the United States—at least since electronic record-keeping began in 2002, and possibly ever.

Here are three industries spending huge sums to influence your vote:

Landlords and real estate agents outraising rent-control advocates 3-to-1

Landlords are largely bankrolling the campaign against Proposition 10, which would allow local governments to expand rent control.

“They don’t want to see their property values decline; it’s that simple,” said Steve Maviglio, spokesman for the No on Prop 10 campaign, which has raised $74.7 million.

Prop 10 would repeal a 1995 state law that forbids cities from applying rent control to single-family houses, or any type of home built after 1995; that 1995 law also allows landlords to raise apartment rent any time a tenant moves out. Instead, the ballot measure would give cities the option to expand rent control to cover more homes—making it harder for landlords to turn a profit.

“It’s about their future, their bottom line. That’s why they’re spending so much,” said Charly Norton, spokeswoman for the Yes on Prop 10 campaign, which has raised $25.9 million, mostly from the AIDS Healthcare Foundation.

Supporters say Prop 10 is necessary, because homelessness is on the rise, and a growing share of Californians spend more than half their income on rent. Opponents say it will worsen the state’s housing shortage by discouraging developers from building more homes.

Donors against Prop 10 include corporate property owners like Blackstone, Essex and Equity Residential, as well as many individual landlords. The biggest donor is the California Association of Realtors, which has given $8 million to the campaign.

The Realtors' association also has poured $13.2 million into the campaign for Proposition 5, making it the sole funder of that push to change California’s property-tax law.

Californians now generally pay much higher property taxes if they buy a new home after selling a house they’ve owned for many years. That’s because property taxes are based on the sales price of a house, not how much it’s worth as it appreciates over time. This initiative would allow three categories of homeowners—those over 55, disabled or who lost their homes in natural disasters—to keep the property-tax levels of the home they sold if they buy a new home. Real estate agents say it would encourage older Californians to sell their homes, making more houses available in our tight market. (Experts disagree.) Of course, it also would boost their commissions.

“It will give a huge windfall to the real estate industry,” said Mike Roth, spokesman for the campaign against Prop 5, which has raised about $3.2 million, largely from public-employee unions that could see cuts if the government loses tax revenue.

Steve White, president of the California Association of Realtors, insisted it’s about “meeting a need. The unaffordability of housing in California … is largely dictated by lack of availability,” he said. “We have tens of thousands of homes that could be waiting for all those tens of thousands of younger families.”

Dialysis clinics outraising labor opponents 5-to-1

The most expensive fight on the California ballot this year is over Proposition 8, which would limit profits for dialysis companies. The businesses are fighting back, pouring $111 million into the campaign against Prop 8—most of it from two dialysis companies, DaVita and Fresenius.

“Prop 8 was designed to have a negative impact on dialysis clinics in California, and that’s why the groups that are opposed are fighting it so heavily,” said Kathy Fairbanks, spokeswoman for the No Prop 8 campaign.

She said the measure wouldn’t allow dialysis clinics to be reimbursed by insurance companies for many routine business expenses. Ultimately, that would cause companies to close clinics, Fairbanks said, giving patients fewer places to seek treatment.

Workers at dialysis clinics are not unionized. A labor group that represents other health-care workers has had its sights on organizing dialysis workers, and put Prop 8 on the ballot as part of a much larger feud within the industry.

“This record amount of (campaign) spending speaks to the priorities of the dialysis corporations, which is to protect their profits,” said Sean Wherley, spokesman Service Employees International Union-United Healthcare Workers, the sponsor of Prop 8.

The Prop 8 campaign has raised $20.3 million, most of it from SEIU United Healthcare Workers. The union argues that dialysis clinic companies are netting huge profits while allowing shoddy health and safety conditions at some clinics. Limiting the companies’ profits to 15 percent, as Prop 8 calls for, would encourage the clinics to put more money into improving patient care, the union argues.

Ambulance companies outraising labor opponents more than 600-to-1

Colorado-based company American Medical Response put Proposition 11 on the ballot and contributed most of the $29.9 million raised to support it. The measure would allow private ambulance companies to require workers to remain on call during breaks, so they can respond to an emergency even if it comes while they’re eating lunch. That’s already the common practice, but this measure comes in response to a court ruling that security guards cannot be required to stay on call while they’re on breaks. Ambulance companies don’t want to be held to the same standard.

“If applied to the ambulance industry, it would have a significant public safety risk,” said Marie Brichetto, spokeswoman for the Yes on Prop 11 campaign.

Opponents—the emergency responders who work on ambulances—aren’t raising much money; the American Federation of State, County and Municipal Employees union contributed just $47,000 to oppose Prop 11.

“This is a classic ‘big corporation against its own employees,’” said Jason Brollini, president of the United EMS Workers union that is affiliated with AFSCME.

He contends the ambulance companies’ real motive with Prop 11 is to eliminate any liability they could face from employees who sue over not getting the extra pay they’re supposed to receive when their breaks are interrupted by an emergency call.

CALmatters.org is a nonprofit, nonpartisan media venture explaining California’s policies and politics.

Published in Politics

One way or another, two words are likely to dominate the complicated politics of California’s housing crisis in 2018: rent control.

On Thursday, Jan. 11, state lawmakers are slated to hear a proposal from Assemblyman Richard Bloom, a Democrat from Santa Monica, that would allow cities to dramatically restrict what landlords can charge tenants year over year.

The bill couldn’t even get a hearing last year amid intense opposition from landlords. But looming over legislators’ heads this time around is a potential ballot initiative supported by tenants’ rights groups that would do much of the same. If the bill stalls, there’s a good chance you’ll see the rent-control question on your November ballot.

What should an average Californian know about a rent control debate poised to gobble up so much political oxygen? Here are five key points:

1. Under current state law, a wide swath of California’s housing stock can’t be placed under rent control.

Rent-control or rent-stabilization policies come in different shapes and sizes, depending on the city in which you may find them. Some place a hard cap on how much a landlord can raise rents year over year, while others may be indexed to inflation. Currently, 15 California cities have some form of rent control on the books, including major population centers like San Francisco, Los Angeles and Oakland—and one Coachella Valley city, Palm Springs.

But current state law prohibits any locality in California from imposing rent control on properties built after 1995. That’s the year the state passed the Costa-Hawkins Act, which also prohibited cities that already had rent control laws on their books from updating them for new properties. Thus in Los Angeles. rent control only applies to buildings constructed before 1978, and in San Francisco, rent control only applies to buildings built before 1980. Palm Springs’ ordinance only covers properties built before April 1979, among other exclusions.

A bit of background: After some cities responded to tenants’ concerns about rising rents in the 1970s and 80s by adopting rent-control ordinances, real estate interests first tried to stop them in the courts. Unsuccessful there, they focused on the Legislature. Bills to pre-empt local rent control would routinely pass the Assembly and then die in the Senate, held up by then-Senate President Pro Tem David Roberti, a West Hollywood Democrat. The year after he was termed out of office, Costa-Hawkins passed by a one-vote margin.

Both Bloom’s bill (as it is currently written) and the initiative would fully repeal Costa-Hawkins, massively expanding the number of properties on which cities could impose rent control. That includes single-family homes, which Costa-Hawkins also excluded from rent control protections. (Palm Springs’ ordinance currently excludes “buildings consisting of four units or less containing one unit occupied by the owner as his/her primary residence.”)

2. Most economists—left- or right-leaning—think rent control is bad.

Economists have a hard time agreeing on most things, but regardless of partisan leaning, most economists say rent control is not great policy. Even prominent progressives like Paul Krugman have expressed opposition.

Rent control is quite literally the textbook example of a “price ceiling,” and undergrad economics textbooks will often feature problem sets with questions about what’s wrong with rent control. The classic microeconomic downsides include killing the incentive to build more housing, causing landlords to neglect maintenance and repair, and inflated prices for non-rent-controlled units. A poll of ideologically diverse economists found that only 2 percent agreed with the statement that rent control had a positive impact on housing affordability in cities like New York and San Francisco.

3. Scholars in other fields are generally bigger fans. And if you took away rent control, the results could be disastrous for affordability.

Many urban planners and other scholars studying gentrification and displacement cite rent control as an effective policy to keep long-time residents in the communities in which they live and work. And because rent control has become so deeply embedded in the housing markets of some cities, taking it away—no matter how economically inefficient it may be—could spell disaster for current residents.

The Bay Area Council Economic Institute—a business-aligned policy think tank—ran a simulation of 20 policy changes that could improve or worsen housing affordability in San Francisco. The policy that would make things worst? Getting rid of rent control, which they found would plunge 16,000 households into an unaffordable housing situation.

4. One of the best studies of rent control shows that it primarily benefits older households—at the expense of households without rent control.

There actually aren’t a ton of empirical studies looking at how rent control plays out in practice. But a groundbreaking Stanford University study released last year on San Francisco’s rent-control experience has shed new light on who wins and loses from the policy.

Looking at a roughly 20-year span of proprietary rental and migration data, the study authors found that rent-controlled tenants age 40 or older saw average savings of nearly $120,000 from rent control; by contrast, younger rent-controlled tenants only saved an average of $40,000.

That’s because younger households were more likely to move out of rent-controlled apartments because of various life milestones—a new job, a new family, buying a house in the suburbs, etc.

5. The study also found that rent control paradoxically fueled gentrification, as landlords converted units to condos.

The Stanford study found that rent controlled buildings were 10 percent more likely to be converted to a condominium or some other type of non-rental property, as landlords searched for ways to evade the law. Those units being drawn off the market partly drove up rental prices for tenants searching for apartments in San Francisco. In this sense, the study authors argue, rent control paradoxically contributed to the well-publicized gentrification the city has experienced over the past few decades.

While the study also found that rent-controlled tenants were more likely to stay in the city than tenants without rent control, the gap may not be as wide as you think. After 10 years, about 11 percent of tenants without rent control were living at the same San Francisco address. Tenants with rent control? Just 13 percent stayed put.

The rent control bill will be heard by the Assembly Housing and Community Development Committee on Thursday, Jan. 11 at 9 a.m., and will include a public comment period. You can watch the hearing—which should be pretty lively as far as legislative hearings go—here.

CALmatters.org is a nonprofit, nonpartisan media venture explaining California policies and politics. For more of Matt Levin’s housing coverage, check out the CALmatters podcast “Gimme Shelter.” Jimmy Boegle contributed to this version of this article.

Published in Local Issues