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“ON THE HOOK” What Section 10 of Prop 10 Could Mean for California Taxpayers

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by Daniel Yukelson

We have less than 30-days left until the November 6th election that will decide the fate of the multifamily housing industry in California. Proposition 10, the so-called “Affordable Housing Act” is on the upcoming ballot, and in case there is any sort of confusion, VOTE NO on PROP 10. A no vote saves the apartment industry, and a yes vote could possibly end it. Vote no, and tell all of your friends and family to vote no. Please vote no on Proposition 10.

In addition to repealing the 1995 law that placed restrictions on local rent control ordinances, the Costa-Hawkins Rental Housing Act, and eliminating rent control exemptions that now exist for single family homes, condominiums and newer construction and ending vacancy “de-control” (the right to increase rents to market when a tenant moves out); Proposition 10 has some hidden “gems” that could cost the State of California hundreds of millions of dollars each year.

Section 10 of Proposition 10, which is hidden at the very, very end, contains a provision requiring that we California taxpayers pay its proponents’ legal bills if any homeowners, tenants, voters or any other parties challenge the law in court. Even if the proponents lose in court, taxpayers will still be “on the hook” to pay for the proponents’ legal bills. Section 10 of the proposition states, in part:

“if the State, a government agency, or any of its officials fail to defend the constitutionality of this Act… proponents shall have the authority to intervene in any court action challenging the constitutionality of this Act…The reasonable fees and costs of defending the action shall be a charge on funds appropriated to the California Department of Justice....”

This Section 10 provision grants Proposition 10’s sponsors the unlimited power to defend their own measure in court and requires that the California Department of Justice and you, the California taxpayers, must fund post-election legal work to defend against any such challenges, win or lose. In effect, it makes the proponents of Proposition 10 unelected public officials that can decide how to deploy California’s budget for legal issues that are a threat to Proposition 10’s constitutionality.

This is an extraordinary power grab by Proposition 10 chief proponent and principal backer, Michael Weinstein, and it is extremely anti-democratic. California voters have elected a state attorney general to defend the state legally; and it is up to our attorney general to make choices about pending legal cases, priorities and resources. But, the initiative’s sponsors want to supplant the judgment of our state’s attorney general. If Proposition 10 passes, California might just be handing over the state attorney general’s budget to Michael Weinstein. For Californians, this means Weinstein is handing us an unlimited price tag for an unlimited time that would take needed resources from our schools, police and firefighters, and other government services.

If Proposition 10 passes, all California taxpayers will be required to help pay for Proposition 10’s legal bills, including tenants, apartment owners, and others. This could easily cost California hundreds of millions of dollars each year. There is no “cap” to any of these litigation defense costs. The only way our state could fill the obvious “budget hole” these added costs will create is by taxing us more – that impacts everyone’s pocket books. That’s both you and me!

While it is highly unusual for taxpayers to bear the legal costs for initiatives like Proposition 10, in recent years, more and more proposition proponents have tried to “slip in” litigation defense coverage. Initiatives such as Proposition 10 already contain broad powers by changing the law and putting in place a statute that can only be undone by another vote of the people. But, apparently this is not enough, and Mr. Weinstein wants to assume the responsibilities of California’s attorney general as well. Also, on this November’s ballot, Proposition 11, which is being sponsored by an out-of-state medical transport firm, has similar language in that it requires California to appoint independent counsel to defend the statute.

The legal defense obligation outlined in Section 10 merely adds to the many other flaws contained in Proposition 10. From allowing government to dictate pricing for housing of all kinds or even just a room; to facilitating the expansion of rental boards placed in charge of housing that will give governments unlimited power to assess fees to be passed on to tenants and property owners; to creating an environment where badly needed rental units will cease to exist as owners exit the rental housing business; and to adversely impacting property values that will result in lower property taxes and fees needed to fund our schools and first responders. Read it for yourself. Proposition 10 has too many flaws to count on my own two hands. 

Even our own state’s non-partisan, independent legislative analyst concluded that Proposition 10 will increase costs for local governments by tens of millions of dollars per year and cost the state millions more in lost revenue, which could mean diverting funds from vital state services. Earlier this year, State Assembly Bill 1506 proposed by Richard Bloom that would have had a similar impact as Proposition 10 by repealing the Costa-Hawkins Rental Housing Act did not even make it out of committee – even our own State legislature is against repealing Costa-Hawkins. On top of that, both gubernatorial candidates, Gavin Newsom and John Cox are against Proposition 10 and Costa-Hawkins’ repeal.

Ironically, despite its name, Proposition 10 does not create any affordable housing units. In fact, it has been proven in study after study that stricter rent controls have the opposite effect as property owners exit the rental housing business by converting apartments into condominiums and other uses, which merely creates even more of a rental housing shortage.

NOW’S THE TIME EVERYBODY! STEP IT UP! 

We need money to defeat this horrific ballot measure. Please contribute to the Issues Political Action Committee of AAGLA. Please mail your check today to c/o Reed & Davidson, LLP, 515 South Figueroa Street, Suite 1110, Los Angeles, California 90071-3301; Attn. C. Davidson, Treasurer, or contribute online at: https://secure.anedot.com/aaglaissuespac/donate. Please give generously. 

Travis Watson