The Costa–Hawkins Rental Housing Act ("Costa–Hawkins") is a California state law enacted in 1995, placing limits on municipal rent control ordinances. Costa–Hawkins preempts the field in two major ways.The Act's complexities are abridged and simplified here. First, it prohibits cities from establishing rent control over certain kinds of residential units, such as single-family dwellings, condominiums, and newly constructedThe 'newly constructed' designation may be more complicated than it appears. Any rental units built after the 1995 Costa-Hawkins Act would be exempt. But also, with regard to cities with existing rent control ordinances, the Act counts as "new construction' any built after that ordinance was enacted. See below the section "Exemptions to rent control". apartment units (these are deemed exempt). Second, it prohibits "vacancy control", also called "strict" rent control. The legislation was sponsored by Democratic Senator Jim Costa and Republican assembly member Phil Hawkins.

If an apartment was under "vacancy control", the city rent control ordinance worked to deny or limit an owner's ability to increase its rent to new tenants, even in cases where the prior tenant voluntarily vacated the apartment or was evicted for a 'just cause' (such as failure to pay rent). Costa–Hawkins changed this by allowing an apartment owner the right to rent the vacancy at any price (i.e., usually the market price).The "decontrol" of such "vacancy controlled" rents was phased in over a three-year period starting at the end of 1995.The act also addresses incidental technical issues, such as, when such rents may be increased on a remaining subtenant.

In 2019, the California legislature passed and the governor signed AB 1482, which created a statewide rent cap for the next 10 years. The Tenant Protection Act of 2019 caps annual rent increases at 5% plus regional inflation. For example, had the bill been in effect in 2019, rent increases in Los Angeles would have been capped at 8.3%, and in San Francisco at 9%. The increases are pegged to the rental rate as of March 15, 2019. The new law does not apply to buildings built within the prior 15 years, or to single-family homes (unless owned by corporations or institutional investors). It also includes a requirement to show "just cause" for evictions, and retains "vacancy decontrol", meaning that rents can increase to market rate between tenants. Many municipalities in California continue to have their own rent control laws, which remain intact under AB 1482. This ability of city governments is limited by the federal and state constitutions, as well as federal and state laws.Here the issue is State of California limits put on its cities. Federal and State constitutions both establish and limit government power. Cf., the Tenth Amendment. Cf., Dillon's Rule. Costa–Hawkins is one of the most prominent state statutes limiting the power of California cities to regulate their rental markets.The Act also repeals or reforms various California state programs that subsidized qualified renters of residential dwellings. These provisions are mentioned below, but are not the focus here. The Act's 3-year phase-in for vacancy decontrol, and these reforms, complicate the language of the statute.See text below for source citations.

Factors causing 1970s rent control The late 1970s saw the second wave of rent control ordinances in California, and nationwide.The first wave was in the late 1940s, during the economic surge following World War II. Alisa Belinkoff Katz, "People are simply unable to pay the rent" What History tells us about Rent Control in Los Angeles, at UCLA Luskin Center for History and Policy, October 2018. Introduction by Zev Yaroslavsky. Accessed 2018-11-1. This study covers three rental housing crises and related rent control enactments in Los Angeles: the above post-war, the post-Prop 13 in 1979, and the current, on-going situation."The California experience is representative of the range of public responses... ." Keating in Niebanck (1983), p.57. Rising real estate values and surging interest rates made single family homes in California less affordable. Disappointed buyers often moved into apartments. A rental housing shortage appeared, rents went up. For chiefly non-housing reasons (e.g., land use), cities began restricting the building of new dwelling units. As prices rose for rental housing properties, return on investment and cash flow motivated new landlords with mortgages to raise rents. State and federal low-income housing assistance fell. Inflation was economy-wide, yet wages and salaries also fell. The consumer movement and Proposition 13 effects then stimulated tenant activism in municipal politics.Lenvin and Moskovitz , ∮7.8 on factors causing rent control in the 1970s: rising real estate prices for homes and for apartment houses; economy-wide inflation; tight housing markets from short supply and high demand; the consumer movement).Sternlieb and Hughes, in Niebanck (1985), pp. 11–28: rent control by cities "dependent on national market factors" at p.11; own versus rent, and housing supply, at pp. 11–20; private investment in rental housing property, at pp. 25–28.Keating, in Niebanck (1985), pp. 57–73, at 57–59 (fall of tenant incomes, rise in rents; the housing shortage: vacancy rates, not enough new construction; low income households and percent spent on rent; housing subsidy cut-backs: fed policy & state budgets; Proposition 13; rent control in California), and at pp. 70–73 (growth and land use restrictions, increased fees and requirements for new housing construction; Proposition 13; very high mortgage interest rates; state budget problems limit its housing remedies; Proposition 13; policy trade-offs).Niebanck, in Niebanck (1985), pp. 105–122. After analysis of multiple issues in a city's rental economy, including market malfunction and two benchmarks (the vacancy rate, and income percentage spent on rent), the UCSC professor suggests: "A locality's interest in rent control has at least as much to do with underlying cultural, socioeconomic, political, and ideological factors as it has to do with market conditions" at pp. 110–111 (quote).Keating (1983), pp. 3–4. Sponsors of Proposition 13 claimed that tenants would share in the benefits of reduced property taxes. But after it passed, most landlords declined to do so. The legislature refused to heed the tenant protests.Heskin (1983): 1960s rental glut, 1970s fall in housing construction and rise in rents (pp. 32–33, 40–41); Prop. 13 and 'tenant revolt' (pp. xiv, 41, 47–49). Civil rights, anti-poverty, anti-war movements were followed by tenants who organized, first in college towns (p.32). Kerner Commission, p.102.Dreier (1997), Part I, "The Battle for Rent Control" at ¶¶ 8–10. Earlier tenant movements of the 1960s were "spillovers" from the civil rights, the poor peoples, and the student movements (¶8). He notes (at ¶10) that the Kerner Commission found that "housing problems among low-income tenants was the primary grievance behind the mid-1960s ghetto rebellions." The National Tenants' Organization, founded in 1969, was for a time widespread across America (¶8).

The Costa–Hawkins legislation of 1995

Political events leading to the Act

In 1972 Berkeley became the first California city to adopt a second-wave rent control ordinance. In 1976 Governor Jerry Brown, a Democrat, vetoed state legislation (AB 3788) that would have preempted local rent control laws. It had been supported by a mainstream real estate group, the California Housing Council (CHC). In response to the veto, the real estate industry managed to get an initiative, Proposition 10, on the state ballot for 1980.Heskin (1083), p.61: "a coalition of real estate developers, building trade unions, and landlords" formed to promote Proposition 10. It was soundly defeated, however, 65% to 35%.Keating (1983), pp. 5–6: Although somewhat similar to Costa–Hawkins, in its details Prop. 10 would have been substantially different, e.g., Prop. 10 mandated that a city could not enact a just cause requirement for evictions. Re Berkeley 1972 (pp. 3, 4).Heskin (1983): Berkeley, CHC and AB 3788: Brown's veto (pp. 41–43); Prop.10 (pp. 61–63).

In the meantime, in June 1978 Proposition 13 had been approved two to one by California voters. Before the election Howard Jarvis, the leader of the Prop. 13 'taxpayer revolt', as well as of the California Apartment Association, had suggested that landlords would lower rents if Prop. 13 passed. Many voters were said to have thought that Prop. 13, by lowering landlord property taxes, meant lower rents. The CHC, fearful of a tenant backlash if landlords failed to follow through, decided to oppose Prop. 13. Despite post-election efforts by Gov. Brown and the CHC, few landlords lowered their rents.Dreier (1997), Part II, at section "Rent Control in California", Jarvis at ¶5, CHC and Prop. 13 at ¶¶ 5 and 6b, Proposition 10 at ¶15.Keating (1983), pp. 3–4. Proposition 13 proponents: their unfullfilled promise to lower rents inspires tenants to mount a fight for rent control.Heskin (1983), p.47: Jarvis announced agreement between two landlord associations to lower rent if Prop.13 passed; p.48: statewide tenant revolt following Prop. 13 vote and few landlords pass on tax savings to tenants; p.49: landlord costs go up.

Across California urban tenants formed numerous local groups, which quickly grew in intensity and strength. Tenant activists organized political agitation directed at state and city government. Gov. Brown's new 'tenant hot line' was getting 12,000 calls a day. "In response to tenant pressure, rent strikes, and steady news coverage about rent increases and angry tenants, especially seniors, the Los Angeles City Council passed a six month rent freeze in August 1978." By 1988, fourteen cities had adopted full rent control, and sixty-four cities rent control for mobile home parks.Dreier (1997), Part II, at section "Rent Control in California", Governor's 'hot line' at ¶7, fourteen cities at ¶8, Los Angeles quote at ¶9.Keating, in Niebanck (1985). After Prop. 13, Los Angeles Mayor Tom Bradley moved from opposition into support for rent control. "Tenants then turned to local government for relief via rent control." Fourteen cities. A poll taken in May 1979 had Californians in favor of rent control 56% to 21%, tenants in favor 73% to 20%. At that time 55% of Californians were renters.Heskin (1983), pp. 39, 43–47, 48–49: 1970s growth of tenant movement; p.48: Governor's 'hot line'; pp. 50–55: tenant groups active in Los Angeles, rent freeze becomes rent control; pp.55–61, 63–65: in Santa Monica, Prop. A rent control, tenant majority on city council.

The strength of the tenants groups, however, eventually began to dissipate. Yet CHC attempts to partially 'preempt' rent control were thwarted by Democrats, led by State Senator David Roberti, until term limits forced his retirement in 1995. On the other hand, Democrat Jim Costa in the Assembly had unsuccessfully carried 'preemption' bills for the real estate industry since 1983. He was now in the Senate, where his 1995 bill passed the Judiciary Committee; absent Roberti, it drew Democratic votes. The bill then passed the Senate with one vote "more than the majority required."Dreier (1997), Part II, at section "The Politics of Deregulation in California", Roberti anti-Costa at ¶¶ 2–3, Roberti term limits at ¶¶ 5–7, Costa in Assembly at ¶¶ 1–2, Costa in Senate at ¶¶ 6–9, tenant advocacy weak at ¶3, 9; at section "Rent Control in California", Roberti rent control at ¶3, tenant groups weaken at ¶16; at section "Comparative Analysis," subsection "Weakness and Fragmentation of Tenancy Constituency".Max Vanzi, "Legislature deals blow to rent control", in The Los Angeles Times, July 25, 1995. Sen. Jim Costa said the Act represented "an 11-year effort to try to end extreme forms of rent control in California."

The Act: sponsors, and opposition