RELEASE: New Study: Prop 10 Will Reduce Property Values, Hurt Small Businesses & Force Budget Cuts, October 23, 2018
UC Berkeley Fisher Center for Real Estate and Urban Economics/Rosen Consulting Group Conclude Repealing Costa-Hawkins Will Worsen CA’s Affordable Housing Crisis
SACRAMENTO –Proposition 10 will “significantly reduce property values and could take millions in tax revenue away from school districts and local communities,” according to a new study released by the UC Berkeley Fisher Center for Real Estate and Urban Economics and the Berkeley-based Rosen Consulting Group.
“If Prop. 10 passes and cities expand rent control, the potential decline in apartment property values is in the 10% to 35% range,” said Ken Rosen, Chairman of UC Berkeley’s Fisher Center for Real Estate & Urban Economics and Chairman and Founder of Rosen Consulting Group. “Schools districts across the state, which rely heavily on property tax revenue, could lose hundreds of millions of dollars per year,” said Rosen.
The report, the fourth in a series of papers examining the economic and housing market impact of rent control, details the numerous unintended negative consequences likely to result if Costa-Hawkins is repealed. If cities adopt stricter forms of rent control major impacts would include: 1) a significant drop in apartment property values; 2) deferred maintenance on existing properties and a deterioration in housing quality; 3) lost revenue that will squeeze thousands of small mom-and-pop businesses; and 4) a decline in state and local tax revenue that will limit funding for school districts and strain city and county budgets.
This report mirrors findings from the nonpartisan Legislative Analyst (LAO). In its assessment of Prop 10, the LAO noted “If many communities pass strong rent control, revenue losses could be in the hundreds of millions of dollars per year.”