Propositions 98 and 99: Stop the Dilemma

A great deal of money is being spent—along with a lot of emotion—over confusing propositions on the June 3 ballot: Propositions 98 and 99.

Contained within both are the issues of eminent land domain for property owners (pitting government officials and wealthy developers against homeowners, churches and small businesses.) But another hot topic—rent control—is inherent only to Proposition 98.

For Proposition 98 or Proposition 99 to succeed, either measure will have to accomplish two things: (1) earn more than 50% of the vote and (2) earn more affirmative votes than its competitor. Put simply, whichever gets the most votes over 50% wins.

Huge amounts of money are being spent to defeat 98 and to see 99 be a slam-dunk winner at the polls.

Take a look at these dollars:

Amount spent promoting Proposition 98: $ 3,178,096.55

Amount spent promoting Proposition 99: $19,651,673.23

The Proposition 98 money comes largely from the Howard Jarvis group and apartment owners.

The Proposition 99 money comes largely from city government lobbying groups and wealthy developers.

Proposition 98 amends the State Constitution to (1) constrain state and local governments’ authority to take private property and (2) phase out rent control.

The misleading ads, direct mail campaigns and emails are scaring many.

Historically, what voters do in cases like these is simply vote “No” on both propositions.

First, let me explain the issue. Then we’ll look at the pros and cons of each initiative.

How did these propositions come about? They’re in response to the controversial U.S. Supreme Court decision Kelo vs. City of New London. That 2005 decision upheld the right of a city to forcibly take away private property and hand it over for use in private economic development. That means the developer gains the land and the city gets new tax revenue as the homeowner, business owner or church loses out.

What’s happening now is an outcry to protect property owners from “eminent domain abuse” by local government. Specifically, eminent domain means the right of a government or municipal quasi-public body to acquire private property for public use.

How is public use defined?

According to the Legislative Analyst’s Office (California’s nonpartisan fiscal and policy advisor), common examples of public use include providing new schools, roads, government buildings, parks and public utility facilities.

Essentially, if a city government redevelopment agency or an environmental group wants to take over a church, home or business, it can do so—and not even pay fair market value. Oftentimes, government’s authority to take property by eminent domain leaves financial destruction, mental anguish and the crisis of unexpected loss and upheaval in its wake to families, businesses, employees and communities.

Constitutionally, here’s why the current law of eminent domain is a death threat to privately held property titles.

First, the protection of homes, churches and businesses from intrusive government interference is a fundamental principle of a free society.

Second, local government agencies are out of control with little hope of restraint. Since the Kelo Supreme Court decision, we’ve seen more than 1,000 private properties belonging to residential homeowners, businesses and churches condemned.

What would you do if this happened to you?

	Take clothing outfitter Joe Sun & Co. The store has sold blue-collar work clothes to Sacramentans for 88 years, and has occupied its current storefront on the K Street Mall since Richard Nixon was president. After 36 years of paying taxes, the owners are fighting an ambitious plan to keep government from forcibly moving their clothing store, bulldozing their building and giving their property away. Why is this happening? So new owners can construct another, fancier building while the city reaps the windfall of higher sales and property taxes every year from new tenants such as Z Gallerie, Lucky Brand Jeans and Sur La Table, a kitchen supplies retailer.
	Or, take Cottonwood Christian Center. Do you remember this? They engaged in a battle to defend their property being seized and given to Costco. Then-mayor of Cypress justified the takeover tactic this way, “This key corner lot in our redevelopment zone will eventually develop large sales tax revenue.” As an afterthought, he added, “There are plenty of other churches in the area.”
	And a Filipino Baptist Church in Long Beach recently fought this same battle.

You see, churches don’t generate tax revenue. That’s why government wants to take their land in the names of “redevelopment” and “increased revenues.”

Pastor Roem Augustine’s Baptist church in Long Beach has been threatened because a developer wanted to condemn it with the help of the Long Beach Redevelopment Agency. The developer wants to replace the church with new condominiums.

	“Good thing government is supposed to protect the little guy,” says John Revelli of Oakland. The entrepreneur was forced to shutter his tire shop after 47 years in business to make way for a housing project. “They took my building. They took my business and they took my livelihood.”
	Manuel Romero had eminent domain used against his family restaurant so that a Mercedes-Benz dealership next door could turn his business into a parking lot.
	Monte, who came from Eastern Europe, put his life, work and savings into property in central California to build his dream home. But his dream came crashing down when he lost everything to environmentalists who used the legal power of eminent domain that prevented Monte from using his personal land for his own use.

Many Christians feel this “systematic” government transfer of property—the taking of land from one person and the handing it over to another—is corrupt and immoral. It’s legalized theft. Theft occurs when someone takes something that does not belong to them, against an owner’s will and/or consent.

After many hits and misses for getting the ballot issue right, there’s general public agreement that land protection is needed.

Enter the Howard Jarvis Taxpayers Association. Together with taxpayer groups, Proposition 98 was born. In response to 98, the League of City Governments and big developers wanted a friendly initiative and put Proposition 99 on the ballot.

Proposition 99 concentrates purely on private homes. It forbids state and local government from using eminent domain to acquire any owner-occupied residence and then turn it over to a private person or business.

But it says nothing about apartments, businesses, rental homes or churches…thus leaving open most current eminent-domain options.

And its language is such that the city can still basically do what it wants.

Let’s look more closely at Proposition 98.

Those for 98 say:

Those for 98 say it’s the strongest protection for all property owners. They have 7 major “yes” arguments.

Those against 98 say:

Those against 98 say it’s a deceptive scheme by wealthy landlords to abolish rent control.

They have 4 reasons why they are against 98.

Those for 99 say:

Those against 99 say:

Rent control

To wrap up our discussion, you need to know how 98 affects rent control. Proposition 98 bans “regulation of the ownership, occupancy or use of privately owned real property or associated property rights in order to transfer an economic benefit to one or more private persons at the expense of the property owner.”

That means no regulation on rents, either in apartments or mobile-home parks.

This provision would let existing rent controls stand until today's renters move out, just like existing rent-control laws. But where 98 differs from current law is that, when a new renter moves in, there’s no rent control.

From an economic and practical standpoint, rent control is bad for all, especially the poor.

The few under it, it helps. But for everyone else, it has the following negative effect:

	Builders “red circle” rent control areas and do not build new apartments or mobile homes in rent-control areas. This creates a housing shortage, hurting everyone as rents increase and available housing decreases.
	Owners have less incentive to upkeep their building.
	Owners are harmed because they must sell property at a much lower price in rent-control areas, cutting down on investment capital.
	Today it’s a nightmare for owners to kick out drug addicts/sellers/producers, gang bangers, multiple occupants and just bad tenants—hurting the good tenants.

The big lie being spread is people on fixed incomes will be forced to pay more. Not true. It will not affect rents as they are today…only if a person moves.

The politics of self-interest

I understand those under rent control, developers and city officials have a self-interest in seeing 98 defeated.

But what’s best for everyone is a free society that protects private property and stops coercive government action.

We recommend YES on Proposition 98.

We recommend NO on Proposition 99.