Saturday, May 31, 2008

No on 98/Yess on 99

The other day I ran across a piece that brought joy to my heart. It appears that Proposition 98 is going down to well-deserved defeat. Proposition 99 has a narrow lead. Both of these initiatives were allegedly drafted in response to the US Supreme Court's Kelo decision, allowing a local government to take a property, not for a direct public purpose such as a road, sewer line or school, but to resell the property to a private developer. Propositions 98 and 99 are the second and third initiatives since the Kelo decision to address this issue, even though California government entities only rarely take private homes by eminent domain at all. (The first, Proposition 90, was defeated in 2006.)

What's most interesting is the much-increased support for rent control among most sectors of the population. Ferhevensakes, 39% of California Republicans support rent control. A bare majority of homeowners support it. I guess that 25 years of rent control have convinced most Californians that cities with rent control will not resemble the South Bronx, that property values will not collapse (rent-controlled communities in California have some of the highest property values in the country), that rental housing will deteriorate no more with rent control than without it, and that the protections afforded by rent control and just cause eviction have saved tenants from the worst depredations wrought by the landlord class.

California tenants have had a recent lesson in the joys of rent control and just cause eviction. Just cause laws in California do not allow foreclosure as a just cause for eviction. This means that tenants in rent-controlled communities cannot be evicted as a result of foreclosure. (This doesn't afford much protection for tenants of single-family houses, but that's because the State Legislature exempted same from rent control--although not just cause eviction protections--in 1988.) So the timing of the initiative cannot have been worse for the landlord class.

But Proposition 98 does even more. In our own little mini-NAFTA, Proposition 98 also prevents localities from taking over private enterprises better run as public services. This means that a public utility could not be formed in an community already served by a private utility, even when the public utility would provide better service more cheaply. It would also prevent the expansion of an existing utility into areas already served by an existing private utility. Bad idea. Even rabid right-wing free marketeers in areas served by public utilities would not trade them for private service. Our local electrical provider, SMUD, is fully one-third cheaper than PG&E. Roseville Electric is even cheaper.

In a recent attempt to expand into Yolo County (to the west of Sacramento, served by SMUD), the major issue was the valuation of PG&E's infrastructure. PG&E claimed that their lines and poles were worth far more than any legitimate appraisal and even the legitimate appraisals were higher than the value claimed for tax purposes. PG&E spent millions to defeat the initiative (SMUD is barred by law from campaigning for expansion rights), but had it passed, the court might well have used the tax value in setting compensation. It doesn't appear that PG&E has made any contributions to Yes on 98 though.

Proposition 99 would prevent the taking of owner-occupied homes through eminent domain actions. If both Propositions 98 and 99 pass, the initiative passing with more votes would prevail. So Proposition 99 is a safety. Were Proposition 98 to pass (which seems increasingly unlikely), a larger number of votes for Proposition 99 would prevent Prop 98 from becoming law. I voted for that one, even though I don't like it. I dislike Prop 98 more.

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