Major California cities, San Francisco and Los Angeles in particular, have long had rent control laws. But, in 1995 the state attempted to limit rent control because the unintended consequence of such measures was a housing shortage.
When you limit the income from rental properties, investors and developers have no interest in building more housing. This causes the non-controlled rents to skyrocket, with a shortage. This is a great example of a “feels good” policy that backfires: obtaining a controlled apartment is like winning a lottery, because that’s exactly what landlords resort to when awarding new leases.
Yet, major Democrats in the state support eliminating rent control limitations, immediately after the state legislature rejected meaningful, market-based housing reforms.
There was hope that the state would force cities to allow high-density development near mass transit. Instead, Senate Bill 827 died as the legislators from the most “progressive” communities fought such affordable housing. By forcing cities to abandon zoning restrictions meant to keep out multifamily and affordable housing, the state would have opened the market to meet demand. Instead, well-to-do communities will continue to limit affordable housing through onerous regulations and zoning.
This makes the rent control argument absurd. Instead of building affordable housing the politicians (and voters) want to tell landlords what can be charged. That’s a sure way to limit new development.
From the Los Angeles Times:
Essential California: More rent control, maybe?: Los Angeles Mayor Eric Garcetti said Monday he would “absolutely” consider extending L.A. limits on rent increases to cover newly built apartments, if voters roll back a state law that prohibits it. Garcetti joined tenant and community activists at a news conference outside City Hall to back a proposed ballot initiative that would roll back the Costa-Hawkins Rental Housing Act, which bans cities and counties from capping rent increases on apartments built after 1995.
And from the Sacramento Bee:
BY ANGELA HART
April 23, 2018 02:18 PMCalifornia voters this year will likely decide whether cities across the state should have more power to enact stronger rent control.
Rent control proponents behind a proposed November ballot initiative that would allow cities and counties to pass strong rent control laws say they now have enough signatures to qualify the measure.
“People understand that rents are out of control, that’s why I think you’re seeing this initiative move forward,” said Damien Goodmon, director of the AIDS Healthcare Foundation’s “Housing is a Human Right” campaign.
Funded primarily by the foundation and backed by labor and tenants’ rights groups across California, the initiative seeks to repeal a 1995 state law called the Costa-Hawkins Rental Housing Act. If repealed, cities and counties would be able to strengthen existing rent control policies, or pass new laws that go further than what’s currently allowed.
Politicians are trying to please two groups with conflicting interpretations of what “progressive” means. Eventually, the working class and the educated elites will come into greater conflict and divide California’s Democratic Party.
