Sacramento sets back Santa Monica state reps’ bid to expand rent control
By Gary Walker
Santa Monica’s state representative are pushing for greater local control over rent control laws
Rent control advocates are regrouping after suffering defeat in their first attempt to repeal a 1995 state law that they believe has exacerbated both the homeless and housing affordability crises.
Legislation offered by Assemblyman Richard Bloom and state Sen. Ben Allen, both of them Democrats from Santa Monica, would have rescinded the Costa-Hawkins Act, which keeps cities from expanding local rent control ordinances to cover newer buildings. The bill died Jan. 12 in the Assembly Housing and Community Development Committee, with three Democrats in favor, two Republicans against and two Democrats choosing not to vote. It needed four votes to advance.
“Repealing Costa-Hawkins will not lead to rent control statewide. Local governments will be able to make those decisions on their own,” Bloom argued during the hearing, describing the bill as an attempt to mitigate the one-two punch of stagnant wages and increasing rents. “I needn’t remind you that California has one-fifth of the nation’s homeless population.”
But it isn’t just state lawmakers who are wary of letting local jurisdictions tinker with rental housing prices. Some experts argue that rent control helped create the housing affordability crisis, especially in San Francisco, by limiting the production of new housing despite population growth.
“Rent control never, never works,” said Chris Manning, a professor of real estate at Loyola Marymount University’s College of Business Administration. “It actually makes the problem worse. Developers need incentives to build more housing.”
Voters may soon get their say. The Los Angeles-based AIDS Healthcare Foundation is pursuing a statewide ballot initiative to repeal Costa-Hawkins as early as Nov. 6.
Elena Popp of the Los Angeles-based Eviction Defense Network, which is backing the ballot measure, said failing to expand rent control would result in more homeless on the streets of Los Angeles.
“There are studies that tell us that this is happening. It shouldn’t take a rocket scientist to see the connection [between higher rents and homelessness],” said Popp, who testified at the hearing.
Assembly Housing and Community Development Committee Chairman David Chiu (D- San Francisco) said constituents have urged him to help repeal Costa-Hawkins.
“We don’t just have a housing crisis. We have a tenant crisis,” Chiu told the committee. “Tenants are paying as much as one-third of their income for housing in San Francisco,” where the median monthly rent for a one-bedroom apartment has climbed to $3,400.
Chiu, Mark Stone (D- Santa Cruz) and Rob Bonta (D- Alameda) voted for the repeal; Marc Steinorth (R- Rancho Cucamonga) and Steven Choi (R- Irvine) voted against; and Ed Chau (D- Monterey Park) and James Wood (D- Healdsburg) did not attend.
LMU’s Manning likes the idea of local control, but believes repealing Costa-Hawkins would immediately destabilize housing production.
“If they ever repeal it, then developers will not trust any new provision that lawmakers put in place in two or three years,” Manning predicted.
“If cities are permitted to impose rent control on new construction, investors are certain to abandon plans to build in California,” echoes a statement on the Apartment Owners Association of Los Angeles’ website. “Building more housing decreases market pressures and helps moderate rent prices.”
But the status quo is also untenable, Bloom and Allen argue.
“Despite the recent vote on Costa-Hawkins, the issue of housing affordability will persist and grow. Those facing displacement need our help now,” Bloom said. “Going forward, I remain committed to aggressively attacking all aspects of California’s housing crisis.”
“It’s becoming increasingly difficult for people trying to afford to live and stay in our communities, and that impacts our quality of life and long-tern economic health,” said Allen. “If we are going to adequately address our housing crisis, the Legislature needs to consider creative solutions — including thinking about how we might empower local communities.”
gary@argonautnews.com
Rent control is one of those policies that legislators play politics with: the renting public loves it, so politicians promote it. But the fact is — and politicians know — that it ALWAYS constricts rental housing supply. In the end, the public not only has less affordable housing but also less rental housing overall. All studies bear this out. A vote for rent control is a vote for less rental housing. There is no incentive to build new rental units if no one wants to buy them. And no one wants to buy them if they can’t make a return that is better than other (less troublesome) investments. Just look at what rent control has done to the apartment market: landlords are converting rental units into Airbnb hotels. And the rental market gets smaller. Sure, you can crack down on Airbnb hotels, but then landlords legally convert apartment building into condos and sell the units. And the rental market gets even smaller. And if the ballot measure passes, Los Angeles will be able to extend rent control to single family homes (which are currently exempt in L.A.). When that happens the rental housing market will go into shock. You will be able to watch, in real time, as the “For Sale” signs go up on single family homes that were once rentals. And it’s not like they won’t sell to owner-occuping buyers. They will be gone in an instant, because there’s a housing shortage for buyers too. Result: Thousands upon thousands of rental units will simply disappear from the L.A. rental market in a puff of “Closed Escrow” smoke. And they will never come back as long as there is rent control. You can legislate rent control, but you can’t force someone to be a landlord if they don’t want to be. And you can’t stop people from selling their properties. Rent control might have an emotional appeal, but it always produces the opposite of intended results. A vote for rent control is a vote for less rental housing.