Counterpoint: Rent Control Would Do Major Harm to Sacramento’s Future

Back Commentary Jun 11, 2018 By Patrick Stelmach

This is the counterpoint in a point/counterpoint on rent control. The point, “Sacramento Needs Rent Control,” can be found here.

We are in the midst of a serious housing shortage in Sacramento. Many residents are struggling to find homes and apartments, and families are under financial stress. The reason for this alarming crisis is simple: We aren’t building enough housing, and demand exceeds supply in every category.

One oft-looked-to solution is rent control. We need greater housing affordability. But the rent control measure being proposed for the November ballot in the City of Sacramento would only make the situation worse. Under rent control, few, if any, new apartments would be available.

Related: Sacramento Needs Rent Control

Related: The State’s Most Controversial Housing Bill in Years Just Died

Rent control discourages owners from maintaining and improving their property and discourages builders from building more housing units — and drives them to make investments elsewhere. Renters, like me, would be stuck in our old apartments with virtually no choices to move within Midtown or downtown. Construction sites would be deserted, and more buildings would fall into disrepair and decay.

Economists agree that rent control leads to a decline in the quantity and quality of housing. A 2017 study by Stanford University economists found that rent control in San Francisco actually led to an increase in overall rents as the supply of rental housing declined. If that happened here, many residents would be forced to move out of the area. Such an outcome could have a chilling effect on our local economy and the renaissance of our urban core — just as Sacramento is finally developing a vibrant cultural, food and music scene, and just as we are becoming a place where young people can build their lives in a desirable urban landscape.

I fear that the energetic momentum of Sacramento’s infill communities could grind to a halt. New development projects could stop and proposed projects could be delayed. I would hate to see a situation in which we still have the Golden 1 Center and a few bars and restaurants, but with many dilapidated buildings on K Street and in the R Street corridor.  

When new employers evaluate relocating to Sacramento’s urban core, they could discover that their employees can’t find housing in Midtown and downtown. Meanwhile, more commuters and longer commutes could exacerbate traffic congestion, suburban sprawl and vehicle pollution. That might spur a building boom in West Sacramento, Roseville, Rancho Cordova and elsewhere, but it would be bad news for Sacramento.

Currently, I live in a two-bedroom, two-bath apartment in a Victorian house in the Alkali Flat neighborhood in downtown. It includes free parking and the rent is affordable with roommates. But in response to the threat of rent control, my landlord could raise my rent immediately by as much as $600 per month, disregarding the fine print in the initiative, which calls for rents to be set at February 2018 levels. If the measure passes, it would be difficult for me to find another apartment as the supply of rental housing would decline. Vacancies of apartments in Midtown and downtown are already extremely low, at less than 3 percent. If I had to move, I would likely only be able to find comparable rent in places like Arden, Rosemont and Orangevale.

There would be many other unintended consequences. What about a black market in illegal subleases? With no other apartments available, renters could be tempted to cash in by subletting their apartments and charging a premium far above their rent to another subtenant. Or more rentals converging to create neighborhoods of short-term lodging like Airbnb, so property owners can avoid rent control all together. And what about the impact of a newly-elected Rent Board, which would set its own pay, hire its own staff and be free to take campaign contributions from special interests?

Everyone deserves decent, affordable housing. We have a homelessness crisis in Sacramento that will only be made worse if the supply of affordable housing continues to decline, as it would under rent control. We need housing. We need more affordable housing.

The solution is more building, creating a greater supply of affordable housing and more future development opportunities. Rent control would throw up a barrier to our continued progress as a place where all residents can thrive. We must reject such a future. If this ill-conceived ballot measure qualifies for the November ballot, we must vote to defeat it and find a better solution to provide housing for all.

Comments

Deniece Ross-Francom (not verified)June 12, 2018 - 8:09am

great article! The rent control proponents keep saying their initiative will create more affordable housing, but there's no factual basis for that belief. Lowering the prices won't create more homes, only building will do that. They're ignoring the law of supply & demand - the less supply, the higher the demand, the more prices rise. Increase the supply, prices drop. The one aspect Patrick didn't address is this version of rent control wouldn't just help the lower income residents struggling to pay rent, it would also subsidize tenants in high end apartments, that makes no sense. Let's focus our time, energy & money on the solution - building more housing, including affordable housing.

Marty (not verified)June 12, 2018 - 9:14am

This is spot on! We do need to build more housing and that's where the focus should be. Not on creating a Rent Board, who can set their own pay, benefits and pensions and cost tax payers over $5 million. That wasn't mentioned, but is part of the rent control initiative and would be a complete waste of tax payer dollars and take us in the wrong direction. No to Rent Control. Yes to more housing.

Sue Frost (not verified)June 13, 2018 - 8:43pm

Rent control puts a lid on earnings and ultimately drives values down. It would make affordable housing more difficult to construct in California. Sure... It’s great for the person in the unit now, but why would anyone want to leave a rent control unit? I'm guessing they would stay even after they don't need that much space. Rent control discourages new construction and makes it more difficult to upgrade or modernized because it puts a lid on what investor can make on that property. How can investors afford to reinvest if their revenues are low? They will go where there is profit.
AND... The whole idea of a Rent Board, which can set its own pay, benefits and pensions, will probably cost $5 million a year and add about 20 new city employees who are not subject to a code of ethics or transparency requirements. NOT GOOD. NO ON RENT CONTROL!

VisitorPaula Swayne (not verified)June 15, 2018 - 11:06am

On the face of it, who wouldn't want to keep rents low? However, this initiative is not the solution. Beyond the comments above, it requires "Just Cause" evictions. That includes the inability of the owner/landlord to evict bad tenants...and did we mention that the landlord/owner would have to pay a minimum of $5,500 in moving expenses to the tenant? How is that fair? As a good tenant, would you want someone next to you that possibly is loud or smokes (if you are a non-smoker) and they could not be evicted? This affects your lifestyle. We simply need more housing and to encourage investment into Sacramento housing.

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