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Tag: rent control

  • GUEST OPINION: Rent control won’t solve housing crisis, but more construction will

    Construction, housing, home, Citrus Heights
    File photo, a new home under construction on Turner Court in Citrus Heights. // CH Sentinel

    By Sacramento County Supervisor Sue Frost—
    California voters went to the polls last November and voted overwhelmingly to reject the Local Rent Control Initiative (Prop 10).  I was one of the only local elected officials in our region who was publicly outspoken in my opposition to Prop 10, and rejoiced when it was defeated. 

    Apparently the issue did not die with Prop 10, because its backers are trying a “redo” in 2020 with a modified version that is just as fundamentally flawed as its predecessor. 

    Sue Frost, supervisor
    Sue Frost

    Due to this, I want to take this opportunity to explain to you the history of rent control in California, how the 2020 version differs from the 2018 version, and why I am vehemently opposed to both versions.

    Put simply, rent control is when the government tells property owners how much rent they can charge each year. Local municipalities were allowed to create any form of rent control they wanted until the state passed the Costa Hawkins Rental Housing Act in 1995, preventing rent control restrictions from applying to single-family homes, condos, or apartment buildings built after 1995.

    Finding these limits too constraining, an effort was made in 2018 in the form of Prop 10 to remove the 1995 law, in a move that would have once again allowed local municipalities, like Citrus Heights, to pass strict rent control measures on new construction. 

    The 2020 proposition is slightly different, in that it allows local municipalities to pass rent control on any building that was built over 15 years ago.  This means that housing constructed in 2020 could have rent control imposed on it in 2035, housing constructed in 2021 could have rent control imposed on it in 2036, and so on.

    Both propositions suffer from the same misguided notion that renters are better off with more rent control.  Economists across the world, as well as anyone with a basic understanding of economics, understand that this is simply not the case. 

    While rent control does help affordability in the short run for current tenants, in the long-run it decreases rent inventory and affordability, fuels gentrification, and creates blight in the surrounding neighborhood.

    Rent control laws massively slow down home building, and in many cases landlords convert their properties to different uses entirely.  The laws of supply and demand would tell you that new housing construction is the key to keeping housing affordable, not rent control.  Supporters of rent control should carefully review the rent control policies in areas like San Francisco and Los Angeles, and seriously ask themselves if they would consider either of those two cities affordable.

    In places where there is a demand for more housing, a more effective policy is to simply build more housing.  Instead of penalizing property owners, we should consider policies that offer tax incentives to property owners who keep rents low.  And we should consider allowing housing projects to get the same environmental exemptions that sports facilities get. 

    I do not have all the answers; however, it is clear to me that we cannot continue to create policies that sound good on paper but actually make the situation significantly worse. 

    Sacramento County Supervisor Sue Frost formerly served as a Citrus Heights councilwoman and currently represents District 4, which includes Citrus Heights. She will be hosting an upcoming community meeting at Citrus Heights City Hall at 6 p.m. on Sept. 16, 2019, and can be contacted at (916) 874-5491, or SupervisorFrost@saccounty.net.

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  • Guest Opinion: Rent control would be bad for Citrus Heights

    Guest opinion by Sacramento County Supervisor Sue Frost–
    It is quite rare to see economists largely agree with each other on governmental policy. While economists are supposed to be non-partisan and purely scientific, that’s not really how it works in practice.

    Sue Frost, supervisor
    Sue Frost

    Often times you can have well-respected economists taking radically different positions on the same subject. So for an issue that has 0% of economists strongly supporting it, according to a University of Chicago business school survey of 40 of America’s leading economic experts, one would think that the concept of rent control would similarly have zero political support. Yet, as you read this, efforts are underway to bring rent control to California, which would directly impact Citrus Heights.

    Rent control can sound good on the surface — rent gets set at a fair price and can only be raised by modest percentages so renters aren’t priced out of their homes with huge rent increases that they cannot afford.

    Proponents will argue that low income families don’t have enough options for where to live as it is, and that having to find a new home can be devastating (in some cases lead to homelessness). But while these proponents are correct, their proposed solution to this growing issue unfortunately magnifies the problem.

    The amount that property owners charge for rent is largely dependent on market forces. If the demand for rooms is low and supply is high, then rents decrease to ensure that owners are able to keep vacancy rates as low as possible. Conversely, if the demand for rooms is high and supply is low (as is the case currently) then the rents increase as more people compete for less units.

    If the government imposes restrictions on property owners and forces them to offer lower rents than the market would otherwise dictate, we see two incredibly negative things immediately happen:

    First, no new housing will be built and in some cases, housing will be torn down and replaced with other uses (like commercial business). By forcing rents below the market price, rent control reduces the profitability of rental housing, directing investment capital out of the rental market and into other more profitable markets. In a situation where there is already a lack of housing options, this is about the worst thing that can happen. If the quantity of housing options does not keep pace with population increases, the problem is greatly exacerbated.

    Second, due to diminishing profits for property owners and an increase in demand, they are no longer financially able to perform proper upkeep of the property or to quickly respond to requests for repair. The quality of the properties quickly decline and that is not a positive thing for the renter, or for the community of Citrus Heights who has to live with deteriorating buildings in their neighborhood.

    In places where there is demand for more housing, a more effective policy is to simply build more housing. The challenge then becomes how to reduce the cost of construction, where to site the housing, and how to implement affordable housing programs in a way that works for the neighboring communities.

    But in order to keep our housing affordable, we can’t create policies that sound good on paper but make the situation worse – we have to come up with long term solutions if we ever want to fix things.

    Sacramento County Supervisor Sue Frost formerly served as a Citrus Heights councilwoman and currently represents District 4, which includes Citrus Heights. She can be contacted at (916) 874-5491, or SupervisorFrost@saccounty.net.

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