Rent Control – Temporary or Not – Won’t Bring Down Sacramento’s Housing Costs

Rent Control – Temporary or Not – Won’t Bring Down Sacramento’s Housing Costs

Sacramento Mayor Darrell Steinberg is trying to have his cake and eat it too.

He announced in June that he opposed a local ballot measure being pushed by labor unions and activist groups to impose new rent control restrictions in Sacramento.

That measure, according to the Sacramento Bee, would “cap annual rent increases on older apartments at 5 percent, force landlords to provide financial assistance to tenants evicted for certain reasons, and create a nine-member elected housing board that would set maximum rent increases each year.”

We might expect such a proposal in Venezuela, not Sacramento.  The measure would infringe upon property rights, essentially legalize squatter’s rights for those about to be evicted and impose mob rule in setting rent prices on people’s private property.

Steinberg should have let his opposition stand, but he unfortunately turned around earlier this month to announce plans for a “temporary rent control” measure.

In a blog post, he said he’s proposing “a temporary, 5 percent cap on annual rent increases that would remain in place for 3 years” and would only apply to older units “so we don’t discourage developers from building new housing.”

There’s no such thing as a temporary tax increase, and there’s no such thing as a temporary law, either.

The Mayor is probably getting heat from activist groups that would otherwise support him, so he’s trying to satisfy them with an alternative.  The alternative needed is to educate these extreme elements that everywhere it’s been tried, rent control increases costs, reduces housing supply, and thwarts housing construction.

Consider:

  • A paper by a group of Stanford researchers found that rent control in San Francisco reduced supply by 15 percent and triggered a 5.1 percent city-wide rent hike.
  • A study by Sacramento State and the Sacramento Regional Research Institute found that rent control policies over two decades cut housing supply by more than 8.7 percent over two decades in Santa Monica and nearly 7.5 percent in Berkeley.
  • Three California rent control cities – Los Angeles, San Francisco, and San Jose – rank among the nation’s top 5 most expensive housing cities.

Steinberg is right that we should make it easier to build new housing.  He has proposed “a series of fee waiver and permit streamlining ideas to make it faster and easier to build more affordable and workforce housing.”  His reforms include some discussed by PRI California scholar Kerry Jackson in his brief Unaffordable, such as reducing permit times, cutting fees, and whacking parking requirements.  These reforms should extend to all housing, not just those types that are politically-favored.

Other reforms suggested by Jackson that Steinberg should consider include letting folks build “granny flats” or second units on their lots, increasing higher-density developments, and ending exclusionary zoning policies that benefit the wealthy.

“We can all agree that City government must do more to enable the private and non-profit sectors to build – and to do so without years of unnecessary delay,” Steinberg concludes.

He’s right.  Sacramento and other cities must cut ordinances, bureaucracy, and fees that thwart local housing construction.  Steinberg should go a step further and demand California Environmental Quality Act reform to eliminate unnecessary hurdles, costs, and delays in housing construction.

At the end of the day, we won’t really solve California’s housing crisis until the burdensome local and state laws that hold up new housing construction are either reformed or repealed.

Tim Anaya is communications director for the Pacific Research Institute.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.