In my most recent blog, I documented the city of Sacramento’s worsening homeless problem, and the inaction by city leaders to get the problem under control.
Now entering the policy void are a troika of left-wing city councilmembers who have put forward a plan called “Sacramento Forward” that would be anything but if enacted.
Among their proposals:
- Requiring that a percentage of new housing units be affordable for low-income households
- Expanding city rent control policies and eviction restrictions
- Mandating that rental housing for sale be sold to a tenant or “eligible community group” if they meet the initial listing price
- Imposing a prevailing wage for publicly-funded building projects
- Placing a measure on the 2024 ballot to fund “the acquisition, construction, and protection of affordable housing units, along with important support programs such as emergency rent assistance.”
Self-described Democratic socialist councilmember Katie Valenzuela told Capital Public Radio of her agenda that, “we can’t continue to focus just on triaging our homelessness crisis . . . this is what moving upstream looks like.”
The reality is that the plan, which recently took its first step forward in the city council’s law and legislation committee, would take Sacramento backwards. Each of these ideas has been tried many times before, and experience has shown that they don’t work and actually will make the problems of housing and homelessness worse.
On rent control, a group of Stanford University researchers found that San Francisco’s rent control ordinance reduced housing supply by 15 percent and saw city rents go up by 5.1 percent. Despite having rent control policies, four of the nation’s most expensive cities to rent – San Jose, San Diego, Los Angeles, and San Francisco – are in California.
Citing Thomas Sowell, who notes that “it becomes very difficult to profit from residential housing in a city with rent control,” PRI’s Kerry Jackson writes that rent control ordinances “keep a city’s housing stock artificially low, which forces home prices to artificially high levels.”
On the push for “affordable housing” building requirements, the nonpartisan Legislative Analyst’s office notes that adding more market rate housing actually increases affordability as “market-rate housing constructed now will . . . add to a community’s stock of lower-cost housing in the future as these new homes age and become more affordable.”
On implementing a prevailing wage for city-funded housing construction projects, Jackson cites data from Beacon Economics showing that imposing a prevailing wage could increase the costs of residential home construction by 46 percent. This type of thinking is why we’re seeing government-funded affordable housing projects cost upwards of $1 million per unit, as we’ve seen under Project Homekey.
Rather than increasing government, Sacramento would be wise to look to free market reforms to increase housing supply and affordability. As outlined in PRI’s brief on California’s housing crisis, “Unaffordable,” reforms worth exploring include increase homebuilding in all value ranges, reforming the California Environmental Quality Act and other laws that frequently act as a roadblock to new construction, streamlining the review process for home construction projects, and revising the practice of assessing fees on new housing projects, the funding of which typically goes for worthwhile spending like education but also add to costs for the renter or buyer.
Upon reviewing the plan, Sacramento councilmember Eric Guerra said, “I want to make sure . . . we are also not creating a scenario that as we’re doing that, we disincentivize the interest in Sacramento people.” He’s rightfully worried that passing the plan as drafted could incentivize building in Roseville, Elk Grove, and Davis – not Sacramento.
If city leaders are serious about wanting to dramatically increase Sacramento’s housing supply, they should look to proven free market ideas and reject failed ideas that will make the problem even worse.
Tim Anaya is the Pacific Research Institute’s vice president of marketing and communications.