As with many cities across California, Santa Rosa is struggling with a housing crisis conceived by a paucity of home construction, soaring rents and a negligible vacancy rate. It’s also fueled by reports of property owners going to deplorable extremes to evict tenants or to jack up rents to levels that have forced many low-income and fixed-income residents to look elsewhere in a competitive rental market or to leave town. But Santa Rosa is among just a handful of cities that’s seeking the most heavy-handed of solutions — the adoption of rent control.
Until recently, only about a dozen of the 482 cities and towns in the state had resorted to taking this drastic step. In response to the current housing crunch, five Bay Area communities went to voters in November seeking adoption of rent control. Three of these measures failed (Burlingame, San Mateo and Alameda) while two succeeded (Mountain View and Richmond).
Now all eyes are on Santa Rosa where on June 6 voters will be deciding on Measure C, a rent stabilization ordinance adopted by a divided City Council in August. The Press Democrat recommends a no vote. Here’s why.
First, rent control is poor housing policy. The overwhelming majority of economists support that view with their research. Rent control tends to benefit a select few — those with the good fortune to be renting a covered apartment when it takes effect. But many times those who benefit are not the ones cities hope to assist.
As with most rent control ordinances, Measure C seeks to help low-income residents by capping rent increases at 3 percent a year. But such limits tend to have the opposite effect, especially in California where under state law Measure C would only apply to apartment units built prior to 1995. Research shows rent-control actually discourages mobility, keeping middle-income families from moving up to newer housing units that they otherwise could afford, thus reducing the units available to low-income renters. As Chris Thornberg, founding partner of Los Angeles- based Beacon Economics, told a Santa Rosa crowd at the time rent control was first discussed 18 months ago, “It’s a terrible idea.”
Second, given that Measure C would only apply to units built more than 22 years ago, it’s like having a stop sign that only applies to older cars. It creates an unlevel playing field for property owners, potentially depressing the values of older complexes while discouraging major capital improvements such as new roofs or seismic upgrades. To relocate tenants for such major projects, property owners would be required to pay tenants three months of rent plus an additional $1,500. Thus, for each $1,500-a-month apartment, a property owner would have to pay $6,000 on top of the cost of the upgrades themselves and the loss of rental income.
Third, Measure C also comes with a “just-cause eviction” provision that would make it more difficult for landlords to remove problem tenants, meaning they will likely be less willing to accept low-income tenants, especially those with Section 8 housing vouchers. This would no doubt have a chilling effect on the city’s ongoing efforts to get more of its homeless population off the streets.
Finally, there is no real sunset clause with Measure C. The ordinance calls for the City Council to reconsider the law if the city’s vacancy rate increases above 5 percent for 12 months. But nobody seems to remember a time when that has occurred, although vacancies reached 5 percent for a brief period some 12 years ago.