San Francisco skyline seen from Alamo Square.
Rents are too damn high in most major American cities. In New York, Washington, and Boston the extortionate cost of housing is a key driver of the cost of living. But none of those places can match the San Francisco metro area for the sheer terror that the rental real-estate market inspires, where just getting the keys to an apartment can easily cost five figures.
California housing costs are astronomical, higher on average than any state except Hawaii. The Bay Area is the epicenter of the U.S. housing crisis, and the latest response to that predicament is a slew of rent-control ballot initiatives.
Rent control rarely finds favor with economists or the real-estate industry: They complain it drives down construction starts and property tax revenues and leads to deterioration of existing properties. But rent control is the all the rage again since California has utterly failed to come to grips with its acute housing shortage, especially along the coast.
Waiting for market responses is not an option for a family or an individual staring at a median rent of $3,510 for a one-bedroom apartment in San Francisco or $2,280 in San Jose. Rent-control measures surged onto the books in the 1970s and 1980s in a number of California cities and towns, only to flame out and get replaced—after a major lobbying effort by the real-estate lobby—by draconian statewide prohibitions against strict controls on price increases.
Rent-control battles are now under way in five cities that ring San Francisco: Alameda, Mountain View, and Richmond voters will consider rent-control measures in November. Tenant advocates in Burlingame and San Mateo are waiting to find out if they collected enough verifiable signatures to get their initiatives before voters.
In California, the term “rent control” is a misnomer. What these measures aim to implement is not so much rent control (the rent cannot change) as rent stabilization (the rent can increase, but only by a specified amount, such the rate of inflation.)
Overall, the measures aim to cover as many units as possible. Burlingame, where the monthly rent for a studio apartment can run up to $3,000, has a unique situation: For starters, the city’s ballot question aims to repeal a 1988 ordinance that prohibited the establishment of rent control. Initiatives in Alameda and Richmond—both working-class cities—would roll back rents (to May and July 2015 levels, respectively), cap them, and set up rental commissions, as well as create “just cause” eviction frameworks that would restrict the reasons landlords can use to evict a tenant.
The Richmond ordinance alone would cover 10,000 units, covering an estimated 20,000 residents, according to Tenants Together, a statewide tenant advocacy group.
Rent-control measures may be popular, but municipal leaders, not surprisingly, are not immune to strong-arming by real-estate industry groups, which wield considerable influence in most municipalities on matters from zoning to campaign contributions. The Richmond ordinance is up for a second go-round: City councilors initially passed a measure, and then repealed it after the California Apartment Association, the state’s strongest rent-control opponent, launched a signature-gathering effort designed to compel city councilors to seek a referendum.
The California Apartment Association takes the classic stance that “rent control is as damaging to renters as it is to rental property owners.” It has aggressively moved against at least two of the ballot initiatives. In Richmond, two measures will appear on the ballot; one backed by the association and one by Tenants Together. (The group received reports that the association paid its signature-gatherers $20 per signature.)
In Alameda, voters will consider three separate rent control questions, one backed by the association, one by Tenants Together, and one by the city council. Mountain View voters may also see a second ballot question on rent control.
Tenant advocates remain cautious about the outcomes of these initiatives. Multiple ballot questions on the same issue will undoubtedly sow confusion in the affected communities. In Burlingame, Cindy Cornell of Burlingame Advocates for Tenant Protections notes that although more than 50 percent of the city’s residents are renters, many of them are international H-1B visa holders or workers from other states who are ineligible to vote in California.
One answer to an overheated housing market is simple: Build more housing at price points that low-income and middle-income people can afford. With companies streaming into the region, new housing starts should be part of a multi-pronged plan of attack on high housing costs. But without a plan, there can be no attack: Since 2010, San Mateo County, where Burlingame is located, has added nearly 55,000 jobs, but only about 2,150 new housing units.
Building more housing runs smack into some of the most powerful forces known to humankind: NIMBY-fueled zoning regulations and the people who insist on them. California cities and towns have managed to stave off increased density, school-aged children, renters, and other perceived threats to a community’s existence with ordinances designed to discourage or prohibit the construction of housing that the vast majority of everyday people can afford.
Rent control may be an imperfect response, but it has energized Bay Area residents. The real challenge they confront, however, isn’t local, but rather, the state’s restrictions on rent control—specifically, the Costa-Hawkins Rental Housing Act. The 1995 law effectively exempts single-family homes, condominiums, and any dwelling built after 1995 from rent control. The law also prohibits cities and towns from updating ordinances passed before 1995 to cover more units. State lawmakers managed to fight off real-estate industry attempts to get the law passed for almost a decade. But after the bill’s legislative opponents moved on, industry supporters were finally able to get the measure passed.
“It’s been a long time since there’s been a grassroots tenant movement in California that could even be mass mobilized to target the state level,” says Aimee Inglis, the acting director of Tenants Together. “They have been organizing in their cities … to do statewide strategy and change the Costa-Hawkins Act,” she says.
Deeper engagement with the economic challenges posed by high housing costs will require policy coordination between residents, politicians, and business and industry leaders. Rent control may be illogical in the world of economics, but in the world of $3,500 apartments, it is a lifeline. “People keep hoping it’s going to change,” says Cornell of the housing crisis. “We just don’t see any change happening; it’s just getting worse.”
Article source: http://prospect.org/article/bay-area-voters-take-rent-control
