Rent Control – A Counterproductive Public Policy

By Metro Chamber|June 6, 2018|Advocacy|

A charter amendment has been proposed for the November ballot that would impose rent control in Sacramento and create a new appointed board and bureaucracy to oversee rental units in our region’s urban core. These would be some of the most restrictive rent controls in the country.

It is understandable to initially believe that “rent control” would help stabilize the price of housing. In reality, it actually does the opposite. It further restricts supply which is the primary cause of the increasing cost of housing in the Sacramento region.

Rent control is an artificial mechanism that will have real and significant negative consequences. It does nothing to address the real reasons low-income workers and even the middle-class can’t afford housing in our area, the lack of sufficient affordable housing supply. It does exactly the opposite.  It adds one more hurdle to the solution.

Evidence clearly indicates that adoption of a rent control mechanism will hurt the very people it is meant to help, as it will discourage the development and construction of additional new rental housing units that are vital for our City to meet a growing demand.

Multiple studies, including those recently presented by the Urban Land Institute, demonstrate that rent control drove the cost of housing in San Francisco up by an increase of 5.1 percent and decreased the availability of rental housing by 6 percent. In a survey of economists, an overwhelming 98 percent agreed that rent control had a negative influence on San Francisco’s affordable housing. In 2015, The Economist published evidence that rent-controlled apartments were actually occupied by higher median income tenants.

To drive economic prosperity, create jobs, and grow our economy, our attention, energy, and actions should be focused on fostering a thriving business climate and ultimately building vibrant and healthy communities with a robust and diverse workforce. We need to build competitive advantages; not impose restrictions.

Instead of pursuing additional barriers to increase housing supply and density, we call on City leadership (not just in Sacramento, but throughout the region) to actively pursue initiatives that will build both the housing and commerce we need to strengthen our region’s urban core and provide meaningful employment opportunities throughout the region:

  1. We must create predictability in permitting, fees and related processes so builders and businesses can secure the financing they need to increase our housing supply and deliver projects on time and on budget, open new businesses, and create employment opportunities for all.
  2. Our local governments must return to what local government does best – plan for and provide the public infrastructure support that connects our neighborhoods, our jobs, and our communities to each other and to the world. Infrastructure is the platform upon which strong and healthy communities and economies are built, including the roads and rail, pipes and fiber that are vital to new housing and jobs development.
  3. Every municipality in our region should be focused on developing and enacting creative solutions for the land parcels that could, or should, be activated for new rental housing units, housing density, and business centers. A few such ideas are: the entitlement of specific plans for designated parcels; the incorporation of specific goals related to housing during general plan updates; and, giving consideration of key updates to master EIR’s that decrease cost, increase predictability, and minimize the uncertainty of CEQA lawsuits that are so prevalent on urban infill and density proposals.

The Metro Chamber has long been a leader and convener in advocating for and supporting regional economic success, embracing innovation and economic evolution, and supporting organic job and business growth in the region.

At a time when we are just beginning to recover economically, and housing starts for affordable and rental units are just starting to accelerate to meet demands (as discussed in the two-part series we have published here in our E-news from our policy partners titled Housing Matters), adoption of any form of rent control will move us backward and jeopardize the momentum or region is experiencing.  Instead, we must embrace innovation and economic evolution to pursue a comprehensive approach to increasing both market rate and subsidized affordable housing.

Action Requested: Please join us as in the following action steps:

  1. Do not participate, support or sign the signature campaign being led to put rent control on the November ballot.
  2. Educate your friends, coworkers, neighbors, and employees on the negative economic impact rent control will have on our community.
  3. Contact your local elected officials and encourage them to oppose rent control policies, and instead, support creative solutions that help us build housing inventory. We need a dynamic and robust business environment, we need healthy communities, and to achieve those goals we need to make it easier to start a business, build a business, build our workforce, and build housing to meet our communities’ needs.

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