Rent Control in California: Seven Myths and Seven Solutions for Protecting Tenants. Churches in Pasadena favoring rent control

8 May

My husband Anthony and I have been involved with the Pasadena Tenants’ Union‘s efforts to stabilize rents in our City, where skyrocketing rents and rent-gouging have caused displacement and exacerbated our homelessness crisis. The recent homeless count showed that 50% of Pasadenans were forced into homelessness due to high rents. The Pasadena School Board recently voted to support rent control, in part because teachers and staff cannot afford to live in this City. And over fifteen churches  have allowed us to gather signatures from their congregants (see list below).

For the past few weeks, we have been canvassing neighborhoods in Northwest Pasadena, where we have gotten to know our neighbors and their stories.  For the most part, residents enthusiastically support rent control, and for good reason. We’ve seen tenants living in squalor, fearful of asking for needed repairs, lest the landlords raise their rent or evict them. We heard stories of landlords raising rents $500 or even $1000 per month, driving out tenants. We’ve also met compassionate and honest landlords who care about their tenants and treat them fairly. Many of these good landlords have signed our petition. And we have found overwhelming support for rent control in the African American community, since over 24% of this population have been forced to leave the City in the last ten years because of gentrification and rising rents

Despite the obvious need for rent control, there are many myths about it, which this excellent article by Parisa Ijadi-Maghsoodi dispels.

Rent control can help solve California’s housing affordability and homelessness crisis by decreasing displacement and protecting the rights and dignity of working families, the elderly, and long-term tenants. To demystify rent control in California, here are seven rent control myths followed by seven anti-poverty tenant protection ordinances cities can implement. 

By Parisa Ijadi-Maghsoodi / UrbDeZine

Articles and studies from newspapers to academic journals warn the public against the havoc and devastation caused by rent control ordinances. However, it is not tenants and community-based organizations that are funding these articles and studies, it is real estate investors, developers, and corporate apartment owner associations. For decades, tenants and community-based organizations across California have worked tirelessly to enact rent control ordinances to decrease displacement and protect the rights and dignity of working families, the elderly, and long-term tenants. Tenant advocates continue to direct their limited resources to local initiatives and ballot measures, not to fund studies, articles, and lawsuits.

Myth 1: Rent control is illegal.

Fact: Rent control is legal and an effective tool to address housing affordability.

California state law does not prohibit the enactment of new rent control ordinances.  Since 1976, California courts have upheld rent control ordinances. When a rent control ordinance is challenged, courts analyze the ordinance to determine if it is “reasonably calculated to eliminate excessive rents and at the same time provide landlords with a just and reasonable return on their property.”

Since 2016, rent control ordinances have been successfully enacted in Richmond and Mountain View, and rent control campaigns are underway in Long Beach, Glendale, Santa Cruz, Pasadena, San Diego, Inglewood, Sacramento, Santa Rosa, and Concord.

Despite the clear legal standard, investors, real estate developers, and corporate apartment owner associations file lawsuits each year challenging the constitutionality of rent control ordinances. In 2016 and 2017, the California Apartment Association filed challenges to new rent control ordinances in Richmond and Mountain View. In an attempt to avoid a decrease in profits, property owners sought a restraining order to prevent the new Richmond ordinance from going into effect. The court denied the restraining order, holding that the harm the corporate apartment owners associations alleged – possible lost profits – was not sufficient. The California Apartment Association dismissed its remaining case against Richmond’s rent control ordinance. Both lawsuits were unsuccessful. Tenants in both cities are benefiting from rent control ordinances while corporate apartment owners and their investors continue to receive a fair return on investment.

Tenants and community-based organizations across California are effectively utilizing rent control against increasing housing instability caused by the lack of affordable housing and the loss of redevelopment agencies and to prevent tenant displacement posed by new commercial and corporate development in cities likeInglewood.

 Myth 2: Rent control decreases the housing stock by disincentivizing new housing construction.

 Fact: Rent control has no impact on new construction because it does not apply to new construction.

State law prohibits rent control ordinances from applying to new housing units and requires rent control ordinances include vacancy decontrol. Rent control does not disincentivize new housing construction because new construction is not covered by rent control. Arguments against rent control on grounds that it disincentivizes building are legally inaccurate, misleading, and meritless. Nevertheless, real estate investors, developers, and corporate apartment owner associations continue to propagate this argument. The enactment and enforcement of rent control ordinances have no impact on development. In fact, the law banning vacancy control and rent control from applying to new construction, the 1995 Costa Hawkins Rental Housing Act, was a political compromise reached by the wealthy developers and investors who continue to propagate the myth that rent control has a chilling effect on new development.

While rent control does not have a chilling effect on new construction, it does have a chilling effect on the ability of real estate investors, developers, and corporate apartment owner associations to gouge hard-working families, the elderly, and others who rely on the rental market. Rent control allows corporate apartment owners and their investors to receive a fair return on investment, not a windfall in profits.

In cities that enacted rent control in the 1970s and 1980s, units constructed over the last thirty to forty years have been exempt from rent control, and cities with more recently enacted rent control ordinances exempt units constructed in the last 20 years:

  • Los Angeles exempted from rent control are structures built after 1978 (L.A.M.C. Section 151.28)
  • San Francisco exempts structures built after 1979 (S.F. Administrative Code Ch. 37A)
  • Berkeley exempts units built after 1980 (B.M.C. Section 13.76.050)
  • Richmond exempts units constructed after 1995 (R.M.C. Section 11.100.070)
  • Mountain View exempts units constructed after 1995 (C.S.F.R.A. Section 1720)
  • East Palo Alto exempts units constructed after 1988 (E.P.A. Mun. Code Ch. 14.04)
  • Oakland exempts units constructed after 1983 (O.M.C. Section 8.22.070)

Myth 3: Rent control causes the rental stock to decrease because rent control units will be converted to condominiums.

Fact: Ordinances restricting condominium conversions protect the stock of rental units under rent control.

The loss of all rental units through condominium conversions is not the inevitable, impending consequence of rent control, despite the argument put forth by real estate investors, developers, and corporate apartment owner associations.

Cities have the power to enact ordinances restricting condominium conversions. Limiting condominium conversions effectively prevents the removal of rental units under rent control from the rental market. Cities across the State of California have enacted and enforced condominium conversion ordinances to maintain a stock of rental units. These ordinances effectively recognize the need of century-old apartment complex owners to sell units when the cost of maintaining or upgrading an entire apartment complex becomes unsustainable while protecting the rental housing stock.

Note that there is no standard definition of a condominium conversion. Despite the common use of the phrase, converting a rental unit to a condominium is not a simple, overnight process that has the power to decimate the rental housing stock the moment a rent control ordinance is enacted. Instead, to convert a multi-unit rental complex into individually owned condominiums, a complex legal process must be followed. In addition to abiding by local ordinances, the process requires, at a minimum, providing tenants with notice of certain protections including the right to purchase, obtaining state approval to market residential units, a recording of a declaration of conditions, covenants, and restrictions, a recording of the subdivision or parcel map for purposes of creating a condominium, a recording of the condominium plan, and the conveyance of the unit.

Myth 4: Rent control hurts tenants.

Fact: Rent control helps tenants. Rent control studies are funded by real estate developments, investors, and corporate apartment owner associations, and their own data supports the effectiveness of rent control.

A recent rent control study released in October 2017 found that rent control in San Francisco caused a $2.1 billion net benefit to tenants with tenants aged 40-65 benefitting most from rent control. The study which is a Working Paper of the NBER Real Estate Institute, incorporated in 1920 with $116 million in assets and 2017 corporate sponsors AIG, ExxonMobil, Goldman Sachs, Vanguard, and JP Morgan Chase, concluded that rent control destroys rental housing stock and causes gentrification. Another study, prepared for the California Apartment Association, concluded that rent control laws make low-income residents worse off and argue for a free market approach to addressing the growing housing affordability crisis.

The NBER study focused on San Francisco’s limited rent control ordinance which is applicable to apartment units constructed before 1980. In its analysis, the authors found that as of 2017, more of the half-century-old units under rent control had been converted to condominiums than the newly constructed units not under rent control, resulting in a $5 billion loss to the rental housing market. However, not only were all of the units under rent control built more than a half-century ago, each unit was part of an apartment complex, adding to the cost of maintenance and upgrades, and increasing the likelihood of condominium conversion. If the age of the buildings under rent control were accounted for in the context of conversions, the tenant gain would be greater than $7.1 billion, creating a net gain to tenants of more than $2.1 billion.

Building upon this finding, the authors conclude that the characteristic of rent control, rather than the characteristic of building age or the need for a stronger condominium conversion ordinance, was the factor that caused the condominium conversions. Since condominium conversions can lead to displacement and gentrification, the authors took their findings a step further and declared that rent control was the cause of gentrification in San Francisco. However, the lack of affordable units is the factor at play in displacement, not local rent control ordinances. Without rent control, low-income, long-term tenants would have been displaced sooner and in greater numbers.

For the rest of this article see https://sandiegofreepress.org/2018/03/rent-control-in-california-seven-myths-and-seven-solutions-for-protecting-tenants/

 

Here’s a list of the all the churches that so far have had tables to receive signatures after church-I thank God for these open doors. Let pay that the Catholic Churches will also see the value and open their doors.

  • New Revelation
  • Scott United Methodist
  • First United Methodist
  • First Presbyterian
  • Refuge Christian Center
  • Lincoln Ave Christian Church
  • Pasadena Church
  • Metropolitan Baptist Church
  • Bethel New Life
  • Bethel Church
  • Bethleham Church of God
  • Zion AME
  • Frist AME
  • Zion Star
  • New Macedonia Missionary Baptist
  • Morning Star Baptist

 

To God be the glory!! Jill

 

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