Though arguably not the bellwether state it once was, California’s policy issues are still of interest. Case in point: Proposition 10, which would repeal a state law that preempts cities from expanding rent control. (Here’s the report on Prop. 10 from the Legislative Analyst’s Office.)
In Governing magazine, Ryan Bourne and Vanessa Brown Calder, both with the Cato Institute, write, of a renewed interest in rent control.
After most states passed laws blocking rent control in the 1980s and ’90s, there’s now a push to reintroduce it from coast to coast.
Californians will be voting Tuesday on a ballot measure that would repeal a state law prohibiting cities from expanding rent control. In Illinois, the state legislature is contemplating eliminating a ban on rent control and creating six boards to manage rents statewide. Meanwhile, the New York city council is considering a potentially unconstitutional commercial rent-control proposal that would limit property owners’ ability to increase rents for office, industrial and retail space.
This resurgence comes in the face of escalating pressure to “do something” about sharply rising rents in urban areas. Yet economists of all political persuasions are highly skeptical that rent controls can be successfully re-imagined. Indeed, it is difficult to think of another policy where conservative economist Thomas Sowell, who once observed that “the goals of rent control and its actual consequences are at opposite poles,” can agree with liberal economist Paul Krugman.
Those who follow Seattle politics will be familiar with the rent control retread. As Seattle Met reported last February, a Seattle-backed proposal failed in the Legislature. Supporters, however, remained upbeat.
State representative Nicole Macri’s bill that would have repealed the ban on rent control died in committee on Friday.
Activists who want to see rent control enacted in Seattle packed the public hearing last month, optimistic that a Democratic majority in both the House and Senate gave them a better chance this year. State law currently makes it illegal for local jurisdictions to implement rent control.
Still, city officials Monday morning said this year’s attempt showed the movement gained momentum on the state level.
If the idea is gaining momentum, with a new Legislature coming to Olympia in January it may be time to recall what’s wrong with rent control. The Washington Research Council’s 2016 special report on rent control should be kept handy. The WRC wrote,
Economists have identified a number of negative effects stemming from rent control. Residential rent control reduces the supply of rental housing by discouraging new construction and encouraging the conversion of rental units to owner occupancy. It discourages maintenance of rental housing, causing housing stocks to deteriorate. It reduces the property tax base. It lowers tenant mobility, generating mismatches between units and tenants. It discourages densification and lengthens commute times. Within rent controlled cities, local property taxes are shifted away from rental housing onto owner-occupied housing and commercial and industrial properties. Regional and state-wide property taxes are shifted onto property owners outside of the city.
Policymakers have tended to agree [with the economists].
They should continue to do so.
