Why California’s Legislature should kill rent control bill
California voters made their views on rent control clear last November when they rejected Proposition 10 by nearly 20 percentage points.
While Californians face an unprecedented housing crisis, they understood that rent control doesn’t work. Period. Instead, it discourages development that’s essential for bringing down housing prices.
Apparently Gov. Gavin Newsom and Assemblyman David Chiu, D- San Francisco, didn’t get the message.
Newsom on Wednesday reiterated his support for Chiu’s AB 1482, which for the next three years would limit annual rent increases to 7% plus inflation.
The governor also voiced support for stronger tenant protections than the bill’s current language provides. Chiu’s bill already includes a “just cause” provision, requiring landlords to provide a reason for evicting tenants, and only exempts rental units built in the last 10 years.
Chiu’s legislation passed the Assembly in April and is scheduled to go before the Senate Appropriations Committee.
The state Senate should heed the will of voters and kill the bill. Lawmakers should instead focus on doing everything possible to increase the supply of housing. That remains the most effective method of easing high housing costs.
Newsom told the Los Angeles Times on Wednesday that he hoped the legislation would avoid the potential for another rent control ballot initiative in 2020. The better way to accomplish that goal would be to use his platform to inform Californians on the shortcomings of rent control.
The goal of protecting lowincome tenants from greedy landlords is worthy. Rent gouging must be stopped. But rent control has been demonstrated time and again to come up short as a solution to skyrocketing rents.
Most economists agree that rent controls discourage developers from building new projects. The independent state Legislative Analyst’s Office agrees. When it reviewed Prop. 10, it concluded that the initiative would not “increase the supply of housing and, in fact, likely would discourage new construction.”
The state Department of Finance reported in July that the number of approved building permits in the first five months of 2019 had dropped 12.2% from the same period in 2018. And permits for apartments and other multifamily units had decreased by a troubling 42.2% compared with last year.
This despite the governor’s declaration that solving the state’s housing crisis is his top priority. Newsom set a goal in January of adding 3.5 million new units by 2025, which would require a statewide construction rate five times higher than today.
California simply cannot afford to take action that would further slow housing construction.