Coming to a Town Near You: Rent Control and Continued Housing Shortages
California decides to steer into the crazy skid: Sacramento adopts local rent control ordinance just as California makes another run at a statewide rent control policy.
Voters handed left-lining tenant groups and politicians a defeat last year with the failure of Proposition 10, a statewide ballot measure that would have allowed cities to expand rent-control policies to more types of housing by repealing the Costa-Hawkins Rental Housing Act. Costa-Hawkins prevents cities from extending rent control to condominiums and townhouses and apartment units built after Feb. 1, 1995. But even with Costa-Hawkins still in effect, some cities are creating new rent-control laws and enacting rent freezes. Meanwhile, rent-control advocates, including the Sacramento chapter of the Alliance of Californians for Community Empowerment (ACCE), the Sacramento Democratic Socialists of America, and Union SEIU Local 1021 are hopeful that the California legislature will approve a bill that would go even further to limit annual rent increases statewide.
The City of Sacramento ordinance would cap annual rent increases for most properties and extend a limited set of eviction protections to tenants across the city. The bill, called the Tenant Protection and Relief Act, would prevent landlords from raising rents in a given year by more than 6 percent plus the Consumer Price Index (CPI), which last year in Sacramento was around 2.5 percent. Regardless of the inflation rate, annual rent increases cannot surpass 10 percent under the law.
The law further limits the property rights of the owners by forcing them to keep current tenants whether they want to or not: Tenants who stay in a certain unit for at least one year will also get new eviction protections as Landlords will be barred from terminating or not renewing leases unless tenants fail to pay their rent or otherwise break the terms of the lease.
City of Sacramento Councilmember Steve Hanson, seemingly oblivious to the chilling effect the new ordinance will have on any new housing construction in the City, stated: “I think we’ve all come to understand that helping tenants who are vulnerable is a very important measure in the interim until we get more supply”. Note to Hanson: taking away any incentive to build or invest in new housing will NEVER get you more of it. Cast your eyes 90 miles to the west and see what draconian rent control and property restrictions have done for housing prices in San Francisco. The only way to bring housing prices down is to increase the supply. ;\