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The Troubles With Rent Control

Santa Cruz is facing a potential ordinance on the ballot this November that proposes rent control and just-cause eviction measures in the city. Trouble is, the way the ordinance has been written, these measures would do more harm than good, in many cases harming the very people they were designed to protect. And there is no changing the ordinance now that it has been drafted into its final form for petition.

There is no question we are in the midst of a dire housing crisis that is driving everyday people out of the area. Our well-meaning civic leaders have recognized this crisis and have responded to it, but if you pay attention to what has already happened in other Bay Area communities who tried rent control, there are many grim examples of how it backfired with unintended consequences.

One of the key factors missing in the ordinance is any type of “means testing” to confirm whether the person living in the rent-controlled unit is the rightful beneficiary of below-market rent. Consider the judge in San Francisco who was still in law school back when his apartment became rent controlled.

He now earns a comfortable six-figure salary and still enjoys low-cost housing with no incentive to move out, while there are poor families on the street—far more deserving of such assistance—who could really use such a break but have none.

The proposed just-cause eviction measures in Santa Cruz would disallow property owners to ask a tenant to move out unless they meet one of 12 narrowly defined valid reasons (spoiler alert: the end of the lease, even a month-to-month lease, is not one of the valid reasons). And one rule in particular, designed to protect those age 62+ or handicapped with lifetime tenancy, is already backfiring as middle-aged or disabled renters looking for a place to live are now worried that it will become difficult to find rental housing if the ordinance passes, since home-owners will not want to create a situation where they cannot move back into their homes.

In response to the rent freeze passed in February, multiple housing providers took immediate steps to withdraw their homes from the rental market to put the properties up for sale as owner-occupant residences. Under the just-cause eviction rules, both the old and the new owners have to certify that the home will not be rented out again for the next 10 years unless first offered back to the displaced tenants at the same rent they were paying, even if the home is substantially remodeled. Where are those displaced tenants going to live for the next 10 years?

Realistic projections put the annual costs of administering this kind of program in the millions of dollars. As I see it, the biggest trouble with the proposed rent control ordinance is that not one dollar of those millions will be spent to provide even a single home for the homeless or a single unit of housing for the low-income members of our community. And frankly, if we are going to spend that kind of money, I for one would rather see it go to a program that could provide that kind of housing.

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