Regulating rents is but one tool, but it is too useful not to use it.
OPPONENTS of rent control have made three broad statements:
• It won’t create additional affordable housing.
• It would lead to fewer housing units being built.
• It has led to disastrous results where it’s been used.
Let’s look at each:
Affordable housing is not created neither through rent control nor through the marketplace. Rent control preserves affordable housing; it is not designed to build new housing. New rental units coming on the market will always rent for more than comparable units already existing in the housing supply because construction, land and finance costs are higher. That is particularly true in a growing economy like Seattle’s.
The critics then argue that apartment construction would shrink with rent controls. Let’s do the numbers: New York City’s two biggest 20th century housing booms occurred under its strictest rent-control policy. In the early 1970s, housing construction fell by 88 percent in New Jersey, but it fell only by 52 percent in cities that enacted rent-control regulations.
Lastly, opponents drag out San Francisco and New York City as the poor victims of rent-control regulations. It’s been repeatedly said that both suffer from some of the highest rents in the nation, which somehow are either the result of rent control or that it has failed to lower rents. Critics argue that if it were not for rent control, more apartments would have been built, keeping rents low.
The fallacy is that it assumes there is a static relationship between supply and demand. That is not true anywhere. Look at the rent increases in four cities last year: San Francisco’s was the highest in the nation, with 14.9 percent, but New York’s was only 2.9 percent; Los Angeles has rent control and Seattle doesn’t, but both had increases of 4.9 percent. Rent control does not shape the housing market’s demand.
The ability to regulate rents in some manner, whether it’s called rent control or rent stabilization — in New York they are different, in Los Angeles they are the same — is just one of many tools to help provide more affordable housing. We need more incentives like zoning laws that require a percentage of new buildings to either include affordable housing or owners must financially contribute to it. We need linkage fees on new construction that would help pay for additional housing. We need more public funds, either through city bonds or levies, devoted to new affordable housing or acquiring existing affordable market-rate housing to preserve it.
Seattle residents and those in other cities should have the right to decide for themselves and not told by state government whether they can regulate rents.”
And lastly, Seattle residents and those in other cities should have the right to decide for themselves and not told by state government whether they can regulate rents in some manner. I wrote legislation, with Councilmember Kshama Sawant as a co-sponsor, to have the City Council go on record asking our state Legislature to lift its current ban on any rental regulations. The legislation will be voted on in Councilmember John Okamoto’s housing committee in September.
The ghoulish specter of rent controls should be confined to pulp fiction. In reality, cities that regulate rents do not have fixed caps on rents. All of the major rent-control programs across the nation have vacancy considerations — rent controls are temporarily removed to allow for further adjustments — and they also have exemptions from rent control for new construction. In many instances, maximum rental rates can exceed the consumer price index, such as in San Jose, where the maximum rate is 8 percent.
Seattle needs to have a serious discussion on how to solve our housing crisis. Just last year, more than 300 tenants faced eviction when their rents were jacked up because their apartments were sold to new owners. If nothing else, numerous studies have shown that rent controls eliminate extreme rent increases during tight housing markets like the one we are having now.
I believe that the council and the mayor will respond to this need, but only if they hear from those affected by this crisis. They must hear the voices of those who are losing their homes and they must recognize that it’s the free market that is not working.
If they want to correct it, then we must do so with a number of different strategies. Regulating rents is but one tool, but it is too useful to keep locked in the shed. We need to break it out. We need to lift the ban on implementing any type of reasonable regulations.