Rent Control Under Fire In California
A California ballot initiative heading to voters in June could bring an end to the state's rent control laws.
"In the spring, voters will decide whose interests prevail. More than 100 owners and operators of apartment buildings and mobile home parks spent nearly $2 million to put an initiative on the June 3 ballot to phase out California's rent control laws. About 1.2 million people statewide are covered by such laws."
"Los Angeles, which has 626,600 rent-controlled residential units, could be affected more than any other city if the measure passes."
"Big financial backers of the California Property Owners and Farmland Protection Act include the Howard Jarvis Taxpayers Assn., which gave $100,000 to the effort and lent the campaign $200,000; the Western Manufactured Housing Communities Issues political action committee, which contributed $150,000; and the Apartment Owners Assn. PAC, which put in $100,000."
"Proponents tout the measure as one that would limit government's use of eminent domain, preventing the taking of private property for private development. Although that is the first provision of the measure, it goes on to phase out rent control. Opponents have dubbed the measure the "Hidden Agenda Scheme," in part because rent control is not mentioned in the ballot title."
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Pitting one tenant against the other.
The article inadvertantly points out one of the biggest unintended consequences of (and argument against) rent control, one tenant is in effect subsidizes the other. Elisena pays rent that has never increased more than 4% a year. However, in reality, there's no actual cap on operating expenses for the landlord. So, if expenses go up more than 4% per year, to earn an equivalent return, the landlord has to raise Mary's rent to cover both Mary's increased expenses and Elisena's increased expeneses above her limited rent increases. Mary's rent will go up more than it otherwise would have as she now has to cover two people's costs, so she is in effect subsidizing Elisena's rent. So Mary is going to get the boot so Elisena can enjoy a cheap place to live. Way to go unintended consequences.
I'm no fan of rent control (obviosuly), but I do think a sneaky line item hidden in an eminent domain ballot initiative smells funny. If there's anyone out there from Mass, is that how the end of rent control there came about? I remember it was a state law, but i don't recall if was soemthing relatively sneaky like this or more open.
(edited for snarky tone)