Santa Rosa rent control: Sides for and against debate June ballot measure

With less than a month until a June 6 vote in the Sonoma County city of Santa Rosa on rent control, two councilmembers outlined the pros and cons of the issue.

“Action is needed immediately to achieve a fair, affordable and stable community now,” Julie Combs told more than 250 members and guests gathered May 3 for the monthly Sonoma County Alliance meeting. “While Measure C does not build homes, lower rents or house the homeless, it does prevent current residents from being displaced.”

Tom Schwedhelm called Measure C a “distraction.”

“Rent control is too extreme for Santa Rosa and is a distraction from the real problem - building more housing.”

Combs said in 2015 the fastest-rising rents in California were in Santa Rosa and “with a vacancy rate of around 1 percent, we might as well hang a ‘no vacancy’ sign at the city limits.”

Combs noted portions of the proposed law would lift restrictions under certain conditions. It includes a sunset clause, triggered when the apartment vacancy rate rises to 5 percent. And landlords can return to market rate rents between tenants.

What’s more, rent control cannot be applied to new construction projects by state law, the Costa-Hawkins Rental Housing Act. Landlords have a guaranteed fair rate of return on their investment, she said.

Measure C applies just to buildings constructed prior to 1995, which comprises about 20 percent of Santa Rosa’s housing stock.

It is these tenants who reap the benefits of government’s artificial manipulation of the system, without any means of testing to confirm their need of rent-controlled units, Schwedhelm said.

Many assume rent control will assist the lowest income community members. However, since rent controlled units are not managed by the tenant’s ability to pay, someone who could afford to pay market rate may never leave a rent-controlled unit, he said.

“At the end of the day, those who are seeking affordable housing or close to experiencing homelessness are on the outside looking in,” Schwedhelm said.

Combs replied that the current housing market economy doesn’t work for most renters, because there is no place to move. She noted that tenants are spending a higher percentage of their income on rent, leaving less money to spend in the local economy.

“More than half of the renters in Sonoma County are rent stressed with many paying 50 percent of their income on rent, and some paying 75 percent, meaning they can’t afford to live here if their rents climb higher with the market,” she said.

The rent-control ordinance was “carefully crafted to ensure that every Santa Rosan who lives here now and who works hard and plays by the rules can live in an apartment without the specter of unlimited rent increases hanging over their heads,” Combs said.

She pointed to a 2016 University of California, Berkeley, Urban Displacement Project study. It found that cities with rent control have been more stable, have slowed displacement and have protected and preserved their existing community.

“These cities are a testament that rent control works to preserve stability and keep our residents in their homes,” Combs said.

She contended studies support the idea that frequent moves triggered by difficulty in getting housing leads to developmental and health issues for children. Santa Rosa is working to address housing with a five-program and a 24-point Housing Action Plan with a housing-first policy for the city’s homeless. However, she pointed out it will take years for the supply of housing to meet demand.

“Action is needed immediately, not years from now,” she said.

Schwedhelm said with a cap on investment return, landlords have no motivation to keep their properties properly maintained.

“Reduced income received by owners of rental housing results in owners seeking ways to reduce their operating costs, which can result in foregoing maintenance and repairs,” he said.

Schwedhelm also took issue with Measure C’s just-cause eviction section.

It “adds an expensive bureaucratic process for removing problem tenants requiring landlords to provide written cause for termination and provide evidence supporting the eviction action,” he said.

A problem with that is neighbors would have log formal complaints, Schwedhelm said.

“It’s been my experience that most neighbors are not willing to do that for fear of retaliation,” he said.

Measure C’s passage would create a new bureaucracy to manage the ordinance, estimated to cost approximately $1.4 million. The intent is for the annual program fee to cover all the city’s costs. Proposed funding would come from the landlords, and half the fee could be passed on to tenants.

“Unfortunately, how successful has the city been in estimating the costs associated with new projects and programs?” Schwedhelm asked.

Combs argued that there are real economic benefits to be gained from rent control.

“If our average rent is $1,686, and with a 3 percent increase, it would be about $51,” she said about the renter’s share of the fee. “Compare this to unchecked rent increases that would be about $152 in today’s market - savings that could be put back into local businesses by renters, instead of going to apartment owners.”

She explained that it is much more cost-effective to cover the existing 12,000 rentals in the city, which are home to an estimated 25,000 to 40,000 people, than to subsidize building new ones at an estimated cost of $3.6 billion.

“We can’t find that kind of money, nor could we build housing fast enough to alleviate the current crisis, especially not with a projected 51,000 more residents moving into Santa Rosa by 2040,” she said.

Combs acknowledged that some say apartment owners will pull their units off the market if there is rent control. She pointed to Los Angeles, where last year one-10th of 1 percent of rent-controlled units were taken off the market, fewer than 3 percent of those units over the last 15 years.

And in San Francisco last year, 90 percent of the multi-unit apartment buildings bought were rent-controlled, meaning investors are buying them because of their stability, low turnover rates and lower default rates, she said, referencing research by the Harvard Joint Center on Housing.

Schwedhelm countered that the solution is more housing, not rent control, and that the government needs to get out of the way and encourage more development.

This includes improving the permitting system to be efficient and fair, providing time certainty to housing and other development projects, and having appropriate impact fees that encourage building, rather than hindering it