Santa Barbara’s Rent Control Proposal Has Problems

First, do no harm: Were that the steadfast litmus test for all political policies, we’d have far less division in our society. Oftentimes, the initial intentions are sincere, but the advocate’s enthusiasm overshadows the predictable and negative consequences. Yes, I’m talking about the recent local rent control initiative which would be in addition to the statewide law passed back in January.

A legal contract between private entities should remain exactly that, i.e. private. Inserting a one-size-fits-all presence limits the freedom and discretion of both parties and assumes an adversarial relationship. While a sense of protection for the tenant is the intended purpose, these restrictions can be problematic for the number of available rentals and the development of new rental units.

Many small landlords are entertaining the idea of simply liquidating and getting out of the business altogether. Others are deferring cosmetic improvements to their properties as this action would either lengthen the time to recoup their investment or jeopardize their standing with a lending institution. Multi-unit landlords are seeing exorbitant relocation fees required. Still others see difficulty in removing a disruptive tenant for the benefit and quality of life for the other tenants in the complex.

For these private relationships, we have the Rental Housing Mediation Task Force to allow both sides to air grievances without the expense of lawyers and court time. This used to be grant and donation-funded until my council colleagues and I moved to permanently fund staff to assist the broad spectrum of community volunteers who participate in this effort. We saw the value that both landlords and tenants saw. Mediation over legislation. The more arcane the laws, the more expense required. Mediation begins and encourages conversation and solutions. Legislation quashes dialogue and has winners and losers in the outcome. Which of these fits a community like Santa Barbara best?

Lastly, the development of new units requires private sector investment. The state is poised to tell us we need 8,000 new units in the next decade. We average about 150 per year currently. Supply could ease the demand and eventually the pricing of these units, but how do you put these types of limits on investment returns and expect new inventory? There are already too many burdens on new units like the recently enacted 20 percent requirement of “inclusionary” housing for multi-unit developments. If you don’t want to see more supply, then this rent control proposal is your savior. If, on the other hand, you want to see lower rents vis-a-vis increased available inventory, then allow the market to perform. The market always wins in the end, and restrictions will not give you the desired result.

Do no harm, indeed.