Commentary: Sacramento Mayor Backs Temporary Rent Control – Should We?

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On Tuesday, Sacramento Mayor Darrell Steinberg supported a temporary rent control measure.  In a blog entry (here), he made it “clear that I do not favor permanent rent control…”  Instead, he argued that “building more affordable units is the only successful long-term strategy to stabilize rents and provide quality housing for Sacramentans at all income levels.”

He also argued that “permanent or onerous regulation could stifle the incentive to build more housing.”

At the same time, he recognizes that “the path to new supply won’t produce results for years.”

He asks: “How do we help the tens of thousands of people and families who can’t afford to wait? How do we address the plight of real people who are one rent hike away from losing their homes?”

The mayor writes: “Sacramento’s rent trends are troubling. In 2017, renters in our city experienced an average increase of 9 percent, the highest year-to-year increase in the country.

“Too many people in our community struggle under an excessive rent burden. Among Sacramento’s 95,000 renter households, 49,167 spend more than 30 percent of their income on rent. More than 26,200 of these people pay the landlord more than half of what they earn.”

The focus in Davis has been on providing sufficient housing to meet the increased demand from students due to UC Davis enrollment increases, as well as the pent up demand from the lack of new housing built in the city for the last 15-plus years.

However, affordability is an issue in the city of Davis.

While Davis has fared better than other UC communities, the cost of housing on campus is prohibitive.  Many have held up on-campus housing as a solution to the housing shortage, and yet recent studies show that not only is on-campus housing about 60 percent more expensive than off-campus housing, they also show UC Davis is both more expensive than the average UC campus and has the second worst disparity.

We have not dipped enough into the issue of affordable housing.  UC Davis has commissioned its own affordable housing task force, and we expect to have those results within the next two weeks.  Already, Don Gibson of the Graduate Student Association has been leaking out information, at least on issues like housing security.

Last week, at a public comments, he noted that through the Affordable Housing Task Force’s survey, “we estimate that 19 percent of students have some form of housing insecurity.  This includes not being able to pay rent on time, having to move twice within a year, or having to double up rooms because of financial reasons.”

They also estimate that somewhere between seven and nine percent “face some form of homelessness.”

“That doesn’t mean that nine percent of campus is forced to live in tents,” he explained.  “That means that they were forced to be evicted from a room, they were forced to live in shelter, approximately two percent reported living at some point within the last year in a tent, a car, or a building not made for housing.”

Homelessness, he said, is an issue “we can only solve by building more homes.”

In the meantime, Davis City Manager Mike Webb indicated that the city is looking at its affordable housing requirements.  He told the council that the preliminary report is concluded and that they will roll out the findings sometimes this fall.  But a lot of that will focus on the issue of how much the city can require in new projects, not an examination of affordability in general.

This is an issue that is very important, and hasn’t gotten near enough coverage.

We have focused on increasing supply because I think most people across the board agree that the lack of available housing is driving a lot of these problems.  It is what is increasing density.

Don Gibson pointed out last week, “Even though the total number of units in the city hasn’t increased, you’re having greater and greater density.  Now it’s regular for students to double up in rooms because of high demand.”

Supply remains an issue.  Already, 3000 beds that were approved at Lincoln40 and Nishi are tied up in litigation.  The Davis Live apartments may soon join them.  That would mean about 3500 of nearly 4200 beds approved in the last 18 months would be tied up in litigation.

Others have argued that we have a lack of rental housing for families.  That is certainly an issue that we have yet to address.  One of the problems is the high cost of housing for two- and three-bedroom apartments.  When you are having to pay on average $2000 to $2400 per month for an apartment, is it cost effective for families to live here?

Students have an advantage.  They can split the rent.  If the rent is too high, they can double up in rooms, even if that is not the optimal arrangement.

There have been scattered pushes and discussions about things like rent control, but, for the most part, the issues in Davis have focused on addressing supply needs.  What we have not addressed at all is cost.  As soon as we move away from student housing, cost is going to become the most overwhelming issue.

—David M. Greenwald reporting


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About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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20 thoughts on “Commentary: Sacramento Mayor Backs Temporary Rent Control – Should We?”

    1. Keith O

      I agree.  My daughter lived in campus housing her first year at UCD and had to share an apartment  with 6 students.  They all had doubled up bedrooms.  That was how UCD assigned it.  If it wasn’t a problem then, 1998, why is it considered a problem now?

      I think we all know the answer to that, because it helps in driving the “we’re in a crisis” agenda.

      1. Ken A

        I’m sorry to hear about Keith’s daughter’s living situation at UCD (hopefully she at least had better bike racks then the ones proposed for the new “Davis Live” property”).  Maybe Davis can think about a parcel tax that can help avoid the horror of sharing a room that Keith’s daughter experienced (and maybe a second parcel tax could help every kid in town get an iPhoneX)…

        1. John Hobbs

          Those were great times, no cell phones, no personal computers, plenty of available classes. You should write a history for the kids graduating now  $150k+ in debt, no hope of home ownership and a kleptocracy trying to insure their continuing servitude.

  1. Ken A

    It is interesting that people so often go to “rent” control, but not price controls on other things that have gone up even more like health care, tuition, books, and hard to get “craft” beers.  Another option would be for the city to flip a coin and decide if they want landlords or business owners to take a hit and have heads “rent control” or tails “every employee in town gets a $1/hr raise”…

  2. Ron

    Renters will always be the ones most vulnerable to increasing housing prices.  That’s a primary reason why people buy houses, instead of renting.  (At least, those who are able to do so.)

    As prices increase, Affordable housing and rent control are essentially the only real leverage available to renters. That’s why we’re witnessing the efforts described in the article, in Sacramento.

    Regarding mini-dorms conversions, nothing will stop that for houses close to UCD.  Regardless of what’s built on campus or in the city, mini-dorms will continue to have the cheapest rent, the ability to choose one’s own roommates, and no on-site landlord to deal with.

  3. Wesley Sagewalker

    Rent control, in attempting to solve one problem, creates several more–like an economic hydra. Rent control provides temporary price relief for current renters by mortgaging the welfare of future renters in several ways. First, it creates strong disincentives for landlords to maintain the existing housing stock. Second, it creates large discrete price increases for future renters in order for landlords to earn a reasonable rate of return for their capital investments. These large discrete price jumps distort the housing market to make length of tenancy the operative rationing scheme. Most people, I think, would regard this as a rather inefficient rationing scheme versus allowing prices coordinate supply and demand.  Creating a system that subsidizes long-term tenants via the young and recently arrived to Sacramento is not a rationing system that has any particular ethical or practical appeal in my opinion. Third, it reduces the potential supply of future housing by making the returns for capital lower than they otherwise would be. If Sacramento (or Davis) thinks the available housing stock isn’t increasing fast enough as it is, wait until they implement a policy that depresses the rate of return for capital even further.

    Sacramento/Davis’ housing shortage is the result of decades of failure to permit a sufficient increase in the supply coupled with an ever-increasing stream of regulations and mandates. Some of these, undoubtedly, are socially beneficial, but it also cannot be denied that they collectively have also increased costs and pushed up the cost of rent to ensure capital allocated to housing receives an appropriate level of return. If we want things like higher environmental standards, project labor agreements, and additional safety features (which is a perfectly reasonable position to hold), then we have to accept that rent will go up. Capital only flows into projects with sufficient returns. If we increase the costs of building, then we also increase the rent. Similarly, if we prohibit an increase in supply while we are simultaneously experiencing an increase in demand, then prices will obviously increase.

    This is a problem that has been created over decades. Short term fixes will have unintended consequences which are socially detrimental. Real solutions require time, governments committed to increasing the housing supply, and a revisiting of what mandates and regulations truly provide more social benefit than the costs they impose.

    1. Richard McCann

      Setting those higher standards is not the reason for the majority of the rising rents in Davis–it’s the opposition to building any new housing, and using the “it isn’t perfect” argument as a cover for opposition.

      1. Ron

        Richard:  How would that apply, regarding Sacramento’s rising rents (which has experienced some of the fastest-rising rents in the nation) and efforts to implement rent control, there – as described in the article above?

        Is it your belief that the “slow-growthers” are causing this to occur in Sacramento, as well?

    2. Wesley Sagewalker

      Richard, I fully agree that the majority of the increase in rents is due to suppressed supply coupled with rising demand. A lot of the papers I have read looking at the situation put most of the increase in prices due to insufficient supply.

  4. Alan Miller

    Davis have focused on addressing supply needs.  What we have not addressed at all is cost.

    As supply addresses cost, that is ludicrous.   I believe what you are saying is “we” have not addressed (mandated) subsidy.

  5. Mark Orewyler

    Many comments about the woes of student housing but few comments about the “average Joe/Jane” who works and also wants to live in Davis but has been completely priced out of both the Davis rental and home ownership housing market due to the extremely high cost. As everyone already knows, this is not only a local problem but mostly, a statewide problem. We are at the height of the worst housing crisis that California has ever known. Build more housing NOW! Don’t delay. We also must change our mindset regarding density, go vertical, let go of the suburban one or two story suburban model that promotes more and more land consumption.

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