Editorials

When it comes to rental costs, Proposition 10 is not the answer. It deserves a no vote

A proposal to bring accountability to the city of Fresno’s permitting and planning processes forced city leaders to take steps to improve the Development and Resource Management Department and improve the city’s business climate.
A proposal to bring accountability to the city of Fresno’s permitting and planning processes forced city leaders to take steps to improve the Development and Resource Management Department and improve the city’s business climate. Fresno Bee file

Picture a young adult, mid-20s, hoping to move out (finally) of her parents’ home. She looks around Fresno for a nice, safe, affordable apartment. She discovers she will need to spend about $800-$1,000 a month for a decent place in a quiet neighborhood.

This is an outrage, she thinks. Somebody should pass a law!

Just not Proposition 10.

Passing Propositon 10 would repeal the Costa-Hawkins Act of 1995, allowing individual cities to impose rent control. Economists agree that rent control does exactly the opposite of what is intended – raising rents and making rentals harder to find.

After rent control in San Francisco, a UC Berkeley study found the number of units fell 15 percent and rents rose 5.1 percent. After some Los Angeles suburbs invoked rent control, the number of units fell 5.9 percent as nearby cities without controls saw an increase.

This is economics 101: Short supply, high demand, higher prices. More units, low demand, lower prices.

Tell a landlord she can’t raise the rent, and repairs will be delayed. With rents locked in place, upgrades never pencil out. Keep rents stagnant as taxes, insurance premiums and utilities rise and landlords will convert apartments into condos, sell them and invest the cash elsewhere.

Those living in rent-controlled apartments, meanwhile, find it difficult to move – they’ll never find rent that low again. So they stay.

Voting yes on Proposition 10 might soothe the outrage felt by writing a $1,200 rent check, but it won’t solve the problem.

“If Prop 10 is passed … it will kill multi-family housing in this state,” said Greg Terzakis, executive director of the California Apartment Association.

As Bay Area rents soar out of reach (a parking space goes for $400), rents in our Valley drift ever higher.

And there are better solutions. Cities that haven’t kept up with demand should to accept their failures and offer building incentives – property tax rebates, discounted loans, streamlined permitting.

Fixing the California Environmental Quality Act “is a great place to start,” said Terzakis. “CEQA has been used as a club by the NIMBYs.” The Legislature carves out exemptions for sports stadiums, so why not housing?

Terzakis cited an abandoned mobile home park in Fresno that took four years to permit for new, low-cost apartments. “The builders were ready, the city wanted it. Why should (CEQA delays) ever happen?”

Proposition 10’s opponents are pushing Proposition 1, a bond to help pay for water and sewer lines, transportation, infill and building near transportation centers. Workable solutions.

In the end, Fresno Mayor Lee Brand believes the market itself will make things right.

“The economics will play themselves out,” said Brand, who runs a property management firm. “You go back to 2008 and we were giving away all kinds of things to get people (into leases). A month’s rent, club memberships, all kinds of things.

“We’re probably in the strongest market I’ve ever seen in Fresno … (In the past) we had to give away rent for free. We’re in a very tight situation right now, but things will change over time. ...We’ve been riding the crest of a wave … but sooner or later, it will crash; things will slow down and prices will drop.”

It is notable that The Mercury News in San Jose, ground zero for soaring rents in California, recommended a note vote to its readers. It said: “Rent control is a feel-good idea. A quick fix to a complicated problem. But it is not very effective at protecting poor or vulnerable tenants. And, more significantly, rent control discourages new rental home construction, the very thing we need to ease the state’s housing crisis.”

Our recommendation: Let market forces take care of rental pricing. Vote no on Proposition 10.

  Comments