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News + PoliticsHousingBig Real Estate wants to prevent effective rent control—and is pushing SF...

Big Real Estate wants to prevent effective rent control—and is pushing SF supes

Showdown looms next week on state ballot measure that would let local government regulate rents on new housing and vacant apartments.

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The Big Real Estate lobby, with the support of California Yimby, is going to great lengths to defeat a measure that would allow effective rent control in California—including a lobbying campaign to stop the SF Board of Supes from endorsing the measure.

At the center of the local effort is Sup. Catherine Stefani, who this week tried to block a normally routine effort by the supes to endorse the state bill.

Stefani, who spoke against the repeal of the Costa-Hawkins Act, was the beneficiary of an $329,000 in an independent expenditure campaign funded entirely by the biggest real estate interests in the state in her state Assembly primary, public records show.

Supervisor Catherine Stefani is running for state Assembly with big real estate money—and trying to kill a rent-control bill

A group called Housing Providers for Responsible Solutions spent that money on research, polling, and mailers supporting Stefani. You can see the disclosures here.

All of the money for the IE came from the California Apartment Association, the Association of Realtors, and the Building Industry Association.

David Lee, her primary opponent who will also be on the November ballot, told me he supports the repeal of Costa-Hawkins, as does every tenant organization in California.

Costa-Hawkins bars local government from imposing rent controls on vacant apartments, or single-family houses, or any housing built after 1979.

California Yimby takes the line we have heard from big landlords for decades: If there’s rent control, nobody will build new housing. In an analysis that is almost two weird to believe, the group says that rent control is responsible for bad housing conditions in Mumbai—which has nothing in common with the housing market in California.

Effective rent control, which includes controls on vacant apartments, starts with the concept that landlords should be allowed what the courts have called “a reasonable return on investment.” That means they should be allowed to charge enough to pay for construction, maintenance, and other costs, and make a reasonable profit.

They should not be allowed to make the maximum possible money by squeezing renters.

The concept is that housing should be treated as a public good, and regulated like a public utility (although not like PG&E).

When Berkeley, West Hollywood, and Santa Monica had rent controls that applied to vacant apartments, landlords didn’t abandon buildings and allow the cities to collapse into blight.

The reason that nobody built new housing in the 1980s in places like San Francisco and Berkeley had nothing to do with rent control. It was simple capitalism: The rate of return on offices was higher than on housing. (And of course, if the argument is that landlords mush be able to charge the highest possible rents if they are going to build, it undermines the essential Yimby argument that more market-rate housing will bring down prices.)

But the myth that rent control prevents housing still drives the discussion. It’s important to remember that the folks who are funding this are not organizations that work for more affordable housing; they are Big Real Estate operations that make more money when tenants have to pay higher rent.

A group of some of the city’s biggest real estate interests has written a letter to the supes opposing the idea that San Francisco should support a measure that simply allows cities to pass rent control that works in their jurisdiction.

That’s the way it was in California until 1995. Cities did not fall into ruin.

In fact, very few cities actually passed local laws that allowed rent controls on vacant apartments. San Francisco did not.

But maybe in the future it would, the landlords say:

The implementation of vacancy control as would be enabled by the passage of the Justice for Renters Act and supported in this resolution would fully derail San Francisco’s efforts and its mandate to meet its housing production goals, and would undermine the recent, commendable efforts that San Francisco has made to streamline housing production at all income levels while creating an environment where capital is attracted to investing in San Francisco mixed-income housing projects.

The passage of JFRA would effectively eliminate any financial incentive to invest in new housing production in San Francisco, and make moot the city’s efforts to meet its mandate to add 82,000 new units of housing by 2031, thus jeopardizing hundreds of millions of dollars in state funding for affordable housing and transit.

Been there, heard that. It was never true. The reason the city will never meet its mandate to add 82,000 new units of housing is because developers aren’t making enough money on residential construction. Every new unit in the city is now exempt from rent control. And yet: Hardly any new housing.

The letter was signed by:

Janan New and Charley Goss, San Francisco Apartment Association; Chris Wright and Wade Rose, Advance SF; Jim Wunderman, Bay Area Council; David Harrison, Building Owners and Managers Association San Francisco; Corey Smith, Housing Action Coalition; Mary Jung and Jay Cheng, San Francisco Association of Realtors; Daniel Herzstein, San Francisco Chamber of Commerce; Mike Grisso, Kilroy Realty Corporation; Eric Tao, L37 Developmen; Ross Edwards, Build Group; Oz Erickson and Marc Babsin, Emerald Fund; Chris Rivielle, Plant Construction; Dan Safier and Craig Greenwood, Prado Group; Cyrus Sanandaji, Presidio Bay Ventures;Bill Witte, Related California; Greg Vilkin, The BayLands Company; Maggie Kadin, Tishman Speyer; Michael Covarrubias, TMG Partners; Matt Rossie, Webcor Builders; Christopher Meany, Wilson Meany

You can see what we have here: Big landlords and developers against rent control.

The supes will consider the measure again next Tuesday.  

48 Hills welcomes comments in the form of letters to the editor, which you can submit here. We also invite you to join the conversation on our FacebookTwitter, and Instagram

Tim Redmond
Tim Redmond
Tim Redmond has been a political and investigative reporter in San Francisco for more than 30 years. He spent much of that time as executive editor of the Bay Guardian. He is the founder of 48hills.

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