We Get Letters: Bell Gets it Wrong

Dear Editors,

In a recent letter to the editors of Pasadena Now Ryan Bell interprets comments I made about rent control. His fictionalization of my comments warrants correcting.

I said very clearly rent control “will not have any of the purported benefits” proponents allege. Rent control only keeps rents stabilized for those in rent-controlled units, in California apartments built before 1995. For those people, especially those who remain in their rent-controlled units for a long period of time, which many such tenants do, it will be a very nice entitlement in a unit that will deteriorate during their tenancy. For every other renter not in subsidized housing, it will mean rent increases, likely substantial rent increases over time.

We do not need studies to tell us rent control actually pushes rents higher. We only need to look to Santa Monica where rent control has been in place for decades yet its renters enjoy the 5th highest rents in the US, according to rent.com and apartments.com.

But studies also bear this out. In an article for EconLib, an online library of writings from economists, that sought to summarize the findings of economists on rent control, Walter Block notes, “Economists are virtually unanimous in concluding that rent controls are destructive.” He further notes that in a poll of 464 economists in the US, 93 percent agreed “that “a ceiling on rents reduces the quantity and quality of housing available.”

Here is what rent control does accomplish, according to numerous academic studies and published findings:

1. Promotes Condo Conversions-A Stanford University study found that rent control laws caused a 15% reduction in rental supply in San Francisco and a 5.1% citywide rent increase. Diamond, McQuade and Quian in their 2018 study DMQ found “that rent-controlled buildings were 8 percentage points more likely to convert to a condo than buildings in the control group. Consistent with these findings, they find that rent control led to a 15 percentage point decline in the number of renters living in treated buildings and a 25 percentage point reduction in the number of renters living in rent-controlled unit.”
2. Leads to deteriorated rental units-In rent-controlled markets, apartment owners cannot recoup costs related to price increases. To maintain income, apartment owners defer anything that is not required for livability. In his research, economist Paul Niebanck reported that 29 percent of rent-controlled housing in the United States was deteriorated. Only 8 percent of the uncontrolled units were in a state of disrepair.
3. Depresses the construction of rental housing-Investors look for safer investments with a better chance of a return for their investment dollar, even if new units are not covered under rent control provisions. Oregon’s rent control law was designed not to cool construction by exempting new housing for 15 years. Investment in new rental housing still declined 38% following passage of the law.
4. Raises rental costs for everyone not in rent-controlled units-Cities in the US with some form of rent control also have the highest rents in the country. New York is the highest, San Francisco, Oakland and Santa Monica are among the 10 most expensive cities for renters (apartments.com, rent.com, Bloomberg and may others).
5. Create a government bureaucracy answerable to no one-Measure H would put in place an appointed board that can levy taxes on rental units and use the income to pay its own staff and themselves more than $40,000 per year. There is no mechanism to remove members of this board and no oversight from anyone-not voters, not the city council or city manager. Lack of oversight and responsibility is an invitation to corruption.

Without citation, Mr. Bell claims that “report after report affirms that rent control is successful at keeping rents affordable for tenants” the fact is that report after report actually says the opposite. Even reports supporting rent control point to all of the above-mentioned results as negative impacts brought by passage of laws such as Measure H.

While Mr. Bell misrepresented my comments and mischaracterized my meaning, I will say he did get one thing correct: he spelled my name right.

Paul Little
Former Pasadena City Council Member
President and Chief Executive Officer, Pasadena Chamber of Commerce Pasadena single family homeowner (NOT a rental property owner)

Got something to say, email Managing Editor André Coleman, at andrec@pasadenanowmagazine.com