The Case for Ending Rent Control

In other words, if rent control were suddenly lifted, some 180,000 rent-controlled units would be thrown into the open market, inevitably lowering overall market rents. To be sure, many tenants with rent-controlled apartments would find their rents greatly increased, and such increases would fall most heavily on those with low or fixed incomes.

But even if San Francisco's rent control laws were simply loosened, so that half of currently rent-controlled units were safeguarded with protective subsidies for elderly, fixed-income, and very low-income people, 90,000 units would flood the rental market immediately, and 90,000 more would follow over time.

This does not mean that 90,000 or 180,000 units would become empty. It does mean rents would probably go up and, then, gradually fall to a market equilibrium. It does mean that some people could no longer afford to live in their apartments, depending upon their relationships with their landlords. But, for tenants as a group, rents would eventually stabilize -- as supply met demand -- at significantly lower market rates than those that prevail today.

Housing experts generally agree that abolishing rent control without encouraging housing starts by other methods would be an act of futility, and that abolishing rent control suddenly would produce unwarranted suffering. Decontrol of rent will work to lower overall rents, they say, but the decontrol should probably be phased in as a significant undersupply of available housing is addressed.

Because of its small land mass, San Francisco is indeed the second most dense city in the country, after New York City. But the notion that there is nowhere to build housing that would meet existing demand again appears to be more a matter of local folklore than empirical fact.

In 1950, the population of San Francisco was 775,000, almost what it is today. And government studies indicate that there is room for expansion of housing stock to fit current demand.

With the defeat of rent control in Cambridge, San Francisco, New York City, Santa Monica, and Berkeley became the last strongholds of stringent rent control in America. In city after city, unbridled rent control has been moderated, toned down, and even eliminated, not because it was accomplishing its purportedly central goal of keeping housing affordable to low-income populations, but because the price controls were ruining housing markets and raising rents for tenants as a whole, most especially for the poor. To be sure, landlords pushed for decontrol. Just as surely, stringent rent control has been the bane of, rather than a boon to, the poor.

This fall, however, San Francisco voters will be considering two electoral initiatives that would make rent control even stricter than it already is. The city's political establishment, meanwhile, is busily not commenting, apparently afraid of electrocution by San Francisco's third political rail, otherwise known as rent control.

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The Mayor's Office of Housing recognizes a need for, at least, 20,000 to 30,000 new rental units in San Francisco. Housing officials have a tentative multiyear plan to subsidize nonprofit developers to build 3,500 units of moderately priced housing, mostly in Mission Bay.

Beyond that, however, the city government has no apparent plan for solving the housing crunch. When contacted over the last several weeks, city housing officials were universally reluctant to take a position for or against continuing rent control and land use restrictions that limit housing construction. Mayor Willie Brown's press spokesperson, for example, commented only that, "The mayor supports the idea of rent control."

In San Francisco, there is obviously tremendous political resistance to asking the question of whether rent control serves its intended purpose.

Calvin Welch, age 56, is the leading political strategist for San Francisco's nonprofit housing developers, who specialize in the construction of housing for those of low and moderate income. As another icon of radical respectability, Welch's claim to fame is his championship of Proposition M in 1986, which put an annual cap on the amount of office space that can be built in San Francisco.

Asserting that the price of rental housing is not affected by supply, Welch unabashedly supports permanent rent controls. He also favors two tenant-inspired ballot initiatives that will go before the voters this fall.

One proposition would strengthen a law limiting the conversion of rented apartments into condominiums, i.e., apartments that are separately owned. The proposed law would make it very difficult for groups of tenants to buy buildings jointly, through an arrangement known as tenancy-in-common. This measure was put on the ballot by the San Francisco Tenants Union, which is concerned that this form of group ownership permanently removes apartments from rent controls.

The other proposition, steered by the Housing Rights Committee, would ban most capital improvement pass-throughs to tenants. This means that landlords would have no financial incentive to fix major problems, like leaky roofs, or shaky foundations, because they could not recoup their costs either by pass-through or a rent increase.

Welch, tenant leaders, and two dozen neighborhood organizations united in an umbrella group called the Coalition for San Francisco Neighborhoods are also working hard to persuade the electorate to kill live-work loft development and further limit office development through a ballot initiative modeled on the original Proposition M.