When Minneapolis passed the Midwest’s first $15 minimum wage and St. Paul followed suit a year later, it was a historic victory for workers, especially women and people of color – disproportionately pushed into low-wage jobs. Our movement won against entrenched opposition from the majority of elected officials in both City Halls who spoke generally in favor of $15 per hour minimum wage while doing everything in their power to undermine, delay and confuse its passage.
Now the real gains of $15 are under threat from rising prices of basic goods, medical care, lack of union recognition and rising rents, which have skyrocketed an average of 10% nationally in the last year alone. This is why renters in both cities voted in favor of rent control. To win a strong policy that actually benefits renters, it’s going to take building a relentless movement of union, faith groups, community organizations, working class homeowners and most importantly, renters.
Conceding to the growing movement for rent control, the Minneapolis City Council has launched its own process, which doesn’t even explicitly set the target of strong rent control. It’s currently being guided by councilmembers who openly spoke against strong rent control last summer when they killed the renter-led pathway. The language of “involving all stakeholders” describes a long history of tables packed with corporate and real estate interests, with the goal of a compromise position. At such tables, working-class people are always at the disadvantage.
To win $15, our movement collected 20,000 signatures to put the decision to voters, but the Minneapolis City Council legally doubled down twice to keep $15 an hour off the ballot. The council created the Workplace Advisory Committee (WAC), and we sat on any table, spoke with anyone who was genuinely open to enacting the strongest possible $15 per hour. While the WAC has gone on to lead on a wage theft ordinance and other important proposals, we need to be clear: fifteen was won through a showdown between workers and corporate interests, not a Minneapolis City Hall composed committee.
Corporate interests sat on committees at City Hall to discuss worker’s rights, then turned around, lined up with state-level Republicans and sued the city to stop the implementation of sick time and $15. The same real-estate lobby that opposes almost any pro-renter policy, even the federal eviction ban itself, obviously has no place on a committee to pass rent control.
Minneapolis City Hall will drag its feet and claim it needs more data. This cry has come from councilmembers who ignore the city’s own, University of Minnesota delivered studies on both $15 and rent control. In both cases, the studies showed what working people have said all along: the rent won’t wait.
Some Minneapolis workers are only this year reaching $15 per hour because corporate interests were successful in pressuring City Hall to water it down. Our movement mobilized to the very last vote to defeat further pro-corporate amendments to carve-out industries, leaving workers behind. Without the clarity that our power in the streets needed to counter the big business lobbyists in the backrooms of City Hall, it’s unlikely that we would have won.
Also, St. Paul’s rent control victory offers a powerful lesson for our movement. Mayor Melvin Carter is fighting to gut the policy, approved by a majority of voters, with developer-friendly exemptions. This is contrary to the national momentum behind the renters’ rights movement that has fought back to defeat carve-outs previously won by the landlord lobby, like “vacancy decontrol.” New construction carve-outs are a death blow to strong rent control, incentivizing big developers to bulldoze existing affordable units to skirt rent control mandates.
In Minneapolis, Lake Street and West Broadway Avenue corridors are primed for development over the next several years; without strong rent control, these working-class, historically Black and immigrant neighborhoods are under threat of being quickly priced out. This is why any Minneapolis rent control must be universal, without these corporate carve-outs, and retroactively applied to cut across price fixing.
The most important lesson from the $15 minimum wage campaign in Minneapolis is this: working people cannot limit themselves to what is deemed acceptable by the political establishment and its ties to big business. We need to organize independently around our collective needs to get things done.
Ginger Jentzen is a member of Socialist Alternative and a volunteer organizer with Minneapolis United for Rent Control. Guillermo Lindsay worked in fast-food and played a leading role in the Fight for $15 alongside Centro de Trabajadores Unidos en Lucha (CTUL). Rod Adams is executive director of the New Justice Project and was a lead organizer in the Minneapolis fight for a $15 minimum wage.
I would have thought we’d learned to avoid “bulldoz[ing”] after it was used so disingenuously by the forces of the status quo in 2040 debate.
“Now the real gains of $15 are under threat from rising prices of basic goods…”
Econ 101. Irony is so ironic.
This argument gets a key piece wrong because it relies on out-moded coastal approaches to rent control that are different from what Mayor Carter is proposing. In California and New York City, rent controlled housing was set by a firm date: for California, it’s 1995, and for New York City, it’s 1974. What that means is that, under those rent control policies, there was always a fixed, limited amount of rent controlled housing. Nobody was ever going to make any more. It also meant that the total supply of rent controlled housing in those places shrinks every year. Because of the lack of vacant sites, most new housing developments inherently come at the expense of rent controlled homes. For example, if someone built a 20-unit apartment building on the site of a 4-unit LA “dingbat”, it meant the permanent loss of rent controlled housing, even though it was a net gain of 15 homes.
As the authors of this piece point out, this kind of policy explicitly pits housing supply against affordability, and leads the sort of toxic housing politics that are par for the course in expensive coastal cities. For nearly every new apartment building, housing advocates on the left fight about housing construction, all in the midst of a severe housing shortage and affordability crisis.
This problem is why, instead of a fixed date, almost all newer rent stablization policies, including the proposal from Mayor Carter, use a rolling time window to differentiate between rent controlled and decontrolled housing. In this case, it’s a 15-year window, meaning that any new housing built in Saint Paul would become rent controlled after 15 years on the market. This solves one of the big problems created by California-style rent control policies: each year there’s new rent controlled housing that becomes available, and any new housing built today will, eventually, fall under a rent stablization or rent control policy.
For Mayor Carter’s proposal, specifically, here’s how that would look. Under a 15-year window, there would be about 9,000 uncontrolled apartments, the sum total of everything built in Saint Paul over the last 15 years. (By the way, that number is far too low!) Each year some of them would enter the rent control scheme even as more housing is built. For some context, that’s about 20% of the city’s total stock of 46,000 rented homes.
But, unlike in New York City or California, that 20% number would stay fairly steady as new homes were built and entered into rent control. For example, in 2012 there were 729 apartments built in Saint Paul; these would become rent controlled apartments in 2027. In 2028, there would be 27 new rent controlled homes added, and 412 in 2029, etc. This kind of policy means that building housing is not a zero-sum game, and building new housing does not mean the permanent destruction of rent controlled homes in the city.
The question I have for advocates of strong rent control, like the authors of this piece: without for-profit developers, who is going to build the tens of thousands of new apartments we need in St. Paul and Minneapolis? Without very expensive government intervention, which realistically has to come from the Federal level, the answer is almost surely that nobody will build it.
Without building lots of new homes, a rent control policy will exacerbate the housing shortage, forcing up the costs of owner-occupied homes, and causing escalating pressure on the existing rental housing whose owners will invariably find work-arounds for whatever policy we create. It’s a recipe for importing California-style housing prices to the Twin Cities, and working-class people will pay the price by being forced out of the city and/or left out of the housing market and the equity benefits that come with it.
The differences between the St. Paul model and the coastal models Bill is referring to are deliberate. It’s funny, rent control critics seem to want to play both ends of the stick, they point to failed rent control regimes on the coast when they denounce rent controls, but then denounce the differences between THIS rent control regime and those as if the failed models are better at controlling rent than the new model. In the end, they’ll consider an inherently flawed rent control regime that fails to deliver affordable housing, which is why they’re so opposed to a rent control regime that actually works. In other words: “rent control is an awful idea because it doesn’t work, but this rent is even more awful because it succeeds where the the others didn’t!”
The fundamental flaw that keep appearing among Lindeke’s and his like minded comrades are the persistent references to a defunct assumption that we’re going to build our way into affordable housing. Few models have failed to deliver affordable housing as spectacularly as the growth oriented development model these industry champions have been promoting for decades. Housing costs have doubled and trippled far beyond any other inflationary metric while incomes have remained nearly static over the last several decades.
The myopic reliance on the defunct development model inflicts a form of economic blindness supported by a number of facile assumptions. I think the biggest mistake Lindeke is making here is the assumption that this rent control design will kill ALL development permanently. As if the a few months of canceled permits signals a permanent abandonment of St. Paul. This is a manufactured dilemma organized by an industry that just spent $4 million in a failed attempt to defeat this initiative. No one is actually obligated to join this fantasy, common sense actually dictates the developers will not permanently abandon the State’s second largest and vibrant city simply to protest rent controls. When Lindeke and others ask rent controllers who will build the new stuff, once suspects he’s perfectly aware that same builders throwing tantrums about rent control today will be the developers who build in the future.
In the meantime… St. Paul renters will have the security and stability of affordable rent increases and housing… something that developers NEVER delivered.
Let’s see, pay more for workers the cost of goods goes up. Who would have seen that coming???
Wait, I thought inflation was Uncle Joe’s fault exclusively. I mean I get wanting a multi-purpose bogeyman, but you should at least ATTEMPT to disguise your disingenuousness a little bit.
Biden free money to workers~More cost ti entice workers into workforce~Cost of goods increase
Simple
Sure Greg, let’s stick to the free money for owners, banks, and investors model… that’s never gone wrong.
That’s inflationary as well
“bulldoze existing affordable units” Maybe you ought to think about landlord/slumlord control? You all evidently haven’t seen or don’t care much about the condition of many of these rental properties, or the behavior/life styles of the folks that rent them.
Rent Control = less rental housing construction. That may help renters who currently have a place to live, but it total screws anyone looking for a new apartment.
Look, you’re right, “the rent is too damn high!” But that’s because we have a scarcity of housing. Rent control does not address that scarcity, it increases it. Developers can’t get financing to build in Saint Paul, so our housing stock is not increasing .
It’s a problem for older housing as well. Let’s say you own a duplex that needs a serious energy efficiency upgrade; new windows, insulation, modern furnace. This will save tenants money in the long run (and benefit the rest of us.) How are you going to get it done with a 3% rent increase?
Small landlords will have a much bigger incenive to follow the path of least resistance and let tenants pay for all the energy that the building wastes. Rent control virtually ensures that our aging stock of “naturally occurring affordable housing ” will continue to decay. And it may not save tenants money in the long run.
Good point, it may not just be the rent, what next utilities control? Folks also don’t like to address single family vs apartment living, or how many folks are sharing the rent. Back in the day, had 5 guys sharing a log cabin in eastern Wisconsin to pay the bills on those $1.75 hr construction jobs.
Mnuchin, the Trump Treasury Secretary, came our of the Dubya Bush years and the subprime mortgage crisis that cost many Americans their chance at homeownership with the nickname “Foreclosure King”.
The losses to the housing sector quickly were turned into profits for those who could get their hands on mortgages that could be forced into foreclosure.
The housing sector was looted by Mnuchin and his purchase of IndyMac. Hannity even got into buying up lost homes for speculation. Lots of people with cash swept into the market and took advantage.
[Google]
“As of March 2008, an estimated 8.8 million borrowers – 10.8% of all homeowners – had negative equity in their homes, a number that is believed to have risen to 12 million by November 2008. By September 2010, 23% of all U.S. homes were worth less than the mortgage loan.”
When that much is taken out of a huge sector, the recovery can’t be quick. Billions of losses ruined many lives. Many of those same folks will never recover once they have lost their home.
The rise of rents is a symptom of a sector that was looted by opportunist billionaires and their lesser “millionaire” friends.
Que the supply and demand fantasy’s that have promised but never delivered more affordable housing. Ignore the holes that have always been punched into rent control regimes in the past. etc. etc.
The fact that free market may not provide enough affordable housing (the fact notwithstanding housing is nowhere near a f ree market) supply and demand still drive prices upward.
This piece references the study that CURA produced for the City as if it supports their viewpoint. But in fact, the study was very measured, did not offer any specific recommendation for “hard” or “soft” rent control. Moreover, it explicitly mentioned that some of its conclusions (i.e. that rent control didn’t lead to reduced building) were contingent upon exempting new buildings.
Other than the many misstatements and outright falsehoods. These authors failed to bring to the table any real solutions of providing affordable housing. And why wouldn’t investors and landlords be at the table. They are the ones with the real skin in the game in taking the risk. Renters should be there too. I think we all agree we want our citizens to be in acceptable housing at an affordable price. But what’s their magic solution when you consider the cost of land, building materials, the labor to build these units, permits and taxes? As Mr. Wagner pointed out when I couldn’t forward an apartment, I had roommates for many years.
And before you start pointing fingers at others why don’t they offer their own experience how they provided a living wage and affordable housing to their employees? Instead of telling people what they can do with their hard-earned capital. Why don’t they show a viable plan to get this done? Rent control is not the answer. I have yet to see an example where it’s worked as prescribed. In my view St. Paul did nothing more than make the situation worse by discouraging investors to build additional housing units.
I only hope Minneapolis does not follow in Saint Paul’s footsteps. It was a mistake in Saint Paul, and it would be a mistake in Minneapolis. And by the way the majority of Saint Paul citizens did not vote for rent control. Sure, the measure did pass but by a minority of its citizens.
” These authors failed to bring to the table any real solutions of providing affordable housing. And why wouldn’t investors and landlords be at the table. They are the ones with the real skin in the game in taking the risk. Renters should be there too.”
Yeah, the people paying the rent are always an afterthought… rent control IS the solution or at least part of it.
Make it simple, how does rent control increase housing supply?
Greg, you’re trapped in a circular absurdity that assumes increasing supply is the problem and solution. We’ve been steadily increasing supply for decades and prices and rents just keep increasing along with the new supply.
Rent control, as the very words imply, is NOT a development scheme, it’s mechanism that moves towards affordable housing by limiting rent increases. Obviously development has failed in this regard, so these questions asking how something that’s not designed to promote development… will promote development- simply deny the existence of an affordable housing crises. The myopic insistence the only priority that can possibly matter is whether or not builders, landlords, realtors, investors, etc. etc. are making as much money as they want, is the very engine driving unaffordable housing for decades.
Seriously, what part of “rent control” are people not understanding here? For the first time in decades rent increases will not exceed 3% regardless of development, THAT’S THE OBJECTIVE and unless the Mayor et al find a way to sabotage it that’s what will happen.
As for development: Opponents of this initiative spent millions of dollar trying to defeat it, and threatened all along to take their marbles to a different sand box if it passed. They lost, but they haven’t given up so they’re throwing a tantrum. However I remind everyone that there is NO other sandbox like St. Paul so any developmental vacuum developers leave will be filled by someone, if not the return of developers. You just don’t walk away from the second most populace city in the state with a thriving local economy just because rent is now controlled. And I REMIND everyone again for the umpteenth time that the ordinance allows for exemptions, landlords just have to apply. So if you need a new roof or whatever you can still raise rents if need be, you’ll just have to fill out some paper work.
The core problem is that building and maintaining decent housing costs more than what is affordable. Increasing supply has limits to what it can do to prices. It will never drop it below the costs of providing the product or service. On the flip side, simply capping the price won’t create affordable housing either when the input costs are higher than the potential return relative to other investments; nobody will want to provide that good or service.
The irony is that while it was an effort to create affordable housing, the new rule benefits wealthy renters the most by shielding them from property tax increases. All while providing zero immediate or mid-term relief to those who most need it. It could easily be ten years of 3% rent limits and 7-8% inflation before an apartment that is currently unaffordable becomes considered affordable. If inflation happens to go back down to 3%, then affordability will never happen.
The discussion has nothing to do with the intent of those supporting the rule or developers who opposed it. Intent or motivation aren’t evidence of how something will work. Just the mechanics involved are in question and there are zero reasons to think policies like the one implemented in St. Paul will do what supporters say it is intended to do.
Also, developers don’t care if they build apartments, condos or offices. They will pick the projects that ofter the best return. If condos become significantly more attractive than rentals that is what they will build. This same very fast switch happened in 2008 and it can flip back again on a dime.
Yes, but there is no solution without more supply. I’m not normally a supply sider, but in this case I don’t see how you can ignore the lack of housing units.
It’s really tough to build or own rental property in general. Things break, upgrades are needed. Most small landlords are just getting by and may put a few dollars in their account in a good year. Not so much if a new roof is needed or a major breakdown happens. Limiting the increase in rent, as per the St Paul law does, will decrease the number of units available.
Gerry,
If you need to pay for improvements in St. Paul you can apply for a variance to exceed the 3% cap.
Rules shouldn’t be made that require variances to deal with typical and/or ongoing maintenance issues.
especially when there is zero structure around who should or shouldn’t receive variances that would provide consistency and not make it simply the opinion of the person reviewing the request. It is simply bad governance on every level.
Also, it would seem that the degree to which variances are approved is the degree to which the system is ineffective. Either because they are acknowledging that the 3% isn’t reasonable in the current environment or because it is simply allowing rent to go up faster which, would of course, means it is failing to cap rent increases.
Yes, but you’re not assured of getting your variance. You don’t get it by right. You usually have to borrow to make major repairs or improvements, and the bank won’t even dicuss a loan until you’ve got the variance on paper. How long will that take? How much longer will it take if you screw up the application on the first try? What are the rules? Are you going to need a lawyer to get through this? Will you have to go to a hearing that will be held on a weekday?
Adding complexity to the system disadvantages small landlords and advantages large ones, who can hire professionals to navigate legal complexity and have access to ready capital.
$15.00 per hour was going to cure everything. Not so sure now. Are there places still paying that little? Like Target, Best Buy, Home Depot, etc.?
“When Minneapolis passed the Midwest’s first $15 minimum wage and St. Paul followed suit a year later, it was a historic victory for workers, especially women and people of color – disproportionately pushed into low-wage jobs.”
Who exactly “pushed” these people into low-wage jobs? Please name names.
Dan, John, Bill,
Thanks for you comments but I think Dan sums it up nicely:
“The core problem is that building and maintaining decent housing costs more than what is affordable.”
I hate to say but while this does sum up the problem, it’s NOT the problem Dan refers to. The “core” problem is un-affordable housing and rents that are so high a majority of voters in both of our biggest cities voted to control them. You guys just don’t seem to get that on a fundamental level. You either argue that affordable housing is impossible, or that it’s inevitable, but the truth is it’s neither. The ONLY problem you are willing to recognize is the artificial problem of ensuring sufficient profit for landlords and developers rather than affordable housing, hence it’s no surprise that your narrative has failed to produce affordable housing.
I refer to this as an artificial problem because your comments are based on a collection of bad and unsupported assumptions:
“Rules shouldn’t be made that require variances to deal with typical and/or ongoing maintenance issues.” and “Yes, but you’re not assured of getting your variance.” Well, we all to live with rules and there are no guarantees in life. Up until now no one guaranteed renters affordable rents or predictable rent increases, nor has there ever any variance available for renters to escape rent increases, renters are just expected to live with that. That may not be a problem for YOU, but obviously it’s a problem for a significant number of renters.
As for governance, I would suggest landlords and developers el al focus on implementing this rent control regime rather than repealing it. If you want access to the variances you apply for, make sure you create system that provides them.
However beyond this difference in assumptions and mentalities, you’re both making a bizarre economic and financial assumptions. You’re assuming that despite decades of rent increases and profitability every landlord in the city is on the verge of bankruptcy with crumbling buildings that can’t possibly be repaired without applying for a variance. If these landlords couldn’t keep their properties from collapsing when they were able to raise rent at will, what makes you think they’d fix them without rent control? 3% isn’t an arbitrary number, your assumption that no landlord can live with it, or maintain a building with it, is a specious assumption.
Another specious assumption that your making is that all rent increases are driven by financial necessity rather than profit motive, that’s just plain daft. Do I really have to explain how something like gentrification works? An uptown landlord raising rent in their 90 year old apartment is cashing in on the fact that brand new units renting for hundreds of dollars more just opened up two blocks away. That’s not about paying for a new roof or boiler. This is how new development has actually been driving rents up rather than down. This is where the rent control connects with living wages policy.
Business interests almost always claim narrow “margins” prevent them from paying higher wages, taxes, or keeping rents low, yet these restaurants and rental properties are obviously lucrative business- we wouldn’t have so many restaurants and rental properties in the first place if the owners were locked into poverty by insufficient “margins”. And you will note that these guys never actually show us how much they’re making. Both $15 minimum wages and 3% rent limits are the product of economic research confirming they’re sustainability.
Finally, back on April 5th Tim Walsh wrote a commentary here in Minnpost that essentially refuted the ongoing claim that 3% rent caps would either make landlording or development impossible.
https://www.minnpost.com/community-voices/2022/04/facts-not-fear-when-it-comes-to-st-paul-rent-stabilization/?hilite=facts+not+fear
It’s time to stop bouncing around in an echo chamber of specious economic assumptions that perpetuate the housing crises. Affordable stable housing and rents won’t depopulate St. Paul or ruin it’s economy… on the contrary. Housing and shelter isn’t just a source of profit, it’s actually a human necessity, you don’t have a sustainable civilization without it. Affordable housing, predictable and stable rent increases, are not only possible, they’re necessary.
I agree that unaffordable housing is the problem we are looking to solve. That isn’t in dispute. The core issue with providing a solution is that even with zero profit for anybody it isn’t possible to use market forces/manipulation to provide housing in a way we have generally defined as affordable. All the discussions around supply & demand or what motivates developers are pointless. Just like more supply can’t drop the price below the cost of creating the product, capping the price won’t lead to affordable products being available. It is the same formula read in opposite directions. It doesn’t add up either way.
The only way to effectively provide affordable housing to those who don’t have the means to pay the market rate is to provide subsidies or directly build public housing. Both have or are being done to some degree already with programs of often dubious design and results. However, that path is still more viable than the current rent control measure that doesn’t even on a theoretical provide much if any benefit. Keep in mind that a 3% rent cap would lead to rents on current units becoming affordable in 10 or more years, at best. Because there isn’t any mechanism to stop new units from being priced as needed to maintain overall profit levels by developers/managers all-new unit rents will have the rent cap baked into the starting rent level or they won’t be built.
Hello Dan,
“The core issue with providing a solution is that even with zero profit for anybody it isn’t possible to use market forces/manipulation to provide housing in a way we have generally defined as affordable.”
I’m afraid your just contradicting yourself, you claim to recognize one “core” problem only to substitute a specious neoliberal market paradox as the REAL problem. Just to recap my responses:
Your market claim simply declares that affordable housing is impossible without subsidies given current market conditions. There are three observations we can make about this claim: 1) It’s not supported by any real data beyond specious claims that emerge from the construction industry. Show us your numbers, don’t just echo “small margin” claims that developers use as an excuse to build expensive housing. 2) If building can’t solve the problem, why do you keep telling us that building is the only possible solution to the problem? Why do you keep telling us we’ll build our way into affordable housing if affordable housing is impossible to build? 3) Rent control isn’t about building new affordable units, which you claim to be impossible anyways. Rent control is about controlling runaway rent hikes that are partially responsible for un-affordable rents. I’ve never seen anyone claim that stabilizing rents and controlling runaway rent hikes is supposed promote new development, and since according to you, new development can’t produce affordable housing anyways, that’s not a rational outcome in any event. Rent control controls rent… hence the term: “rent control”.
Un-affordable housing is a multi-facetted problem. Rent controllers don’t imagine this single policy will be a magic bullet of any kind, it’s just one response to one of the factors that contributes to the crises, but it’s an extremely significant response that delivers the stability free marketeers with simplistic supply and demand models have failed to deliver for decades.
Now we can always go deeper into the weeds on this, but it’s a futile endeavor so long as neoliberals simply refuse to recognize any problem beyond whether or not developers and builders are “properly” incentivized… i.e. making as much money as they want. Look, we can talk subsidies anytime you want but I can tell you because I’ve been there that subsidy talk always crashes when we get to the part where builders don’t get the subsidies they demand. Dude, we’ve been dealing with this your way for 30 years, don’t imagine no one has suggested subsidized development ever before. (It’s not only been suggested, it’s been built!) We start talking about subsidies, developers start blathering about their “margins”, and since they’re private entities we can’t see what their margins really are, and they just keep telling us they’re too small… and round and round we go. Meanwhile, economists tell us that profitable affordable housing can be built even without subsidies. So whatever.
Even if we try to talk about “inventory” it’s funky because we’re not dealing with anything normal people would call an actual housing shortage, we’re dealing with a tight market that the industry maintains in order to sustain price growth. We talk about population growth and pressure but we don’t have refugee camps full of people who want to move here and can’t find a place to live, so there’s this basic disconnect between the population and housing growth projections and “inventory” claims.
So whatever. Rent control is just a piece of this puzzles and it will work in it’s silo. Obviously there are a number of people who are quite willing to let other people live with some degree of crises indefinitely while they themselves marvel at the mysterious workings of the “market”. The majority of voters in St. Paul and MPLS… obviously not so willing and complacent.
I have never claimed that increasing supply will result in affordable housing. Quite the opposite. I have clearly stated the cost to build housing (between $175-$250/sf if livable wages are provided) plus the cost of land, permits, etc for the build, along with property taxes, insurance, and even minimal maintenance ($1/sf), totals more per unit than is affordable by any reasonable definition. I say that not in defense of developers but as an honest acknowledgment of the raw costs involved before landlord/developer profit is considered. Building more supply won’t change that fact, nor will a rent cap. I agree that we can’t supply our way to affordability.
If we set aside the topic of new rental development since you have stated that you are not concerned with any impact the cap might have on future rental stock availability, we can deal directly with how it impacts the affordability of current stock for current renters. The 3% cap does nothing in the short term to help people who need it since the base problem statement is rent currently isn’t affordable. It would take 10 years or more of the lowest wage earners’ wages go up by 6% or more to make a meaningful portion of the current rental stock affordable. Based on 1/3rd of income and current average rent prices. That best-case scenario is very unlikely to happen. The 3% cap was based on what was generally regarded as the typical rent increase over the last 10 years or so, which means it wasn’t even designed to make things more affordable. Just limit the rate at which it could potentially get worse. So what happens in the meantime? What is actually being done to deal with the issue? The cap simply assumes renters can hold on for a decade or more while hoping the fundamental economics of the world shift in their favor. Not exactly a plan for success. Add to that the irony that those who will see the largest potential real dollar benefit are wealthy renters.
On top of that, how much change can current property owners effect over that 10-year period to circumvent the restrictions? As you have stated, they are willing to do whatever it takes to protect their margins. It isn’t like they wouldn’t be willing to make changes that remove utilities from the base rent and make individual renters responsible or implement/increase fees for things like parking, laundry, storage, etc. They could even go the route of some places I looked at when living in LA that charged a separate rental fee for appliances like the refrigerator if you didn’t bring your own.
I also never said we should subsidies developers, so I’m not sure why you made that assumption. I would be much more in favor of direct subsidies for people who need them than attempting to “trickle-down” money through second, third, and fourth parties. I truly don’t care about developers or landlords. Your focus on that is simply a distraction while avoiding the real issue.
Child care, education/training, transportation, a slew of other approaches, along with direct monetary support for rent to those who need it, actually address the issue of wealth disparity at the core of the problem. It isn’t sexy, and given the political realities is an ongoing and difficult path. But that doesn’t mean simplistic, easy-sounding solutions will actually work. Capping rent is truly tilting at windmills based on a beilief that stopping the blades from turning will keep the wind from blowing.
Thanks for your lengthy reply Dan,
I’m not sure anyone is still following this thread but I’ll type a quick reply anyways.
I suppose we’re making some progress here in the sense that you now appear to be back-tracking or contradicting most of your previous comments. You now appear to be acknowledging the defunct nature of the supply/demand model of affordable housing when you deny claims that new development will lower rents. You’re denial however is obviously disingenuous, if you don’t expect new development to mitigate un-affordable housing why do keep asking how rent-control will promote development? Likewise, if you don’t want to talk about subsidizing development, why do you keep bring it up?
“I have clearly stated the cost to build housing (between $175-$250/sf if livable wages are provided) …” Actually this is first time you made any of these statements, till this point you’ve just made “narrow margin” claims with no support. Unfortunately your figures here don’t really demonstrate anything therefore your ongoing claim that affordable housing is impossible to produce remains unsubstantiated.
You continue to vacillate around regarding the nature of rent control, it’s function, and it’s effectiveness. This is common among rent-control opponent/critics. Not to be flippant, but again what part of the phrase: “rent control” is confusing? Rent control is about limiting current rent increases, not reducing existing rents; neither myself nor anyone else has claimed otherwise. And again, the benefits of stable, predicable, and affordable rent increases are obvious compared to runaway rent hikes. Obviously interrupting a primary driver of unaffordable rents can help produce more affordable housing.
Look: If rent controls are so easy for landlords to work around, why is the industry so worried about their effect on “margins”? You can’t have it both ways… on one hand claiming that rent control will ruin the business while on the other pointing out how easy it is to circumvent. In any event, you realize that rent control and regulation isn’t locked into it’s current format right? For every action there can be a reaction. If landlords want continue this dance with hidden rent hikes for utilities, parking, etc. they can provoke rent controllers into responses… why do landlords assume everyone is too stupid to recognize what’s they’re doing? And why do they assume that renters are helpless to respond? If the industry wants to escalate the conflict fine, but then they don’t to complain about all the “acrimony” do they?
As for affordable child care, wages, transit, etc… Great, let’s talk; these policies have long been part of the liberal/progressive agenda. Bare in mind, we don’t have to repeal rent control to pursue additional policies, and no one ever claimed that rent control in and of itself is the magic bullet of any kind.