EXPANDS LOCAL GOVERNMENTS

Transcription

1 PROPOSITION EXPANDS LOCAL GOVERNMENTS AUTHORITY TO 10 ENACT RENT CONTROL ON RESIDENTIAL PROPERTY. INITIATIVE STATUTE. OFFICIAL TITLE AND SUMMARY PREPARED BY THE ATTORNEY GENERAL The text of this measure can be found on the Secretary of State s website at Repeals state law that currently restricts the scope of rent-control policies that cities and other local jurisdictions may impose. Allows policies that would limit the rental rates that residential-property owners may charge for new tenants, new construction, and single-family homes. In accordance with California law, provides that rent-control policies may not violate landlords right to a fair financial return on their rental property. SUMMARY OF LEGISLATIVE ANALYST S ESTIMATE OF NET STATE AND LOCAL GOVERNMENT FISCAL IMPACT: Potential net reduction in state and local revenues of tens of millions of dollars per year in the long term. Depending on actions by local communities, revenue losses could be less or considerably more. ANALYSIS BY THE LEGISLATIVE ANALYST BACKGROUND Rental Housing Is Expensive in California. Renters in California typically pay 50 percent more for housing than renters in other states. In some parts of the state, rent costs are more than double the national average. Rent is high in California because the state does not have enough housing for everyone who wants to live here. People who want to live here must compete for housing, which increases rents. Several Cities Have Rent Control Laws. Several California cities including Los Angeles, San Francisco, and San Jose have laws that limit how much landlords can increase rents for housing from one year to the next. These laws often are called rent control. About one-fifth of Californians live in cities with rent control. Local rent boards administer rent control. These boards are funded through fees on landlords. Court Rulings Limit Local Rent Control. Courts have ruled that rent control laws must allow landlords to receive a fair rate of return. This means that landlords must be allowed to increase rents enough to receive some profit each year. State Law Limits Local Rent Control. A state law, known as the Costa-Hawkins Rental Housing Act (Costa-Hawkins), limits local rent control laws. Costa-Hawkins creates three main limitations. First, rent control cannot apply to any singlefamily homes. Second, rent control can never apply to any newly built housing completed on or after February 1, Third, rent control laws cannot tell landlords what they can charge a new renter when first moving in. State and Local Government Tax Revenues. Three taxes are the largest sources of tax revenue for the state and local governments in California. The state collects a personal income tax on income including rent received by landlords earned within the state. Local governments levy property taxes on property owners based on the value of their property. The state and local governments collect sales taxes on the retail sale of goods. PROPOSAL Repeals Costa-Hawkins. The measure repeals the limits on local rent control laws in Costa-Hawkins. Under the measure, cities and counties can regulate rents for any housing. They also can limit how much a landlord may increase rents when a new renter moves in. The measure itself does not make any changes to local rent control laws. With a few exceptions, cities and 58 Title and Summary / Analysis

2 EXPANDS LOCAL GOVERNMENTS AUTHORITY TO ENACT RENT CONTROL ON RESIDENTIAL PROPERTY. INITIATIVE STATUTE. PROPOSITION 10 ANALYSIS BY THE LEGISLATIVE ANALYST counties would have to take separate actions to change their local laws. Requires Fair Rate of Return. The measure requires that rent control laws allow landlords a fair rate of return. This puts the results of past court rulings into state law. FISCAL EFFECTS Economic Effects. If communities respond to this measure by expanding their rent control laws, it could lead to several economic effects. The most likely effects are: To avoid rent regulation, some landlords would sell their rental housing to new owners who would live there. The value of rental housing would decline because potential landlords would not want to pay as much for these properties. Some renters would spend less on rent and some landlords would receive less rental income. Some renters would move less often. These effects would depend on how many communities pass new laws, how many properties are covered, and how much rents are limited. Voters in some communities have proposed expanding rent control if this measure passes. If many localities enacted strong rent regulation, other economic effects (such as impacts on housing construction) could occur. Changes in State and Local Revenues. The measure s economic effects would affect property tax, sales tax, and income tax revenues. The largest and most likely impacts are: Less Property Taxes Paid by Landlords. A decline in the value of rental properties would, over several years, lead to a decrease in property tax payments made by owners of those properties. More Sales Taxes Paid by Renters. Renters who pay less in rent would use some of their savings to buy taxable goods. Change in Income Taxes Paid by Landlords. Landlords income tax payments would CONTINUED change in several ways. Some landlords would receive less rental income. This would reduce their income tax payments. On the other hand, over time landlords would pay less to buy rental properties. This would reduce expenses they can claim to lower their income tax payments (such as mortgage interest, property taxes, and depreciation). This would increase their income tax payments. The measure s net effect on income taxes paid by landlords in the long term is not clear. Overall, the measure likely would reduce state and local revenues in the long term, with the largest effect on property taxes. The amount of revenue loss would depend on many factors, most importantly how communities respond to this measure. If several communities expand moderate rent control to cover most of their rental housing, revenue losses could be in the tens of millions of dollars per year. If few communities make changes, revenue losses would be minor. If many communities pass strong rent control, revenue losses could be in the hundreds of millions of dollars per year. Increased Local Government Costs. If cities or counties create new rent control laws or expand existing ones, local rent boards would face increased administrative and regulatory costs. Depending on local government choices, these costs could range from very little to tens of millions of dollars per year. These costs likely would be paid by fees on owners of rental housing. Visit for a list of committees primarily formed to support or oppose this measure. Visit ca.gov/transparency/top contributors/nov-18-gen.html to access the committee s top 10 contributors. If you desire a copy of the full text of the state measure, please call the Secretary of State at (800) 345-VOTE (8683) or you can vigfeedback@sos.ca.gov and a copy will be mailed at no cost to you. Analysis 59

3 PROPOSITION 10 INITIATIVE STATUTE. EXPANDS LOCAL GOVERNMENTS AUTHORITY TO ENACT RENT CONTROL ON RESIDENTIAL PROPERTY. ARGUMENT IN FAVOR OF PROPOSITION 10 The rent is too damn high! Voting YES on Proposition 10 will free our local communities to decide what rent control protections are needed, if any, to tackle the housing crisis. Prop. TEN protects TENants. Too many families spend over half their income on housing. That s simply unacceptable. Living paycheck to paycheck means it s difficult for these families to make ends meet, much less save for an emergency. Seniors on fixed-incomes have less to spend on food and medicine. Many of the people who should be the foundation of our local communities the teachers, nurses and firefighters are forced to move far away from the communities they serve because corporate landlords are doubling or even tripling the rent. With so many families struggling, many are driven to move away from California altogether, leaving jobs, relatives and schools behind. Even worse, many are forced into homelessness and living on the streets. With every 5% rent increase, 2,000 more people are forced out of their homes a devastating blow to them and an even worse homeless problem for California to cope with. Voting YES on Prop. 10 will allow cities that need it to pass laws limiting rent increases. Prop. 10 does NOT mandate rent control. It does NOT force any community to adopt any rent control measures that would not be a good fit for their own housing situation. It does NOT force any one-size-fits-all solutions on any city. Instead, Prop. 10 simply allows communities that are struggling with skyrocketing housing costs to put an annual limit on how much rents can be raised. Communities are free to bring more fairness to housing, ensuring that tenants have protections against huge rent increases, while ensuring that landlords receive a fair rate of return with reasonable yearly increases. Voters have heard a lot of confusing arguments about Proposition 10. Don t believe the attacks. Wall Street corporations like the Donald Trump-linked Blackstone have spent millions of dollars to fight this measure because they are terrified this will cut into the huge profits they make from the thousands of foreclosed homes they buy. They don t care that California families are being crushed by high rent. It s time to take a stand FOR affordable housing and against greedy Wall Street billionaires and corporate landlords by voting YES on Prop. 10. Prop. 10 is a limited measure that answers one question: who decides housing policy local communities or Sacramento special interests and powerful real estate investors? It doesn t establish new housing policies, it just lets local communities which are closer to the people decide what works best for them. It s time we had the power to tackle the problems of homelessness and skyrocketing rent within our own communities. California nurses, teachers, seniors, organized labor, including SEIU State Council, housing advocates, civil rights groups, clergy and faith-based groups and other organizations you trust all urge YES on Proposition 10. Remember, Prop. TEN protects TENants. Get the facts about Proposition 10: ZENEI CORTEZ, Co-President California Nurses Association NAN BRASMER, President California Alliance for Retired Americans ELENA POPP, Executive Director Eviction Defense Network REBUTTAL TO ARGUMENT IN FAVOR OF PROPOSITION 10 PROP. 10 WILL MAKE THE HOUSING CRISIS WORSE, NOT BETTER The sponsors of Prop. 10 want you to believe it will magically solve our housing crisis, but it s badly flawed and will just make the housing crisis worse. Prop. 10: Allows regulation of single family homes Puts bureaucrats in charge of housing decisions Gives as many as 539 rental boards the power to add fees on top of rent Puts taxpayers at risk for millions in legal costs Adds tens of millions in new costs to local governments AFFORDABLE HOUSING LEADERS AGREE: NO ON PROP. 10 Prop. 10 prevents any future statewide housing solutions and handcuffs the legislature and governor from adopting tenant protections. Alice Huffman, President, California State Conference NAACP Prop. 10 does nothing to build new affordable housing that families desperately need. John Gamboa, Co- Founder, The Two Hundred a coalition of 200+ social justice leaders Under Prop. 10, families searching for affordable housing will find themselves with even fewer choices and more expensive housing options. Robert Apodaca, Executive Director, United Latinos Vote For seniors on Social Security and fixed incomes, Prop. 10 could be devastating. Marilyn H. Markham, Board Member, California Senior Advocates League Prop. 10 allows bureaucrats to tell homeowners what they can and cannot do with their own homes. Stephen White, President, California Association of REALTORS Prop. 10 would allow unelected bureaucrats to impose fees on all housing, including single-family homes, with no vote of the people or local elected body. Jon Coupal, President, Howard Jarvis Taxpayers Association Join independents, Democrats, Republicans, renters and homeowners, seniors, taxpayers, and minority groups in voting NO on Prop. 10! ALICE A. HUFFMAN, President California State Conference of the National Association for the Advancement of Colored People (NAACP) BETTY JO TOCCOLI, President California Small Business Association MARILYN H. MARKHAM, Board Member California Senior Advocates League 60 Arguments Arguments printed on this page are the opinions of the authors, and have not been checked for accuracy by any official agency.

4 PROP. 10 IS BADLY FLAWED AND WILL MAKE OUR HOUSING CRISIS WORSE. VOTE NO. PROP. 10: BAD FOR CURRENT AND FUTURE HOMEOWNERS Prop. 10 could hurt homeowners by authorizing a new government bureaucracy that can tell homeowners what they can and cannot do with their own private residence. It could make homes more expensive for future buyers and hurt families trying to purchase their first home. Stephen White, President, California Association of REALTORS PROP. 10: BAD FOR RENTERS Tens of thousands of renters, INCLUDING SENIORS AND OTHERS ON FIXED INCOMES, could be forced out of their apartments and communities under Prop. 10, which allows wealthy corporate landlords to turn apartments into condos and short-term vacation rentals. It will increase the cost of renting and make it even harder to find affordable housing. Alice Huffman, President, California State Conference NAACP NO ON 10 TOO MANY FLAWS: ALLOWS REGULATION OF SINGLE FAMILY HOMES Prop. 10 repeals protections homeowners have enjoyed for over 20 years, and lets the government dictate pricing for privately owned single-family homes, controlling how much homeowners can charge to rent out their home or even just a room. Prop. 10 might even lead to bureaucrats charging homeowners a fee for taking their home off the rental market. PUTS BUREAUCRATS IN CHARGE OF HOUSING Prop. 10 puts as many as 539 rental boards in charge of housing, giving government agencies unlimited power to add fees on housing, ultimately increasing rents and making homes and apartments more expensive. These boards may have unlimited power to set their salaries and benefits, while adding fees to housing that will be passed on to tenants in the form of higher rents. PUTS TAXPAYERS AT RISK FOR MILLIONS IN LEGAL COSTS Don t be fooled by the corporate special interests opposing Proposition 10. If they wanted to help renters afford housing, a basic human need, California wouldn t be in this housing crisis. Follow the money: Wealthy real estate interests, corporate landlords and Wall Street investors have profited from the current system for decades. These big corporations shamelessly double or even triple rent because they can get away with it. They make HUGE PROFITS from the housing crisis they helped create. No wonder they don t want to fix it! Who Supports Prop. 10? Nonprofit organizations, teachers, nurses, retirees, labor, faith-based groups, housing advocates, and California Democratic Party all urge YES because Prop. TEN protects Tenants. Tenants and homeowners should vote YES to keep communities strong. It enables working people teachers, firefighters, long-term care workers, grocery clerks to live in communities they serve, while still affording basic needs like food and childcare. Greedy corporate landlords are forcing too many disabled and seniors on fixedincomes to choose between rent or medicine, and they re forcing more low-income families into homelessness a growing, costly crisis. Prop. 10 doesn t mandate new laws or bureaucracies for ARGUMENT AGAINST PROPOSITION 10 EXPANDS LOCAL GOVERNMENTS AUTHORITY TO ENACT RENT CONTROL ON RESIDENTIAL PROPERTY. INITIATIVE STATUTE. REBUTTAL TO ARGUMENT AGAINST PROPOSITION 10 PROPOSITION 10 If homeowners, tenants or voters challenge the law in court, Prop. 10 requires California taxpayers to pay the sponsors legal bills. Taxpayers could be stuck paying millions of dollars for a poorly drafted and flawed measure. ADDS TENS OF MILLIONS IN NEW COSTS TO LOCAL GOVERNMENTS The state s non-partisan Legislative Analyst says Prop. 10 could increase costs for local governments by tens of millions of dollars per year and cost the state millions more in lost revenue. This could result in less money for schools and emergency services, reduced new home construction, and a loss of thousands of well-paid construction jobs. DRIVES UP THE COST OF EXISTING HOUSING New government fees and regulations will give homeowners a huge financial incentive to convert rental properties into more profitable uses like short-term vacation rentals, increasing the cost of existing housing and making it even harder for renters to find affordable housing in the future. BOTTOM LINE: PROP. 10 HAS TOO MANY FLAWS AND WILL MAKE THE HOUSING CRISIS WORSE. Learn why voters from every political persuasion and corner of California are voting NO on Prop. 10 at American G.I. Forum of California, California Senior Advocates League, California State Conference NAACP, California Association of REALTORS, Family Business Association of California, Howard Jarvis Taxpayers Association, California Chamber of Commerce, California Business Roundtable, United Latinos Vote ALICE A. HUFFMAN, President California State Conference of the National Association for the Advancement of Colored People (NAACP) FREDERICK A. ROMERO, State Commander American G.I. Forum of California STEPHEN WHITE, President California Association of REALTORS any community it just gives YOU, the people, the power to develop rent control policies for YOUR community. People win, not the greedy special interests. The rent is too damn high! YES on TEN to protect Tenants. SUPPORTED BY CALIFORNIA DEMOCRATIC PARTY; California Nurses Association; Housing California; National Urban League; ACLU of California; AIDS Healthcare Foundation; Property Owners for Fair and Affordable Housing; Painters & Allied Trades 36; Service Employees International Union (SEIU); American Federation of State, County and Municipal Employees (AFSCME); Humboldt and Del Norte Counties Central Labor Council AFL-CIO; California Rural Legal Assistance Foundation; Western Center on Law and Poverty; National Action Network-Los Angeles; Central Coast Alliance United for a Sustainable Economy; and tenant organizations throughout the state. ERIC C. HEINS, President California Teachers Association REV. WILLIAM D. SMART, JR., President, Southern Christian Leadership Conference of Southern California ROXANNE SANCHEZ, President SEIU California Arguments printed on this page are the opinions of the authors, and have not been checked for accuracy by any official agency. Arguments 61

5

6

7

8

9

10

11

12 Back to previous page document 1 of 1 Rent control isn't the answer to California's housing crisis, but it could help. Yes on Prop 10 Los Angeles Times (Online), Los Angeles: Tribune Interactive, LLC. Sep 15, Find a copy &volume=&issue=&spage=&au=&isbn=&jtitle=Los+Angeles+Times+%28Online%29&btitle=&rft_id=info:eric/&rft_id=info:doi/ Click here to order Full Text from OCLC ILLiad &rft.volume=&rft.issue=&rft.spage=&rft.title=Los+Angeles+Times+%28Online%29&rft.issn= Abstract None available. In the middle of a housing crisis, California voters are being asked to consider a ballot measure that would, depending on whom you talk to, either keep struggling renters from being kicked to the curb or cause rents to climb even higher. Actually, the reality of Proposition 10 is far less dramatic and more nuanced, and that s one of the reasons The Times editorial board supports it. Proposition 10 would repeal the Costa-Hawkins Rental Housing Act, a 1995 law that restricted cities ability to enact or expand rent control. Costa-Hawkins bars cities from imposing rent control on apartments built after 1995 (or earlier in cities that already had rent control in place), forbids rent control on single-family homes and condominiums, and prohibits vacancy control, which is when a unit s rent stays capped even after the tenant moves out. Under Costa-Hawkins, Los Angeles cannot impose rent control on apartments built after 1978, when the city s rent stabilization ordinance was adopted. For years, tenant advocates have complained that Costa-Hawkins ties the hands of local officials so that they cannot respond when rents and displacement surge in their community. There is no question that California is in a housing affordability crisis; nearly 1 in 3 households statewide spend more than half their income on rent, leaving many families one rent increase or missed paycheck away from losing their homes. And in much of California, rents are rising far faster than incomes. But state lawmakers have repeatedly failed to enact even modest tweaks to Costa-Hawkins that would have given cities the option to prohibit exorbitant rent increases, permanently or temporarily. Frustrated activists are now taking their case to the voters with Proposition 10. The ballot measure would wipe Costa-Hawkins off the books and allow cities and counties to enact rent control measures or not. Fifteen cities across the state currently have some form of rent control. Nobody knows how many other cities would follow suit, or how cities might broaden their existing rent control laws. One possibility some cities have looked at is rolling rent control, which would slowly expand the number of regulated units by applying rent control to apartment buildings as soon as they turn 20 years old. Still, any predictions that Proposition 10 would either save or devastate the housing market are overstated. If passed, the measure would allow local communities to debate and decide what renter protections to adopt, if any. That s important. Although the housing crisis is widespread, each city has its own challenges and needs the flexibility to adopt its own remedies. Opponents argue that rent control has the perverse effect of discouraging the development of new housing, limiting supply and driving up rents. That s the risk, but not necessarily the result. Research has shown that moderate regulations that allow modest rent increases and let landlords raise a unit s rent to the current market rate when the tenant moves out do not stymie housing production. Proposition 10 also would codify what the U.S. Supreme Court has already decided: Landlords have a right to a fair rate of return, which means they must be allowed to raise rents enough to make a profit each year. Granted, if Proposition 10 passes, cities would have the freedom to adopt more stringent rent limits, including vacancy control and rent caps on new construction (though property owners would surely sue). But any measure that takes regulatory power from the state and gives it to local governments carries a similar risk that it would be used unwisely. Enter the Fray: First takes on the news of the minute from L.A. Times Opinion» The root of California s housing crisis is the lack of supply. The state needs to build 1.8 million more homes by 2025 just to keep pace with population growth; it would need 1.7 million new homes on top of that to satisfy pent-up demand and stabilize prices. To even get close to that number would require a building boom unlike any California has seen since the 1960s. In the meantime, cities need to be able to respond to upheaval and suffering caused by rapidly rising rents. Just look at Los Angeles County. In the last few years, a record number of homeless people have been placed into housing, yet there hasn t been a meaningful decrease in people living on the street. Why? Because more people are becoming homeless, often for the first time, because of economic stress, such as rising rent, a lost job or an eviction.

13 Local governments are on the front lines of managing homelessness, displacement and gentrification. They need the ability to stop the bleeding. Proposition 10 would give them an additional option for helping those at risk of losing their homes. Proposition 10 isn t the solution to the state s affordable housing crisis, but it is a valuable tool to manage the consequences. Follow the Opinion section on and Facebook Credit: The Times Editorial Board Copyright Tribune Interactive, LLC Sep 15, 2018 Subject Housing; Rent control; Rents; Economic models; Homeless people Location Los Angeles County California; California; Los Angeles California; United States--US Company / organization Name: Los Angeles Times NAICS: ; Name: Twitter Inc NAICS: ; Name: Facebook Inc NAICS: , ; Name: NAICS: Supreme Court-US Title Rent control isn't the answer to California's housing crisis, but it could help. Yes on Prop 10 Publication title Los Angeles Times (Online); Los Angeles Publication year 2018 Publication date Sep 15, 2018 Section Opinion - Editorials Publisher Tribune Interactive, LLC Place of publication Los Angeles Country of publication United States, Los Angeles Publication subject General Interest Periodicals--United States Source type Blogs, Podcasts, & Websites Language of publication English Document type Editorial ProQuest document ID Document URL Copyright Copyright Tribune Interactive, LLC Sep 15, 2018 Last updated Database 3 databases View list Global Newsstream Los Angeles Times

14 The Case for Preserving Costa-Hawkins: Three Ways Rent Control Reduces the Supply of Rental Housing Kenneth T. Rosen September 2018 Prepared by Rosen Consulting Group 2018 Rosen Consulting Group, LLC

15 The Case for Preserving Costa-Hawkins: Three Ways Rent Control Reduces the Supply of Rental Housing A Compromise in Jeopardy Following decades of strong population growth and persistent underbuilding, California is in the midst of a housing crisis. The statewide failure to keep up with new demand for housing, even through the recent period of rapid economic growth, resulted in a shortage of available housing and rapidly rising housing costs. In particular, apartment rents surged since the end of the Great Recession, and vacancy rates in many California markets fell to historically low levels. Indeed, the lack of housing affordability represents a major hurdle for many residents and is a significant risk for the California economy. Although there are many factors contributing to the difficulties of building adequate new supply, rent control policies, which are often touted as an affordability solution, exacerbate the problem by significantly reducing the supply of rental housing, even as demand continues to rise. Rent control was first introduced in California in the City of Berkeley in 1972, and was subsequently adopted by several local jurisdictions across the state in the late 1970s, in response to an extended period of rapid inflation and rent increases 1. While these original rent control efforts sought to temper the rapid rise in housing costs, many ordinances were highly restrictive and reduced the potential income owners could generate from rental properties. As such, over time a large number of property owners chose to convert apartments to other, more profitable uses, and new apartment development became extremely difficult to justify as a viable investment. In response, the Costa-Hawkins Rental Housing Act, enacted in 1995, was a compromise between local and statewide interests that allowed California Rent-Regulated Laws by Market City Year Rent Control First Introduced Berkeley 1972 Los Angeles 1978 Beverly Hills 1978 Santa Monica 1979 San Jose 1979 San Francisco 1979 Palm Springs 1980 Oakland 1980 Los Gatos 1980 Hayward 1983 East Palo Alto 1983 West Hollywood 1985 Richmond 2016 Mountain View 2016 Alameda 2016 Notes: Rent control was introduced in Santa Rosa from August 2016 to June 2017, but was repealed by ballot initiative in a special election. Sources: State of California Department of Consumer Affairs, U.C. Berkeley, California Apartment Assoc., Various City Governments 2018 Rosen Consulting Group, LLC 2

16 for rent control to continue, but placed pragmatic limits on rent control regulations in local jurisdictions. For example, the ordinance in Berkeley previously included vacancy control, tying property owners to a fixed starting rent and only incremental rent increases over time, even when units turn over from one tenant to another. By contrast, Costa-Hawkins allowed for vacancy de-control, guaranteeing the ability for property owners to charge market rents upon the vacancy of a rent-controlled unit, thereby providing potential for future income over time. Additionally, Costa-Hawkins ensured that newly built buildings would not fall under rent control, alleviating fears of property owners and developers that cities would impose rent control even on newly constructed properties. Despite the continued and numerous effects of maintaining local rent control policies over the long term, the limitations that Costa-Hawkins provided eased a number of the most restrictive rules that existed in several cities, which previously made it particularly difficult for property owners to maintain existing properties, or for developers to justify new construction. As a result, construction activity increased in many markets in the years following the Costa-Hawkins legislation. While still insufficient to solve the statewide housing shortage, Costa-Hawkins represented an important step toward maintaining the existing supply of rental units and making the development of new housing supply viable in communities with rent control. Today, this compromise is in jeopardy. Proposition 10, a statewide ballot initiative in the upcoming November 2018 election aims to repeal the 1995 law. If Costa-Hawkins is repealed, the rules that provided assurances for existing property owners and enabled increased levels of new construction activity will be abolished, and local jurisdictions will be free to enact more restrictive forms of rent control. A return to more rigid rent control laws could severely reduce new construction activity, lead to greater housing scarcity and further increase rents for many households in the coming years. In order to highlight the significance of why this policy change would be detrimental for the California housing market, it is critical to understand the ways that rent control reduces the supply of rental housing units over time. Specifically, rent control ordinances reduce rental supply in several important ways: 1) Rent control incentivizes property owners to convert rental units to other uses, such as for-sale housing units or non-residential buildings; 2) Rent control reduces the effective supply of available rental units through an inefficient allocation of housing; and 3) Rent control limits the creation of new rental supply by discouraging development activity, especially without guaranteed exemptions for new properties and assurances that property owners can adjust rents to market level upon tenant vacancies. All of these factors combine to decrease the supply of rental housing in markets with rent control, which ultimately lowers apartment availability and raises rents Rosen Consulting Group, LLC 3

17 As California continues to grapple with an unprecedented housing shortage, an expansion of rent control would create yet another hurdle that would shrink the overall rental housing supply over time and impede the development of new apartment units in ways that are likely to significantly exacerbate the current statewide housing crisis. Three Ways Rent Control Reduces the Supply of Rental Housing Rental Conversions Shrink the Number of Available Rental Units Rent control decreases the supply of rental units by creating incentives for property owners to convert existing apartment buildings to other uses. Policies that limit the amount of rent or the rent increase that can be charged for an apartment unit, effectively decrease the return on investment for property owners by capping the income that the property can produce. Over time, this fundamentally changes the incentive structure for owning rental properties, and pushes property owners to convert existing units to more profitable uses. In particular, property owners may feel compelled to convert apartment units, or buildings, to residential uses that are not subject to rent control, such as condominiums, or to redevelop entire properties to non-residential uses such as office or retail. For smaller, mom-and-pop property owners, some may prefer to leave units that would otherwise be available on the rental market vacant, or to move into rent-controlled units themselves, rather than leasing those units out to tenants. As such, these incentives significantly constrain the existing supply of rental units. Academic research provides a great deal of evidence for this trend of increased rental conversions for units subject to rent control, both in California and around the country. A recent Stanford University study examined the effects of a 1994 ballot initiative (Proposition I) passed in San Francisco that extended the coverage of the original rent control ordinance to include smaller multifamily buildings with four units or less. In response, property owners converted rental units to single family housing, condominiums or renovated properties into new offerings not subject to rent control. In fact, the Stanford study found that nearly 10% of the properties newly covered by the updated ordinance were redeveloped during the period from 1994 through Moreover, this study found these properties were 8% more likely to convert to condo or TIC (Tenancy in Common) following the law change. As a result, there was a significant loss of rental supply in San Francisco in direct response to stricter rent control laws. Numerous studies find similar effects from rent control in other markets around the country. A 2006 Brigham Young University study found that rent control in the Greater Boston area led to an increased number of units converting from 2018 Rosen Consulting Group, LLC 4

18 rental to owner over time. 3 In particular, the study estimated that from 1990 through 1998, housing units in jurisdictions in Greater Boston with rent controls were 6-7% less likely to be offered for rent, than in jurisdictions without rent control. Moreover, the study estimated that rent control kept thousands of rental units off the market as property owners converted units to for-sale housing. Another report by the City of Berkeley in 1998, which was in favor of rent control, still found that rent control encourages alternative use of rental space by reducing the opportunity cost of conversion. 4 Indeed, as the cap on rental revenue compounds over time, decreasing the return on investment for rent-controlled properties, alternate uses for existing properties become increasingly appealing investment opportunities. Under these circumstances, it may prove more profitable for owners to remove rental units from the market. New York City offers a particularly insightful example of the way that rent control can lead to conversions over time. In 1974, New York passed an updated rent control law, which dramatically changed the way existing rent-controlled supply could be taken off the market. One of the allowable ways to decontrol a building, or a collection of units, is for a collective of tenants to opt-in to a co-operative ownership structure. Specifically, a conversion can occur when at least 15% of the occupants of a building opt-in for a co-op conversion. 5 Existing rental tenants must then be offered their units for purchase. Tenants who do not want to buy their unit, may remain in their unit as a renter. However, if rent-controlled tenants vacate their units, the units can then be converted to be part of the co-operative. Largely in response to the limitations of rent control, many property owners leveraged this option to convert units in order to sell off their rental units. Indeed, the number of co-operative units in New York City ballooned to 255,000 units as of 1999, up from 106,000 in 1976, an increase of 140%, with many of these new co-operative units converted from formerly rentcontrolled apartment buildings. 6 In New York, the long-term effect of rent control significantly reduced the overall rental supply and dramatically hollowed out the number of units in some neighborhoods, particularly affluent parts of the City. The supply of rent-controlled units also declined in Californian cities since the enactment of rent control, as property owners converted apartment buildings to other uses. In West Hollywood, a review of City records found that from 1986 through 2016, 764 rent-controlled units were removed from Conversions of Rent-Controlled Units (West Hollywood) 9.4% 7.9% 51.7% the rental market. 7 Nearly 52% of these removed units stayed off the market or were converted to single family homes. An additional 31% were 31.0% Single Family / Off-Market Condos Apartments Change of Use Source: City of West Hollywood 2018 Rosen Consulting Group, LLC 5

19 converted to new or pending condominiums. Less than 10% of all units converted from rent control, Rent-Controlled Units Removed ( ) 3,500 were returned to the apartment market as new apartment units. In nearby Santa Monica, a total of 3,042 units were withdrawn from the rental market from 1986 through During this time, only 1,094 of these units were replaced with new apartment units. Indeed, the slow leakage of rental units due to conversions had significant effects on rental supply in both of these markets, and in many 3,000 2,500 2,000 1,500 1, West Hollywood Sources: City of West Hollywood, City of Santa Monica Santa Monica other rent control jurisdictions across the state of California. California currently faces a persistent and wide-spread housing shortage. Rent control measures that reduce the potential for rental income over time substantially shift the incentives for property owners. The introduction of rent control laws create an environment where property owners are more likely to convert their rental units to other uses, reducing the number of rental units on the market. As the existing stock of rental units falls, predictable outcomes that would happen in any supply-constrained market ensue. Specifically, rents tend to rise rapidly and low availability becomes a persistent challenge for tenants in search of an apartment. As such, while some households benefit from lower rents, rent control further contributes to the broader problem of housing scarcity in California, as the conversion of rental units to other uses significantly decreases supply. Inefficient Housing Allocation Increases Scarcity In addition to conversions, rent control creates unintended consequences that further reduce the supply of rental units through an inefficient allocation of housing, especially over long periods of time. In an environment of scarcity, it is difficult for residents to find new housing and many existing tenants may feel stuck in their units, unable to move or downsize as their housing needs change along with their stage in life. For example, a family household may require a relatively large multi-bedroom apartment today, but will likely require less space later in life once their children reach adulthood and form their own new households. However, for households living in a rent-controlled unit and paying substantially below-market rent, it is significantly less likely that they will be able to find an opportunity to downsize to a smaller unit. The result is a decrease in the total number of people living in the same number of rental units over time Rosen Consulting Group, LLC 6

20 A 1990 Auburn University study provides considerable evidence for this phenomenon. Specifically, researchers found that one-quarter of families in New York City consumed at least 25% more housing under rent control than they would if rent control did not exist. 9 Similarly, research on San Francisco found that there was a 25% reduction in the number of renters living in rent-controlled units during the period from 1994 through Both cases, exhibit the effects of a prolonged duration of rent control. Indeed, as the inefficient allocation of housing accrues over time, the effective supply of apartment units declines, and cities are faced with a situation where more units are needed to house the same population. While it is an unintended consequence of rent control, in practice, this inefficient allocation of apartment units increases the scarcity of rental housing and amplifies the adverse effects of the statewide housing shortage. Unrestricted Rent Control Impedes New Construction California is a severely undersupplied housing market. During the last decade, statewide deliveries averaged less than 80,000 new housing units annually, compared with the estimate of 180,000 units needed per year to keep pace with household formation, according to the California Department of Housing and Community Development. 11 Persistent low levels of construction reflect a wide range of factors including a combination of high construction costs, restrictive land use zoning, community obstruction and prohibitive or costly regulatory hurdles. Compounding the challenges associated with limited supply additions, rent control further restricts supply through rental conversations from apartments to nonapartment uses and the inefficient allocation of housing. As rent control actively shrinks the rental housing supply, it is critical for developers to add more units through construction activity. However, if rent control were expanded to include newly constructed properties, or even applied to newer properties on a rolling basis based on the building age, such as after 15 or 20 years, these limitations on apartment rents, or on the pace of rent increases, could significantly impact the feasibility of many development projects. Importantly, developers do not build apartment units in a vacuum, they are responsible to their investors to make a reasonable profit, and they are responsible to their lenders to repay development loans. Without sufficient potential for rent and income growth from a property, investors will be hesitant to invest, lenders will be unwilling to lend, and developers will be unable to finance new construction projects. Currently, Costa-Hawkins prohibits rent control on apartment buildings built since 1995 (or earlier for cities with existing restrictions in place prior to Costa-Hawkins) and establishes vacancy de-control, which ensures the ability for property owners to set new rents after a tenants moves out of a rent-controlled unit. These requirements provide assurances 2018 Rosen Consulting Group, LLC 7

21 for property owners and new developments in cities across the state, regardless of whether rent control is currently in place. Without these assurances, many investors and lenders could choose to allocate capital to other less risky opportunities, or other regions of the country, creating an environment where new apartment development activity Annual Multifamily Building Permits (San Francisco) 2,500 2,000 1,500 1, in California could stagnate. 0 Pre Costa-Hawkins ( ) Costa-Hawkins ( ) While there are many factors contributing to the pace of new housing construction over time, including broader economic and housing market conditions, the trend in multifamily home permitting activity in California before and after Costa- Hawkins may be illustrative of what could happen if Proposition 10 passes. Several rent control jurisdictions, including San Francisco, Berkeley and Santa Monica, had highly restrictive rent control regimes that were subsequently eased by the enactment of Costa-Hawkins in From Sources: Census, HUD Annual Multifamily Building Permits (Berkeley) Pre Costa-Hawkins ( ) Costa-Hawkins ( ) Sources: Census, HUD 1980 through 1994, San Francisco permitted an average of fewer than 1,200 multifamily units annually, including both apartment and condominium properties. In contrast, following Costa-Hawkins, construction activity increased considerably to an average of nearly 2,200 units per year from 1995 through Similar patterns occurred in both Berkeley and Santa Monica, which permitted an Annual Multifamily Building Permits (Santa Monica) annual average of approximately 30 and 180 mul- 0 Pre Costa-Hawkins ( ) Costa-Hawkins ( ) Sources: Census, HUD 2018 Rosen Consulting Group, LLC 8

22 tifamily units, respectively, from 1980 through 1994, before ramping up construction to an average of nearly 150 and 230 units, respectively since Research on the Ontario, Canada rental market provides further evidence of the potentially significant impact that adopting restrictive rent controls can have on new rental construction. Specifically, a 1988 study from the University of Toronto examined the effects of the Residential Premises Rent Review Act, which implemented rent control in Ontario starting in The detrimental impact to housing supply in Ontario is most evident when observing the trend in rental housing starts before and after rent control was implemented. Specifically, during the four-year period preceding the adoption of rent control, rental starts averaged more than 36,800 units. In contrast, rental starts dwindled to an average of approximately 14,500 units during the five years that followed. Moreover, starts remained depressed, averaging nearly 13,400 units annually from 1980 through This dramatic decline in construction starts highlights the way that diminished returns for property owners resulting from rental control regulation, do not adequately incentivize bringing new supply to the market, thereby contributing to a dearth in available rental product for those the regulation aims to serve. In California, if current statewide limitations were removed, it is likely that a number of jurisdictions across the state would choose to adopt stricter forms of rent control. In particular, the Costa Hawkins protections for new construction and vacancy de-control could be subject to change at the city level. Such actions would dramatically reduce the incentive for investors, developers and lenders to fund new apartment construction, as potential return on investments would immediately be called into question. Additionally, with the uncertainty that each individual jurisdiction could propose new limitations at any time, investors would be unable to determine the scale of their potential risk exposure and would likely shift funds to other less risky and more productive investment opportunities. Moreover, existing property owners would have even greater incentives to turn to alternative uses for their properties. Despite the drawbacks of the current rent control system in California, it is clear that a removal of statewide limitations could drastically slow new construction activity, further exacerbating the critical housing shortage the state already faces. Conclusion Amid a critical housing shortage, the compromises that Costa-Hawkins established between local and statewide interests ensured a degree of certainty for the housing market and supported the development of new apartment supply in recent years. Today, however, repealing Costa-Hawkins could create a haphazard patchwork of differing rent control rules in cities across the state. Moreover, the rules in each city could be subject to change at any point in the future, creating 2018 Rosen Consulting Group, LLC 9

23 untold uncertainty for property owners, investors, lenders and developers. Rent control already reduces existing rental supply through conversions and the inefficient allocation of units. Stricter rent control would further reduce existing rental supply, while also limiting new development, making it even harder to keep pace with population growth and household formation, and exacerbating the challenges of low vacancy rates and rapidly rising rents. The current pace of new construction continues to fall far short of the statewide housing needs, and the last thing California needs is another barrier to building new rental housing. Instead, the best model for the California housing market would be to reduce barriers to construction in order to incentivize new supply and alleviate the perpetual cycle of housing scarcity. Preserving Costa-Hawkins is a critical first step to achieving this goal Rosen Consulting Group, LLC 10

24 End Notes Rent Control in Berkeley was in effect from 1972 through 1976, a modified rent control was subsequently re-enacted in 1978 and formally went into effect in The Effects of Rent Control Expansion on Tenants, Landlords, and Inequality: Evidence from San Francisco, Rebecca Diamond, Tim McQuade & Franklin Qian. (December 2017). Retrieved from: 3 Out of control: What can we learn from the end of Massachusetts rent control?, David P. Sims. (August 2006). Retrieved from: 4 Rent Control in the City of Berkeley, 1978 to 1994: A Background Report, City of Berkeley. (May 1998). Retrieved from: Conversions to Condos and Co-Ops. (2018). Retrieved from: 6 The Condominium v. Cooperative Puzzle: An Empirical Analysis of Housing in New York City, Michael Schill, Ioan Voicu & Jonathan Miller. (July 2006). Retrieved from: 7 Housing Report: City of West Hollywood, Rent Stabilization and Housing Division. (2016). Retrieved from: org/home/showdocument?id= Annual Report, Santa Monica Rent Control Board. (2017). Retrieved from: 9 The Economic Effects of Long-Term Rent Control: The Case of New York City, Richard Ault and Richard Saba. (1990). Retrieved from: 10 The Effects of Rent Control Expansion on Tenants, Landlords, and Inequality: Evidence from San Francisco. 11 California s Housing Future: Challenges and Opportunities, California Department of Housing and Community Development. (January 2017). Retrieved from: s-housing-future-full- Public-Draft.pdf 12 Permitting Data, State of the Cities Data Systems (SOCDS), U.S. Department of Housing and Urban Development. ( ). Retrieved from: 13 An Economic Assessment of Rent Controls: The Ontario Experience. Lawrence Smith. (1998). Retrieved from: springer.com/article/ /bf Rosen Consulting Group, LLC 11

25 The Case for Preserving Costa-Hawkins: Who Really Benefits from Rent Control? Kenneth T. Rosen September 2018 Prepared by Rosen Consulting Group 2018 Rosen Consulting Group, LLC

26 The Case for Preserving Costa-Hawkins: Who Really Benefits from Rent Control? A Scattershot Approach The State of California is currently facing a severe housing shortage, and the lack of rental housing supply is fueling competition for existing units and increasing rents to levels that are squeezing many households, especially low income renters. Following decades of underbuilding and recent strong economic growth through the current business cycle, market conditions are very tight in most apartment markets in California, making it very difficult for many households to find affordable rental housing. As of 2016, nearly 54% of renter households in California spent more than 30% of annual income on rent, a critical cost threshold that is designated as a cost burden. 1 Moreover, the current vacancy rate for the most affordable, workforce segment of the California apartment market is extremely low at just 2.3% as of July 2018, according to Yardi Matrix. 2 In comparison, the vacancy rate in the high-end, discretionary segment of the apartment market was double the workforce segment at 4.6%, during the same time period. 3 Given the extreme shortage of available units, low income households often have no other option but to exceed the cost burden threshold. Although advocates often seek to promote rent control as a mechanism to help these households, evidence from markets with rent control in California and around the country show quite the opposite. Rent control compounds the affordability crisis by significantly reducing the supply of available rental units, as outlined in the previous paper in this series, The Case for Preserving Costa-Hawkins: Three Ways Rent Control Reduces the Supply of Rental Housing. 4 In particular, by reducing the potential for operating income, rent control incentivizes property owners to convert existing apartment buildings to other uses. Moreover, rent control creates an inefficient allocation of housing, such that more units are needed to serve the same population over time, and restrict the financial viability of new apartment construction, making it very difficult for new supply to keep pace with the growth in housing demand. Beyond the negative supply effects, rent control is commonly intended to assist low income renter households by flattening rent increases and making it easier for these households to stay in their existing units. However, there are no mechanisms whatsoever to ensure that low income households actually receive these benefits. Instead, rent control is applied based only on the age of the building, and does not require any means testing for household incomes. As such, 2018 Rosen Consulting Group, LLC 2

27 households of all income groups can and do reside in rent-controlled units. In practice, however, low income households often do not have the resources to spend searching for these highly coveted units. As highlighted below, numerous case studies focused on markets with existing or past rent control demonstrate that a significant portion of the benefits from rent control accrues to households in higher income brackets. This occurs largely because households with more education and greater financial resources have significant advantages in terms of finding and securing units in rent-controlled buildings. In effect, rent control increases competition and exacerbates the housing shortage for low income households, while the cost-saving benefits accrue haphazardly to those who: 1) happen to be in the right place at the right time; 2) have the wherewithal to find available units; and 3) have sufficient lifestyle flexibility and job opportunities to make it possible to stay in the same unit over an extended period of time. Critically, this scattershot approach does not consider who is most in need. Repealing the Costa-Hawkins Rental Housing Act (Costa-Hawkins) would not change this fundamental flaw inherent in the concept of controlling rents and does not address the root cause of the problem the inadequate supply of rental housing. Quite the opposite, if Costa-Hawkins were repealed and local jurisdictions across California were to further expand rent control with stricter measures, such as vacancy control, low income households would likely be squeezed even further by additional reductions in supply, while relatively high income households would disproportionately reap the cost-saving benefits of living in apartments with below-market rents. More Competition for Low Income Households As detailed in the previous paper in this series, rent control shrinks the supply of rental units on the market, and thereby increases competition for available housing units. Indeed, not only do low income households often compete with one another for both rent-controlled units and relatively low cost market units, but these households also face considerable competition from wealthier households who are often in a much better position to track down and secure rent-controlled units. Finding housing can be a complicated and time consuming process that varies widely by income and location. However, relatively high income households have several major advantages over low and middle income households when it comes to finding a rent-controlled apartment. First, households with relatively high incomes and higher levels of education are much more likely to have regular access to reliable internet and transportation. In San Francisco, 42% of extremely low-income households, defined as households with annual incomes less than 30% of the area median income (AMI), 2018 Rosen Consulting Group, LLC 3

28 found their current residence through family or friends, according to the 2018 San Francisco Housing Needs and Trends Report. 5 In comparison, only 10% of high-income households, defined as households with incomes of more than 200% of AMI, relied on family or friends to find housing. Instead, high-income households were three times more likely than the lowest income group to find their residence through the internet or in newspapers. 6 Second, relatively high income renters typically have stronger credit and the ability to pay for application fees on multiple units (or even large deposits) factors that are particularly helpful when searching for housing in a tight housing market. Perhaps most importantly, higher income households often have the resources to pay for their current residence, or for temporary accommodation, while they spend the time to find a new place to live. This luxury to dedicate substantially more time and money to the housing search process, represents a considerable advantage that makes it much easier for households with greater financial resources to patiently search for a highly coveted unit in a rent-controlled building. Given the large disadvantage when it comes to the apartment search process, it is not surprising that low income households are less likely to receive the benefits of below-market rents through rent control over time. 7 In addition to the direct effect on the ability to access rent-controlled units, the overall reduction in rental housing supply resulting from rent control (highlighted previously) can also increase competition in the broader market for relatively low cost market-rate units. As a result, the challenges of finding housing in a tight housing market can keep low income households stuck in their current homes even as their needs change over time, or may force households to move farther away from employment opportunities in order to find lower cost housing. Although rent control is often intended to benefit low income households, the reality is that rent control actually makes it more difficult for low income households to find rental housing by reducing the number of available rental units and increasing competition among households of all income groups for a limited number of highly prized discounted units. Who Really Benefits from Rent Control? Households of all income types reside in rent-controlled units because there are no means testing to target households based on either income or net worth. As such, while the goal is often to support low income households, middle and higher income households frequently live in these units. Although rent control does decrease housing costs for some low income households, the savings from living in these units tends to accrue disproportionately to: 1) households who happen to be in the right place at the right time; and 2) households in higher income brackets with greater ability to secure and remain in rent-controlled apartments, for whom housing assistance is least needed Rosen Consulting Group, LLC 4

29 In addition to the challenges of competing to secure a rent-controlled unit, the savings from living in a rent-controlled unit generally accrue slowly over an extended period of time. As a result, benefits are greatest for households with sufficient lifestyle flexibility and career opportunities to allow for long-term residency. In contrast, recent residents moving to a new community and households who move frequently are largely excluded from these costs savings. In practice, however, many renter households do not have the luxury to stay in one home over the long term without the need to move in search of work, or to accommodate other changing housing or family needs. In fact, more than 30% of renter households in California, or 1.8 million households as of 2016, moved into their unit during the prior two years, while 73% moved within the prior six years, according to the Census. 8 Moreover, low income households typically move much more frequently than higher income households. As of 2016, more than 18% of the California population living at or below the poverty line had moved to a new residence in the prior year, compared with less than 12% of the population living at or above 150% of the poverty level. 9 Given the challenges of both renting and remaining in a rent-controlled unit, rent control is a highly ineffective and inefficient method to provide rental assistance for low income households. Numerous case studies on communities with current or past rent control measures reach similar conclusions. A 2006 Brigham Young University study on rent control in the Boston metropolitan area found that rent control programs that existed in several communities in the region from the late-1980s through the early-1990s were not particularly effective at transferring the benefits to low income or minority households. 10 Specifically, only 26% of rent controlled apartments were occupied by renters in the bottom quartile of the household income distribution, while 30% of units were occupied by tenants in the top half of this distribution. 11 Moreover, Hispanic and African-American minority groups, which accounted for one-quarter of the population in the cities with rent control, only represented 12% of the population living in rent controlled units. 12 As a result, much of the benefit from rent control accrued to wealthier households. Further research on the Cambridge, MA market also found that, rent-controlled apartments were concentrated among highly educated professionals, while the poor, the elderly, and students were generally excluded. 13 Research on rent control in New York City led to similar conclusions that rent control was an inefficient mechanism to target benefits for low income households and resulted in a random redistribution of wealth. Specifically, researchers found that the strict rent control program in New York City did a poor job at providing equitable benefits to similar families, and that the tenant benefits were, higher for wealthier and older families and lower for larger families and minority families Rosen Consulting Group, LLC 5

30 Further supporting this concept, a 1988 study from the University of Toronto examined the effects of the Residential Premises Rent Review Act, which implemented rent control in Ontario starting in The research highlighted the fact that only 34% of benefits from the rent control program went to low-income households and concluded that rent controls, appear to be an extremely inefficient and inequitable method of income redistribution. 16 These results are not at all surprising, considering the fact that rent control is applied blindly, based only on the age and size of the property, with no means testing and no consideration for which households are most likely to benefit from living in rent-controlled buildings. Conclusion While the scarcity of available housing and the challenges of rising rents represent major hurdles in many markets in California, rent control is at best a poor mechanism to help low income households afford their monthly rent. Whereas individual households struggling with the challenges of housing costs generally need targeted assistance designed to facilitate both access and affordability, rent control is entirely need-blind, and therefore largely fails to ensure that the benefits of lower rents help those most in need. Instead, rent control exacerbates the problem of housing scarcity, creates greater competition and, ultimately, makes it harder for households with limited resources to secure affordable housing. Repealing Costa-Hawkins and expanding the scope for rent control would do nothing to more effectively target rent relief to the households most in need. To the contrary, many of the households who would benefit from the cost savings are likely to be those who least need the assistance relatively high income earners who already live in existing apartments and those who have the resources to find rent-controlled apartments. There is no doubt that California is facing a housing crisis following decades of underbuilding, and many California households are struggling with the challenges of declining rental affordability. What these households need today are thoughtful and well-crafted programs designed to support the development of more rental housing and to effectively target benefits to those in need of assistance, not a scattershot approach that is likely to exacerbate the problem for many of the state s most vulnerable households Rosen Consulting Group, LLC 6

31 End Notes The State of the Nation s Housing 2018, Joint Center for Housing Studies of Harvard University. (2018). Retrieved from Yardi Matrix: Commercial Real Estate Data and Research, Yardi Systems, Inc. (August 2018). Retrieved from yardimatrix.com/ 3 Ibid. 4 The Case for Preserving Costa-Hawkins: Three Ways Rent Control Reduces the Supply of Rental Housing, Rosen Consulting Group, The Fisher Center for Real Estate and Urban Economics, UC Berkeley, Ken Rosen. (September 2018). Retrieved from: 5 San Francisco Housing Needs and Trends Report, San Francisco Planning Department. (July 2018). Retrieved from: 6 Ibid. 7 Rent Controls: A White Paper Report, National Association of REALTORS, Legal Research Center, Inc., Val Werness. (2016). Retrieved from: 8 Geographic Mobility, American Community Survey, U.S. Census Bureau. (2016). Retrieved from: 9 Ibid. 10 Out of control: What can we learn from the end of Massachusetts rent control?, David P. Sims. (August 2006). Retrieved from: 11 Ibid. 12 Ibid. 13 How Rent Control Drives Out Affordable Housing, Cato Policy Analysis No. 274, William Tucker. (May 21, 1997). Retrieved from: Citing Rent Control: Affordable Housing for the Privileged, Not the Poor. A Study of the Impact of Rent Control in Cambridge, Cambridge, Massachusetts: GeoData Analysis, Rolfe Goetze. (1994). 14 The Economic Effects of Long-Term Rent Control: The Case of New York City, Richard Ault and Richard Saba. (1990). Retrieved from: 15 An Economic Assessment of Rent Controls: The Ontario Experience. Lawrence Smith. (1998). Retrieved from: springer.com/article/ /bf Ibid. Citing: The Impact of Rent Review on Rental Housing in Ontario: A Staff Research Report, Ontario Ministry of Municipal Affairs and Housing, Toronto. (July 1982) Rosen Consulting Group, LLC 7

32 From Dukeminier et al., Property (8th ed. 2014)

33

34

35