Sitting in traffic recently on his way to pick up his son from school, Josh Brahinsky looked around at the cars surrounding him.
Most commuters, he realized were using Highway 1 to get home from work because they can’t afford to live in Santa Cruz.
“People have not stopped working in town, but they’re rapidly stopping living here,” he says.
Along with fellow organizers from the Lower Ocean Neighborhood Assembly, Brahinsky says he has a plan to get a handle on the skyrocketing rents that are changing the fabric of Santa Cruz. “We’re not only a city that’s less creative and less diverse, we also get more congestion,” he says.
The neighbors’ idea is to pass a ballot measure establishing rent control in Santa Cruz, and tie it to the cost of living. They’re also pushing for a ban on short-term evictions so that landlords will have to give a reason before kicking out tenants. Brahinsky says they’re almost done writing the ordinance, which the group has been keeping under wraps, and they’re preparing to make an announcement about it at the “No Place Like Home” event at the Santa Cruz Civic Auditorium on Oct. 19.
Organizer Martin Devecka notes that their group has gotten a surprising amount of buy-in from homeowners who’ve grown tired of seeing their neighbors move away. In a way, rent control is really about creating stability in neighborhoods, Brahinsky says.
The movement first began when the group went door to door in Lower Ocean asking people about their priorities. Rent was far and away the top issue in those conversations.
Lately, there are other ideas out there about how to to address the housing crisis, as well—some of them further along than others. The Santa Cruz City Council, for instance, has been moving toward limiting the number of vacation rentals in town. And former Mayor Don Lane has been working with former county Treasurer Fred Keeley on a possible bond measure to fund new affordable housing. For the Lower Ocean neighbors, reigning in rents seems like the most effective fix—even though previous local efforts have been unsuccessful in establishing rent control, which some see as a political hot potato.
The usually very liberal economist Paul Krugman, for example, is among the country’s more well-known rent control critics. Krugman, a New York Times columnist, wrote in 2000 that “rent control is among the best-understood issues in all of economics, and—among economists, anyway—one of the least controversial.” The policy, he has argued, breeds animosity among tenants—not to mention between tenants and landlords. It creates hotly contested rental markets with long lists of applicants, who can afford the rents but can’t find a place to live, he says.
However, Maya Gupta, one of the local organizers, grew up in Massachusetts and remembers once-infamous rent control laws in the Boston area when she was young that have since been repealed in the name of giving the housing market a shot in the arm. “It’s been just the opposite. There was no change in housing supply when rent control ended,” she says, adding that rents there have since soared.
There’s also a new precedent in the Bay Area for creating rent control; the Lower Ocean neighbors have looked to ordinances in both Mountain View and Richmond while crafting their version, Brahinsky says.
He adds that the “new generation” of rent control laws has proven more effective, although he does wonder what possible changes would mean for people who already have a hard time finding a place to live.
“But working people will have homes!” he says optimistically. “Because people are leaving.”
Yeah. Rent control.
That’ll work.
Of course, it’s failed miserably everywhere else, but maybe Santa Cruz is different.
Right…
Rent control permanently reduces housing by 20% because once your rent is under market you will never move and it is the moving in and out that creates vacancy for new people to move in. Rents rise until you have about 5% vacancy and then level off because nobody can afford or wants to leave a unit empty it’s kike flushing money down the toilet.
If I follow Gupta’s line of reasoning correctly: Removing rent control in Boston didn’t increase supply and rents climbed (would love to see citation for this, BTW), therefore rent control in Santa Cruz will work? I’m not buying it, not as simple as that because there are many factors in housing supply, demand, and prices. Clearly Santa Cruz (and the Bay Area in general) managed to create a housing crisis largely without the help of rent control.
Again and again when economists study this topic they find rent control works in the short term to help a small number of people who can secure and retain a rent controlled unit. The problem is that it makes life more difficult for everyone else, and those who are helped vs. harmed is rather arbitrary. And in the long term rent control reduces housing supply and quality. We can’t ignore hard learned lessons and decades of peer reviewed studies because of a few anecdotal accounts, this would be like ignoring global warming because some place had a record low.
We can do better than this. The real solution is to build a lot more mid-rise housing in already urban areas. Santa Cruz will likely never be a cheap place to live (hence the need for some subsidized housing), and we cannot expect new supply to quickly lower prices because this crisis has been decades in the making. But over time new supply will stabilize and lower prices making the city more vibrant as more diversity of people can afford to live here.
I own a rental property in Santa Cruz, which I rent to a local teacher at about 25% below-market rent. If rent control passes, benevolent landlords like me would quickly raise rent before it took effect so as not to get trapped. Rent control creates slummy, run-down housing stock, disgruntled tenants and resentful landlords. Why interpolate more government regulation between me and my tenant? Rent control has the opposite effect of its intention and drives prices up.
Property taxes and the 27 lines on School Bonds, etc. is a significant expense. Then it’s left to the property owner to pass this on to the renter.
Look at the vacant units near the end of Ocean that were bought recently The story goes that the buyer bought them with the intention to build more units on the property. But he can’t get a loan to do the construction as the current rental rates do not support the cost of the loan. If someone can’t buy run down units and get money to replace than with more new units then how is rent control, which is going to lower rents going to produce more rentals. I don’t get how the math works any other way.
Look at NY they have rent control. Landlords have to walk away from there complexes or give them to nonprofits whom can’t maintain them so the tenants get kicked out for safety reasons. The property gets condemned and a slum is born, the homeless move in and crime goes up.
I own 14 units in the lower Ocean Street area.
Santa Cruz County has one policy that greatly harms the lower end rental market. A very vague State guideline for multi unit properties, originally intended for duplexes or apartment buildings, allows county assessors to assign any crazy high value to a low income ADU unit located on a homesite, and then deduct that from a senior citizen who wants or needs to change homes, using their Prop 60 transfer to take their old property tax value to their final residence. The only way to save your Prop 60 transfer is to evict anyone living on your property and dismantle the additional living space. Your government is not your friend. Until we pass laws protecting low income housing here in Santa Claus County by eliminating punitive actions against existing and future low income ADU units, lower cost housing will continue to suffer. Rent control laws alone will not increase supply.
Here is what the rent control measure will bring. It will create a large segment of rentals under rent control. People whom live in rent controlled units will have less incentive to move once they get better jobs. And those whom loose their job won’t be able to down grade to les expensive units. This will create a drop in available apartments in the city. And thus increase the demand for the remaining units driving up rents in those units. About 80% of the rental market will see even higher rents. Many unwitting tenants in that 80% group will vote for rent control thinking it works for them and they see 10 20 maybe 30% rent hikes. One the other hand the owners of the houses, condos and ADUs will get higher rents and see corresponding increases in their property value.
Rent control only works if it effects everyone at the same time. And only if the city compensates the owners for the loss in rent value. The latter to keep the economy moving and repairs hapening.
My rents have historically been under market. It has been better to keep tenants at reasonable rent rather than deal with turnover costs.
Unfortunately rent control is a game changer. I now need to “price in” the additional risk and costs associated. As my units vacate I need to increase rents significantly to cover additional tenant regulatory costs.
Most people dont realize that rental units in a beach town work on a 2-3% rate of return. Think about that for a second. Would you be willing to deal with tenants, legal risks, potential catastrophies, city permitting beaurocracy and everything else for 3%? Just something to think about.