From xxxxxx <[email protected]>
Subject What Should Rent Control Accomplish?
Date February 1, 2023 2:05 AM
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[Boston Mayor Michelle Wu is backing a return of rent control,
decades after it was banned in a state referendum. But disappointment
among tenant activists raises questions about what rent control is
supposed to achieve.]
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WHAT SHOULD RENT CONTROL ACCOMPLISH?  
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Jared Brey
January 30, 2023
Governing
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_ Boston Mayor Michelle Wu is backing a return of rent control,
decades after it was banned in a state referendum. But disappointment
among tenant activists raises questions about what rent control is
supposed to achieve. _

Boston Mayor Michelle Wu, who pledged to back rent control during her
campaign, has faced criticism for not going far enough in her proposal
to hold down rising rents., Allison Dinner/Getty Images/TNS

 

People like Mike Leyba have spent years working to make it possible
for rent control to return to Boston.

Always an expensive city to live, Boston has become one of the
costliest places in the country in the years since rent control was
banned statewide in the mid-1990s. Advocates like Leyba, the
co-executive director of the social justice group City Life/Vida
Urbana [[link removed]], have worked to build momentum at both
the state and local levels for overturning the ban and reinstating a
policy they say is urgently needed amid a roiling crisis of
displacement and unaffordability.

The movement has picked up key supporters along the way, including
Mayor Michelle Wu, who pledged
[[link removed]] to back rent
control during her campaign. Last year, City Life/Vida Urbana joined
an advisory council convened by Wu to study rent stabilization
policies and make recommendations.

But when the outlines of a proposal leaked to the press a few weeks
before Wu’s scheduled State of the City address, Leyba says his
group was dismayed. The proposal, if implemented, would allow
landlords to raise rents as much as 10 percent every year. For a
$2,000-a-month apartment, a 10 percent increase would add $200 a month
to the cost of housing — like adding a 13th month of rent. When the
group told the tenants in its network about the details of the plan,
Leyba says they suggested protesting outside of City Hall. Their
reaction illustrates the broad array of perspectives on what “rent
control” is supposed to mean — and what it’s meant to
accomplish.

“For me, the key thing is, does it provide the immediate
anti-displacement impact of curtailing rent increases that would
displace people?” Leyba says. “And how does it impact those costs
over time?”

 

Fighting Housing Instability in Boston

Support for rent control was a “key differentiator” between
Michelle Wu and other candidates in the 2021 Boston mayor’s race,
Leyba says. Even though rent control is a policy that can’t be
implemented by the city alone, it’s important to have a strong local
champion if the governor and state Legislature are going to be
convinced to overturn the statewide ban, which was narrowly approved
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by voters in 1994.

But as Wu said in a recent radio interview
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“the words ‘rent control’ mean very different things to very
different people.” Her proposal reportedly caps annual rent
increases at the rate of inflation, pegged to the consumer price index
[[link removed]] (CPI), plus 6 percent — with a maximum
cap at 10 percent regardless of inflation.

“This is the type of proposal that I have been talking about
throughout the campaign,” Wu said on WBUR. “The purpose of rent
control or rent stabilization is very specific. It is to stop the harm
that is happening when we have too few affordable housing units to
match the number of people.”

But for Leyba and other advocates, rent control shouldn’t just
prevent the most egregious forms of price gouging. It should also help
keep rents affordable over time. Capping annual increases at 10
percent won’t accomplish that, they say; instead, the rent control
cap should be the same as CPI. With exemptions for property owners
with just a few rented units, and potentially a public fund to help
cover the costs of major repairs, there’s no reason why the cost of
a rent-controlled apartment should rise faster than inflation, Leyba
says.

“We’re not trying to put small landlords out of business. We’re
not trying to take anybody’s nest egg away. We’re trying to
provide maximum protection for tenants,” he says.
 

A Varied Trend

Rent control spent many decades as the quintessential bad idea
[[link removed]]
in economics 101, under the theory that it would prevent landlords
from fixing their apartments and prevent developers from building new
housing, thereby making housing markets worse over time. But in the
years leading up to the COVID-19 pandemic, as tenants’ movements
gained steam and the housing crisis worsened, it began to catch on
again.

In 2019, Oregon became the first state with a statewide rent
stabilization ordinance, capping
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annual increases at inflation plus 7 percent. California soon followed
suit
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with a similar policy. Those policies prevent dramatic single-year
rent hikes, but they still give property owners lots of leeway to
raise rents.

[NMHC-rent-control-by-state2.jpg]
 
The map shows states with rent control; with preemptions that prevent
rent control policies; states with no rent control or preemptions; and
states that have previously been listed as having preemptions, but
where no statute or case law could be found. (National Multifamily
Housing Council)

Gary Fisher, deputy executive director of Multifamily Northwest, an
Oregon-based landlords’ association, says that under Oregon’s law,
landlords could have raised rents by 9.9 percent last year. But a
survey of the group’s members showed most landlords increased rents
by about 5 percent, Fisher says. The group opposed the 2019 law
because it felt it could prevent landlords from keeping up with rising
costs for maintenance, staff and amenities. But it’s not actively
seeking to have the law changed. The maximum allowable increase
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in Oregon for 2023 is 14.6 percent.

Also in 2019, New York passed
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a state law allowing cities to enact rent control if they declare a
housing emergency. More cities have begun adopting new rent control
policies as well. One of the strictest laws
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in the country was approved by voters in St. Paul in 2021 and enacted
last year, imposing rent control and setting the annual cap at 3
percent. Local leaders there have already begun amending the law after
some developers said they were pausing projects because of the policy,
as the Minnesota Reformer reported
[[link removed]].
 

It’s Not Just About Rent

New York City has had rent control for decades, but the 2019 law that
allowed all the cities in the state to create rent control policies
was partly the result of a growing statewide tenant movement. Cea
Weaver, the campaign coordinator for Housing Justice for All, which
led the charge for the 2019 law, says rent control can be thought of
as a basic “consumer protection” against price gouging, the likes
of which society imposes on all types of goods. It’s meant to
promote housing stability for renters, and that spills over
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into other areas of civic life, like improved educational outcomes and
democratic participation, Weaver says.

“Rent control is really doing two things: it’s controlling rents
but it’s also controlling evictions too,” she says. “It allows
tenants to organize as a group of people. It has these dual goals of
affordability and power-building, which not all housing interventions
have.”

While opponents of rent control often argue that it will prevent
landlords from making improvements, it’s not the case that big rent
increases typically correlate with costly renovations, says Manuel
Pastor, an economist and director of the Dornsife Equity Research
Institute [[link removed]] at the University of Southern
California. Instead, landlords tend to raise rents when a neighborhood
becomes more attractive to renters and there’s more demand for
housing — in other words, simply because they can.

“The classic economic meaning of rent is when somebody who’s got a
fixed asset sees its worth go up through no contribution of their
own,” Pastor says.

Rent control and stabilization policies can help existing tenants
avoid being displaced. But improving affordability in places like
California and Boston also requires more housing supply, Pastor says.
Rent control debates tend to be heated because, “like many issues,
it’s a stand-in for a bunch of other issues,” from the housing
crisis generally to overall beliefs about the role of free markets.

“It is a signal of the relative strength of landlords and
tenants,” Pastor says.
 

Rocky Road Ahead in Boston 

In Boston, any rent control proposal that Wu introduces will need to
be approved by the City Council, the state Legislature and the
governor. In her radio interview, Wu acknowledged that’s far from a
sure thing, even though Massachusetts’ new governor, Maura Healey,
has signaled more openness to considering rent control than other
recent state leaders.

Leyba says that even if a policy passes at the local level, it’s not
going to get far in the state Legislature without enthusiastic
advocacy from groups like his. The advisory committee that Wu convened
included developers and landlords in addition to tenants’ groups and
others. Leyba says it makes a certain sense to include the real estate
industry in discussions about housing policy. But he believes most of
the industry was always going to be opposed to any form of rent
control — a sentiment which some real estate groups have already
expressed
[[link removed]].
But Leyba says he doesn’t foresee a critical mass of tenants going
to bat for a policy that would allow their rent to go up as much as 10
percent a year.

“The line that we were taking was, people deserve to be able to not
be displaced out of Boston — especially if they’ve lived here for
a long time,” Leyba says. “And the real estate industry was
basically like, ‘We don’t want you to do anything that’s going
to infringe on the money that we’re currently making.’ So it’s
like irreconcilable interests. We believe in the right to housing, and
those people believe in the right to make money off people’s
housing. There’s no middle ground that’s really possible.”

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Jared Brey is a senior staff writer for _Governing_. He can be found
on Twitter at @jaredbrey.

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* Housing; Rent Control; Mayor Wu;
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