Gaining momentum elsewhere, rent stabilization policies have yet to catch on in Monterey County. | Cover collections
BETWEEN THE END OF 2020 AND THE END OF 2021, THE AVERAGE ASKING RENT IN MONTEREY COUNTY HAS INCREASED BY 8.6 PER CENT, TO APPROXIMATELY $1,900 PER MONTHin line with a national trend as the knees of the US economy continue to teeter under the weight and complications of the pandemic and, more recently, Russia’s invasion of Ukraine.
In an environment where demand for rental housing is rapidly outstripping supply, prices for most properties continue to rise even as the country contemplates a possible recession.
These times have brought comparisons to the 1970s, when, after the Vietnam War, the country, in many places, experienced an unstable housing market characterized by relatively unaffordable rents, runaway inflation and a slowdown in economic growth. American economy. The crisis at the time sparked a wave of local advocacy for creative solutions. In California, specifically, it has led to a series of rent stabilization policies in cities such as Los Angeles, Oakland, San Francisco, Santa Monica, Berkeley, Los Gatos and Hayward, where there are ordinances that limit increases annual rent payments for certain rental properties. Amid today’s economic realities, the action around rent stabilization is heating up again.
Pasadena voters collected enough signatures to put a rent stabilization order on the ballot this fall. It would limit rent increases to 75% of the annual increase in the consumer price index (CPI). Fairfax, Marin County, is considering whether to pilot rent stabilization for at least a year, and Orange County supervisors are considering a one-year order.
Soaring rents in California were an issue even before the pandemic, leading lawmakers in 2019 to pass the first statewide rent stabilization policy, which caps annual rent increases at 5% plus the rate of inflation, but not more than 10%, with exceptions for singles. – family homes and rental accommodation less than 15 years old. The policy came into effect in 2020 and expires in 2030.
Although covered by this statewide law, rent stabilization as a policy does not exist anywhere in Monterey County. Discussions around rent stabilization touched the stage at Monterey and Salinas City Council last year, but yielded no substantial results. Much of the conversation around housing has focused on increasing supply to alleviate demand and building more government-subsidized units to meet the needs of low-income tenants – solutions that Matt Huerta, director of the housing program at the Monterey Bay Economic Partnership, considers the most important. .
“If we don’t increase the supply of rental housing to meet low, very low and even moderate incomes, then the cause of rent control is much stronger,” Huerta said. “But you can’t continually raise the rent every year by 5-10% and expect the workforce to stick around.”
BUILDING MORE HOUSING HAS BEEN A CHALLENGE FOR MANY JURISDICTIONS IN MONTEREY COUNTY. Salinas City Council member Anthony Rocha is one of the strongest supporters of a local rent stabilization policy, calling it the most effective tool in the fight against displacement and gentrification. “Rent stabilization is a data-driven approach to ensuring we have a fair housing market that protects tenants,” Rocha says.
He helped include rent stabilization as a topic in the city’s strategic plan for the next three years.
Rent stabilization is a polarizing issue in communities across California: Tenant advocacy groups tout it as key policy to tackle the housing and displacement crisis, while real estate lobbyists compare to a scarecrow that will prevent the construction of new housing. A 2019 study from Stanford University found that San Francisco’s rent stabilization policy reduced displacement by up to 20%, and the impact was most widespread for minority and elderly households. ; however, the study also found a tendency for landlords to pull units off the rental market and convert them to condos to reverse the policy. The study found that affected landlords reduced the supply of available rental accommodation by 15%.
In 1995, California lawmakers bought into the argument that rent stabilization dampens construction investment. They passed the Costa Hawkins Law, which imposed, among other restrictions, two significant limits on local rent stabilization rules. The first: multi-family dwellings built after 1995 were exempt from rent stabilization. The second: Local jurisdictions could not apply vacancy controls, meaning that once a tenant had vacated a unit, the landlord was free to list the unit at whatever price they wished.
Efforts to repeal the Costa Hawkins Act by voter referendum – Prop. 10 in 2018 and Prop. 21 in 2020 – failed overwhelmingly at the polls. Leah Simon-Weisberg, chair of the Berkeley Rent Stabilization Board, says the biggest obstacle to rent stabilization is the real estate lobby, which she called California’s most powerful.
Berkeley’s policy, which caps rent increases at 65% of the annual CPI increase, is the result of a local referendum. She says the best path to get rent stabilization passed today is “a strong movement” and put it on the local ballot.
MONTEREY COUNTY HAS AT LEAST ONE EXAMPLE OF SUCCESSFUL RENT STABILIZATION. The Preston Park and Abrams development is a city-owned development that caps annual rent increases at 3%. Thanks to this policy, Paula Pelot, 71, has been able, on a fixed income, to stay in her two-bedroom townhouse in Preston Park since 1997.
Marina Mayor Bruce Delgado says the Preston Park and Abrams development is a success, but it is not easy to replicate as it requires a local jurisdiction to own and become the owner of the rental units. This, he says, is prohibitively expensive in today’s market, especially for smaller jurisdictions.
He makes a similar argument for stabilizing city-wide rents. He says any small jurisdiction that wants to adopt such a policy is virtually guaranteed to be sued by the rental housing policy machine.
Delgado talks about some experience, having helped pass a citywide rent stabilization policy in Marina on mobile home parks — a fight he says lasted 12 years. He says the interests Marina faced in the mobile home battle would be eclipsed by those in the apartment battle.
“We’d be overwhelmed – money from the rental industry makes Marina look small,” says Delgado, who says a city alone in battle would likely have to spend millions just to fight lawsuits.
“It would have to be a regional effort. If the county and the 12 cities agree that we go after rent control together, then there might be a chance.