Friday, April 24, 2015

No Rent Control

Dear Seattle City Councilmembers,

I'm writing to ask you to vote NO on the rent control resolution being brought forth to Full Council.

Rent control is a feel-good policy, but it is fundamentally flawed and negatively impacts poor people more than any other group.

Rent costs are driven by the costs of land, construction, financing, and demand. When a builder decides to build a project, they have to balance the costs with potential rent revenue. If rent potential is too low, a project won’t pencil and banks, lenders, and other funders won’t put money into the project.

In San Francisco, Census data published in 2013 by the American Community Survey shows that over 32,000 housing units sit vacant - a full 1 in 12 housing units in the city. The reason? Rent control.

Rent control is a disincentive for housing production. Less housing built means fewer units, which leads to continued higher prices. Consider that:
  • Rent control doesn’t lower overall prices; if some units are locked in, the difference is made up in other parts of the market with even higher prices.
  • When rent cannot fluctuate, there is no incentive or cash flow to maintain buildings, especially since costs are not controlled and continue to rise in Seattle at a rate of nearly 4% per year. These costs are actually forecast to rise even further due to utility costs.
  • Rent control concentrates poverty, reduces tenant mobility, and prevents new renter from having housing opportunities; once a person is in a rent-controlled unit they end up staying there.
  • The beneficiaries of rent control are a mixed bag - often wealthier households end up getting rent controlled apartments, while truly poor families don’t.
What can the City Council do to create more affordable housing, and preserve existing housing which is affordable? I ask that you please consider the following:
  • Lower costs and barriers to entry for housing producers, both market rate and non-profit. Fees, process, inspections, and taxes make up as much as 20 percent of housing costs in Seattle.
  • Increase production of all types of housing, for all levels of income everywhere in our city. Revisiting microhousing, and expanding opportunities for infill in our neighborhoods with ADU units are two places to start.
  • Identify and define the problem appropriately; does a household paying 31 percent of its income on rent need help? What about the family paying 25 percent for housing, but still struggling to make ends meet?
  • When we build market rate housing for people who have more money to spend that means they are not competing for housing against poor people. This is a simple fact of economics that needs to be factored into our decisions about housing.
  • We need to be efficient about subsidies and how we use our public resources for housing. There is an array of opportunities, like using our debt capacity to building housing on City owned land, an idea championed by Councilmember Sawant.

Thank you for taking the time to hear my concerns, and for your consideration. Again, I strongly encourage you to vote NO to rent control.

Thanks to Rental Housing Association for providing the information above on the issues around rent control.

Happy Investing!

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