A new bill authored by San Francisco Assemblyman David Chiu would do away with the 22-year-old Costa-Hawkins Act, the law that exempts new construction from rent control and generates ire with tenants’ rights activists.
Introduced by Chiu and two other California lawmakers in February, AB 1506 is only two lines long in its present form, which read:
The Costa-Hawkins Rental Housing Act prescribes statewide limits on the application of local rent control with regard to certain properties.
This bill would repeal that act.
Not much room for loopholes there.
The 1995 law exempts a California homes from rent control if “it has a certificate of occupancy issued after February 1, 1995.”
This rule has been a bone of contention in San Francisco’s rental market ever since it passed.
California’s Peace & Freedom Party, for example, makes repealing the act one of the planks of its platform. They note, “The current housing affordability crisis in much of California shows that the weakened tools available to local governments under Costa-Hawkins aren't enough to prevent Californians from being thrown out.”
Oakland writer Robert Gammon wrote in 2015 that “Costa-Hawkins is [...] hurting the economy.”
Gammon suggested that locals wouldn’t fret so much about gentrification from new construction if rent control was in place. But of course, landlords and landlord boosters in the Bay Area by and large prefer the law and provide dire predictions for the future if it falls by the wayside.
“This is the same sort of law [AB 1506] that caused thousands of units to be abandoned across New York City, the owners just couldn't maintain their buildings," Noni Richen, president of the Small Property Owners of San Francisco, told NBC Bay Area.
Writing for the New York Times, economist Paul Krugman commented on the cry for more rent control in San Francisco, saying:
Almost every freshman-level textbook contains a case study on rent control, using its known adverse side effects to illustrate the principles of supply and demand.
Sky-high rents on uncontrolled apartments, because desperate renters have nowhere to go -- and the absence of new apartment construction, despite those high rents, because landlords fear that controls will be extended? Predictable.
Note that that column is from the year 2000.
But rent control laws have fans in spite of economists’ verdicts. A Roosevelt University professor responding to Krugman’s piece 15 years later said:
“Long-term tenants who contributed to this being a desirable place to live have a legitimate interest in staying in their apartments. If we think that income diverse, stable neighborhoods, where people are not forced to move every few years, [are worth preserving] then we collectively have an interest in stabilizing the neighborhood.”
Notably, arguments about the efficacy of rent control tend to line up in opposition to arguments about if and how quickly building more market-rate housing drives down rents.
NBC Bay Area adds that the repeal is one of a suite of new laws aimed at reducing housing costs in Sacramento.