US rent-control advocates adjust drive in light of construction lags

By , Special to The Christian Science Monitor

Rent control is an "emotionally explosive" subject. It divides major segments of the population -- tenants against landlords, brokers and builders against government agencies and legislators.

The controversy in some areas is building up a storm.

Tenants are joining forces and using their political clout to push for rent control. Real-estate leaders are fighting it, maintaining that it works against the best interests of tenants and the total community in the long run.

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"The basic fact about rent control today is that it encourages neglect of existing apartment buildings and discourages construction of new, low-priced apartments," says one housing authority.

Even rent-control proponents now are addressing the problem of reduced construction activity which results from current or even proposed rent-control legislation. New laws and initiatives are being structured to avoid such a hang-up.

San Diego Mayor Pete Wilson describes the problem succinctly:

"Americans face a dismal housing future. Inflation has caused record-high home prices and mortgage-interest rates. The supply of rental housing, the only alternative, shrinks because of rent controls. This creates an unprecedented housing shortage in rent-control areas."

Emphasizing his key point, Mayor Wilson continues: "Rent control has most cruelly and savagely penalized the poor, the very people it was intended to protect, because its inevitable result is the shrinkage of the supply of rental housing."

Responding to this observation, some rent-control advocates are reworking their proposed laws to exclude newly constructed rental units.

In both Los Angeles city and county, for example, proposed rent-control laws would exempt new construction.

A quite unusual rent-control law is proposed in Minneapolis whichwould set up a seven-member rent adjustment board to administer the controls.

The board would set allowable increases annually, based on the landlord's average cost increases. Both tenants and landlords could appeal a board decision.

This approach would also soften the adverse effect of controls on the much-needed construction of new rental units. The trend is away from legislating flat limits on rent increases that could kill new construction projects and deter adequate maintenance of existing units.

Most politicians would like to ignore the rent-control controversy. They hear the clamor from organized tenant groups, but they see the possible negative effects that the imposition of rent controls could cause within the area they represent.

But when the tenant groups (composed of voters) put on enough pressure, some form of legislative action is often the result.

In Berkeley, Calif., for example, a rent-control initiative was approved by the voters along with an eviction ordinance.In Beverly Hills, the city council passed urgency ordinance that limits annual rent increases to 8 percent.

In Southfield, Mich., senior citizens have organized a coalition of tenants to fight for rent and condominium controls.

In Nevada, a state legislative committee has officially recommended that cities and counties be given the power to impose rent controls. In New Jersey, the state supreme court upheld local laws that prohibit rent increases where substandard conditions exist.

On the other side of the coin, some communities, legislators, and courts are taking action to protect their areas from the negative effects of controls.

In Mountain View Calif., voters turned down rent controls, with 61 percent saying no.

In Florida, a bill that would have given municipalities more freedom to control rents died in the Legislature. In Arizona, the Legislature passed, and the governor signed, a law that reserves the responsibility for the police powers over housing to the state.

A portion of the language used in the new Arizona law states, as follows:

"The state legislature determines that the imposition of rent controls on private residential housing units by cities is of statewide concern. Therefore, the power to control rents on private residential property is preempted by the state."

Richard L. Fore, president of the National Multi-Housing Council, expresses this comment about the Arizona law:

A portion of the language used in the new Arizona law states, as follows:

"The state legislature determines that the imposition of rent controls on private residential housing units by cities is of statewide concern. Therefore, the power to control rents on private residential property is preempted by the state."

Richard L. Fore, president of the National Multi-Housing Council, expresses this comment about the Arizona law:

"Arizona joins Florida in recognizing that housing policy is too important to be subject to capricious political forces. In the face of a nationwide housing crisis, Arizona has acted to assure that it will preserve a free-market incentive to provide housing."

The National Multi-Housing Council is an example of coalitions of groups that are being formed to counter the political pressures generated by tenant groups.

Another recently organized coalition of real-estate groups, with a similar objective, is the Rental Housing Industry Coalition.

Participating in this coalition are the National Association of Realtors, Institute of Real Estate Management, National Apartment Association, Building Owners and Managers Association, National Realty Committee, US League of Savings Associations, National Association of Home Builders, and the Urban Land Institute.

Joseph Murray, chairman of the coalition, explains why so many groups decided to join forces:

"They came together out of a shared concern over both rental-housing shortages and the imposition of legislated controls on rental housing. These controls reduce maintenance of existing rental structures and discourage investment in new rental property."

Tenants will continue to organize and push for rent controls. Indeed, it is their right to do so. The tug-of-war controversy will probably stay around till the end of the decade at least.

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