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

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.

"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.

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