Courts, voters set throttle for rent control merry-go-round
Another story, looking more closely at rent-control issues in Berkeley, Calif., will appear next Tuesday. SHOULD rent control be used to provide adequate housing for poor and low-income people? Today, many think the answer is ``yes.'' And courts across the nation have usually backed them up. Tenants and landlords, however, continue to clash over guidelines for rent ceilings, exemptions, and the general scope of ordinances that provide for cost-fixed rentals.
Within the next couple of weeks, two key tests for rent control will occur, involving the divergent communities of Washington, D.C., and Berkeley, Calif.
Both cities house relatively large numbers of minority and have-not populations. Both have acute housing shortages, particularly for those with limited incomes. And for both, this lack is as much a social question as it is an economic one.
But in each case, the specific issues differ and the forums for resolving them are quite diverse. The District of Columbia's rent-control controversy will be adjudicated by popular referendum next Tuesday. Berkeley's dispute will be aired before the United States Supreme Court a week later, on Nov. 12.
In the nation's capital, tenant groups appear to have dual goals: First, they want to invalidate certain recent provisions of a local rent-control law which exempt an estimated 7,000 to 10,000 units from restrictions after current tenants vacate. These are primarily single-family dwellings, so-called ``distressed'' properties, and partially abandoned buildings. But tenant forces are also building a strong political fortress for the future against those who might eventually want to dismantle Washington r ent control altogether.
Now singled out for opposition by the renters' lobby during reelection campaigns are those city council members who voted for ``exemptions'' to the rent-control law. Regardless of the outcome of Washington's referendum, the basic law will stay in place -- although if the present stipulations stand, the city could start to lift all controls on vacant units starting in 1989.
Rent control in the District of Columbia applies to most of the city's more than 150,000 occupied rental properties. Only those are exempt that are government-controlled or owned by private landlords with four units or fewer.
Rent increases are tied to the consumer price index. And although there are some provisions to help landlords claiming financial hardships, these are limited.
Those opposing the referendum -- who favor keeping the exemptions -- say the broader rent-control law has discouraged new construction in the area and has prodded frustrated landlords who are on shaky economic footing to abandon their properties.
On the other hand, supporters say strict rent ceilings are crucial to maintain affordable housing and keep an ethnic and racial mix in Washington neighborhoods. They warn that when units are vacated, landlords will be allowed, under the present law, to set rents that will price out lower and middle-income people.
The Berkeley case embraces similar social and economic issues. Two central legal issues are involved in the high-court test of this community's 1980 ordinance imposing limits on rent increases.
One stems from the ruling of the California Supreme Court, which, in upholding Berkeley's rent-control measure, declared that communities have a ``legitimate interest in enacting economic and social regulations'' that may even conflict with federal antitrust law. This ruling is predictably being stressed by the city and renters' interests.
The other -- emphasized by the owners and operators of Berkeley's 23,000 rental units -- is that the ordinance violates federal antitrust law, specifically the Sherman Act's restrictions on price-fixing.
Landlords and real estate interests also insist that the high court's decision could affect more than the relatively small community alongside the University of California's mother campus. They say the rights of property owners in 50 other Golden State cities are also at stake.
The rent-control measure, its opponents say, ``establishes an erroneous constitutional standard'' that sharply limits landlords' return on their investments without regard to rising property values. Rent increases are now allowed only under limited circumstances to help a landowner meet increases in operating costs.
The justices, among other things, will have to decide whether a municipality -- such as Berkeley -- should be viewed as a commercial enterprise for antitrust purposes.
California's high court said it should not. Cities are not like private businesses looking for financial gain, it held. It found that Berkeley's ordinance was ``designed to deal with its housing crisis, preserve the public peace, health, and safety,'' and help provide housing for the poor, minorities, students, and the disabled.
A Thursday column