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The Case for Ending Rent Control 

Wednesday, Aug 9 2000

Page 5 of 6

In San Francisco, there is obviously tremendous political resistance to asking the question of whether rent control serves its intended purpose.

Calvin Welch, age 56, is the leading political strategist for San Francisco's nonprofit housing developers, who specialize in the construction of housing for those of low and moderate income. As another icon of radical respectability, Welch's claim to fame is his championship of Proposition M in 1986, which put an annual cap on the amount of office space that can be built in San Francisco.

Asserting that the price of rental housing is not affected by supply, Welch unabashedly supports permanent rent controls. He also favors two tenant-inspired ballot initiatives that will go before the voters this fall.

One proposition would strengthen a law limiting the conversion of rented apartments into condominiums, i.e., apartments that are separately owned. The proposed law would make it very difficult for groups of tenants to buy buildings jointly, through an arrangement known as tenancy-in-common. This measure was put on the ballot by the San Francisco Tenants Union, which is concerned that this form of group ownership permanently removes apartments from rent controls.

The other proposition, steered by the Housing Rights Committee, would ban most capital improvement pass-throughs to tenants. This means that landlords would have no financial incentive to fix major problems, like leaky roofs, or shaky foundations, because they could not recoup their costs either by pass-through or a rent increase.

Welch, tenant leaders, and two dozen neighborhood organizations united in an umbrella group called the Coalition for San Francisco Neighborhoods are also working hard to persuade the electorate to kill live-work loft development and further limit office development through a ballot initiative modeled on the original Proposition M.

This alliance of rent control advocates and anti-growth neighborhood preservationists has power that local politicians can only find daunting. Leaders of homeowner organizations, such as Joan Giradot, three-term president of the Coalition for San Francisco Neighborhoods, have not traditionally favored rent control. But they now find themselves agreeing with tenant leaders who represent, in some form, the two-thirds of San Francisco that rents, and who believe that the city's current housing problems are quite simply a result of too many people moving to San Francisco.

Giradot says she supports office development restrictions and limits on residential construction as a way of "preserving the quality of life" in San Francisco.

"People should go somewhere else," she says.

The belief that limits in housing supply, and simply telling people not to come to San Francisco, will somehow create reductions in housing demand may not be particularly logical, or supportable by fact. The notion that making rent control stricter will improve the housing situation in San Francisco is belied by almost all the available evidence.

But logic and evidence do not necessarily win elections, and tenant initiatives have been extremely popular at the ballot box in San Francisco.

Ted Dienstfrey, age 62, is a card-carrying member of the ruling class. The scholarly realtor was chief of the Mayor's Office of Housing under Mayor Frank Jordan in the early '90s. Today, he eases his career toward retirement as he oversees the charitable donations of Gerson Bakar, a local mover-shaker who made great wealth building garden apartments.

Dienstfrey, who was awarded a master's degree in urban planning by the University of California at Berkeley in 1960, has long been an outspoken critic of rent control. Over lunch at Pier 23, eyes twinkling, he tweaks San Francisco's tenant activists by reading aloud from The Housing Question by Frederick Engels, the co-author, with Karl Marx, of The Communist Manifesto.

Engels debunked the respectable radicals of his day (and many a San Francisco tenant advocate), who were claiming that housing is a right, not a commodity, and therefore not subject to the law of supply and demand.

"It is a complete misrepresentation of the relation between tenant and landlord," wrote Engels, "to attempt to make it equivalent to the relation between worker and capitalist. On the contrary, [rent is] a quite ordinary commodity transaction between two citizens, and this transaction proceeds according to the economic laws which govern the sale of commodities in general ... the relation between supply and demand existing at the moment decides [the matter] in the end."

Although he opposes strict forms of rent control, Dienstfrey praises its features that partially prevent landlords from gouging tenants and from undertaking unjust evictions. Then he oh-so-delicately suggests phasing it out, while keeping protections, of course, for the elderly, the disabled, and the very poor.

This could be done, he suggests, by allowing rents to increase by 4 to 7 percent a year, which would provide landlords with an incentive to maintain their properties and to keep apartments on the rental market, as opposed to selling them as condominiums. Elderly, fixed-income, and impoverished tenants could be protected from unaffordable increases with subsidies from a pool funded by city fees on new construction and a gross receipts tax on landlords, he says. When a sitting tenant vacates an apartment, it would be permanently removed from rent control. Protections against unjust evictions would remain in place.

At the same time, he adds, zoning and planning codes could be made more amenable to the building of new residential housing.

Dienstfrey's proposals would be anathema to San Francisco's respectable, radical advocates for tenant rights.

Yet W. Dennis Keating, Michael B. Teitz, and Andrejs Skaburskis are scholars who can certainly be described as having a liberal bent, and their take on rent control is not far removed from Dienstfrey's. In the concluding chapter of an anthology published by the Center for Urban Policy Research, Rent Control: Regulation and the Housing Market (1998), they collectively observe:

"Ultimately, housing in the United States will continue to be delivered through the private market. Finding ways to build alliances that could support moderate regulation while relaxing constraints on development might make more sense than fighting the same wars over and over again. Now may be a good time to rethink the possibilities of regulation, to see how it could be made more socially useful, instead of simply seeking to make controls more stringent or to abolish them.

About The Author

Peter Byrne


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