Rent Initiative Like a Shotgun to the Knee-Caps of New Housing Providers
By: Terry R. Dowdall, Esq.
All you really need to know is that price controls kill opportunities for new shelter of the needy. Rent control builds a new privileged class embedded in the decreasing remaining housing. Housing that generates jealously-guarded housing transfers for cash: like extortion known as "key money"- exploiting the poor for mere access to a tight market. The real rent control is a step back into the dark.
Controlling prices kills growth. People with money find something else to build, buy or invest in. The poor to be helped go without even a chance at new housing opportunities. Nothing gets built. This problem is at crisis levels in California. And now, Santa Ana may make it worse. The tone deafness is astonishing.
If housing does not produce a profit, the carpenters, electricians, dry-wallers, plumbers and salespeople cannot get paid. Without profit, no new housing. Rent control prevents profit. Get it? It is not even debatable.
But does the electorate understand? The demographics do not look great on the face of it. Let's assume that Democrats suffer from analytical deficiency syndrome more than Republicans. And that Democrats are less clear about real effects of government intervention such as rent controls, if not just because it is "just" to stomp on landlords. Never mind that real people like "ma and pa" landlords (who saved up for a small apartment house) suffer the most. Consider the quotes from the leaders of the Santa Ana rent control effort:
"Unregulated profits in the housing industry is only a formula for more people on the streets," Ana Urzua of Santa Ana Building Healthy Communities told the press conference.
If true there are no tenants left. You cannot rent if no one lives there. Landlords fervently desire their tenants stay and pay a fair market rent. Hence, it is antithetical to charge above market. Because the tenants would leave. Duh.
"Rent control and health are super, super connected," added America Bracho, executive director of Latino Health Access. "Poverty is increasing ... because people can't afford housing."
Aren't food prices "super connected"? Well, they are super-unregulated. Why not just deduct 25% off grocery bills? Grocery prices are going up "super faster" than CPI. Housing price cannot affect food choices. Food prices: now that's evil. Super.
But then, look at County statistics. Democrats have the edge. Democrats outnumber Republicans about two to one. Orange County statistics reflect that (2012) the City of Santa Ana had: Democratic voters 57,065 Republican voters 28,672 Independents 1,776.
Other factors are likewise corroborative: homeownership is trumped by renters in Santa Ana. In 2015, 45.1% of the housing units in Santa Ana were owner-occupied. This percentage declined from the previous year's rate of 45.3%. This percentage of owner-occupation is lower than the national average of 63%. Not super.
Santa Ana is a young city. The median age is 29.1 (U.S. Census Bureau 2010).
The "language spoken" reflects that a majority of City denizens do not speak English. In 2015, there were 7.35 times more Hispanic residents (262,436 people) in Santa Ana, CA than any other race or ethnicity. There were 35,699 Asian and 28,149 White residents, the second and third most common racial or ethnic groups. Percentages applied to these figures reflect: 65.5% of the overall population of Santa Ana are native Spanish speakers. 6.53% speak Vietnamese and 0.64% speak Chinese.
The race breakdown shows that the Hispanic / Latino population is the majority.
Racial composition 2010 1990 1970 1950
White 45.9% 68.0% 93.0% 98.8%
-Non-Hispanic whites 9.2% 23.1% 69.8% n/a
Black or African American 1.5% 2.6% 4.3% 1.0%
Hispanic or Latino
(of any race) 78.2% 65.2% 24.6% n/a
Asian 10.5% 9.7% 1.0% 0.1%
See, "Santa Ana (city), California". State & County QuickFacts. U.S. Census Bureau; "Race and Hispanic Origin for Selected Cities and Other Places: Earliest Census to 1990". U.S. Census Bureau. Archived from the original on August 6, 2012; "Facts and Figures, City of Santa Ana". Ci.santa-ana.ca.us. Retrieved November 7, 2017; "2010 Census Interactive Population Search: CA - Santa Ana city". U.S. Census Bureau. Retrieved July 12, 2014.
On April 3, 2018, a "coalition of citizen groups" filed paperwork, seeking to put rent control on the city's November ballot.
Santa Ana is one of a few cities in Orange County where Democratic Party registration outnumbers that of the Republican Party. In the 2008 Presidential Election, Barack Obama defeated John McCain in the city by a margin of 20,357 votes, 65% to 32%. This was despite Obama losing to fellow Democrat Hillary Clinton in the city during the Democratic Primary. Despite the city's high percentage of Democrats, however, the city tends to vote conservatively on social issues, much like the rest of northern Orange County. It voted Yes on Proposition 8-California's amendment defining marriage in the state as a legal union between a man and a woman-by 61.9%, above the county's average of 57.7%. On Proposition 4, which would have amended the California Constitution to require minors to notify their parents before having an abortion, Santa Ana voted in favor of the measure by 62.0%, much higher than the county as a whole, which voted in favor of the measure by only 54.3%.
The Register reported:
--That Jonathan Bibriesca, a social worker from Santa Ana spoke during a rally outside of Santa Ana City Hall in Santa Ana on Tuesday afternoon, April 3, 2018, to protest high rents in the city. Citizens groups are filing paperwork Tuesday with the Santa Ana city clerk to launch a signature-gathering campaign to get a rent control initiative on the November ballot.
--The Santa Ana effort comes as city housing officials are creating a panel of landlord and tenant advocates to work together on tenant protections. Council members requested the action following a February meeting to review the pros and cons of rent control.
--Most council members were non-committal at the meeting on whether to support rent control. But organizer Hairo Cortez told a gathering of about 30 to 40 supporters outside City Hall Tuesday the council is refusing to act. "If our leaders aren't going to act, we are," said Cortez, executive director of Chispa, a Latino activist group. "People are tired of having to choose between food, health care and a decent home."
--Tommy Thompson, Southern California representative of the California Apartment Association, said his group will "strongly oppose this effort every step of the way." He also called the proposed petition drive premature since the city still is looking for solutions. "The tenant activists are looking to force a very bad housing policy on a good city," Thompson said. "Rent control would only make the housing crisis in Santa Ana worse."
This development again proves the admonition. If you are not currently living under rent control in California, as a park owner, one day you will be.
Too late to act? Maybe not.
Property owners in Santa Ana should, as a reasonable management practice in my view, be seeking innovative ways to educate residents about the cost efficiencies and benefits of long term leases.
For park owners, it is time to attain prevailing market rent and vest before whatever roll-back dates to be enforced:
1. Leases allowed by the Mobilehome Residency Law (Civil Code §§798, et seq.),
2. Vesting rents with roll-outs up to full payment,
3. Using diminishing credits to protect a base rent,
but by whatever means, I recommend you not capitulate and just wave good-bye to your property rights. Action needs to be taken now for the protection of your property.
The Rule: If you are leased up, the law cannot be applied to you. This is a superior alternative for residents and owner.
In the end, finding exemptions from the oncoming rent law will be required to prevent shackling your freedom to adjust rents and to the avert the effective conversion of your property into little more than a regulated and diminishing cash flow.
If not Santa Ana, consider possible state law imposition of rent controls. It is time to read Civil Code section 798.17, and determine how it can help you. You should do so now. Super.