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DOWDALL LAW OFFICES A PROFESSIONAL CORPORATION ATTO R N EYS AT LAW City Council of the City of Santa Ana City of Santa Ana September 16, 2021 Page 17 "After rent control is enacted, landlords tend to disinvest from their real estate ventures. This disinvestment either takes the form of conversion to cooperative or condominium forms of ownership, deferred maintenance, or in extreme cases, abandonment." The Economic Effects of Rent Control, supra, p.14. In a study conducted by David Mengle, entitled "Rent Control and Housing Quality," two hypotheses were proven: "Landlords in controlled markets will cut back maintenance expenditures in order to maximize profits (or minimize losses), thereby causing quality to deteriorate to lower levels than would have been the case in a free market." "Quality deterioration, if observed, will tend to increase over time because disinvestment through depreciation only manifests itself slowly." Id This study is based upon 8,000 dwellings from eight American cities, four rent controlled and four not. The quality indicators included, for example: "...broken toilets, leaking roofs, blown fuses, rats and peeling paint or plaster...." The evidence establishes, beyond any reasonable doubt, that a rent control law can impact the physical environment. Rent controls can impact surrounding properties; rent controls can destroy entire neighborhoods. Certainly, there is "substantial evidence" that a rent control law will negatively or adversely affect the environment. The substantial evidence of the potential for a significantly adverse effect is predicated upon numerous and incontrovertible studies conducted by experts, together with, among other things, historical fact and the content of the proposed Ordinance itself. Each of these matters are hereby proffered as an offer of proof of such evidence which now, therefore, must trigger a decision to prepare an Environmental Impact Report. Generally, as well, the passage of a rent control law is a "project" subject to CEQA. The City Council must therefore comply with the requirements of CEQA and of Title 14 of the California Administrative Code, Sections 15000, et seq., (the "Guidelines") prior to adopting any rent control ordinance. CEQA applies to "discretionary projects proposed to be carried out or approved by public agencies...." Public Resources Code Section 21080. "Discretionary project" is defined in the Guidelines (14 Cal.Admin.Code Section 15357) to mean "a project which requires the exercise of judgment or deliberation when the public agency or body decides to approve or disapprove a particular activity, as distinguished from situations where the public agency or body merely [must] determine whether there has been conformity with applicable statutes, ordinances, or regulations." -17-