Correspondence - #33 - Laserfiche WebLink

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Orozco, Norma From: Shane Phillips <shanedphillips@gmail.com> Sent: Tuesday, September 21, 2021 2:11 PM To: eComment Subject: Agenda item #33 -- city council meeting, 9/21/2021 Hello, I am writing as a housing policy researcher in support of agenda item #33, the City of Santa Ana's rent stabilization proposal. Rent stabilization is not a panacea, and must be paired with housing supply policies to promote the production of sufficient homes to meet growing demand, but it should be viewed as a complement to housing production rather than a competitor. Rent stabilization helps residents stay in their homes and provides much -needed certainty about where they will live and the prices they will pay in the future. Adequate housing production (in addition to subsidies for rental assistance and income -restricted development) is necessary to ensure long-term affordability, but tenant protections like rent stabilization offer short-term relief while longer -term strategies are pursued. Just as addressing homelessness requires both permanent supportive housing (long-term) and shelters (short-term), a well-rounded housing policy requires building more homes and tenant protections. In the past, rent control has been designed in ways that lead to negative outcomes for many households. The policy features most likely to produce poor outcomes are vacancy control and applying rent control to new housing. Both of these options are forbidden by the Costa -Hawkins Rental Housing Act, dramatically lowering the chances that rent stabilization will reduce housing production or otherwise harm the City of Santa Ana. The most likely unintended consequence is that some landlords will choose to convert their buildings to owner - occupied uses like condos or tenancies -in -common, and the city should at a minimum provide some mitigations against uncompensated eviction of tenants for such conversions. Most importantly however, as noted above, the best policy to discourage conversions of rental housing is to encourage abundant production of new housing, not to leave tenants vulnerable to rent increases of 5-10% per year (subject to AB 1482 limitations). I would offer one policy recommendation, and that is to strike the 3% cap on annual rent increases. Limiting rent increases to 80% of CPI should be sufficient. By setting a 3% cap you run the risk of having years in which inflation is very high, possibly 6% or above, with costs to landlords increasing much faster than revenues. This in turn could put you afoul of legal restrictions relating to a "reasonable rate of return." The City of Los Angeles approved its rent stabilization program in the 1980s, when inflation was very high, and as such set a floor of 3% on annual rent increases (rather than a cap of 3%, as the Santa Ana council proposes). Santa Ana should avoid making a similar mistake, though in reverse, by not assuming that inflation rates will be at low levels indefinitely. Thank you, Shane Phillips Housing Initiative Project Manager UCLA Lewis Center for Regional Policy Studies