Once upon a time I was a landlord.
As a young landlord, I had little financial reserves and a modest income, so when my tenants skipped rent, I ate a lot of Ramen noodles and stretched out my bills.
There are expenses that come with owning rental properties, and if you depend on rental income to cover those expenses, you are at financial risk. That risk is compounded when a delinquent tenant becomes a squatter.
Legal eviction of a tenant can take time, meanwhile those property expenses won’t wait.
One time, I happened upon and confronted a former tenant who had stiffed me. His defense was: “You’re doing OK. You have more money than me. You can afford it.”
And there we have it, the rationalized moralization for larceny — wealth inequality, real or perceived. Likely, some of my tenants had more disposable income than I did, but I had property — as long as I could afford to keep it — so that made it OK for my tenant to skip out on the rent.
The echo of this “you-have-more-than-me” rationalization can be heard in the argument made by one proponent of Santa Barbara’s proposed rent control ordinance, who contends that if rent controls result in landlords having insufficient rental income to cover their property expenses, they can borrow against their equity in the property to cover those expenses.
So, it’s somehow just and moral that landlords incur debt and interest expense so that tenants can pay less rent. Nothing selfish about that, is there?
The wealth disparity rationalization ultimately underlies the various arguments made for ordained rent control. The arguments are typically flimsy, selfish and shortsighted.
Flimsy because they ignore the ample evidence that rent controls fail to solve the alleged problem. Selfish because such ordinances limit the income of others in order to benefit those who feel entitled to what they can’t afford. And shortsighted because beyond the political expediency of pacifying a vocal entitlement crowd, rent controls have detrimental consequences.
Nevertheless, the Santa Barbara City Council is again considering a rent control ordinance that is even harsher than the one that California already imposes on landlords.
Let’s examine the realities of Santa Barbara.
It is situated on a narrow strip of land between a mountain range and an ocean. It has a semi-arid climate with limited and increasingly unreliable sources of fresh water. Its gorgeous geography and comfortable climate have long made it one of the most desirable places on earth. Consequently, demand for housing always exceeds supply.
Bottom line, there are finite resources, particularly land and fresh water, and infinite demand.
For at least 50 years now, property prices and rents have escalated, sometimes explosively, pressuring price increases in other sectors of the local economy, and making Santa Barbara’s cost of living persistently among America’s steepest.
Yet, the local economy endures. It doesn’t collapse, it recalibrates.
Sensible people recognize these realities and understand that attempting to accommodate everyone who wants to live here is not only futile, it is deeply destructive. But politics are more often about emotion than common sense, and when realities collide with egalitarian entitlement notions, it can create quite a mess.
Rent controls won’t increase rental housing, more likely the opposite — a detrimental consequence for those who for various reasons prefer to rent or who haven’t the means to own a home and must rent.
Repressing the rental incomes of landlords can temporarily benefit some incumbent renters, but only until those landlords decide it is better to convert their rental units to market housing and sell them to new owners who occupy them — leaving the displaced renters scrambling to find housing from a shrinking supply.
A UC Santa Barbara professor who has counseled the council against rent controls has suggested housing subsidies as an alternative — sort of like food stamps. But food stamps have value only because the market has groceries. Housing subsidies would have limited value in Santa Barbara’s tight housing market.
Remember the realities: finite resources and infinite demand.
Also consider: how many people and how much money would subsidies involve? Would the number of recipients be capped regardless of demand? Wouldn’t the value of subsidies rise with rent increases? How much additional bureaucracy would be needed to administer such a program? What would be the qualification parameters? How would the city, already staggering under an obese pension liability, finance a housing subsidy program?
Santa Barbara’s housing issues, with all the attendant hand-wringing, entitlement indignation and dire economic predictions, haven’t changed much in the past 50 years, but the political asininity has.
Case in point: Ethnic diversity is being presented by some politicians as a critical rationale for making housing affordable for certain folks.
So, would we have a quota system for any affordable housing schemes, one that favors folks with the desired genetics? If so, ancestry.com might get a lot of DNA saliva analysis requests from folks wanting to qualify for affordable housing in Santa Barbara.
The City Council had enough common sense to reject a proposal for yet another expensive study by outside consultants — this time to do the thinking on rent control. Maybe this council can do its own thinking and see the folly of intervening in a housing market that is inherently exclusive and will always be out of reach for most people.
Official interventions to make housing affordable for people based on selected criteria such as ethnicity, occupation, birth right or anything but financial wherewithal create more complications and injustices than not. There will always be more folks wanting a home here than can have one. Elected officials shouldn’t choose who gets one.
— Randy Alcorn is a Santa Barbara political observer. Contact him at firstname.lastname@example.org, or click here to read previous columns. The opinions expressed are his own.