Rent Control Cities Like Santa Monica Are Building More Apartments, Housing Advocates Say

By Jorge Casuso

June 5, 2018 -- California cities with rent control, including Santa Monica, have seen more construction of apartment buildings than cities without such controls, housing advocates say.

San Francisco, San Jose and Oakland, the largest Bay Area cities with rent control, have seen a disproportionate number of new multifamily rental units built since 2000, notes Stephen Barton, the former Housing Director for the City of Berkeley.

The three cities, which account for 27 percent of the housing in the Bay Area, built 43 percent of the area's new multifamily rental units in buildings with at least five units, Barton said.

The same trend is reflected in the City of Los Angeles, which accounts for 42 percent of the housing in the County but has built 62 percent of new multifamily rentals, he said.

“Most studies have found that rent control has no effect on new construction,” said Barton, who holds a Ph.D. in City and Regional Planning from the University of California.

In fact, “proportionately more new apartments are built in cities with rent control," Barton said in comments made to the California Legislative Analyst’s Office last month.

The same is the case in Santa Monica, which far exceeded the State-mandated regional housing targets, according to the 2008-2014 Regional Housing Needs Assessment (RHNA).

According to the report, Santa Monica built more than four times its allocation of housing units and far exceeded its allocations for moderate, low and very-low income units, said former mayor Denny Zane.

"Santa Monica knocked it out of the park by far exceeding the number of market rate units in its allocation as well as affordable units," Zane said.

With three years left in the current assessment period, Santa Monica is on track to build triple its allocation and "looks likely to absolutely crush its affordable housing targets," Zane said.

Barton and Zane agree the reason for the disproportionate number of units built in rent control cities is economic.

“When higher-income tenants moving into an area with an expanding job market are unable to simply push current tenants out of the older buildings, then they create an expanded high-income market for new construction,” said Barton, a former deputy director of the Berkeley Rent Stabilization Program.

Zane also credits Santa Monica's renters' rights movement for advocating for more housing and the City's push to concentrate new housing outside residential neighborhoods.

"Because rent control protects existing housing, development is moving to Downtown and closer to public transit," said Zane, who heads Move LA, a transportation advocacy non-profit.

"Until Santa Monica did it, almost nobody was doing mixed use."

Rent control foes agree economic reasons have led to more housing construction in cities that cap rents, but they view it through a different lens.

"Developers are building in more affluent communities that have more educated, higher income residents, and those ae the ones that historically have rent control," said Wes Wellman, a local Realtor who was a founding director of ACTIION Apartment Association.

"Rent control gentrified Santa Monica," Wellman said. "Before, it was a middle class commuter town. Rent control acted as a magnet for high-income people to come here and get a bargain.

"Retail outlets began to upgrade, shops became trendier, there were more and better restaurants. It started a snowballing cycle of gentrification. The development followed.

"People aren't developing here because there's rent control," Wellman said, "but because there is an affluent community that votes its self interest."