By Crescenzo Vellucci
Vanguard Sacramento Bureau
SACRAMENTO – Apparently, there’s rent control. And then there’s rent control.
That was made abundantly clear Tuesday when a new Sacramento rent control ordinance was unveiled, and then quickly approved, at a Sacramento City Council meeting.
The council acted after reports in 2017 showed Sacramento had the highest rent increases for a metropolitan area in the nation. Or close to it.
But the ordinance became law with stiff opposition from the very people who wanted rent control. But not just any rent control.
Faced with a grassroots-organized city charter amendment that would firmly rein in draconian rent increases, and other gross abuses by landlords, the City of Sacramento was forced to sit down and compromise.
Council members met with proponents of the already-qualified measure that had garnered 44,000 plus signatures, or 20 percent of eligible city voters. The grassroots effort was headed for the 2020 ballot.
And generally, initiatives, if qualified, usually go to the ballot, absent some legal challenge. However, under a state law authored by Sacramento Mayor Darrell Steinberg – more than ironic since he supported an ordinance to kill the approved measure – municipalities can meet with proponents of initiatives and cut a deal.
And that’s just what the city did.
That’s why the Sacramento City Council jammed the ordinance on the ballot Tuesday, and then quickly approved the “Rent Control” ordinance – with only one dissent and one abstention. It attempts to mitigate out-of-control landlords.
But it’s not close to what the tens of thousands of Sacramentans thought they were getting when they signed petitions, said opponents Tuesday.
The new compromise ordinance would limit rent increases to six percent plus the Consumer Price Index amount, which was 2.7 percent last year. That would make a maximum increase of 8.7 percent last year, 
but it could go as high as 10 percent a year.
The grassroots-initiated measure was much more renter friendly. It would cap increases at half the city approved one Tuesday – at just five percent. And it could be as low as two percent if the CPI isn’t high.
That difference, as was made clear by speakers, could mean everything to Sacramento renters living in a stagnant wage increase economy.
Councilmember Steve Hansen led the effort to get the less stringent ordinance passed, noting that “this is not so imperfect we shouldn’t support it.” He said the ordinance will help renters facing 20-30 percent increases and those being evicted “for things that have nothing to do with their renting habits.”
However, loud proponents of the grassroots measure were not at all pleased. They said the ordinance approved Tuesday was not what the thousands who had signed petitions “expected.”
And they flat-out charged that city lawmakers – specifically naming Hansen and Steinberg – were bought off by landlords and landowners.
“A big part of why this deal is so bad is that rent can be raised up to 10 percent a year. That’s why we need a permanent rent control, and we need the opportunity to vote,” said one speaker. “We want landlords to profit,” but renters are opposed to “inhumane profits.”
“We were sold out by a labor union. The ones (who made the compromise with the city) were not the ones who gathered the signatures. They were the ones waiting for us back at the office for the signatures we gathered,” said Fairfield teacher Kevin Boltz. “Those voters who signed earned the right to vote (for the initiative).”
He and other speakers claimed that tens of thousands of dollars from developers and those opposed to rent control have flowed into 2020 re-election campaigns of Hansen and Steinberg.
“And we wonder why this (the city measure) is the best we can get. You are letting them kick people on the street,” Boltz said to the council. “I’m disgusted,” he said.
Hansen maintained that “this is not the end of the story, but the beginning of it.” Late in the meeting he asked for a modification of the ordinance so that it would be effective in 30 days, not 60, to give relief sooner to renters. He said he wanted to “send a clear message” to landowners the city wouldn’t “tolerate” rent gouging.
Councilmember Allen Warren said he wouldn’t support the new ordinance, largely because “as written it won’t produce the desired results.” And Councilmember Jay Schenirer admitted he was opposed to rent control, but that he would support the more modest city measure because he has heard many “stories of suffering.”
Citing thousands of affordable housing units under construction, Councilmember Jeff Harris said that “relief is on the way.” Although he said he believes more units is the answer, he voted for the compromise ordinance. Councilmember Larry Carr abstained, noting that he didn’t have time to study the measure, just put on the agenda this week.
Speaking to those opposed to the compromise measure, Steinberg said, “It was the initiative that pushed everyone to the negotiating table. We’ve got nothing now. If you’re looking for perfection this is not the place. It’s good, more than good. It is a start.”
Under the new ordinance, landlords can still evict tenants if they have to make certain repairs, but they need to give a 120-day notice. And the law only covers pre-1995 built structures, and those who have signed leases. It excludes single family homes.
Proponents of the now cast-off ballot measure spent nearly $740,000 to gather the signatures, while opponents of rent control – apartment owners – spent about $775,000, city records show.
If the measure had gone to the ballot next year, observers said millions of dollars would have been spent in a pitched battle for the votes of city of Sacramento voters.
I really need to start working on my retirement exit-strategy from Corruptifornia.
Hilarious. Rent control (albeit highly watered-down) passes in “build everything” Sacramento. And yet, some leaders continue to cling to that model. (Why is that no surprise?)
Enough said.
Probably the most enlightening sentence that this author has ever written. Especially the use of the word “forced”.
I don’t think most people view the world as rent control or supply.
I’d say that the system itself is corrupted (financially, and politically) toward the supposedly free-market “supply-side”. And, that includes politicians who are supposedly liberal/progressive. (I’ll leave out liberal/progressive blogs, for the moment.)
Again, Sacramento (and the entire region) is not exactly known for “restraint”, regarding growth and development.
Note the use of the word “forced”, by your author. It doesn’t get much clearer than that.
Not.
Good point, Bill.
What are your thoughts, regarding the issue? And, why is it that a grass-roots effort was launched in “build everything” Sacramento, despite the reluctance of “progressive” politicians?
Could it be that there’s a “developing disconnect” (pun intended), between those who are actually struggling, vs. the politicians and publications that claim to represent them? (With unions and other interests contributing to that disconnect, as noted in the article?)
Sacramento is growing. Also Sacramento doesn’t have any progressives on its council.
Yes – there are vested interests which are ensuring that this occurs. And yet, Sacramento’s “build everything” model didn’t prevent rents from rising faster than almost every other area in the country, as noted in the article.
You don’t view Steinberg as “progressive”? (Not sure if the mayor position is part of the council, or whether or not the council members are considered progressive.) In any case, are you stating that truly progressive leaders do support rent control?
“You don’t view Steinberg as “progressive”?”
He’s very much an establishment guy.
True progressives would go way further than this.
I believe that you meant to say that true progressives would do the opposite of what Steinberg (and those like him) are doing, regarding resisting effective rent control. Let’s just call this the “dark underbelly” of some who claim to be progressive, but who appear to have close ties to development interests (which are outright opposed to such measures – to help those struggling with increasing rents):
I meant to say what I said. I would also suggest to you that you misunderstand where people on here are coming from. If you’re concern is for lack of housing, you have to build it. That doesn’t mean you’re aligned with developer interests. It just means that there is a temporary alignment between interests at the moment.
I’m not sure what you meant to say, regarding efforts to resist effective rental control by Steinberg (and those like him – who apparently receive significant financial campaign support from development interests who oppose rent control).
Sacramento’s “free market” approach doesn’t seem to be working, for those concerned about significant rent increases. And yet, that’s the approach that some who claim to be “progressive” relentlessly promote.
Something’s seriously wrong, here. Again, I’d suggest that it’s the (actual) “dark underbelly” showing itself.
I think he’s trying to say that Steinberg is no progressive. He’s an establishment Democrat.
“Sacramento’s “free market” approach doesn’t seem to be working”
Maybe you should start by questioning your assumptions on these things.
What approach have they taken?
What are the problems?
Why aren’t they working?
Craig: For starters, you might want to review the citation from the Sacramento Bee article that I posted yesterday, at 9:42 p.m. (below). I’ll re-post it again for your convenience:
Regarding your comment stating what “I should” do, perhaps you might start with reading the comments and articles before chiming in.
What’s weird about this article is that, I learn from other sources, Housing4Sacramento and the Sacramento Housing Alliance — groups which spearheaded the initiative and led the signature-collection process for the initiative discussed in the article — have both endorsed the council’s compromise proposal. The article only reflects the views of the rent control advocates who oppose it.
Is it too much to ask for a little more balance in Crescenzo’s articles?
https://sacblog.newsreview.com/2019/08/09/tenant-turning-point/
In general, I would agree with the implication behind this question.
Not sure I’d agree with this, unless you’re counting the more than 44,000 people who signed the petition for the (original) charter amendment – according to the article you cited. (That’s a lot of “advocates”.)
Note that the “compromise” limits increases to essentially what’s already occurred (e.g., the median increase during 2017). And yet, those increases are nevertheless causing a concern in “development-friendly” Sacramento.
Perhaps it’s a sign of a bigger problem (e.g., stagnant wages/income – especially for those who are most vulnerable – all 44,000 of them – and counting).
So much for “market-based solutions”, in development-friendly Sacramento.
By the way, here’s a more “balanced” article:
Read more here: https://www.sacbee.com/news/local/article233624652.html#sto
What’s weird about your comment is that neither Housing4Sac or SHA spoke at the council meeting. The groups he quoted did.
An interesting, related article:
In areas with rent control already in place, “the bill would extend rent control provisions . . .” For example, “. . . units built in Los Angeles between 1978 and 2009 would be covered”.
https://la.curbed.com/2019/7/10/20687569/california-rent-control-bill-advances-in-senate
Another interesting, related article (this time, regarding statewide rent control – in Oregon):
https://www.curbed.com/2019/3/8/18245307/rent-control-oregon-housing-crisis
Just published by the American Economics Review, considered the leading journal of the profession:
https://pubs.aeaweb.org/doi/pdfplus/10.1257/aer.20181289
The Effects of Rent Control Expansion on Tenants, Landlords, and Inequality: Evidence from San Francisco†
Rebecca Diamond1, Tim McQuade2 and Franklin Qian3
1Stanford Graduate School of Business, 655 Knight Way, Stanford, CA 94305, and NBER (email: diamondr@stanford.edu)
2Stanford Graduate School of Business, 655 Knight Way, Stanford, CA 94305 (email: tmcquade@stanford.edu)
3Department of Economics, Stanford University, 579 Serra Mall, Stanford, CA 94305 (email: zqian1@stanford.edu)
Abstract
Using a 1994 law change, we exploit quasi-experimental variation in the assignment of rent control in San Francisco to study its impacts on tenants and landlords. Leveraging new data tracking individuals’ migration, we find rent control limits renters’ mobility by 20 percent and lowers displacement from San Francisco. Landlords treated by rent control reduce rental housing supplies by 15 percent by selling to owner-occupants and redeveloping buildings. Thus, while rent control prevents displacement of incumbent renters in the short run, the lost rental housing supply likely drove up market rents in the long run, ultimately undermining the goals of the law. (JEL R23, R31, R38)
https://www.sftu.org/newtic/
As others have noted, there is a continuing problem with the Vanguard’s website (which results in a premature cut-off of the time allowed to edit comments). It occurred to me again, above – before I finished editing my comment/citation. I was able to “bold” some phrases before the problem occurred.