The End of Rent Control: The Epiphany in Silicon Valley – By George Drysdale
Mostly because of Prop 13, rent controls got stuck in California. The financial and moral damage to the state has been enormous. This is best evidenced in the San Francisco Bay Area (now almost all part of Silicon Valley). Because of the great success of the Silicon Valley and the high incomes generated, the rents (supply and demand) are around three times the national average. Real estate and all its aspects is the largest segment of the economy.
Because of the high rents, there are those who demand “affordable housing”. There is no such thing as “affordable housing”, just subsidized housing. Politicians, in order to get the sizable voting block of those demanding “affordable housing”, enact legislation that flies in the face of basic economics.
Let’s examine the damage done by politicians for rent (property) control:
- Santa Cruz: on the internet . . . Catastrophe in Capitola and the Great Santa Cruz Land Swindle. After being thrown out in most of Santa Cruz, I went in front of the Capitola city council stating that I represent academia and there still remains rent control on mobile home parks in the county of Santa Cruz. Their county supervisors, in recent legislation, have made it impossible to the remaining mobile home park owners to put their mobile home park land into the development of much needed apartments by demanding that in order to do so, they must find the displaced renters a comparable priced rental in the area. This is impossible because the rents on the rent controlled spaces are about 25% of the current rents in the area. This is highly immoral of the supervisors, but hey, the mobile home owners are a very solid voting block.
- Next, Palo Alto, the capitol city of Silicon Valley. “Affordable housing”. In order to close a trailer park on the most expensive land in America, the city council demands that the owner pay each displaced tenant $80,000 in compensation for having to leave their trailers which have virtually no value themselves except for the fact that the city council has kept the park as “affordable housing.” This situation is now world famous – The Buena Vista Mobile Home Park – Palo Alto. The owner of the land will not bend to this extortion and has used the city. The four acre trailer park is assessed at 3 million dollars. The new development of apartment houses (luxury) would be worth around 200 million dollars.
- San Francisco: Rent control is the most studied subject in economics. All economists and all social studies teachers are dead set against rent controls. Paul Krugman, an American economist, spoke on rent control in San Francisco saying, “The grandchildren can’t trust their grandparents. People living in rent controlled units freeload upon others who must make up the difference. There is no free lunch unless you can parasitize.”
Many, if not most, apartment houses in San Francisco should have higher density earthquake-proof construction. When the inevitable big earthquake hits, the bottom stories of the buildings will fail and will collapse causing hundreds if not thousand of fatalities especially with those apartment houses thrown up right after the earthquake of 1906. But renters want one thing – cheap rents. It is difficult to replace furnaces in San Francisco because under rent control, this will increase rents.
- Meanwhile in San Jose, the city council has called a moratorium on the conversion of very valuable mobile home park land for six months in order to study the situation with rent (property) controls. The Winchester Ranch mobile home park wants to convert its 16 acres into an urban development. The current assessed valuation of the park is 2.5 million dollars. When the urban development is completed, it should assess out at about 400 million dollars and provide rentals for many more people. The question is how much money the city council will try to get from the owners of the mobile home parks to provide assistance to the tenants when nobody else in the city gets any payments when they are asked to leave a rental for an upgrade. Countless times, rent controls go in when tenants jam the city chambers and impose their will upon the sympathetic and vote hungry politicians.
George Drysdale is a retired social studies teacher, an initiator and economics teacher.
Thank you for the great job you all do! Great news to help us try to beat back the far reaching (greedy) arms of government. I am in Northern CA, and have been a member of AOA for years.
I provide magazine subscriptions for my managers in FL and OK and they love it.
I hope to someday fly my OK manager to an AOA trade show. I have never made it down to one, and know I’m missing a lot, could be a great time for all of us. Please keep up the good work and I love seeing the word of God on your page. Sincerely, Paul Scott
For your informational awareness, the following note was sent to John Luebberke, the attorney for the City of Stockton, CA, through the city’s online web portal on December 23, 2015.
Dear John: I am writing this note to bring to the attention of the attorney for the city of Stockton a recent decision in the US District Court for the Southern District of Ohio concerning rental property inspections and licensing fees. (JAMES RONALD BAKER, et al., Plaintiffs, v. CITY OF PORTSMOUTH, et al., Defendants, filed 09/30/2015). In summary, the court ruled that the Defendants violated the Fourth Amendment of the US Constitution as it authorized warrantless administrative inspections of rental properties. The court further concluded that the Plaintiffs be allowed to seek restitution from inspection fees derived from said unconstitutional inspections.
In light of the aforementioned Federal ruling, please provide a response representing the position of the City of Stockton as it relates to Stockton Municipal Code 8.32.
Your prompt reply and cooperation in this matter is greatly appreciated.
Best Regards, Akhtar Ayaz