Term limits can have a liberating effect officeholders who no longer have to face the voters. In the case Assemblywoman Sharon Quirk-Silva, not having to fundraise from the business community frees her from having to carry on the charade of being a so-called “business Democrat.”
Case in point: last week, this “business Democrat” case a “yes” vote for price controls – in the form of rent control.
Years and years of studies have discredited rent control as a public policy tool. It is a form of price controls, and price controls do not work. Ask any reputable economist. Like other forms of price controls, rent control depresses the housing availability and pits the haves (people who already rent an apartment) against have-nots (those seeking rental housing).
That didn’t stop Quirk-Silva from voting last week to advance AB 1157 out of the Assembly Housing and Community Development Committee.
AB 1157 would amends California’s bad statewide rent control law and make it even worse.
The current rent control law, AB 1482, went into effect at the beginning of 2020, limits annual rent increases to no more than 5% plus the local Consumer Price Index (CPI), or 10% – whichever is lower. It also exempted single-family rental homes. It is set to expire in 2030.
AB 1157 dramatically makes the rent increase cap even more draconian, lowering it to just 2% plus inflation, or 5% total – whichever is less. If federal policies reignite inflation, housing providers will be hard pressed to recoup investments in upkeep and improvements, or simply the rising cost of simple maintenance.
Inflation in the Los Angeles metropolitan area is currently at 3%. Under AB 1157′ rules, even a modest increase means housing providers – be the “corporate landlords” or landlords relying on their rentals for retirement income – won’t be able recoup rising costs in the form of higher rents. Tenants will pay for that in currency of reduced or no investment by landlords in maintenance and modernization – because landlords will not be abl to recoup their investment. As rent control drains value from their rental holdings, housing providers will increasingly turn to converting them into for-sale condominiums, thereby reducing the rental housing stock.
AB 1157 also removes the current rent control exemption for most single-family homes (and mobile homes that are owned separately from other units) – bringing a whole new class of rental housing under a punishing rent control regime.
And it makes all these rules – which were set to expire in 2030 – permanent.
At the same time, Quirk-Silva has authored legislation to increase the number of Accessory Dwelling Units a property can, by right, construct on a single-family home lot. It’s pitched as a way to increase the stock of affordable housing.
Has it occurred to Quirk-Silva that her support for more draconian rent control is at odds with the goal of her ADU legislation? Property are less likely to build more ADUs when more stringent rent controls (and “just cause eviction” constraints) call into question their ability to recoup their investment.
Price controls are a singularly destructive policy idea with a long and dismal history of failure. They inevitably lead to shortages, and ultimately harm those whom the controls are intended to help. Rent control is no different.
If Assemblywoman Quirk-Silva has any evidence to the contrary, we’re all ears. In the meantime, her vote for AB 1157 should finally dispel the delusion she is any kind of moderate or “business” Democrat.
