Posted by Halibut on May 24, 1996 at 11:23:49:
In Reply to: Seen on the net - re: Rent Control in Boston posted by Halibut on May 24, 1996 at 11:18:06:
I also found this nonsense:
A publication of the American Association for Small Property Ownership
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Public Policy Fact Sheet -- August 1995
Impact of Rent Control
Summary: Rent control is a community cancer that is robbing urban areas of
their vitality, diminishing mobility, stifling economic growth and costing
billions of dollars to the taxpayer. Only four states - New York, New
Jersey, California and Massachusetts - and the District of Columbia permit
jurisdictions within their borders to maintain rent control. Rent control
operates in 17 communities in California, our largest state; 61 communities
in New York, our second largest state; the cities of Boston, Brookline and
Cambridge in Massachusetts; and, 115 communities in the state of New Jersey.
Rent control has a particularly adverse impact on minorities and the poor.
Communities suffer heavy economic costs because of rent control. There is
irrefutable evidence of the general economic costs that are often associated
with rent control:
* It reduces housing stock and diminishes mobility.
* It leads to a deterioration of housing stock and acceleration of
foreclosures.
* It is costly for cities to operate and there is a government revenue
diminution as property values drop.
* Homeowners end up paying higher property taxes in rent controlled
communities because rent control erodes the community's tax base.
In New Jersey, Jersey City had to borrow $6 million for each of the previous
three years and $5.9 million for the current year to pay tax refunds to
property owners whose properties had been devalued because of rent control.
The city is currently facing a $20 million budget shortfall. But instead of
repealing rent control which would produce $38 million in revenues,
according to the Hudson County Taxpayers Association, the city proposed a 1%
payroll tax, causing four prospective employers to cancel relocation plans
into the city, resulting in hundreds of lost jobs that would have benefitted
minorities and low income workers.
In California, East Palo Alto adopted stringent rent controls in 1983. At
the time, the city was a relatively poor but livable community of mostly
working class ethnic minorities. Rent control precipitated a downward
spiral. Housing stock deteriorated and good tenants moved from the area.
Neighborhood businesses closed. Drug and criminal elements took over. In
1992, it became the murder capital of the United States. With its tax base
lost, the city has become dependent on financial help from the county, state
and federal governments.
Rent control causes hardship for property owners, particularly small
family-owned enterprises.
* It has opened the way for heavy handed bureaucrats to abuse property
owners.
* The specific rules are often complex and arbitrarily applied thus
harming property owners and their families who are forced into costly,
time-consuming and debilitating litigation.
* Under most rent control schemes, income is insufficient to cover normal
operating costs and necessary maintenance expenses.
In New York, the burden of rent control has fallen on small and minority
owners. The vast majority of rent control tenants live in smaller buildings
of 2 to 50 units. Most of these are in poor and lower income neighborhoods.
And, because the system does not recognize any contractual legal rights in
the owner, the bureaucrats have full control.
In Massachusetts, a 1994 report, "Case Studies of Rent Control in Boston,"
by the American Association for Small Property Ownership, assessed the
impact of rent control on small property owners in Boston. A survey of the
financial condition of study participants showed that median monthly
controlled rent of $350 was well below both the median market rent of $775
and the median monthly expenses of $580 per unit.
Rent control does not help the poor and needy. To the contrary, it produces
additional hardships on minorities and low income households.
* Rent control is benefitting many wealthy people at the expense of many
middle class and working class people. Those in rent controlled
apartments are generally well-to-do and politically connected.
In Massachusetts, a comprehensive, U.S. census-based survey of housing in
Cambridge was conducted by Rolf Geotze in 1994. "Rent Control: Affordable
Housing For the Privileged, Not the Poor" found that 20 years of rent
control drove out the poor through an intensified housing shortage and
"gentrification" of rent controlled tenants, ie. fewer poverty level,
minority, elderly or family households.
In California, a 1993 study by St. John & Associates, "The Distributional
Impact of Restrictive Rent Control Programs in Berkeley and Santa Monica
California", concluded that "gentrification" occurred in Berkeley and Santa
Monica either because of or in spite of rent control, resulting in fewer low
income, minorities, elderly and disabled tenants residing in those
communities.
8/3/95 AASPO
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Public Policy Options Sheet -- August 1995
Incentives to Rescind Rent Control
Concept: Federal funds are either wasted outright or put at risk by
communities that maintain rent control. To protect the taxpayer from
increased federal obligations, communities that receive federal funds or
benefit from federal insurance or guarantee programs can not impose rent
controls and still be eligible to receive either direct or indirect federal
benefits.
Rationale: Rent Control is a spoils system which is used by both politicians
to get continually re-elected and ideologically-motivated, entrenched
bureaucrats who are rewarded with well-paying jobs. Because tenants, led by
politically savvy (and often federally funded) tenant lobbies, vastly
outnumber landlords in any given community, property owners can not get
relief locally because of the tyranny of the majority.
Definition: "rent control" means any controls, restrictions or other
regulations imposed by any state, county or municipal government with
respect to the rents that may be charged for any residential housing
accommodations, the conversion of such housing accommodations to the
condominium or cooperative form of ownership, or the removal of such housing
accommodations from the rental market. The term "residential housing
accommodations," as used in the preceding sentence, would not include
publicly-owned dwelling units.
Solutions:
1. Federal mortgage insurance. Rent control imposed by a state or local
government for residential rental units shall not apply to any
single-family or multi-unit property financed with a mortgage that is
insured under title II of the National Housing Act, title V of the
Housing Act, guaranteed or insured by the Department of Veterans
Affairs, held by a depository institution whose deposits are federally
insured, included in a pool of mortgages guaranteed by FNMA, FHLMC or
GNMA, or otherwise guaranteed by any agency or instrumentality of the
United States or government sponsored enterprise.
2. Federal block grants. Any state, county or municipal government which
maintains rent control shall be not be eligible to receive federal
block grants during the periods of time rent control is in effect.
3. Federal transportation funds. State and local governments which permit
and/or maintain rent control shall not be eligible to receive federal
funds from the highway trust fund or transportation grants.
4. Federal welfare waivers and funds. No state which allows rent control
will be permitted to seek or be granted a federal welfare waiver nor be
eligible to receive federal welfare funds.
5. Crime. Insert a provision into a crime bill withholding federal funds
and technical assistance to communities which maintain rent control
and/or eviction rules that inhibit the right and responsibility of a
property owner to act on reasonable belief of criminal behavior (such
as, drug dealing) and dangerous conduct in a unit which poses a risk or
threat to the surrounding community.
6. Taxes. No taxpayer filing in a state which permits or maintains rent
control will be allowed a deduction from federal income taxes for taxes
paid to state, county or municipal governments where rent control
operates.
7. Federal pre-emption. In states and jurisdictions where rent control is
either allowed or maintained, no pre-emption from federal laws shall
apply to individuals, corporations or other entities. For example,
federal pre-emption under employee benefit plans will not be operable
in California, New York, New Jersey, Massachusetts or the District of
Columbia.
8/3/95 AASPO
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