Rental housing bill would upset years of cooperation

A bill on Gov. Jerry Brown’s desk is not only a bad idea for rental housing but, worse, it also effectively would repeal the success of consultation and negotiation that has marked nearly two decades of cooperation between private developers and local governments, which has resulted in the construction of thousands of affordable apartments.

AB 1229 would abrogate a 2009 appellate court decision that upheld the landmark law that moderated the practice of rent control in California. In doing so, it would create a new state policy of command-and-control by granting local governments unconditional authority to mandate that low-income housing be a part of every new apartment development and forgive them the statutory requirement of offsetting the cost — a new form of rent control.

By effectively raising costs, the type of inclusionary zoning authorized by AB 1229 potentially would decrease construction of new apartments, which sparks job growth and is viewed by many as affordable alternatives to home ownership.

After examining the failure of rent control to house low-income families and individuals, the state Legislature enacted the Costa-Hawkins Rental Housing Act (“Costa-Hawkins”) to address the pernicious policy in 1995.

Study after study had shown rent control to be more harmful than helpful to low-income families and individuals looking for housing. Lawmakers also saw that setting limits on rents discouraged new investment in rental housing.

As all laws are, Costa-Hawkins was a compromise. While it prohibited rent caps on new housing, it exempted local governments from the rent-control ban so long as they agreed to work with rental housing builders to offset the economic consequences of capping rents.

Soon, the Costa-Hawkins model of negotiation and cooperation became central to the adoption of “inclusionary zoning” policies, whereby developers would dedicate a certain portion of their apartments to low-income families.

In 2007, the city of Los Angeles imposed unreasonable inclusionary requirements on a developer, he sued and both the lower court and appeals court ruled that city was acting outside the law. The decision is memorialized as Palmer v. City of Los Angeles.

The Palmer decision, in affirming Costa-Hawkins, said essentially that the City’s ordinance was defective and had to include those offsets — the Costa-Hawkins exception. In every other community with inclusionary zoning the exception was keeping local governments honest and affordable housing was being built. To wit: Not long after the decision, the developer (Palmer) came back and negotiated a new deal with the city of Los Angeles — with offsets and dozens of below-market apartments.

AB 1229’s author, Assemblywoman Toni Atkins of San Diego, says her bill isn’t a big deal. “It simply returns things to where they were before the Palmer decision” and, Atkins insists her bill wouldn't touch Costa-Hawkins.

But, AB 1229 can’t avoid touching Costa-Hawkins. By abrogating Palmer, the measure would nullify the 18-year-old imperative created by Costa-Hawkins that local governments must provide cost offsets if they’re going to cap rents. It’s not taking us back to the way things were; AB 1229 would return us to the days when the power of local government to control rents was unchecked. That was never good for affordable housing and the people who need it.

Brown should veto AB 1229.

Pentico is executive director of the San Diego County Apartment Association.

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