by Russ Binder

At nearly every City Council meeting, Claremont Tenants United urges the council to create a rental registry, which is typically a system maintained and administered by the city government intended to track rental properties and their landlords. Goals include ensuring compliance with housing regulations and protecting tenants’ rights. Landlords would be required to register their rental units and provide details about their properties, including ownership information and possibly tenant details. Each rental unit would likely be assessed a recurring registration fee.

Rent stabilization vs. rent control
Rent stabilization and control are both government policy tools that share many of the same socialist ideas. The key difference is rent stabilization controls the rate of rent increases, while rent control sets strict limits on rent increases, often freezing rents at a given level.

Economic and structural impacts
Claremont’s properties rent at the levels they do because people believe they are worth it. If renters did not believe so, they would rent elsewhere. Rent stabilization’s artificial and arbitrary price manipulation and distortion of free market forces may benefit a small (albeit noisy) group of renters in the short-term. It does so at the expense of Claremont’s landlords and the city’s long-term affordability/desirability.

To be effective, rent stabilization must set rents and/or increase rates below prevailing free market levels. Landlords’ profits would then become squeezed between declining revenue and increasing costs for utilities, insurance and property taxes. Investing in rental property would gradually become unprofitable, forcing landlords to cut costs or bail.

Maintenance and appearance expenses are often cut first. This gradually diminishes the look of the community, reducing the perceived value of living in Claremont. Rent stabilization might provide short-term benefits to some but can cause properties to become run-down and decrease property values for everyone in the long-term. At their worst, these programs risk sentencing Claremont to the unintended consequences experienced by other rent control cities.

To stop the bleeding, landlords may instead choose to sell property, often to owner/occupiers.  This reduces the availability of existing affordable rental housing. Rent stabilization actually may keep existing units’ rents artificially high by disincentivizing new construction of affordable housing. Being unable to rent newly built units at a profit obviates the need to build them at all.

A rental registry is costly to create and adds layers of bureaucracy, administration and enforcement. Claremont’s finance director estimated first year costs of creation and operation at around $350,000, with ongoing annual costs of around $300,000. Claremont’s chief of police estimated the cost of a single additional enforcement officer at $100,000 per year, all in. The fees collected from landlords would likely not cover these programs’ costs, requiring a perpetual periodic contribution from Claremont’s general fund.

In fairness to all, these programs must be entirely self-funded. Any surplus the city may have, now or in the future, should be put to more universally beneficial use, such as reducing the shortfall in funding our net pension obligations.

Santa Monica: a cautionary tale
In the late 1970s, Santa Monica adopted tough rent control rules. As a result, properties and then communities began falling into disrepair. This in turn drove real estate investors away. It was the beginning of Santa Monica’s epic death spiral. Their Third Street Promenade now serves as a harbinger of what could happen in Claremont if the city follows a similar path.

Conclusion
Claremont should permanently opt out of enacting rent stabilization and never create a rental registry … because they don’t work. These programs require unmanageable complexity, egregious startup and operation costs and require a high, long-term level of commitment. Their side effects include limiting/reducing existing rentals and discouraging new rental construction.  These are selfish, socialist programs that cap entrepreneurs’ upsides and financially penalize landlords and renters (and possibly all taxpayers). They risk making Claremont a less affordable, less desirable and more difficult place to live. These results are surely counter to the housing objectives of Claremont Tenants United, the City of Claremont and the State of California. For these reasons, a rental registry and rent stabilization should be immediately and permanently dropped from any and all further discussion or consideration.

Russ Binder has served as chairperson of Claremont’s Future Financial Opportunities Committee, is currently president of Active Claremont, was a commissioner on the city’s community and human services commission, and was the creator and host of the “Claremont Speaks” podcast.