Evolving Approaches to Housing Affordability: Rent Control and Anti-displacement Strategy

1. Evolving Approaches to Housing Affordability: Rent Control and Anti-displacement Strategy

2. SESSION CONTENT: • Context: what is the impact of the lack of housing affordability and displacement? • Approaches • Rent Control • Anti-displacement and Community Preference/Right of Return Programs • Direct Funding and Legislation • Grantees’ specific efforts

3. What does the data tell us: AffordabilitySource: Curbed, The Affordable Housing Crisis Explained

4. What does the data tell us: Gentrification & DisplacementSource: Shifting Neighborhoods: Gentrification and Cultural Displacement in American Cities

6. Approach: Rent ControlSource: National Multifamily Housing Council: Rent Control Laws by State

7. Rent Control Studies: Compelling but Inconclusive • Rent control has direct benefit for those households in protected units. McQuade study documented nearly 20% increase in probability of renters’ staying at rent controlled addresses. • Landlords of rent controlled buildings found ways to reduce supply by 15% causing a 5.1% city-wide rent increase overall in San Francisco. Perverse incentives for developers to avoid maintenance of housing and push tenants to move out in order to avoid rent control restrictions. • Economists see rent control as “short-term fix” but advocate for increased housing supply (NLC State by State Analysis, 2019) • Lack of comparison info on cost of administering programs

8. Quick Links to Rent Control Studies/Reports • The Effects of Rent Control Expansion on Tenants, Landlords, and Inequality: Evidence from San Francisco: Diamond, Timothy McQuade; Franklin, Qian Working Paper 24181 http://www.nber.org/papers/w24181 NATIONAL BUREAU OF ECONOMIC RESEARCH, January 2018. NBER Working Paper No. 24181, Issued in January 2018 • Economic Study of the Rent Stabilization Ordinance and the Los Angeles Housing Market: this 2009 study done for the City of Los Angeles Housing Department, illustrates well the complexity of crafting and administering their Rent Stabilization Ordinance (RSO) and documents both the strengths and limitations of the program. The Conclusions and Policy Recommendations section notes that the RSO program impacts a large segment of households in LA, most of whom are low-income and that, as written, the Ordinance covers 40% of total households in the City with protection against rapid rent increases for long-term tenants. It also notes that the program does not fill the gap caused by acute scarcity of affordable units. The attempt to balance protecting renters from excessive rent increase and allowing owners a reasonable return on their investments is “very difficult to achieve in a rental market with both long-term decline in renter incomes and rapid inflation in housing prices.” Source: Economic Roundtable RSO study team available at www.economicrt.org. • What are Effects of Rent Control?Article from the San Francisco Gate cites a 2003 Swedish rent control study which reviewed multiple studies over a 30-year period which provide contradictory, convoluted and hard-to-understand conclusions. As the study summarized “Rent control is legislation, usually at the city level in the United States, that limits how often and how much rents can be raised. In some states rent control is nonexistent. In others it is prevalent. In California, for instance, as of 2010, more than 40 cities had some type of rent control, applicable to at least some types of buildings or mobile homes.” It notes that rent control lends a degree of affordability to tenants who remain in units over time but often does not ensure that those who need the benefit most end up in covered units. “Rent control applies to buildings and not people, the benefits accrue unevenly across the tenant population.” Source: Gallagher, Mary. "What Are the Effects of Rent Control?" Home Guides | SF Gate, http://homeguides.sfgate.com/effects-rent-control-8380.html. Accessed 23 July 2018. • Local Tools to Address Housing Affordability: A State-by-State Analysis at https://www.nlc.org/sites/default/files/2019-03/SMLReport2019_FINAL_0306_32pgs.pdf?eType=EmailBlastContent&eId=cd41075a-7608-4d4c-a2c1-fc1cb7836620

9. Rent Control: Seattle and Oregon Seattle: Preempted by State but Council Debating Oregon: 1st in nation Statewide Law Effective 2/28/2019 Limits residential rent increases within any 12-month period to no more than seven percent above average change in consumer price index, except when the dwelling has been certified for occupancy less than 15 years, or when rent is reduced because of government assistance or subsidy program. Senate Bill Staff Summary • Companion to Mandatory Housing Affordability up-zones? • Interest based on 2017 AFH data showing clear impact on LMI and protected classes of housing affordability • Urgency based on crisis of housing affordability region-wide

10. 2019 Rent Control Legislation StatusSource: Governing Magazine March 4, 2019 • New York currently has rent control guidelines that allow some municipalities and counties to opt in or out of. 51 out of 1,000 towns and cities place some portion of their housing stock under rent control. The current proposal allows all municipalities to opt in to rent control regulations.  • Chicago has on more than one occasion supported a resolution urging the state to end its 22-year-old ban on rent control. According to data collected by Governing, nearly two-thirds, or 62%, of black residents in the state are renters, compared to 27% of white residents. • Colorado State Sen. Julie Gonzalez proposed ending 30-year old law banning local rent control legislation. • California voters rejected November ballot measure that would have repealed 23-year old state law limiting cities’ power to enact rent control

11. Approach to Anti-displacementCommunity Preference: Seattle and Oregon Seattle: Community Preference Policy By Project Portland: Right to Return for Displaced Homeowners Pathway 1000 Initiative: 10 plan to construct 1,000 new affordable homes and rental units Priority given to LMI households displaced during urban renewal in specific north and northeast Portland neighborhood; historic “heart” of African American community since 2000 City provides up to $100,000 for down payment • Allows developers with City subsidy to propose prioritizing members of a surrounding neighborhoods spots in affordable housing rental projects. • Anti-Displacement Executive Order • Ties need for this policy back to the 2017 Assessment of Fair Housing • Balance with Fair Housing Act; details TBD

12. Approach: Direct Funding and Legislation • Seattle Housing Levy: Over 13,000+ LMI units funded since 1981. In 2016, voters approved near tripling of last levy to $290 Million over 7 years. • Seattle Mandatory Housing Affordability : requires new housing development to include units affordable to low-income households or make payments. • As of December 31,2018, MHA payments totaled $13.28 million and 19 units at 40-60% AMI recorded in four projects developed. • Up-zoning in effect in six urban areas across the City which triggers the new development requirements. • Seattle Short-Term Rental regulations: Passed by Ordinance 125483 in 2017 requires licensing for commercial operations who rent multiple properties year-around, established $10/per night tax to try and preserve availability for long-term rentals (Airbnb and VRBO) • Vancouver, BC imposed 15% surcharge in real estate purchases for overseas buyers; causing 96% drop in such transactions in just 7 weeks • Minneapolis 2040: Changes to growth management plan that essentially allows triplexes into traditional single-family zones