Business: Catching the New York Disease

  • Share
  • Read Later

Rent control starts to spread across the country

The political rebels of the 1960s are no longer without a cause. They have discovered rent control. Behind the overwhelming endorsement that voters of affluent Santa Monica, Calif., gave rent control two weeks ago was the Campaign for Economic Democracy, a group started by Tom Hayden and his Oscar-winning wife, Jane Fonda. They are promoting rent control up and down California. As Fonda told a tenants' group outside San Francisco last week, "We're not trying to screw landlords out of their profits, but we have to find a way for people to get a roof over their heads while landlords make a decent profit. What we have to do is eliminate the greed quotient."

High rents and Proposition 13, which granted tax relief to property owners but not to renters, have stirred up California's tenants; they had appealed to landlords to pass on a portion of their tax savings to them, but many landlords refused to do so. As a consequence, Santa Monica enacted one of the stiffest control laws in the country and rolled all rents back to the levels of April 1978. Since November, Los Angeles, Berkeley, Davis and parts of Beverly Hills have voted for rent control. San Diego consumerists are agitating to get rent control on the ballot for a September election.

In many cities and suburbs, the issue is catching on because inflation is combining with a diminishing apartment market to bloat rents. Washington, D.C.; Montgomery County, Md.; Boston, Brookline and Cambridge, Mass, and a number of small towns in New Jersey have enacted rent controls since the early 1970s. In the past twelve months, bills calling for some form of controls have been introduced in the state legislatures of New Mexico, Arizona, Oregon, Hawaii and Pennsylvania. A tenants' association in Miami Beach, where some rents have doubled in five years, is trying to bring back the controls that the city council voted out two years ago.

A legacy of World War II, rent control went into effect throughout the nation in 1943 to protect the families of servicemen overseas and industrial workers at home. After the war controls were lifted everywhere except New York City, where they remain to this day. Opponents of rent control, who include some citizens' groups as well as landlords and real estate developers, point to New York's devastated South Bronx, Brownsville and Williamsburg as examples of the damage controls do. Unable to raise rents to pay for higher fuel, taxes and other costs, owners let their buildings run down and often abandon them. In the two years that controls were in effect in Miami Beach, there was no new rental construction and no sales of existing rental buildings except at distress prices. Building maintenance and services were cut back, causing widespread deterioration. Homeowners rebelled at having their taxes go up as the value of taxable rental real estate declined. To elude rent controls, landlords often convert buildings to condominiums, and tenants must either buy or get out.

  1. Previous Page
  2. 1
  3. 2