Investor TypesRent Control: An Enduring Symptom of Fear-Part 1

August 20, 2020by melissad0

By Neil Fjellestad

I’m not sure whether rent control came up in the initial discussions surrounding the creation of a rental housing association, but I suspect it could have. No, I wasn’t there-haha! But it has been my privilege to connect with local rental owners for 50 years; one-half the centennial period we currently celebrate, and I can attest that the subject of rent control has always been on the lips and/or the minds of at least some of us. Why is this a constant threat to rental owners? Under what conditions does it present itself as a possible solution to renters?    

Perhaps, I can review some local housing history as a backdrop. Locally we experienced government guidelines and controls of housing during and after WWII. Such a layer of additional accountability due to scarcity and necessary public mandates were not uncommon during periods of war or disaster. These are times during our proud history that we could agree to sacrifice for the common good. However, even members of the “great generation” required rules for sacrifice. It was extremely important that there weren’t winners and losers; fairness has always been at the heart of trust.

I was born a “boomer” and as I graduated from Point Loma High in 1965. The largest class in US history up to that point. We believed less in what our parents told us and more in ourselves. It required a “draft” to get our participation in war or anything designated as expected or required by government. Our generation’s idea of sacrifice and fairness had a built-in mistrust as we worked our way through the seventies.       

In 1976

San Diego home prices were on par with the national median price. Between 1976 through 1979 local home prices doubled and moved our region toward becoming labeled unaffordable.

This dramatic shift in property value brought property taxes that were already burdening home ownership. Especially for seniors living on fixed income. Property tax was already on a steady rise all through the sixties and seventies due to the education costs of the rising boomer population. There was also an escalation of highway construction. Seniors were mistrustful of how their property taxes were spent. Finding it an unfair burden since they no longer had children in school and were driving less as well.

Mistrust and a feeling of unfairness become an unmitigated fear in the last half of the seventies and a growing rage for a vocal few. One unlikely hero stepped forward inside the California political scene and became focused on a specific message that got traction. He would slam his fist on whatever podium was in the public meeting in which he appeared and declared that property taxes were unfair to grandmothers and he was “mad as hell.” This unlikely man of the hour, Howard Jarvis became an author of Proposition 13 that was voted into law in 1978. It remains as California law today 40+ years later.

So, we enter the decade of the 80s with housing becoming unaffordable in San Diego. Obviously, the 40-45% of local households that were rentals during the time were growing mistrustful of landlords. Many believed they were using property tax increases as an excuse to raise rent. From a renter’s perspective this was solved for property owners with Prop 13. But rents were not being rebated to share their windfall. This brought impending rage by a vocal few. The result: a rent stabilization proposition O that qualified for the local ballot in 1980.

Proposition O

Prop O was put down mostly due to its language. But also due to efforts of this Association along with the Realtors working together through a Speakers Bureau. It was established to educate the public on this issue. A former business partner and lifelong friend, Darryl Rapp helped organize this campaign. This Association, around the personal leadership of DJ Ryan, didn’t sit back and take the win of O.

There was ample mistrust, fear and legitimate concern on the part of renters who were left without meaningful representation. So, from this “defense came a new offense”. If our renters are concerned, we as rental housing providers demonstrate genuine concern by putting ourselves on the firing line. The Resident Relations Foundation was established as a public demonstration for our Association’s concern. We provided a hotline manned by staff and volunteers to enhance renter support. Give advice and attempt to resolve issues with fairness and equity.

To be continued – Part two will be available soon!

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