Would a Proposed Rent Control Bring Silicon Valley’s Soring Rents into Balance?

After years of punishing rent increases, activists across Silicon Valley and the San Francisco Bay Area are pushing a spate of rent control proposals, driven by outrage over soaring housing prices and fears that the growing income gap is turning middle-class families into an endangered species. Those campaigns, if successful, would lead to the largest expansion of tenant laws since the 1970s.

“In the national picture, tenants’ rights and housing advocacy for the poor has been pretty sleepy for several decades,” said Michelle Wilde Anderson, a law professor at Stanford. “California is starting to wake up, and it may lead to national change.”
The Bay Area may be a special case, with the growth of technology industries driving housing costs into the stratosphere and a California initiative system that allows citizens to put proposed laws on the ballot. But the state has a long history of being at the forefront of populist uprisings that spread across the country, and rent control movements have already popped up in other higher-cost cities like Portland, Ore., and Seattle.
In 1978, Proposition 13 sharply reduced California’s property taxes, presaging a nationwide tax revolt. More recently, the state government adopted one of the nation’s most expansive minimum wage laws, to $15 statewide by 2022, reflecting a populist tide against income inequality that the rent control effort is also riding.
“This is happening so fast that we in the advocacy community can’t even keep track of it,” said Daniel Saver, a housing lawyer who is helping draft rent control proposals in several towns.
Instead of being based in big cities like San Francisco, today’s renters’ rights movement is centered in the collection of suburbs and bedroom communities that fill the peninsula south of the city. Here, the collision of tech riches with decades of slow-growth development measures has pushed rent prices up about 50 percent over the last five years, according to Zillow, the online real estate pricing service.

Today, as in the 1970s, the economic prescription would be to build more and soon. But as tales of eviction spread and landlords raise prices to the limit, even people who acknowledge rent control’s problems argue that it is still the best instrument to help middle-class families and lower-paid service employees who can no longer live close to work.

“The solution to the overall increase in housing prices in this area is bringing supply and demand into better balance,” said Leonard Siegel, a city councilman in Mountain View, where Google has its headquarters. “But until we get there — which means we need time to build housing — we keep losing people, and the fabric of our community is being torn apart.”
Silicon Valley looks and feels suburban, lacking in pedestrians and full of single-family homes. It also has many tenants. In Mountain View, for instance, renters make up 60 percent of the households. And since this is a place where a $1 million starter home is considered a steal, those renters also include well-paid tech workers at some of the most valuable companies on earth.
“In many of these places, rent growth by far outpaces income growth,” saidSvenja Gudell, chief economist at Zillow. “And you will find that not only at the bottom of the market, but even at the top of the income distribution, where incomes are growing but not as fast as rents are growing.”
Google employees routinely show up at City Council meetings to speak out about rents and evictions. And after a 2014 election that served as a housing referendum by bringing Mr. Siegel and two other housing advocates onto the council, Mountain View is poised to add 15,000 new units, about a 40 percent increase in the housing stock.
Nevertheless, a group called the Mountain View Tenants Coalition is collecting signatures for a voter initiative in hopes of putting rent control on the November ballot. One of the group’s leaders and its chief spokesman, Evan Ortiz, is a 29-year-old Google employee who works in ad sales.

Thomas K. Bannon, chief executive of the California Apartment Association, a landlords’ group, said his members were mobilizing a statewide response and planning to spend millions of dollars — he would not estimate exactly how many millions — to beat back the initiatives one city at a time. The members’ message: Don’t blame landlords. Blame cities for making it so hard to build new housing.
“We recognize that if there isn’t new development and there aren’t dollars for affordable housing, we are going to be up against the wall,” he said. “The days of the industry trying to play below the radar are, unfortunately, over.”
Rent control is rare nationally, and it is generally left over from decades-old laws for urban areas of New York, California and New Jersey, as well as the District of Columbia. About half the states have laws prohibiting localities from regulating rent prices at all, according to the National Apartment Association, while others, including California, have imposed limits, such as making more recent buildings exempt.
Economists have an almost universally dim view of rent control because it does nothing to attack the underlying problem here, which is that more people want to live in the Bay Area and Silicon Valley than there are housing units to put them in.
Indeed, study after study has shown that while limits on rental increases may have helped a comparative handful of tenants stay in their apartments, they only added to a shortage of affordable housing and did little to stem the tide of higher costs.
Rent control also comes with unintended consequences. The supply of rental apartments can become tighter as landlords exit the business. The properties that remain can become shabbier as owners stop keeping up with maintenance.

“Rent control exists for a reason, and it’s because someone gains from it,” said Daniel Fetter, an economics professor at Wellesley College in Massachusetts. “The question is, ‘Is that really the best policy for achieving those ends?’”
But such abstruse arguments don’t carry much weight when many people are worried about being displaced, especially in the Bay Area, where losing a cheap apartment can mean moving an hour or more from work.
On a recent evening in Burlingame, a Silicon Valley bedroom community about 20 minutes south of San Francisco, a 66-year-old legal secretary named Cindy Cornell sat at a foldout table in a San Francisco Giants visor collecting signatures for another rent control initiative.
About half the households in Burlingame are renters, and the list of horror stories went up and down the economic ladder. There was a 36-year-old mother of one whose husband is an engineer who makes good money at a tech company. She signed because their landlord raised the rent to $4,600 from $3,400 while she was pregnant.
A woman with four children and a husband who paints houses signed because the rent on her two-bedroom apartment had risen to $1,600 a month from $1,400 a month in two years.
A half-hour later in nearby San Mateo, Reyna Gonzalez, a 57-year-old nanny, was going door to door with her granddaughter and a clipboard, finding voters for similar proposal.
Whether or not these efforts are successful, Mr. Bannon, from the landlords’ group, said he expected escalating housing costs to remain one of the state’s central political issues for years.
“My members are not going to put their buildings on wheels and move them out of California,” Mr. Bannon, the landlord lobbyist, said. “We’ve got to do something to build. We can’t continue like this.”