Time for a Study of the Effects
of San Francisco Rent Control

By Ralph E. Stone

March 5, 2010

Rent control was enacted in San Francisco in 1979. Enough time has passed to justify an independent empirical study of the effects of rent control, if any, on the quantity and quality of housing in San Francisco.

All San Francisco properties with a first Certificate of Occupancy issued prior to June 13th, 1979 are subject to rent control. If a rental unit was in regular use prior to June 13th, 1979, but does not have a Certificate of Occupancy — an illegal unit — the San Francisco Rent Board will still find the unit subject to rent control. This means rents can only be raised by certain amounts per year, which is tied to inflation. Landlords can also petition for other increases, e.g., for capital improvements for a maximum of 10 percent or for increased operating and maintenance costs for a maximum of 7 percent. In addition, tenants can petition the Rent Board to decrease their rent if the landlord is failing to provide agreed upon or legally required services. Tenants can only be evicted for one of fifteen “just causes.”

Many economists argue that rent control reduces the quality and quantity of affordable housing. San Francisco rent control advocates argue that these studies are inapplicable because San Francisco is unique because the City has limited space to expand — 49 square miles; the City is densely populated; and San Francisco zoning and anti-growth ordinances restrictions inhibit the addition of new housing. This mean that without rent control, San Francisco will add too few units to make a significant dent in the City’s housing shortage. To prevent an exodus of the middle class workforce due to lack of affordable housing would have dire consequences on the City’s economy. The ability of this work force to be able to live a middle class life style and afford shelter is essential. Thus, the argument goes, for San Francisco as a whole to prosper, some form of rent control is essential. A study would examine the validity of this argument.

About 70 percent of San Francisco’s residents are tenants and most live in rent controlled property. Clearly, rent control can combat out of control housing prices. It allows tenants to devote a smaller percentage of their income to rent allowing them to spend their money elsewhere. This is extremely beneficial for low income or fixed income renters, especially during a recession. But how has rent control effected the general population of renters and potential renters?

Rents serve to compensate housing providers of existing housing units and developers of new units for the cost of providing shelter and provide economic incentives needed to attract new investment in rental housing, as well as maintaining existing housing stock. Has rent control inhibited new construction in San Francisco or led to the deterioration of existing housing by abandonment of unprofitable property or by condominium conversions or Ellis Act evictions?

A study of the effects of San Francisco’s rent control on the quantity and quality of our housing would be useful to inform our politicians and the general public about rent control issues.

Ralph E. Stone

I was born in Massachusetts; graduated from Middlebury College and Suffolk Law School; served as an officer in the Vietnam war; retired from the Federal Trade Commission (consumer and antitrust law); travel extensively with my wife Judi; and since retirement involved in domestic violence prevention and consumer issues.

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