Monday, October 14, 2013

California Governor Shuts Down Legislative Scheme to Sneak Rent Control Into Your Neighborhood

California Governor Jerry Brown yesterday vetoed a bill that would have effectively sneaked rent control into new apartment buildings where it has been prohibited since 1995. Despite aggressive opposition from California REALTORS, the bill passed through the legislature and landed on the Governor's desk. However, the Governor said "no, thanks" to AB 1229, which would allow cities to incorporate inclusionary zoning. This bill would have gutted the landmark Costa-Hawkins Act of 1995, which prohibits rent control in new construction.

In his veto message, Governor Brown thought back to his days as the mayor of Oakland, Calif., and worried that inclusionary zoning, despite its intent to bring affordable housing to under-served communities, in fact does the opposite:

"As Mayor of Oakland, I saw how difficult it can be to attract development to low and middle income communities. Requiring developers to include below-market units in their projects can exacerbate these challenges, even while not meaningfully increasing the amount of affordable housing in a given community."

Trouble is, rent control just doesn't work. The Governor in his veto of this bill demonstrated his understanding of how to discourage bad policy and encourage investment where it is needed most

The legendary five-term Congressman and Speaker of the House, Tip O'Neil, is remembered most perhaps for his saying that "all politics is local". Yesterday in California, the Governor took the best of his experience as a local elected official - big city mayor - and put a stop to bad policy. Sometimes, maybe, the best policy can be made when policymakers are closer to the communities where that policy will affect.