Terner Center Blog: No Limits

Why We Need a New Conversation on Rent Control in California, Today.

Posted on by Carol Galante

Leaders seeking to address California’s housing crisis are facing an important challenge: how to take meaningful and significant policy action to “stop the bleeding” of rising costs, eviction and displacement without generating new challenges that will only prolong the state’s deep affordability challenges.

Today’s debate over rent control, and particularly, the movement to repeal Costa-Hawkins Rental Housing Act (which places statewide limits on how jurisdictions implement rent control), has pushed this challenge to the fore. One side of the debate is working to qualify a measure on the November ballot that would fully repeal Costa-Hawkins, enabling localities to expand rent control in their jurisdictions, in an effort to protect tenants from rising rents and displacement. The other side is concerned that this repeal will disincentivize both ongoing investment in existing rental homes as well as much-needed new construction of new housing. Both sides are gearing up for a full-blown battle over the ballot measure.

The Terner Center believes these two choices represent problematic extremes, and that there needs to be an honest conversation about alternative paths that can meaningfully protect renters without inhibiting investment in existing homes or preventing new homes from getting financed and built. There are a growing number of leaders and stakeholders who agree that this conversation is needed and that an all-or-nothing fight over the current Costa-Hawkins law will be costly and highly politicized and that ultimately, whichever side wins, renters in California will lose.

To inform and stimulate this “third way” dialogue, we have been working to identify potential policy alternatives, engaging stakeholders on the ground, researching models in other states, and thinking through the pros and cons of multiple strategies. In a new brief, we present two ideas: one that provides real protections against egregious rent increases for all Californians via a statewide cap on rent increases, and a second that creates more affordable housing overall via a new incentive program for the creation and retention of Below Market Rate units.

These proposals are not intended to represent the solution to California’s housing crisis, and need not be thought of as in lieu of other renter protection policy efforts or other pushes to expand the supply of housing in the state. And while we believe they are more effective approaches than a full repeal of Costa-Hawkins, they also do not preclude reforms to the law. In the appendix of our brief, we explore a few such potential reforms, such as extending rent control to certain types of single family rental homes, or adopting a “rolling inclusion” to make more units eligible over time. But these proposals are intended to serve as a starting point for a much-needed and urgent dialogue about the true impact of current options on rent control, and ideas for a better path forward.

This dialogue is especially urgent in this moment. If the repeal initiative is not withdrawn from the ballot by late June, all the attention and focus on the repeal effort promises to distract policymakers and confuse voters about other important policy efforts to address the housing crisis in the state, such as the Veterans and Affordable Housing Bond Act of 2018.

We are calling on advocates, policymakers and thought leaders to come together for this dialogue, and help break through the noise of the current binary rent control debate to find a viable, more sustainable option. We need more thoughtful and effective solutions today and look forward to engaging with others to make that a reality.


A ‘Safe Haven’: Resident Stories Convey the Benefits of Affordable Housing

Posted on by Carolina Reid

The Low-Income Housing Tax Credit (LIHTC) has become the most important funding source for affordable housing development in the United States, producing nearly 3 million housing units since its inception in 1986 and housing over 13 million people. Despite its significance in the housing market, relatively little research has been undertaken to document and understand the experiences of residents living in LIHTC-funded properties. Today, the Terner Center is releasing a new study addressing this research gap. Our analysis sheds light on how living in LIHTC properties impacts low-income residents, particularly with regard to housing stability, economic mobility, and access to…


Renting the Dream: The Rise of Single-Family Rentals

Posted on by Carolina Reid, Carol Galante, Rocio Sanchez-Moyano

Tenants living in single-family homes in the United States represent the fastest growing segment in the housing market today, but neither academic literature nor public policy has kept pace with their growing importance. Today, the Terner Center is releasing a new study seeking to better understand this group of renters, the homes and neighborhoods they occupy, and the policies that might better support their success. Our study presents data on single-family renters living in a range of housing markets across the country. Our first question: why has this market segment grown so fast? In short: a boom in single-family home…


It All Adds Up: The Cost of Housing Development Fees in Seven California Cities

Posted on by Sarah Mawhorter and David Garcia

In the summer of 2017, the Terner Center embarked on a seemingly straightforward task: determine the amount and type of fees levied on new residential development in seven California cities. What was initially thought to be a clear assignment turned into an odyssey of combing through difficult-to-obtain fee schedules, cobbling together piecemeal information across city departments, and repeatedly interviewing various city planning officials. The onerous and lengthy process our research team faced tells the story of the development fee process in California. While fees act as an important tool to mitigate the effects of new construction, the development and administration…


Perspectives: Practitioners Weigh in on Rising Housing Construction Costs in San Francisco

Posted on by Carolina Reid and Hayley Raetz

It is no secret that producing new housing in California is an expensive endeavor. Our Cost of Building Housing Research Series recently launched with the goal of understanding why this is the case, breaking down the elements of the housing development process to identify key cost drivers and potential private and public sector solutions. Today we are releasing our first brief of the series, which examines rising housing construction costs in San Francisco from the perspective of non-profit and market-rate housing developers, architects, and other practitioners on the ground. The brief shares findings from a series of interviews and focus…


Announcing New Terner Center Series: The Cost of Building Housing

Posted on by Terner Center for Housing Innovation

In recent years, the housing affordability challenges faced by high-cost regions have gone from bad to worse. A number of factors, including shrinking public subsidy, explosive job growth, wage stagnation, and a severely constrained supply of housing have all been widely cited as drivers (with each region facing a unique set of circumstances). Another factor that is compounding the housing affordability issue is the actual amount of money it takes to build a housing unit. In recent years, the cost of building has skyrocketed in places like San Francisco - in some cases increasing by up to 50 percent -…


ADU Update: Early Lessons and Impacts of California’s State and Local Policy Changes

Posted on by David Garcia

A multi-pronged approach to alleviating the shortage of housing in California and other high-cost regions is urgently needed. As we have discussed in past research, Accessory Dwelling Units (ADUs) - built with a small footprint predominantly in under-utilized single family neighborhoods - can offer much needed naturally-affordable supply to the market. In the fall of 2016, the California State Legislature passed a set of bills intended to clear the way for the proliferation of ADUs  in California. Even before these changes were adopted, many leaders at the local level were pioneering policies to make it easier for residents to build…


New State Policies Aim to Boost Access to Opportunity through Housing

Posted on by Elizabeth Kneebone and Carolina Reid

In California, the Tax Credit Allocation Committee (TCAC) plays an important role in determining where and how Low Income Housing Tax Credits (LIHTC) get allocated for the production of affordable housing. On Wednesday, TCAC adopted a series of policy changes aimed at increasing the development of affordable housing options for families in higher opportunity communities, signaling a commitment to advancing fair housing goals amid the state’s broader agenda to address California’s housing crisis. The regulations seek to respond to a growing body of evidence that communities that provide low-income families access to good schools and safer, lower-poverty, and less segregated…


A Reform Proposal for the Federal Housing Administration

Posted on by Carol Galante

Media reports and other sources in Washington, D.C. suggest momentum is building for housing finance reform. According to a recent piece in National Mortgage News, “the White House and congressional GOP are eyeing a tight window between tax reform and the 2018 midterms to pass housing finance reform. And with key policymakers readying their exit, the effort could be the most concerted push yet.” As policymakers debate the future of the nation’s housing finance system, I urge them not to overlook both the importance of the Federal Housing Administration and the improvements it needs in order to fulfill its mission and…


Scaling Off-Site Production in the United States: Lessons Learned from Swedish Leader Lindbäcks

Posted on by Mark Trainer and Carol Galante

When it comes to innovation in housing, what does the U.S. have to learn from Sweden? More than you might think. Though they have different histories, economies and social contexts, Sweden and the United States share many housing market challenges – including significant barriers to new construction and high cost of production leading to rapidly appreciating housing prices, especially in urban centers. The Terner Center recently published a policy brief providing a detailed examination of the Swedish housing system, and a companion summary outlining key similarities and differences with the United States. And last month, the Terner Center for Housing…