#117 May/Jun 2001

Rent Control in the New Millennium

During the 1970s and early 1980s, the fight for rent control galvanized tenant organizing. That era’s economic and political context made rent control timely and attainable on a number of […]

During the 1970s and early 1980s, the fight for rent control galvanized tenant organizing. That era’s economic and political context made rent control timely and attainable on a number of different levels. First, inflation from the Vietnam War and OPEC oil embargoes placed economic hardships on increasing numbers of working families. Like today, in many areas of the Northeast and California, rent increases were far outstripping wage increases, and a growing shortage of affordable housing exacerbated the crisis.

Second, there was an infrastructure of tenant organizations able to mobilize large numbers of tenants. Groups such as the New Jersey Tenants Organization (NJTO), the Metropolitan Council on Housing (New York City), New York State Tenants and Neighbors Coalition, the California Housing Action and Information Network and the Massachusetts Tenants Organization coordinated successful local and statewide rent control campaigns. A surge of tenant activism throughout the country led to formation of the National Tenant Union (NTU) in 1980. Each group had leaders with extensive organizing experience gained from the political struggles of previous decades.

The last factor that brought about a demand for rent control was the public’s disillusionment with government and corporate America in the wake of Vietnam and Watergate; large numbers of people saw progressive social change as an attainable and desirable goal.

California, New Jersey, New York and Massachusetts, and cities such as Seattle, Baltimore and Washington, DC, were the sites of pitched battles for rent regulation during this time, many of which were successful. At the height of tenant influence in the late 1970s, rent control laws had been enacted in over 170 municipalities, mainly in the Northeast and California where the rent pressures were most severe and tenant organizations were strongest. Though not uniform, these laws did have a number of common features, one of which was a specified annual rent increase, either a fixed percentage or some fraction of the Consumer Price Index. Most of these laws also provided landlords with capital improvement surcharges, tax surcharges and hardship appeals that guaranteed fair rates of return on investment.

Despite these moderate provisions, landlords vigorously opposed all forms of rent control. The emerging conservative onslaught in the 1980s further slowed or rolled back tenant gains. The National Council of the Multi-Housing Industry (NCMHI), a sister organization to the National Apartment Association (NAA), was created to serve as an umbrella organization for state landlord associations. The NAA and NCMHI lobbied to cut off federal Community Development Block Grant funds to any municipality with rent control and got the Reagan Administration to push for this sanction each time the program came up for authorization. Both of these organizations encouraged their state affiliates to initiate local and statewide referenda on rent control and provided research materials, expertise and guidance for these campaigns. These efforts coincided with a growing conservative and anti-regulatory sentiment in many sectors of the voting population.

Meanwhile, the short-lived NTU collapsed, leaving tenants without the coordinated national voice of the landlords. However, the tenant movement remained strong at the state and local levels where rent control is enacted, so the landlord offensive was largely defeated. The large statewide tenant organizations had broad, organized and vocal constituencies that made a crucial difference in thwarting landlord-sponsored voter referenda, legal challenges and massive tax appeal campaigns. But unlike the 1970s, when tenants were offense and winning victories, they were now on the defensive.

Massachusetts and California: Statewide Losses
When landlords attack rent control in a larger arena that includes fewer urban areas or tenants, they are often more successful. Massachusetts fared the worst in this regard, losing rent control altogether in a 1994 statewide referendum sponsored and financially backed by landlords, which passed by 51 percent. But Massachusetts only had three cities with rent control (Boston, Brookline and Cambridge), and not surprisingly, the referendum lost there. The aftermath of the loss of rent control included drastic rises in decontrolled rents and an aggravation of the shortage of affordable rental housing in the greater Boston area, with rents rising 50 to 100 percent. (See The Decontrol Blues.)

While California’s landlords have failed to win statewide rent control repeal, in 1995 they persuaded the California Legislature to impose vacancy decontrols statewide. Vacancy decontrol, a favorite and widely successful weapon of anti-rent control forces, allows landlords to raise rents well above the allowable annual increase when a tenant moves out. In a large number of cases, rents can be raised to market levels before coming under rent control again. In its extreme version, rents are decontrolled altogether upon a vacancy. This not only has made rental housing less affordable for many tenants in rent-controlled jurisdictions, but also has created a great disparity in rents between new and older tenants. As a result, vacancy decontrol also discourages tenant unity.

In California, statewide vacancy decontrols took effect at the beginning of 1999. For much of the rent-controlled housing, this will mean the end of rent control due to the high demand for housing and the small supply of affordable units. Tenant organizations in cities like Berkeley and San Francisco have had to refocus on the crucial, though rearguard, fight to strengthen eviction protections for those tenants that still enjoy the greater protection of prior local laws. In the November 2000 election, San Francisco tenants passed an initiative measure to limit landlords’ ability to increase rents for capital improvements (except for seismic renovations), and Berkeley voters approved an initiative to tighten owner-occupancy rights.

On the upside, California mobile homeowners have benefited from the strong legislative advocacy of the Golden State Manufactured Homeowners League (GISMOL). The mobile home tenant/owner organization in California is one of the best organized and financed in the U.S. In the mid-1990s, GISMOL led a successful effort to defeat a statewide attempt to repeal California’s widespread strong city and county mobile home space rent control ordinances that have either no vacancy decontrol or limit any special increases upon vacancy.

Washington, DC:
Confronting Consultants
Last year, in the District of Columbia, tenants successfully defeated an attempt to repeal rent control. As required by a 1997 Congressional mandate, the DC Financial Control Board had commissioned a study of the rent control system enacted in 1975. The consultants released a report in 2000 that recommended repeal of rent controls covering more than 100,000 rental units, claiming that they were no longer needed and that high vacancy rates would protect lower-income tenants from major rent increases. DC already allows special rent increases for vacant units, including a provision that allows landlords to raise the rent to that of the “highest comparable unit” in their building – although this is not technically considered vacancy decontrol.

The consultants acknowledged that decontrolled rents in Cambridge had risen by 36 percent between 1994 and 1997, but claimed that this would not happen in DC due to already higher rents and vacancy rates. They estimated average decontrolled rent increases at about 2 percent, with little likelihood of tenant displacement.

The DC Coalition for Rent Control criticized the study’s assumptions and methodology. It involved no new research, says Kenneth Rothman of the Coalition, and the study used the unusually high rent ceilings, created in some cases by the highest comparable law, to make rent control appear unnecessary since some owners were charging less than the ceiling allowed.

Knowing that the city council didn’t look favorably on the study since it had been commissioned by the imposed control board, the Coalition didn’t worry about it much. It focused instead on the need to improve the implementation of rent regulations, specifically the de facto vacancy decontrol. In October 2000, with the support of Mayor Anthony Williams, the City Council extended the existing rent control law for another five years.

Rothman believes that rent control is in less danger of being repealed in DC for two reasons. First, it has one of the highest percentages of renters in the country (approximately 60 percent). And second, it has no state government. In other areas, says Rothman, “When the landlords can’t fight [rent control] locally, they take it to the state so they can work with the legislators whose constituencies aren’t urban.” Although DC has federal oversight, the federal lawmakers are hesitant about interfering locally and also aren’t indebted to local realtors for contributions.

New York: Chipping at the Edges
In 1997, New York tenants defeated Republican-led efforts to impose full vacancy decontrol on municipalities like New York City, but it took a full-scale organizing and lobbying campaign. (see Shelterforce #94.) Landlords did win passage of “luxury decontrol” for units renting for $2,000 or more per month. Early in 2000, the New York City Council extended its rent stabilization law covering approximately 1.1 million rental units for another three years (through March 2003), again largely unchanged due to strong tenant lobbying. However, new landlord-friendly regulations were added by the state Division of Housing and Community Renewal. These new regulations create a procedure for defining legal base rents favorable to landlords, restrict cost-sharing between roommates and allow vacancy decontrol increases more than once a year.

New Jersey:
Local Inroads, Strong State
In New Jersey, long the battleground and site of major tenant rent control victories, a number of factors have led to erosion of tenant power. Two decades of vigorous landlord political activity at the state and local levels have begun to yield a shift of power in their favor. Landlord-sponsored voter referenda, a massive tax appeal campaign (see Shelterforce #55) and co-op and condo conversions have taxed the tenant movement’s resources. In addition, throughout the 1980s and 1990s, public opposition to increases in the state income tax and local property taxes led to the election of conservatives at all levels of government. Demagogic attacks on tax increases strained the already tenuous alliance between homeowners and tenants. In the state legislature, this has manifested itself as a barrage of anti-tenant legislation which has placed the New Jersey Tenant Organization (NJTO) in a constantly defensive position.

At the local level, landlords have chipped away at local rent control laws through the divide and conquer strategy of vacancy decontrol. While tenant leaders understand the long-term negative consequences of vacancy decontrol, it has been difficult to mobilize large numbers of tenants in opposition since the policy does not affect them directly. Landlords have also lambasted rent control as a cause of homeowners’ property tax hikes, which has caused weakness in overall tenant-homeowner unity.

As a result, there has been a widespread enactment of vacancy decontrol measures in municipal rent control laws. Eighty percent of New Jersey’s 115 rent-controlled municipalities now have some form of vacancy decontrol. More than half have full vacancy decontrol that allows rents to be raised to market levels before coming under rent control again. Two cities, Bloomfield and Passaic, have recently implemented permanent vacancy decontrol measures that will phase out rent control. In towns with full vacancy decontrol, rents have quickly risen to market levels, exacerbating the already acute housing affordability crisis in New Jersey.

Landlords have carried their anti–rent control campaign to the state legislature, but unlike Massachusetts and California, they haven’t been successful. The NJTO is still an effective electoral force in the heavily populated northern counties in the state, and in spite of persistent opposition, rent control has become a valued part of the political landscape in more than 20 percent of the state’s municipalities. Also, the issue of home rule steers many conservative state legislators away from the issue.

Nonetheless, landlords maintain the offensive in the state legislature. In March 1997, Republican Assemblyman Michael Patrick Carroll introduced legislation to end rent control in the year 2000 for all apartments renting for more than $750 per month, which is well below the average rent in the state. Carroll’s bill also would have prohibited the enactment of any future local rent control laws. Following this bill’s introduction, then-Governor Christie Todd Whitman called for the establishment of a Landlord-Tenant Task Force to make recommendations on rent control and related property tax issues; the Governor recommended members who would be overwhelmingly supportive of the real estate industry’s interests.

The NJTO was given one seat on the 10-member commission. The remaining members were to come from the statewide landlord, builder, banking and bar associations and the state legislature – one Republican leader from each house. The NJTO organized a statewide campaign that mobilized local tenant associations, labor unions, community development organizations, housing advocacy groups and New Jersey Citizen Action to expand the task force’s composition. As a result of NJTO’s efforts, Governor Whitman added representatives from the New Jersey Mobile Homeowners Association and the New Jersey Housing Community Development Network, and the New Jersey Bar Association named a prominent legal services attorney as its representative.

To date, the task force has not issued its report, and tenant lobbying successfully ended the life of the Carroll bill during the 1999 legislative session. Undaunted, Assemblyman Carroll has introduced a new bill that would impose permanent vacancy decontrol throughout the state. However, this legislation appears to be dead on arrival due to considerable tenant opposition.

The National Picture
Nationally, outside the main rent-controlled regions, there has not been a demand for rent controls due to the relatively low inflation rate during the past decade. However, in hot local real estate markets such as Seattle, rent control has re-emerged in policy debates as a response to exorbitant rents. Housing advocates in communities that seek enactment of new rent control laws have some unique organizing challenges; a number of state legislatures, including Washington and Massachusetts, have preempted local governments’ right to enact rent laws. It will be necessary to start with a statewide presence similar to the past efforts in states of New Jersey, New York and California. Tenant unity across class lines must be built at the beginning of rent control campaigns, and tenant-homeowner unity on tax equity issues is essential to thwart the certain divide-and-conquer strategies used by landlords.

Carrying On
In and of itself, rent control cannot solve the crisis of the lack of affordable rental housing. However, under the right conditions it can avert much tenant displacement by preventing steep rent increases while guaranteeing compliant landlords a fair rent.

The history of rent control over the last few decades offers lessons for today’s tenant groups. First, the location of the struggle is always shifting. Real estate and landlord interests are well organized. If they can’t win at the local level, they will try at the state, and vice versa. Organizing has to be strong at all levels to succeed.

Second, economic and political climates have great influence on the success or failure of rent regulations. Tenant groups need to pay attention to these trends and actively form alliances with other groups, such as homeowners concerned about property taxes.

Third, and perhaps most importantly, vacancy decontrol and other weakening of rent regulations can be just as dangerous or more so than the threat of full repeal. Vacancy decontrol provides a strong incentive to threaten tenants with eviction, it weakens the tenant organizing base because it does not directly threaten rent increases to existing tenants and it rapidly reduces the stock of affordable housing. As Kenneth Rothman of the DC Coalition for Rent Control says, “The real fight is going to be within the details of the law.”



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