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Peskin’s Rent Control Expansion: Will it Work?

February 3, 2016

by Randy Shaw : beyondchron – excerpt

After winning election pledging to address San Francisco’s affordable housing crisis, Supervisor Aaron Peskin is now promoting a novel strategy: expanding rent control to newly constructed buildings. While state law bars rent control on post-1979 buildings, Peskin correctly believes that San Francisco can require rent control and potentially even vacancy control as a condition of approving housing developments that have received special city benefits.

Will Peskin’s measure make a difference? Here’s our take.

Why It’s Legal

Let’s start by explaining how Peskin’s plan gets around state law.

The city cannot impose rent controls on existing post-1979 buildings or those in the pipeline that are consistent with local zoning (so called “as of right” structures). I had previously thought Peskin was trying to cover such structures, but he is not.

Instead, Peskin’s plan impacts projects like the recent 5M development that are asking the city for a significant upzoning. In exchange for receiving that type of major economic benefit, developers would have to agree to rent control.

I was involved in getting rent control imposed at the new Trinity Plaza, which was necessary to replace the rent-controlled units slated for demolition. Parkmerced’s development then followed this model.

Both circumvented the state ban on applying rent control to new construction because the restrictions were part of development agreements. Such agreements would also likely be necessary to implement Peskin proposal…

The Politics of Passage

Despite the limited impact, expect Peskin’s plan to provoke hysteria among some in the real estate industry. State fights over Ellis Act reform show that the real estate industry mobilizes against measures that do not even impact them in order to send a message to legislators to stay away from their turf;  even Peskin’s limited plan to impose rent limits on new buildings will get realtors out in force to City Hall… (more)

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