The cost of living in Silicon Valley has drawn a lot of attention lately. Two neighbouring houses on my street have been sold for more than $900,000. When I bought my house 17 years ago it cost less than $400,000.
There has been a similar effect on renting costs. I know of someone with a two bedroom in San Jose in a middle income neighbourhood whose rent has gone from $1700 to $1850 a month on a one year lease. That's an increase about eight percent which is a lot more than what people are paid. Finally, it can be argued that this leads to an increase in the number of homeless.
Rent is currently controlled in San Jose for apartments other than duplexes built before 1979. The maximum allowable rent increase is eight percent. What is being proposed in San Jose is to extend that protection to duplexes and also introduce a "just cause" ordinance. This would in effect prevent the landlord from terminating the lease under most circumstances. However, the protection would not apply to any apartments built in the past 35 years which are the most expensive.
I'm not in favor of rent controls. When I ran for city council in 2008, one of the planks I was running under was affordable housing. I do think that is a big issue in Silicon Valley, however I do not think rent controls are the best way to address it.
Although rents are increasing all over the United States, the effect is particularly evident in Silicon Valley because we have a booming economy with Santa Clara County being the 15th richest in the United States. When Apple builds a new corporate headquarters costing $6 billion, and when the Santa Clara 49ers build a $1 billion stadium this draws people to the valley and it has a corresponding effect on rent.
In calling for rent controls, people are blaming the landlords while at the same time many of our neighbors are profiting from selling their house. New laws like a just cause ordinance make it much more difficult to evict a problem tenant, such as a user of methamphetamines or a prostitute. Finally, a lot of people in Silicon Valley are very rich but the only property tax is on landowners -- why add to this imbalance.
I think it would be better to change the zoning laws, to provide for the development of more new multi-family units inside single family neighbourhoods. Possibly the city could buy houses during an economic downturn and build on the land. Measures could be taken to help seniors move out of their homes while protecting their economic interests. The new units would be required to be affordable and targetted for the middle class.
The risk in propositions such as those I am making is that renters in these new units would have an advantage over others on the open market. This could be mitigated by limiting leases to 3 or 5 years, or by renting a number of units to deserving individuals such as teachers and police officials. The intent obviously would be to balance this against salary and pension demands. Obviously these proposals would come at a significant cost.
City planning should prepare for higher density housing in Silicon Valley by allowing, through a variety of means, housing at different income levels. It should prepare for better public transit by placing these units as well as stores close to transit lanes.
I realize my views will not be popular with many. I nonetheless think that if rent control is introduced, there will be a number of unprovided for side effects. I have lived elsewhere and the pace of public spending has been much more constrained. The issues of housing cost, jobs, and homelessness are complex and need more than a knee-jerk response.
