Reining in Rent Control

The plain facts may undermine a divisive practice.

Imagine not being able to legally move your family into a house you own. That's what happened to a rental-property owner in Santa Monica, California. And it's one of the reasons why the Pacific Legal Foundation, a free-enterprise public-interest law firm, and the California Apartment Association, a landlord group, are taking rent control to court.

The PLF's legal strategy is to show that rent control simultaneously diminishes an owner's rights while failing to advance a governmental interest. In the late 1970s, Santa Monica and Berkeley passed rent-control legislation with the specific intent of securing and maintaining affordable housing for residents such as the elderly, college students, the physically handicapped, and low-income families.

After conducting an extensive survey of census data in comparable California cities, however, the CAA and the PLF found that during the time rent control has been in force, Santa Monica and Berkeley have experienced significant declines in precisely the populations the legislation was intended to protect. By virtually every standard, including median income, demographic breakdowns, availability of rental units, and average education level, the two communities have become more exclusive after a decade of rent control. The survey is central to the PLF's argument, since the courts will only consider the actual effects of rent control in deciding on its legality.

The PLF will represent landlords in California's lower courts and says it will exhaust the appeals process, going to the U.S. Supreme Court, if necessary. Although there have been court challenges to rent control in the past, "this is the first time a combination of the economic anti-rent control theory and empirical data will be used," says James Burling, the PLF's director of property rights. The PLF will bring cases later this year in Santa Monica, Berkeley, Escondido, and Cotati.

The PLF hopes that rent control will ultimately be ruled unconstitutional. "Hopefully, [our cases] may also make the courts look more carefully at the rationale for economic regulation, especially since so many government regulations have the opposite effect of what's intended," says Burling.