The High Cost of “Affordable” Housing

Jeff Harding’s recent column in the Montecito Journal brings up one of the hottest topics facing City Council currently. “Rent Control” surfaces periodically as a solution to the relatively high cost of living in a city where demand for affordable housing has traditionally out-paced supply. Due primarily to our high-functioning Housing Authority, Santa Barbara actually does enjoy a relatively high percentage of dwellings made affordable by covenants and subsidies. The demand, however, persists. As Mr. Harding points out, solving the issue with the one-pronged approach of demonizing property-owners and landlords as the cause of this phenomenon is neither fair nor practical. And the result of these programs has been played out in cities all over the world to the eventual detriment of the rental dwelling market and thus the tenants. The latest scheme proposing capping rent increases at 60% of CPI does not take into account realities of inflation, utility costs, price and availability of insurance and may not cover annual property tax increases. Lastly, it disproportionately punishes structures built prior to 1995, which, while aging and prone to needing repair, provide a major source of below-market opportunities for tenants. Santa Monica, a city almost identical in population to ours, runs a rent control program at the cost of $6,000,000 per year, and finding an affordable unit there is no slam dunk. Where would we find that money?

Artificial market mechanisms, preferred by politicians as a panacea for socio-economic issues, are rarely successful in the long run and have unintended consequences. Price supports, wage floors, rent caps and, my new favorite, tariffs, are all actions that gain political favor but result in adverse consequences down the line. A very real example of that is AB 1482 which caps rent at 5%+CPI. The result has been rents increasing at about 10% per year not out of “greed,” but for fear of losing base value, an unintended consequence based on uncertainty. Voters in California, including within the City of Santa Barbara, voted against Prop 33, which would have made it even easier for localities to increase the scope of rent control. A majority of voters understand the concept that rent control is simplistic, reactionary and historically unsuccessful. Socializing a private asset in the name of the “Greater Common Good” goes against the grain of this country, and diminishes the notion of individual achievement.

Solutions to Santa Barbara’s housing issue may be elusive, but there are mechanisms that don’t place the burden squarely on one element of the private sector. The previously mentioned Santa Barbara Housing Authority leverages tax-credit financing to produce units, State programs allow bonus density for the production of deed-restricted units, and the Average Unit Density program inserts smaller units into the housing stock to provide more opportunity. Some of the larger employers have been participating in subsidizing employee housing. A robust voucher program could help a lot of folks once a financing mechanism is realized. Lastly, the article mentions supply. Could demand ever be satisfied without becoming Santa Monica ourselves?

Research for the proposed rent control ordinance will require much precious staff time and take away from ongoing efforts such as the Short-Term Rental ordinance. This proposal is political, not practical, and would be to the detriment of the tenants that it purports to serve.

Randy Rowse Santa Barbara

If I Wanted to Destroy Affordable Housing in Santa Barbara, I Would…

If I wanted to destroy affordable housing in Santa Barbara, I wouldn’t swing a wrecking ball. No, I’d smile politely and pass laws. I’d say I was protecting people, preserving neighborhoods, saving the environment, looking after the renters from evil landlords. And then – brick by brick, regulation by regulation – I’d make it impossible to build or maintain housing anyone could afford.

First, I would drown every new housing proposal in process. I’d let planning and permitting drag on for years, not months. I’d require stacks of studies – seismic, coastal, archaeological, biological – each one necessary, each one slow. I’d delay until developers gave up and lenders moved on.

Then I’d make building small and dense – the kind that working families can actually afford – practically unlivable. Height limits, setback rules, coastal overlays, neighborhood overlays, aesthetic overlays – I’d stack them like sandbags around every parcel of land. The message would be clear: if you want to build homes, build somewhere else.

I would weaponize fees. Impact fees, traffic fees, school fees, transit fees – a fee for every dream. I’d whisper the word “inclusionary” and pretend it meant affordable housing, while quietly making every unit more expensive to construct.

Then I’d turn neighbors into vigilantes with “community review.” I’d hold public hearings that last until midnight and invite emotional testimony about “neighborhood character.” I’d call it democracy. But really, it’s tyranny of the minority. It would be veto power for the loudest five percent. 

But why stop new housing when I can punish the people who already provide it?

I’d pass rent control – the silent killer of affordable housing. I’d promise it protects tenants, but I’d ignore its history. I’d ignore that when you cap rent, you cap maintenance. When you freeze income, you freeze investment. And I’d act surprised when landlords sell, rental units disappear, and the housing supply shrinks.

Then I would raise energy costs. I’d mandate all-electric conversions, solar retrofits, EV infrastructure, energy compliance audits – noble ideas, every one of them. But I’d force landlords to pay for it alone. I’d call it climate policy, but I’d never admit it drives rents higher and pushes mom-and-pop housing providers out of business.

Next, I’d inflate property taxes and assessments with endless bond measures. A little extra for schools here, a little for transportation there – and before long, I’d have doubled the cost of holding a modest fourplex without building a single new home. And call into question the safeguards afforded all property owners through Proposition 13 making claims it creates “inequities.”

I would pass ordinances that quietly turn landlords into criminals – rent caps, relocation penalties, inspection schemes, private right of action lawsuits. I’d make it easier to sue a landlord than to lease from one. And I’d make sure the rules were confusing, so even good landlords lived in fear of technical violations.

Then I’d divide the community – tenants against landlords. I’d pass Tenant Protection Ordinances that presume guilt, that forbid “harassment” but never define it, that treat every no-fault eviction as a moral failure. Good people who provide housing would be treated as the enemy. And I’d call it justice.

Finally – I would ensure everyone blamed “the market” instead of the real culprit: bad governance.

Because if I wanted to destroy affordable housing in Santa Barbara, I wouldn’t need a bulldozer. I would only need:

•Endless regulation

•Weaponized rent control

•Soaring energy mandates

•Escalating property taxes

•Ordinances that punish housing providers

•Laws that divide landlord and tenant

•And a government that says “yes” to process and “no” to housing.

And I would do it all while insisting I care deeply about affordability.

But – if we want a different ending to this story – we should remember a simple truth:

Housing is not created by speeches, hearings, or government slogans. Housing is created when we allow people to build it and control it.

Don Katich
Santa Barbara