Rent Control to Save Street?
By William Smithers
In a recently-published article describing a conference of business owners, citizens and local government officials brainstorming ideas as to how to improve the economic outlook for Santa Barbara's State Street, where currently there are 34 vacancies, one idea in particular struck me as innovative and interesting.
It's well-known that skyrocketing rentals along the city's main thoroughfare are causing increasing business closures and/or business flight from that scene.
The latest UCSB Economic Forecast Project reports retail sales increased everywhere in the county except in the cities of Santa Barbara and Carpinteria, where they dropped 1.1 and 3.5 percent, respectively.
Landlord explanations for large rental increases are always that they are simply market-driven: if you want a desirable location for your organization or business, you have to pay up for it.
What about rent control?
As far as housing is concerned, it seems that the California Local Rent Control Initiative (#17-0041) may appear on the November 5, 2018 ballot, since it has received 565,000 supporting signatures when only 365,880 are required.
“The measure would allow local governments to adopt amendments, ordinances, or regulations to govern how much landlords can charge tenants for renting apartments and houses. The measure would also repeal the Costa-Hawkins Rental Housing Act, a law designed to prohibit local governments from enacting rent control on buildings first occupied after 1995.” (sfgate.com)
But as to businesses, under current California law:
“Rent control, or the capping of rents in a specific area at a certain amount by a public entity, is prohibited by California law with regard to commercial property. … Under Section 1954.27 of the California Civil Code, no public entity is allowed to enact or enforce any type of commercial rent control in the state. However, commercial landlords are allowed to voluntarily enter into a capped rent agreement with public agencies. “(op.cit.)
This creates the possibility for bringing into existence one suggestion from the brainstorming session described above:
Create a municipal “Economic Czar,” as other communities have done. Under this aegis, permit an Association of Business Owners that could negotiate rental prices with landlords.
I think this an extremely interesting idea. No landlord would be compelled to enter into such negotiations, but if some do and arrive at an agreed sum, a process might be underway that could persuade non-signers to get on board to be competitive.