Burlington Rent Control
Listing Date: 10/21/2005 4:27 PM
Article taken from the October 25, 2005 Burlington Free Press:
Council kills rent control
Published: Tuesday, October 25, 2005
By John Briggs
Free Press Staff Writer
Burlington's City Council, faced for the second consecutive council meeting by an auditorium filled with disgruntled landlords, effectively killed a rent control measure introduced this month by Ward 3 Progressives Phil Fiermonte and Tim Ashe.
The council voted 9-5 against sending the measure to the Super-housing Committee for further study, then voted 11-3 to kill it.
The resolution, noting the quick increase in rental prices in Burlington and a decline in income, urged the council to create a "simple but effective method of regulating the annual rate of increase in rents while allowing property owners to recover reasonable costs."
Though the resolution wasn't debated at the Oct. 11 council meeting, a number of landlords appeared then and told the council that any attempt to control rents in the city would backfire by discouraging new investment and by forcing landlords to raise all rents annually by the 5 percent contemplated by the resolution.
They returned in force Monday, and 15 landlords spoke in opposition to the resolution. One tenant argued that renters need protection from escalating rents.
In other business, the council:
Unanimously passed a resolution urging the Burlington School Board to pay a livable wage to all of its employees. School Department employees are not covered by the city's livable wage ordinance.
The City Council is going to reconsider the Rent Control resolution this Monday evening at 7:00 PM. The agenda link is attached below. The text of the resolution can be read at the other link.
Link: http://www.ci.burlington.vt.us/ct/agendas/resolutions/Rent_Stabilization_1024.pdf
Link: http://www.ci.burlington.vt.us/ct/agendas/citycouncil/20051024.doc
Please attend the meeting and voice your opinion. The only chance to do so at this meeting will be at the public forum. The sign up sheet for the forum is typically at a table on the left side of the room. The goal is simple. Kill the resolution so that it is not referred to any committees for further study. This not so much because we are afraid of the committee process ( the facts will show that rent control is an old idea that has not worked ), but it will just drag down huge amounts of time and energy. It also encourages this type of foolishness in the future.
VAOA will be there to address all these issues.
Below is a summary of the adverse effects of rent control. It was provided in part by a VAOA member . It tracks all the nationally recognized issues / problems that rent control creates.
Rent control would be devastating to the goal of affordable housing in Burlington and especially devastating to those they are trying to protect.
Rent control/rent stabilization actually has the following perverse effects:
1. It actually drives out affordable housing;
2. It creates a housing shortage; if rents are established at less than their equilibrium levels, demand will necessarily exceed supply, and rent control/stabilization will lead to a shortage of dwelling spaces.
3. It dramatically boosts rents and housing prices in the "shadow sector" (the unregulated portions of the rental housing market-- and there always are such unregulated portions)
4. It diminishes the quality of the rental housing stock-- by encouraging fewer repairs and less maintenance;
5. It diverts new investment away from rental housing, thus further reducing supply;
6. It creates an unnatural supply/demand mismatch (severely limiting supply);
7. It encourages "hoarding" of rent controlled/rent stabilized housing .
8. Those of us "wealthy" enough not to need rent control will hoard these apartments to the detriment of those who actually need the reduced rent
9. It drives down property tax assessments for rental housing, thereby increasing the property tax burden borne by all other types of housing in the community;
10. Rent control/rent stabilization has destroyed whole parts of certain cities (i.e., the Bronx).
11. Vermont has had rent control in mobile home parks for years. No new parks are being built; rents continue to rise; parks are closing.
Below is a summary of a September 2005 report prepared by Allen and Brooks on the Chittenden County Apartment Market
The annual survey of apartment rental rates in Chittenden County was recently completed by Allen & Brooks. From this information, they calculate the average apartment rent, by unit type, under two scenarios: 1) with the tenant paying utilities and 2) with the landlord paying utilities. The analysis allows them to track rental inflation over time.
Rental inflation was determined by comparing average 1, 2 and 3 bedroom rents with prior year figures. For 2005, the average level of rental inflation for all unit types was approximately 1.5%. The analysis of the 2005 data illustrates recent inflation of roughly 0% to 2.8%, with the lower end of the range associated with 1 bedroom unit types and the higher end of the range for 3 bedroom units.
The analysis indicates a significant decrease in rent inflation as compared with 2004 when the average inflation rate was 4.5%. The most recent period represents the lowest level of rent inflation they have observed. Between 2000 and 2004, the average rate of inflation has been 5.2%. The dramatic decline in rent inflation is the result of an increasing supply of apartments combined with weakened demand. Historically considered a tight rental market, Chittenden County is now experiencing conditions more favorable to tenants. The new supply of rental housing includes recently constructed affordable projects as well as new condominium units acquired as investments and offered for rent. Concurrently, demand for rental housing has weakened. Supported by a climate of low interest rates, some of the demand for apartments has been shifted to owner occupied housing. The inevitable result is that more units are available for rent and there has been negative pressure on rents. They expect these general market conditions to prevail over the next year and this will limit the potential for any significant increases in rents. Undercurrent market conditions, we expect inflation to continue to be nominal over the foreseeable future.
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