Here’s a real-life story of rent control. I grew up in New York City. My mother and father married when he was in the Army during World War II. After the war, my dad took a clerical white collar job at a corporation where he diligently worked for the rest of his career. He hadn’t gone to college and never made a lot of money, so his lower-middle class income qualified our family for a rent-controlled apartment in Brooklyn.
Rent control started in NYC in the 1920s. In the 1970s, it was renamed “rent stabilization,” with a Rent Guidelines Board determining “fair” rents and increases. Today, one million rent- stabilized apartments account for 44% of the city’s rentals and 28% of its 3.6 million homes. It’s extremely popular with New Yorkers whose monthly rent is well below the going rate in the rental market. But wasn’t so for landlords whose rental income over the years didn’t keep pace with the cost of administration, maintenance, and taxes for their buildings. Consequently, conditions in rent-controlled apartments deteriorated as landlords scrimped on expenses. Not surprisingly, landlords who owned those buildings could only sell their property at fire sale prices.
Tenants complained about conditions in those buildings to sympathetic politicians who understood the political calculus of rent control: the number of renting voters greatly exceeds the number of landlords. In the 1980s with landlords pleading for financial relief, NYC government allowed landlords to convert their apartment houses to individual condominium ownership but only with the approval of two-thirds of the tenants who had agreed to accept the landlord’s conversion price. Desperate to unload these near-worthless rent-controlled properties, landlords were in a very weak bargaining position, and the tenants knew it.
Getting back to my folks, later in the 80s long after I had moved to Denver, they were living in another rent-controlled apartment in the borough of Queens. One day my dad called for advice. He said the tenants in his building had finally agreed to a deal after negotiating terms and prices for each condo with the landlord for months. Mom and Dad could convert their apartment to a condo for $28,000 (adjusted for inflation that would be $70,000 in today’s dollars). He was soon to retire, and they were planning to move to Florida. “Are you kidding? Grab it,” I said, “When you sell the condo you can buy a lovely home in Florida with the equity windfall.”
Grabbed it, he did. Two years later, they sold that condo for $200,000, moved to Florida and paid cash for a very nice condo with great community amenities in Boynton Beach and had plenty of cash to boot. They won the rent control lottery. I was happy for them, but as Milton Friedman explained there’s no such thing as a free lunch. How did a $28,000 condo appreciate to $200,000 in just a couple of years? It hadn’t. It was really worth about $200,000 when they bought it. Thanks to NYC rent control, the landlord was robbed of that appreciation.
Denver’s governing progressives don’t like landlords either. To them, the very term sounds like medieval lords oppressing serfs. As a matter of social justice, they believe everyone has a right to “affordable housing.” Denver now mandates developers (aka landlords) of new apartment houses with ten or more units to subsidize a specified share of those units at below-market rates for renters with incomes under the Denver Area Median. That subsidy, of course, will be recovered by those developers through higher rents for the non-subsidized renters. Furthermore, rent control also discourages development, ultimately driving up rental rates for everyone as lower supply encounters demand.
Denver government has also become a benevolent landlord, itself, buying hotels and remodeling office buildings to create affordable housing along with free shelter for indigent street people and illegal immigrants who flock to our sanctuary city — at taxpayer expense, of course.
Another sanctuary city is now having second thoughts. With a hundred thousand illegal immigrants flooding NYC, Mayor Eric Adams is distributing thousands of flyers at the U.S.-Mexico border declaring, “There is no guarantee we will be able to provide shelter and services to new arrivals.” In other words, don’t come to the Big Apple, go somewhere else. (In January, Adams had merely pleaded, “There is no room in New York. New York cannot take more.”)
NYC has certainly changed its tune since 2019, when Adams, then Brooklyn’s Borough President, proclaimed on Twitter, “To anyone in the world fleeing hatred and oppression, the ultimate city of immigrants wants you to remember you’re ALWAYs welcome here.” Apparently, “always” didn’t mean forever.
Denver has enough problems already with crime, the homeless, and ever-rising government spending and taxes. Isn’t it about time to pull in our self-destructive welcome mat as a Sanctuary City?
Longtime KOA radio talk host and columnist for the Denver Post and Rocky Mountain News Mike Rosen now writes for CompleteColorado.com.
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