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As a senior living on a fixed income in Santa Clarita, I have become abundantly aware that the lack of rent control is making it impossible for a large population of senior citizens to continue living in their current senior apartments.

We seniors chose where we live because the apartments/rentals were affordable. However, each year the rent increases are as high as $50 to $100 a month, and many of us are unable to remain in our homes.

As seniors on fixed incomes, we are struggling to keep a roof over our heads and food on our tables.

The current market rate for senior living posted March 1, 2017, by the Consumer Housing Information Services for Seniors of the Santa Clarita Valley shows prices for privately owned, one bedroom apartments range from $815 (not accepting applications, one year waiting list) to $1,695.

Two-bedroom apartments range from $1,130 to $1,799. So-called affordable senior apartments range from $946 to $1133.

However, the “affordable” units not only have long waiting lists, they also have an income range of $1,200 – $1,975, causing many to be caught in a “donut hole” of income too high for assistance, with not enough left for ordinary expenses.

Santa Clarita, a city in Los Angeles County, is not alone in this current housing crisis. On March 28, 2017, The Daily News published an article stating of the 40,000 people waiting for Section 8 housing in L.A. County, only 1,000 received vouchers last year, and the housing authority is no longer accepting names for the waiting list.

What will it take for Santa Clarita to “wake up” and realize it is time to impose rent control in our city?

 

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Comments
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  • Brian Baker

    Hopefully, that will NEVER happen.

    Actually, I think you’re seeking a socialist utopia. Might I suggest Europe?

  • Ron Bischof

    You’re not entitled to property owner subsidized housing in a given community, Ms. Broggie. Rent control is using the force of government to engage in an unconstitutional “taking” of the property of others. That’s unjust.

    There are legitimate ways to address market demand driven pricing, i.e., increase supply or relocate to where housing demand is less.

    Here’s a video primer on how “rent control” is corrosive to communities:

  • Jim de Bree

    Rent control has proved disastrous in many communities across the nation. Properties subject to rent control do not allow the owner of the property to receive an adequate return on investment and consequently maintenance is deferred. This eventually leads to run down communities.

    If you are a senior citizen on fixed income, you might have to find a cheaper place to live–most likely out of state. The cost of new construction in California is high for a variety of reasons.

    As a flip side to the LTE author’s position, my sister owns an interest in a mobile home park in Carlsbad. The property is located right next to the ocean. In a mobile home park, the occupant usually owns the mobile home, but pays ground rent to the owner of the park. The property in which my sister owns an interest is subject to strict rent control thanks to a left wing city council. The rents are so low that when a mobile home owner sells their mobile home, they can get a $40,000 premium.

    My sister is in her 80’s and is on fixed income as well. She bought into the mobile home park forty years ago to provide an investment this is supposed to be a hedge against inflation. Her investment would generate an annual $20,000 return without rent control, but it only generated a $2,600 return in 2016. As a result of the decline in her income, she cannot afford to live in her condo in Cincinnati causing family members to subsidize her housing costs.

    Santa Clarita’s rents are more affordable than other suburban communities such as Agoura, etc. There is a shortage of so-called affordable units because at the rents mandated for low income housing there is no incentive to build new units. Low income housing is typically funded by tax credits, of which there is only a finite amount available.

    I spoke with one of my clients who builds both conventional and low income housing and the construction costs are currently about $180/sq. foot plus land costs. That means to construct the 600 square foot one bed room apartment referred to in the letter it costs about $108,000. Land costs probably add another $40 per square foot to the cost for a total cost of around $132,000. In order to make construction feasible, the apartment unit has to generate a 7% return of about $9,200, exclusive of recouping a return on land costs. Based on a recent study conducted by NAI, the operating expenses for an average apartment unit in LA County are about $6,400 annually. That means that the unit has to generate $15,600 of annual rents or $1,300 monthly. A two bedroom apartment is about 25% more.

    The 7% return is predicated on a 5% growth rate in the return on investment. Rent control would eliminate the growth, so a higher return would be called for which would translate into significantly higher rents.

    Rent control would bring new construction to a halt because the higher rents required would likely price new housing construction out of the market.

    If the LTE author is looking for lower rents, moving to Texas, Arizona or Florida is probably the best way of achieving that result.

  • nansanas

    Most seniors are not able to pack up and move as you suggest! We were told that social security would take care of us after paying into it over 40 years but the right wing made sure that we would not get a cost of living increase! You must be a greedy landlord who only thinks of himself!

    • Ron Bischof

      I know Jim de Bree personally and he’s not at all as you describe.

      Your post is non-responsive to his excellent explanation.

      • Jim de Bree

        Must have been a nasty post as it was deleted.

        • Ron Bischof

          It was a vacuous attack against your person and accused you of being a “greedy landlord”, Jim.

          As a friend that recognizes your generous donations of personal time to improve our community, I couldn’t let it stand unchallenged.

          • Jim de Bree

            Well thanks for the kind words and the defense. As to being a greedy landlord, the only “rental property” I own is a condo in Cincinnati where my sister lives rent free. Ironically, it is rent control that prevents her from earning a decent return on the only investment asset she owns. Without rent control, she could afford to live in a house without family subsidies.

            The cost of housing is an increasingly significant issue, but the solution definitely does not involve rent control.

          • Ron Bischof

            Yes, I was aware of your “landlord” status when responding to the ignorant and uncouth poster. I’m also familiar with the significant expenditures on behalf of your daughter’s health challenges. That’s why I found the assertion of “greed” so offensive.

            As an accounting professional that’s a subject matter expert on real estate business models and taxation, your detail on investment and rates of return in your original post are authoritative. Hopefully, others reading it will process the information and inform their opinions accordingly.

            I concur that rent control isn’t a solution and in fact exacerbates the problem it purports to solve.

          • Jim de Bree

            There are a couple of other points worth mentioning. On the investment side, the largest investors in commercial real estate are pension funds. As of the end of the third quarter of 2016, US pension funds have allocated about 8% of their portfolio into US commercial real estate, including apartments. Their goal is to increase to 10%. US pension funds hold ~$22 trillion in assets. That means that they have invested about $1.8 trillion in real estate and are expected to invest another $350 billion in the coming years. In fact, over the past seven years, the largest investor sector has been multi-family housing (aka apartments). Based on National Real Estate Investor’s website, they are seeking returns approximating 8% (higher than I noted).

            The other point is that, according to the US government, the average annual cost live in Santa Clarita is about $39,000 per person. Assuming that a retired person receives $19,000 annually in social security benefits, that leaves a $20,000 shortfall that has to be funded from other sources. Using the 4% rule for distribution from retirements (i.e., annual distributions should not exceed 4% of the balance of the fund), that means that a retired person would have to have accumulated $500,000 in retirement savings. Santa Clarita is an expensive place to retire and it is not likely to be a viable alternative without a half million retirement nest egg.