Friday, February 02, 2007


Rent control works--for residents and small businesses

Image from Google Earth, copyright 2007 Bluesky

I have been meaning to write about this, and today the Advertiser beat me to it. See their editorial, Study of rent control a necessary first step. They're correct that the subject is controversial.
Opponents of rent control insist the free market is the best arbiter of rents and should be allowed to work without government interference.
Trouble is, the "free market" is just freedom for owners to gouge. The losers are the increasing number of families that can't survive their greed (does the phrase "greedy landlords" offend you? Why?) and also businesses, large and small, which find it hard to recruit workers. 

New York City is an expensive place to do business, so people are acutely aware of of what makes their economy tick. We could learn from their successes and failures. One success, for both residents and businesses (large and small) has been rent control. Because workers of all kinds are able to live in the city, they are available at reasonable wages for employment. While the executives might commute on the Long Island Rail Road to remote suburbs (or even to different states), they can't expect their staff to do that. People need to live reasonably close to work. In NYC, that means within a reasonable subway or bus ride.

And so there must be a place for them to live.

If this falls apart, business will suffer along with almost everyone else (Why is it that greedy landlords never seem to suffer?).

But enough theory. Here's one alternative to rent control that worked when I lived there in the early '70s. I think it might be adaptable to Hawaii's situation in some way, and not get the free marketers too upset.

We were students, so income was limited. We bought a co-op apartment in Amalgamated Warbasse Houses (see pic above). How it worked was very simple (how it was set up is probably more complicated of course). I think we paid $1800 at that time for our one-bedroom unit. There was a monthly charge as well, and that was keyed to income, with a cap. After awhile, when we started to make some real money, we exceeded the income limit, so we paid the max, which was still very reasonable for those days. And when we moved out, we had to sell back to the co-op for exactly what we paid when we moved in: $1800. That's the secret.

In Hawaii we're talking about "affordable housing" but it doesn't stay affordable if someone can turn around later and sell the affordable units at market prices. What might work is an extensive regime such as I have described. Maybe it's one idea, anyway. My understanding is that the next occupant would have purchased the unit from the co-op for the same $1800.

I don't know what those units go for today, presumably there's some adjustment over time. Or maybe not. Looking at the picture above, I'm reminded that most of the tenants were senior citizens. There were plenty of benches for them outside, and on a warm day they gathered in flocks, like the friendly pigeons. You could hear conversation in several languages. The air was good, because the project is located in Coney Island. The location was ideal for seniors or for anyone.

Look what surrounds it, within a very short walking distance: At the lower left is a supermarket, dry cleaner and some shops. To the left is an elevated subway. Upper right is a school. To the right is Ocean Avenue, a major artery to the rest of the civilized world, and Coney Island Hospital, just across Ocean Avenue from the co-op.

Just outside the right edge of the picture is a great bagel place, everything made fresh daily, and all the stores and restaurants of Brighton Beach. And yes, one could walk the short distance to the boardwalk and Coney Island. Nathan's Hotdogs... bagels... lox... I'm getting nostalgic... not only for the bagels, but for the cheap housing!

If we're clever enough, we can find a way to produce more and more affordable housing. It will be good for the people of Hawaii and good for our economic prosperity. Let's put our heads together. We have nothing to lose but the "free" market that is hurting nearly everyone.


Yeah, I grew up in Warbasse. To get an apartment, you had to wait on a waiting list. Then, as the disparity grew between the regulated purchase price and the market value, people would bribe the management to get apartments. It got to the point where the list was meaningless, and the free market - in this case illegal - still determined the price of the apartment. Only the profit wouldn't go to the seller, who had actually participated in developing the community, and who needed the money to buy another house elsewhere. Instead it went to the management who, in part, used their bribe money to cement their place in office. Great system. I think you should definitely try it.

There was a waiting list when I applied, also. I suppose that can't be helped with only a limited number of apartments available. I don't think there was bribery going on back then, though obviously I could have missed it...

New York has a rent control law which is a different thing. Nothing is perfect, but neither is paying the highest rents in the nation in a state with low wages.

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