Local Government
How Rent Control Benefits the “Rich and Frugal”

How Rent Control Benefits the “Rich and Frugal”

By Sheila Dey, Executive Director, Western Manufactured Housing Communities Association.

The Sacramento Bee recently profiled mobile home owners who are taking advantage of a “loop-hole” to reduce their tax liability on beach front homes in Malibu, worth millions of dollars. Needless to say, the Los Angeles County tax assessor wants more property taxes, and the law is on the side of property owners.

While focusing exclusively on how wealthy mobilehome owners have exploited tax laws, the Sacramento Bee overlooked the opportunity to tell the story of how misdirected California’s housing policies have become, especially when one can own a $4 million “rent controled” mobile home!

Tax assessors would not be seeking state legislation to properly assess so-called “mobile mansions” if rent control had been means tested. Because these “mobile mansion” owners pay so little in taxes and rent in relation to what they can afford, it artificially creates a premium on the mobilehome.

Rent control is not means tested, whatsoever. This is a story that must be told, but no need to share this news with state legislators, they already know. Efforts to reform rent control have been stifled by rich and frugal mobilehome owners who have lobbied against modest changes to control rents, and sometimes for second homes.

The failure to reform rent control at the statewide level comes with consequences. Not only is it not serving those it purports to benefit, rent control is also harming the many small business owners who operate the parks. At best, rent control can deny park owners a reasonable rate of return on investment, and at worst, they can go out of business when operational costs exceed revenue.

This is not right. That was the conclusion of a Federal Court that ordered the City of Carson to pay a park owner $3.3 million for denying them their constitutional rights. As disappointing as it may be for some politicians, government can’t purposely deny someone the opportunity to make a reasonable return on investment.

Rent control has been no more effective in increasing the stock of affordable housing than efforts to fix gas prices during the 1970s. Price controls lead to diminishing supplies, always have, always will. But, despite its wholesale failure, there are no indications that politicians are ready to abolish it anytime soon.

Even proponents of rent control can no longer deny the need to means test mobilehome parks, especially when the demand for attainable housing has never been greater. What’s more, when new manufactured homes offer all the quality and comfort of a traditional house, and at prices 30% less, a strong case can be made for incentives to build more mobile home parks and not fewer.

The task of making housing more plentiful and affordable is proving to be very challenging for our political leaders, but reforming rent control should not. It is misdirected, plain and simple. Until it is fixed, the rich and frugal will continue to enjoy sunsets from “mobile mansions,” and homeownership will remain out of reach for many Californians who would choose to live in a manufactured home community.

 

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