This document discusses rent control and housing policy in Seattle. It provides historical examples of rent control from Roman Emperor Diocletian, King Cnut the Great of England, and Seattle City Councilmember Kshama Sawant. It summarizes economic arguments against rent control, including that it reduces housing supply and incentives for landlords. The document also discusses potential policies to increase housing supply in Seattle such as allowing more development and using tax credits and subsidies instead of rent control.

1. The Emperor, The King, and The
Councilwoman
The Story of Rent Control

2. Seattle For Growth
Seattle For Growth is a 501(c)4 non-profit organization created in
2013 by builders and developers to advocate for more housing.
We are for creating more housing of all types, in all
neighborhoods, for all levels of income. We are for jobs. We are
for opportunity. We are for change. We are for innovation. We
are for progress. We are for growth!

3. What’s going on in Seattle?

4. What’s going on in Seattle?

5. What’s going on in Seattle?

6. What’s going on in Seattle?

7. What’s going on in Seattle?

8. What’s going on in Seattle?

11. What’s going on in Chicago?

12. What’s going DOWN in Chicago?

13. What’s going DOWN in Chicago?

14. What’s going on in Chicago?

16. What’s going on in Chicago?

17. What is rent control?
• Rent control is a price control that is an anti-
inflationary measure.
• When prices go up, some people want to
impose restrictions so that they don’t.
• The underlying assumption behind price
controls is that prices are set by individuals
acting out of self-interest and greed.
• Rent control proposals, therefore, deny the
proposition that prices are a quantitative
indicator of supply and demand.

18. Diocletian
Roman Emperor
284 -305 AD
Because of
those that “seek
private gain and
are bent upon
ruinous
percentages of
profit to their
avarice, ye men
of our provinces,
regard for
common
humanity impels
us to set a
limit…if anyone
have acted with
boldness against
the letter of this
statute, he shall
be subjected to
capital
punishment. “

19. Cnut the Great
King of England 1016–1035 AD
“Let all men know how empty and worthless is the power of kings.”

20. Kshama Sawant
Seattle City
Councilmember
2014 – Present
“Rent control is merely a
way of outlawing price
gouging and preventing
landlords from profiting off
the increase in property
values driven by real estate
speculation and lack of
supply. It’s essential to
address the existing power
imbalance in which
landlords and developers
have all the control”

21. Why rent control doesn’t work?
The problems with rent control are, “among the best-understood issues in all
of economics, and – among economists, anyway – one of the least
controversial” – Paul Krugman
• A restrictive price ceiling reduces the supply of property to the market.
• When prices are capped, people have less incentive to fix up and rent out,
or to build rental property.
• Slower supply growth exacerbates the price crunch.
• Those landlords who do rent out their properties might not bother to
maintain them, because when supply and turnover in the market are
limited by rent caps, landlords have little incentive to compete to attract
tenants.
• Tenants may stay in properties longer than makes sense.
• Evidence shows that those living in rent-controlled flats in New York tend
to have higher median incomes than those who rent market-rate
apartments. Wealthier households are better at tracking down and secure
rent-controlled properties.
From the Economist (2015)

24. Rent control in Washington State?
Current State law, RCW 35.21.830, prohibits local government from imposing, ”Controls on rent
for residential structures.’ In order for local governments to pass rent control ordinances, the
State Legislature would have to repeal or rewrite the law.

25. How Washington gets rent control
1. Donald Trump motivates lots of people to vote against him,
and they vote for Democrats all the way down the ballot
2. The previously conservative Senate is now under the control
of liberal Democrats
3. Seattle Councilmembers Herbold and Sawant push a repeal
of preemption
4. The Senate goes along with the repeal
5. By this time next year, the Seattle City Council is debating
what kind of rent control ordinance it will pass by the end of
2019
6. With 2019 being an election year for Mayor and some
Councilmembers there is little debate about why rent
control is a bad idea, instead everyone pushes for their
favorite version
7. Rent control passes in the fall of 2019 and is law by 2020

26. Commercial rent control in Washington State is not clearly pre-empted by State law.
Councilmember Sawant has proposed commercial rent control in Seattle in the name of
protecting small business. There is no indication that there is any opposition by the Mayor or
Council to this idea. High rents for commercial spaces are a function of supply and demand, and
the Council acted several years ago to prohibit small commercial spaces in low-rise zones. Their
actions made the situation worse and this proposal would make it worse still

27. Could it get any worse? Meet Mandatory Inclusionary Zoning (MIZ).
The Mayor and City Council in Seattle are in the process of implementing a policy that would
mandate a fee on all new residential development by the square foot or the inclusion of a
percentage of set aside, rent restricted units.
• Infeasible – The policy will render some projects infeasible because of additional costs
• Illegal – Is a clear violation of the plain language in RCW 82.02.020 prohibiting fees
• Inflationary – The only way this policy will work is when rising rents absorb additional costs

28. Ludwig Erhard
Minister of Economics under Chancellor Konrad
Adenauer from 1949 to 1963
General Lucius Clay: What have you done?
You’ve changed the allied price controls.
Ludwig Erhard: Herr General, I haven’t changed
them, I’ve abolished them!
Clay: My advisors tell me it’s a big mistake.
Erhard: Herr General, my advisors tell me the
same thing!
“It started the markets working. With free
prices instead of nothing being in the windows
of the shops everything started to come up.
And that began the German economic
miracle.”
--Milton Freidman
From the PBS series “The Commanding
Heights.”

29. What’s the right thing to do?
• Stay principled – More housing of all types, all
over the city, and for all levels of income are
what we need to lower prices;
• Stay engaged – the Mayor and Council aren’t
listening, but being on the record matters;
• Support each other – your associations and
organizations matter; and
• Offer a positive alternative.

30. What’s needed?
• More housing supply and diversity
• Tax credit and incentive programs
• A better definition of the problem
• Direct cash subsidies for rent
• Create a risk pool for harder to house renters
• Avoid subsidized capital construction
• Inventory older, below market apartments
• Low-interest loans to stop deferred maintenance

31. Discussion