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DOWDALL LAW OFFICES A PROFESSIONAL CORPORATION ATTORNEYS AT LAW City of Santa Ana August 28, 2023 Page 6 However, under pressure to fight rising rents, state lawmakers in Illinois, Oregon, and California are considering repealing laws that limit cities' abilities to pass or expand rent control. While rules and regulations of rent control vary from place to place, most rent control consists of caps on price increases within the duration of a tenancy, and sometimes beyond the duration of a tenancy, as well as restrictions on eviction. According to Brookings, current research examining how rent control affects tenants and housing markets offers empirical insight (not dogmatic rhetoric) into how rent control affects markets. While rent control appears to help current tenants in the short run, in the long run it has proven to decrease affordability, fuel gentrification, and create negative spillovers on the surrounding neighborhoods. Moreover, a substantial body of economic research has used theoretical arguments to highlight the potential negative efficiency consequences to keeping rents below market rates, going back to Friedman and Stigler (1946). — They argued that a cap on rents would lead landlords to sell their rental properties to owner occupants so that landlords could still earn the market price for their real estate. — Rent control can also lead to "mis-match" between tenants and rental units. Once a tenant has secured a rent -controlled apartment, he may not choose to move in the future and give up his rent control, even if his housing needs change (Suen 1980, Glaeser and Luttmer 2003, Sims 2011, Bulow and Klemperer 2012). — This mis-allocation can lead to empty -nest households living in family -sized apartments and young families crammed into small studios, clearly an inefficient allocation. — Similarly, if rental rates are below market rates, renters may choose to consume excessive quantities of housing (Olsen 1972, Gyourko and Linneman 1989). — Rent control can also lead to decay of the rental housing stock; landlords may not invest in maintenance because they can't recoup these investment by raising rents. (Downs 1988, Sims 2007). Against the background of these arguments emerges newly -available housing -market data spanning periods of dramatic change in rent control laws in Cambridge, Massachusetts and in San Francisco, California have allowed economists to examine these questions empirically. The Empirical Data Equally Apply to Santa Ana and Impeaches Each Recital in the Santa Ana Proposal: Diamond, McQuade, and Qian (2018) (DMQ) examine the consequences of an expansion of rent control on renters, landlords, and the housing market that resulted from a unique 1994 local San Francisco ballot initiative. In 1979, San Francisco imposed rent control on all standing