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DOWDALL LAW OFFICES A PROFESSIONAL CORPORATION ATTORNEYS AT LAW City of Santa Ana August 28, 2023 Page 11 buildings without rent stabilized units tend to exceed their zoned capacity. Id. This disparity in development demonstrates that the RSL contributes significantly to the underdevelopment of rental properties, thus aggravating the very housing supply problem that it purports to remedy. The RSL reduces revenue from buildings that could be reinvested into further development and restricts owners' ability to demolish and rebuild their buildings to provide additional rental units. Id. Moreover, the RSL's limitations, just like the ordinance in Santa Ana, dealing with an owner's right to recover units create substantial barriers to redeveloping a building, because stabilized tenants (and their successors) can leverage their rights to extract outsized buyout payments in exchange for vacating the premises. Id. 127. In California, in Santa Ana, the ability to sell subsidized tenancy rights on every street corner eviscerates any benefits that rent control may have on the second generation of tenants. All the benefits of rent control are sold in the bundled transaction for the mobile home, at full market value. The tenant pays for the premium tenancy as part of the gray -market sale of tenancy rights, like key money. By further comparison, the 2019 Amendments to the RSL make the problem worse. The amendments eliminated two decontrol provisions, eliminated two bases for rent increases, and capped the amount recoverable for making improvements to rental units. Id. 131-33. Because rent control worsens, rather than solves, the problem of housing scarcity, one additional consequence is that rent control laws tend to contribute to greater rent increases in the unregulated market. One study concluded that the RSL had this effect on rents in uncontrolled units. 16 Another concluded that rents in uncontrolled units in New York City were between 22% and 25% higher than they would be in the absence of the RSL." Likewise, due to the Vega case binding upon all cities in California, beginning rental rates under the ordinance have a right to start the general market conditions, resulting in rent increases. Rent controls increase rents. Rent Control Reduces the Quality of Available Housing Not only does rent control reduce the supply of available housing, it also results in deterioration of the quality of existing housing. This is in part because property owners derive less revenue from their rental units and thus have less money available to devote to maintenance 16 Dirk W. Early, Kent Control, Kent a I Housing Supply, and the Distribution of Tenant Benefits, 48 J. Urb. Econ. 185 (2000). " Steven B. Caudill, Estimating the Costs of Partial -Coverage Kent Controls: A Stochastic Frontier Approach, 75 Rev. Econ. & Stat. 727 (1993). -11-