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The hidden costs of rent control: Unintended consequences for the Biggest Little City

Reno Gazzette Journal

November 1, 2024

As anyone who knows the history of the City of Reno, our nickname of the “Biggest Little City in the World” was coined because of our tourism, gaming, and entertainment boom — despite our relatively small size. Now, over 150 years later, our city is diversified and thriving, but our work isn’t done yet. To ensure Reno remains the best place to live, work and play, we need to continue to “reimagine” what our city will look like for our growing population.

The City of Reno’s population has increased by more than 56,000 people since 2000 and is forecast to increase by an additional 62,000 people over the next 20 years. Because of this, the City of Reno adopted the “Reimagine Reno” master plan in 2017. The plan outlines our goal to be a resilient local and regional economy, to increase access to parks and transit for our residents, to reduce traffic and congestion, and to diversify housing and increase infill development.

Recent reports indicate the nationwide housing crisis is hurting the Biggest Little City in a big way. The median price of a home just hit record highs last month, and while rents are dropping, the supply-demand imbalance of additional housing stock will continue to extend our housing problems into the coming decades. As our population continues to rise, implementing market-driven policies that address our need for additional housing and infrastructure, is more time-sensitive than ever before.

As a former State of Nevada infrastructure coordinator, former Washoe County commissioner, fifth-generation Nevadan and a businessman, I have seen our region grow and I know what kind of investments are needed in our neighborhoods. The improvements we make at the federal, state and local levels are funded by tax dollars the city collected thanks to our thriving economy. But what happens if our revenues drop, or we stop growing?

As the saying goes, if we’re not growing, we’re dying. I am gravely concerned rumors and whispers of regional and legislative conversations surrounding rent control continue to pop up. Rent control kills jobs and discourages new housing development and — what proponents often glaze over — reduces property values which drastically deplete local and state budgets.

Don’t believe me? Consider St. Paul, Minnesota. Property values dropped 6-7% instantaneously, and the city lost $1.6 billion in revenue that paid for police, parks, roads and schools. In New York, an estimated annual $370 million in property tax revenue was lost due to reduced taxable assessed property values in rent-controlled properties. In New Jersey? Over $3.2 billion. In Montgomery County, Maryland? The city and county’s budget shortfall, which was $46.1 million in 2020, is estimated to be $101.3 million per year by 2025 in property tax loss alone. That doesn’t include an additional direct loss of $327.8 million in the same 10-year period due to unrealized sales tax and income tax. In Washington, D.C., the D.C. Policy Center found that an estimated $26 million to $115 million would be lost per year in the District of Columbia alone, depending on growth scenarios.

I’d provide additional examples, but there are only six states in the entire country that allow for rent control laws. Even more telling, 34 states prohibit local municipalities from enacting rent control laws.

In Nevada, property taxes help fund services like roads, schools and police. All these could take a hit from rent control. The City of Reno and Washoe County have a number of upcoming maintenance projects and have hundreds of millions of dollars planned to address critical infrastructure needs for our residents. For our future to continue to shine as brightly as the neon signs of downtown, there is no room for rent control!

Source: https://www.rgj.com/story/opinion/2024/10/25/the-hidden-costs-of-rent-control-unintended-consequences-for-reno/75807677007/#:~:text=In%20Nevada%2C%20property%20taxes%20help,infrastructure%20needs%20for%20our%20residents.