Dear Santa Barbara City Council Members,
I respectfully ask you to consider the long-term consequences of adopting a rent cap tied to only 60 percent of the Consumer Price Index (CPI). While the goal of protecting tenants from rapidly rising housing costs is understandable and commendable, a permanent cap that fails to keep pace with the actual cost of owning and maintaining rental housing will create an ever-widening gap between rental income and operating expenses.
This is the effect of compounding, sometimes referred to as exponential growth. Each year’s increase builds upon the previous year’s increase. Even what appears to be a relatively small difference in annual growth rates becomes substantial over time. For example, if operating costs increase by 4 percent annually while allowable rent increases are limited to 2.4 percent (60% of CPI), the gap between costs and income grows larger every year because both figures compound…