Attempt to clarify long-running confusion over local authority becomes debate on ‘rent control’

Legislation to clarify local government’s ability to address the housing crisis, which Democratic state Sen. Edgar Flores considered a “straightforward” proposal since it only required clearing up existing law, turned into a debate over “rent control” and how much governing power municipalities should have.

Senate Bill 371 would expressly give counties and cities the authority to “enact any ordinance or measure relating to affordable housing” including capping the rate rents could increase. The legislation doesn’t mandate action.  

The bill is a response to counties and cities, who have cited “Dillion’s rule,” a governing principle that limits local powers to those expressly granted by the state, as the main reason they can’t consider rent stabilization and have kicked responsibility back to the state.

But the Legislative Counsel Bureau’s legal counsel has previously said, including during the recent hearing for SB 371, that existing law already gives them the power. 

The legislation, Flores said, seeks to make it clear local governments have the power if they choose to use it. 

“It is a straightforward and easy bill that will likely be blown out of proportion,” Flores said at the beginning of a hearing on the bill April 12. 

The legislation passed out of the Government Affairs committee Friday in a 4-1 vote, but will likely face further opposition from both Democrats and Republicans, as well as industry groups. 

Two Republicans on the committee, state Sens. Pete Goicoechea and Lisa Krasner, voted for the bill, though Krasner expressed concerns about the bill’s language. 

“For my jurisdiction, this works,” Goicoechea said. “I prefer to have the board of county commissioners talking about rent control than I would this body.”

Democratic state Sen. Skip Daly voted against the bill advancing, saying the intent of the bill could be “misconstrued.” 

“When I read any ordinance or measure related to affordable housing, it seems like you’re giving them the authority to do just about anything as long as they tag it with affordable housing,” he said. “To me, that creates a problem.”

Housing organizers, labor groups including the Culinary Union, and civil rights groups, who have been pushing for action to address the housing crisis, support the bill. 

Lilith Baran, the policy director of the ACLU of Nevada, said the last few years has “been a game of hot potato between the legislator and local governments” and left residents confused about who has the power to do what.

“People really need clarity on this issue and cannot go two more years of (playing) hot potato,” she said. “It’s not a potato. It’s a grenade. We couldn’t wait two years ago and we certainly can’t wait two more years.

Industry groups, including realtors, testified in opposition. 

Azim Jessa, a lobbyist for the Nevada Realtors, argued for keeping Nevada a Dillon’s rule state while also labeling “rent control” policies “flawed housing policy that diminishes housing values, discourages production of new rental units and will lead to a reduction in available rental units.”

“Rent control” is typically a term used for policies that freeze rents and don’t allow them to increase. While SB 371 identifies “rent control” as a potential option, it doesn’t mandate it. Housing policy bills that have been proposed during this legislative session deal with rent stabilization, which doesn’t freeze rents in place, but limits how much rents can increase.

Absent from the hearing was any representatives from county and local governments who have been contending that they are powerless to confront rent increases without authorization from the state.

In February, when Flores said he would introduce the measure, the Nevada Current asked Clark County if it thought lawmakers should consider clarifying Dillon’s rule.

The county declined to comment. 

The ghost of 2015

The legislation is one of numerous proposals considered this session to address growing housing insecurity in Nevada. 

“When we look at data, we need at least 80,000, on the conservative end, of affordable housing units to meet the needs of our community,” Flores said. “It is estimated over 243,000 renter households (in Nevada) are paying over 30% of their household income on rent.”

Nevada has faced skyrocketing rent prices since 2020, along with having one of the nation’s fastest and challenging eviction systems – summary evictions require a tenant first file with the court after receiving a pay of quit notice from landlords. 

All these factors into the state’s housing crisis.

“There is an ongoing debate in the midst of a horrible housing crisis in the state of Nevada,” Flores said. “There isn’t a single entity, private partner, nonprofit or legislator in the state of Nevada that does not agree we are in the middle of a housing crisis.”

Housing insecurity isn’t new, though conditions related to affordability were exacerbated by the pandemic. 

Lawmakers have considered measures over several legislative sessions designed to increase housing supply, offer tenant protections, reform the eviction process and  give local jurisdictions more authority over housing and zoning policies. 

Many of those proposals, which were vehemently opposed by industry groups, failed.

In 2015, lawmakers modified Dillon’s rule and gave counties the ability to exercise powers through two bills. Flores was opposed to both those bills. 

During SB 371’s bill hearing last week, Heidi Chlarson with the legal division for the Legislative Counsel Bureau reiterated that the 2015 laws “grants counties and cities” the authority “to regulate affordable housing including imposing rent control measures.”

“The 2015 bills explicitly said if there is any fair or reasonable doubt concerning the existence of a power of a city or county to address a matter of local concern, it must be presumed that the county or city has that power unless the presumption is rebutted by evidence of a contrary intent by the legislature” she said

Flores said eight years later elected officials are still debating exactly what that means, and what powers local governments have “in the midst of a horrible housing crisis in the state of Nevada.”

His bill this year isn’t the first attempt to clarify the 2015 legislation. 

Similar legislation in 2019 also offered some clarifying language for counties and cities. It was opposed by real estate groups and developers, but passed out of the Senate on party lines. However, after being voted out of Assembly Government Affairs Committee, it died without explanation.

In addition to rent stabilization, Flores said localities could also consider policies such as inclusionary zoning, which requires a certain portion of new residential construction to go to affordable housing projects, or require builders to include low income housing in new developments or pay additional fees to be used to create affordable housing.

SB 371 does not mandate any of those proposals, but merely authorizes counties to adopt them if they see fit. 

Daly, who has proposed rent caps on manufactured homes and voted to advance a statewide rent stabilization measure out of committee, questioned how local jurisdictions might interpret SB 371 and worried they might go beyond the scope of what’s allowed.

Despite only clarifying counties and cities have the power, most of the opposition to SB 317, including from the Vegas Chamber and developers, testified on the assumption  — by no means a certainty — that local governments would use it. 

In previous sessions, the Nevada Housing Coalition, a group that consists of non-profit organizations, social service providers, businesses and banks, has proposed legislation that would enable, not mandate, local governments to consider collecting fees in lieu of inclusionary zoning or fees linking market-rate housing to the production of affordable housing. 

Two bills to that effect that were proposed during the 2021 session died in committee without receiving a single vote. 

Both those bills were opposed by developers who called the proposals “fundamentally flawed.”

Christine Hess, the executive director of the Nevada Housing Coalition, said at the time she was disappointed efforts didn’t move forward and said “enabling these tools at this time was to get this conversation started” around how to deal with Nevada’s housing crisis. 

This time around, Hess is opposed to SB 371, specifically its mention of rent “control” and lack of clarity around what’s considered affordable housing. 

“We are in an affordable housing crisis and there is not one solution,” Hess said during SB 371’s bill hearing. “There are many solutions. Rent control is not the solution.”

The Nevada State Apartment Association also opposed the legislation arguing the affordable housing crisis was a statewide problem and needed a statewide solution. 

The association is currently opposed to other legislative solutions being proposed at the state level to address that crisis including rent stabilization, a yearlong rent cap for seniors and people with disabilities, changes to Nevada’s eviction law and regulations for rental application fees. 

Flores said most of the opposition didn’t address the issue at hand: local control.

He argued the state already passed language giving local government the power to act, and his bill only clarifies the decision.

“For those who…don’t like having local jurisdictions having control, who don’t like local jurisdictions being involved in this space, I made that argument in 2015, and I lost,” Flores said, referencing his opposition to legislation eight years ago,

His bill this year has until April 25 to pass out of the Senate.