On Friday, Democratic State Senator Pat Spearman introduced Senate Bill 426, The Neighborhood Stabilization Act, which prohibits landlords from increasing rent during the first year of tenancy and ties rent increases to the state’s cost-of-living index, as determined by the state housing authority, for the area surrounding a unit. The increase, according to the bills language, must not exceed five percent.

The bill does not apply to units owned by a governmental agency or a landlord who provides rent reductions through a government program. It also does not apply to units that are the only ones owned by the landlord in Nevada or for structures that contain four or fewer families where the owner occupies one of the units.

During the hearing of the Senate Commerce and Labor Committee, Senator Spearman noted, “A minimum-wage earner would need to work 62 hours to afford a studio apartment.”

Republican State Senator Jeff Stone is a landlord and took exception to a specific clause in the bill: “How do you define reasonable return on investment, when there are so many variables that different landlords have to contend with?”

“To create all these bureaucratic pathways that I have to go through to justify what I can charge a tenant, not to charge 5% when inflation is 8.5%, you’re already requiring landlords to take a 3.5% hit,” Stone said.

As reported by Channel 5,

Representatives of Nevada’s Culinary Union joined Spearman in support of her bill.

“We have Wall Street landlords, private equity, large corporations buying homes, apartments, Air BnB’s,” the Culinary Union’s Secretary-Treasurer Ted Pappageorge said during Friday’s hearing on the bill. “(They’re) cornering the market, raising rents beyond affordability, causing evictions and churns of residency, and creating a generation of renters and denying that generation the American dream of owning a home.”

Senator Spearman says about 30% of single-family homes in Nevada are owned by investors.

Senator Stone also challenged the exemptions in the bill for new construction citing that large investors are given an advantage and lack of incentives may inhibit new construction.  “You are going to hinder investment,” he argued. “And if you hinder investment, it’s going to exacerbate the supply and demand issues that we have here in Nevada.”

The Nevada Policy Institute echoes Senator’s Stone’s concerns by using St. Paul, Minnesota as an example of unintended consequences.

Last summer, the Culinary Union gathered signatures for a “Neighborhood Stabilization” rent control ballot initiative in North Las Vegas, however the city clerk struck down the initiative due to the lack of necessary signatures. The North Las Vegas City Council upheld the Clerk’s decision in a 4-1 vote.

Although their efforts failed in North Las Vegas, Senator Spearman who was born and raised in North Las Vegas and who has represented District One since 2012, has introduced the ballot initiative in the form of a SB426 that will, if passed by the Democratic majority, head to Governor Lombardo’s desk for signature or veto.