Who needs a timeout?

CITY COUNCILMAN BILL ROSENDAHL announced last week that he thinks property owners in his Westside district need a timeout. If they want to convert their rental units into salable condominiums, he suggested, they may have to wait a year -- maybe two -- to give the council time to solve the apparently pressing problem of landlords investing money in their buildings.

The move comes on the heels of a similar moratorium on the conversion or demolition of single-room occupancy hotels, mostly downtown. Given the prevailing political winds at City Hall -- which are blowing onto the November ballot a $1-billion affordable- housing bond (which would be financed by taxing property owners) -- this activity could be a precursor to a new condo-conversion ban citywide.

That may be good politics, as a sop to an array of noisy interest groups, but it’s bad economics. No elected body, no matter how enlightened, has a better chance of “managing” the business cycle than the market.

It’s practically the first lesson of Econ 101: If the price of something is too high -- and the price of even bottom-of-the-market rental apartments is quite high in L.A. -- what’s the best way to lower it? Increase the supply.

Instead, the council is increasingly deciding that the best approach to this problem (high-priced apartments) is to limit the freedom of those best able to solve it (potential buyers and builders of affordable apartments). With even casual talk of moratoriums, council members may make the problem they are trying to solve worse. Owners may be uncertain about their ability to upgrade, sell or destroy their property, and so may decide simply to focus on the less-restrictive higher end of the market.

Such cavalier treatment of property rights is alarming in any case. But city officials can’t even prove that the problem they’re trying to solve exists. Depending on which city agency is counting, from 3,300 to 4,500 rental units have been converted to condos since 2001. A total of 11,000 rent-controlled apartments (including 4,000 in Rosendahl’s district) have been taken off the market, for whatever reason, in that time. Most of that activity occurred in the last 18 months, though many forecasters predict that the conversion mania has peaked because the housing market is cooling off.

But 11,000 is a fraction of the city’s total of 626,000 rent-controlled apartments, a number that has increased by 162,000 since 2001. (It’s unclear, however, whether that increase represents a net gain in affordable rental property.) In addition, there are at least 4,000 more city-financed affordable-housing properties now than there were in 2003. And then there’s the flood of new, non-rent-controlled, multiunit buildings hitting the market -- L.A. County led the nation with 11,000 such projects underway at the end of 2005.

To make the case that limiting property rights is a good idea, council members need to show that the total supply of apartments, and the amount of “affordable” units, is decreasing. Until they can do that, maybe they’re the ones who need a timeout. They could use it to study policies, such as zoning changes and variances, that expand rather than restrict the ability of owners to control their own property.