Mountain View's City Council has shot down a version of rent control that was the centerpiece policy of a package aimed at slowing the rapid growth of housing costs. On Tuesday night, after hours of public testimony, the City Council decided that whatever short-term relief tenants would gain from rent control would be outweighed by the potential hardship it would inflict on the local housing market.
The decision on Tuesday, March 15, brought to a close a discussion that has dominated city business for the last six months and packed the City Council chambers like no other issue. In that time, scores of renters and landlords have made the case that their respective livelihoods were at stake.
Parents working low-wage jobs described how they would need to pull their children out of local schools to move hours away because they were being priced out of their apartments. On the other side, local seniors explained how they invested their entire nest egg in an apartment project thinking it would provide them with a stable income.
By all accounts, it was a situation with no easy answers, and the council admitted as much in front of the overflow crowd on Tuesday.
"No other issue has caused me to lose more sleep -- this is one vexing topic," said Councilman Ken Rosenberg. "I fear the fabric of our community of Mountain View is being ripped apart in front of our eyes ... yet rent control remains a bad policy."
Formal rent restrictions were just one piece of a much larger and complex program of rental policies being considered Tuesday night.
In December, the last time the topic was taken up, a majority of the council signaled support for designing a three-stage process to resolve disputes between landlords and tenants. This program would start with a step called conciliation, an informal phone conversation brokered by the nonprofit housing group Project Sentinel to discuss tenants' complaints and see whether a resolution was possible.
If that step failed, tenants could bring the dispute to stage two, mediation, which would bring in a trained mediator to encourage a compromise.
The rub of the meeting was the possibility of a third step, formal arbitration managed by a third-party who could dictate a binding resolution to the conflict.
In a dispute over a rent increase, for example, an arbitrator could rule on whether a tenant's rent increase fit the city's criteria. Landlords could make their case for why a big rent increase was justified, but in the end the arbitrator was authorized to throw out rent hikes deemed excessive.
This system would have had plenty of differences from rent control in the formal sense, which normally means that a city sets a hard cap on the size of rent increases. But for many in attendance on Tuesday, the proposed binding arbitration was tantamount to rent control.
"Call it binding arbitration; call it rent control; call it rent stabilization -- it's picking an arbitrary number without basis and deciding that's the amount that rents can increase in a year," said Jessica Epstein, government affairs director with the Silicon Valley Association of Realtors. "You don't need to go to this extreme policy so early in the process."
A large contingent of landlords at the meeting repeatedly emphasized to the council that restricting rents would give owners less reason to maintain their properties. As in other meetings, public speakers warned of slums, sewage leaks and renters who would abuse the system.
"This process would be confusing and cumbersome for small property owners, and ultimately it would discourage maintenance beyond the bare minimum," said Roger Strom, president of Strom Properties.
But there were plenty of exceptions to the restrictions the city proposed to impose. City staff members noted in their report that any arbitration process had to take into account that property owners deserved a "reasonable rate of return" and that the cost of property maintenance could generally be passed onto the tenants.
For that matter, many apartment complexes would be unaffected. Under the state Costa-Hawkins Rental Housing Act, California cities can restrict rents only on apartment buildings occupied before 1995.
Tenants' advocates repeatedly reminded the council that voluntary measures would do little to curb rents that have been rising wildly out of proportion to many people's incomes. They urged the city to go further by including protections so tenants won't have to fear eviction if they raise complaints.
"We've taken one step forward only to find ourselves two steps back from where we started," said Evan Ortiz, an organizer with the Mountain View Tenants' Coalition. "Anything less than full protections will actually leave renters more vulnerable than ever."
As the discussion came to the council after a lengthy public comment period, it soon became clear that many council members had misgivings about the rental package as proposed by staff. To varying degrees, a majority of members came out swiftly against the idea of binding arbitration, saying they had fundamental disagreements with anything resembling rent control.
"You don't go from the free market environment to price controls in one fell swoop," said Councilman Chris Clark. "The art of policy-making is disappointing everyone in the room at a rate they can accept."
Clark and councilmen Mike Kasperzak, John McAlister and Ken Rosenberg each explained that they favor a mandatory mediation process that would encourage, but not compel, resolution for disputes over large rent increases, maintenance issues and other matters. The real remedy for the skyrocketing rents was to add more housing to the region, they argued. They were joined in opposition by Councilman John Inks who said he was also against any mandatory process for landlords, saying it was still a form of rent control.
In the minority were Mayor Pat Showalter and Councilman Lenny Siegel, who described the local rental crisis as a "cancer in the community" that needs a short-term fix. If the city leaves its rental policies entirely voluntary, very few landlords would have any real reason to limit their rent increases, Siegel said.
He blasted the majority's preferred plan as "naive," saying few tenants would risk angering their landlords for a futile mediation hearing.
"Landlords will go to mediation and say, 'Thank you, but I don't need to do anything.' There's no incentive for mediation to work," he said. "I'm going to oppose anything short of binding arbitration. It's pretending we're doing something that's not going to work."
With binding arbitration out of the picture, the council faced a second contentious question of what the rent-increase threshold should be for mandatory mediation. More than one council member said that setting a number would be an arbitrary decision. After taking a total of seven votes, the council finally zeroed in on an agreement to set the threshold at a 7.2 percent rent increase. At Clark's request, the council indicated that the 7.2 percent could be spread out over two increases over a given 12-month period.
To staff the new beefed-up mediation program, the city allocated $70,000 to help finance extra staff time at City Hall and Project Sentinel. Landlords would be required to register for the new program and pay $7 per housing unit annually to defray the city's costs. All apartment complexes with three or more units, including those built after 1995, would be affected by the new program and its fees.
The council agreed to review the progress for the new rental housing program within six months and again in one year. They added a "sunset" clause that would require the program to be reconsidered in September 2019.
Closing the discussion, Showalter said the city may be hearing more about these issues much sooner. She wondered if tenant advocates would prepare a voter measure seeking rent stabilization since the City Council seemed unwilling to take stronger action.
"This is better than nothing, but I don't think it's going to be nearly seen as good enough," Showalter said. "That does sadden me. We had an opportunity to go a little further here."