News

Low rents a bad bargain for cancer-stricken landlord

Owner is first to petition city to raise rates beyond what's allowed by rent control law

In some ways, Jeanne Walker is a lucky woman. About a decade ago, she inherited a goldmine -- an apartment complex on Plymouth Street, just across the highway from Google's headquarters. Renting out the property's apartments provides her with a steady income and even a small cottage out front for her to live in.

In other ways, Walker is unlucky. For most of her adult life, the lifelong Mountain View resident has suffered from recurring bouts of cancer. The disease has inflicted a hefty toll on her well-being, and her doctors have warned her it will come back. Now bound to a wheelchair and requiring assistance, the 78-year-old said she has learned to appreciate each day she has left.

Since inheriting the apartments, she has kept the rents astonishingly low by Mountain View standards. Each of her one-bedroom units is now being rented out for about $900 a month even though they could easily go for three times that price. After seeing so many seniors priced out of town, she said she wants to keep her rents low as an act of defiance against the greed of the area.

But being sympathetic to her renters also makes Walker feel foolish. Her cancer treatments aren't cheap, and she now struggles to balance her medical bills with the cost of maintaining her apartments. If an expensive appliance, say a refrigerator, suddenly breaks, she has to buy a replacement on credit. She wishes she had raised her rents a little more because now she is explicitly barred from doing so. Mountain View's rent control law that took effect last year means that she can only raise rents by the cost of inflation. In her case, that's about $30 extra annually.

All these conflicted feelings come spilling out as Walker describes her unique predicament as owner of a 10-unit apartment complex that is one of the best bargains a renter could hope for in Silicon Valley.

Ever since she inherited the property from her father, she has tried to abide by his principles -- keep the rents low, and don't sell the property. She is now near the point where she must cave on at least one of those rules.

"My dad felt people were being gouged by landlords. This place was all paid off, so we didn't feel like we needed to raise the rent much," Walker said. "But right now, I've got myself in a tight spot. I'm reaching the point now where if something bad happened, then I'd have to consider selling and getting out."

Just released from a three-week hospital stay, Walker told the Voice it is getting more difficult to resist the temptation to sell. Every single week, she receives a few calls from real-estate agents with offers to put her property on the market, promising her up to $6 million. It's a decision that would be life-changing, not just for her but also her tenants, some of whom have lived there for decades.

Before it comes to that, she is seeking another option. Walker's Plymouth Street apartments are being reviewed by city officials as the first case for a special adjustment under the city's rent control program. In November, Walker and her brother filed an exhaustive 66-page form to request an extra rent increase because her units were so far below the market average. If approved, the petition would allow her to raise rents to about $1,100 per month -- which leaves them still far below even federally subsidized Section 8 housing, Walker points out. Later this month, a city hearing officer will review her case.

Across the city, landlords ranging from small-time family owners to large, publicly traded corporations have faced challenges as they comply with the Measure V rent control law. In the buildup to the 2016 election, these regulations were promoted as an appropriate response to the Bay Area's housing crisis and the landlords suspected of profiting from it. On average, Mountain View's apartment rental prices have increased by about 90 percent since 2011.

Walker's apartments defy this trend. For several years, she simply didn't raise rents. In 2005, she was charging just under $800 for most of her one-bedroom units. By the time the rent-control law took effect, those rents had been increased to just $990 per unit.

Measure V is admittedly a one-size-fits-all solution, and landlord advocates have warned that the new rules would fall hardest on small-time owners. For Walker, this means her low-priced apartments are restricted under the same price controls as market-rate units costing four times more. Additionally, she must pay the same $155 per-unit annual fee to fund the city's rent program. In fact, when the rent-control program took effect she was forced to rewind her rents back down to $915 and give her tenants a refund for the difference.

"We had tenants who tried to give back the money, but I had to tell them we can't accept it because it's against the law," said Jeanne's brother Wayne Walker, who helps manage the property. "With the benefit of hindsight, we probably should have stayed closer to the market rate, but at least my sister is comfortable."

Walker isn't the only considerate landlord who is now struggling under the rent control measure, said Joshua Howard, spokesman for the California Apartment Association. She and other property owners are effectively being punished for trying to keep their rents low, he said.

"Measure V clearly hurts those housing providers who were most generous with their residents," he said. "It’s not fair that this owner is now forced to choose between providing housing or paying her medical bills."

Folks living at the Plymouth Street apartments would have to be blind not to know what a great bargain they're getting, said Debbie Zimmerman, who's lived there for 15 years. Among her neighbors are teachers, blue-collar workers and some retirees like herself. Tenants have tried to show their appreciation for Walker's generosity by handling the upkeep, doing chores like gardening, yard work and cleaning, she said. For many of them, it would extremely difficult to stay in Mountain View if they were forced to leave.

"We know we're getting a great deal here," she said. "If we couldn't live here anymore, we'd probably have to move out to Oregon."

Walker's thoughts are conflicted regarding her tenants. She is glad to provide a cheap place to live, and she knows her tenants are grateful for it. Some of them even scrawl a "thank you" on each monthly rent check. She has heard stories of seniors her age in Mountain View living out of their cars, so it seems right for her to help where she can.

But she doesn't hide her frustrations with her current situation. Before her generosity was optional; now it's mandatory. It has led her to ponder whether her tenants are making the same sacrifices she has had to make. Some of them take vacations and drive such nice cars, so maybe they have more money than they say, she said.

"I'm not complaining, but I wish I had a little more freedom to increase the rent more than 3 percent a year," she said. "This is really financially hurting us."

In 2016, the Plymouth apartments suffered a minor crisis when the Walkers had to pay $90,000 for sewer and roof repairs. Combined with the rent rollback, that year ended up as a loss for the family that will take years to recover, Wayne Walker said.

The Mountain View city staff were very helpful and they explained a variety of options under the city's complex rent regulations, he said. Learning those rules, he saw that their apartment rents would likely be eligible to be raised as high as $1,400. After talking to his sister, they decided to keep their request modest, asking only to raise their rates to $1,100.

"We just thought that a $400 increase is a hell of a raise to put down on our tenants," he said. "I was a renter for eight years. If my landlord jacked up my rent, it would have concerned me."

Members of the Mountain View Tenants Coalition said the Walkers' predicament is exactly the kind of unique situation that deserves to be reviewed under the city's petition process.

"Measure V has built-in mechanisms for cases like this where someone has kept their rents so low," said Steven Chandler, a Tenants Coalition spokesman. "I would think this will be approved by the Rental Housing Committee. If it's not, then something's wrong."

Not knowing how much longer she will be around, Walker has already laid out plans to pass on the apartment to her nephew, who said he would try to avoid selling the complex.

Comments

188 people like this
Posted by No more Nice Landlord
a resident of Rex Manor
on Jan 12, 2018 at 12:38 pm

"On average, Mountain View's apartment rental prices have increased by about 90 percent since 2011."

Come on, Voice! The above statement is true only because from 2007 - 2011 rents decreased substantially. Please at least show the full picture, otherwise it looks like you are trying to manipulate your readers. In 2001, I was paying $1,800 a month to rent a one bedroom apartment. With a 3% increase each year, that same apartment should rent in 2018 for $2,975. A quick search on craigslist just now shows many 1 bedroom apartments in Mountain View renting for much less than this. The range was $2,300-$2,500. So I'm not even convinced rents are that unreasonable.

What's more likely is that there's a big increase in people moving to Mountain View with very high incomes at tech companies who are able to price other people out of the apartments they've been in for years. That is a valid discussion to have, but that's a different argument than "rents are too high, we need to cap them".

And why the sudden change of heart? According to the Voice and the Tenants Coalition, all landlords were greedy and untrustworthy and needed to be regulated. There are many smaller landlords (including me) who have left rents lower than market rate. As a result of Measure V, I have stopped being the nice landlord and will forever and always increase rents on my tenants to maintain market rate. That's what you've accomplished.


Posted by Name hidden
a resident of Old Mountain View

on Jan 12, 2018 at 1:18 pm

Due to repeated violations of our Terms of Use, comments from this poster are automatically removed. Why?


17 people like this
Posted by Anke
a resident of North Whisman
on Jan 12, 2018 at 2:27 pm

Anke is a registered user.

A compassionate solution would help both Jeanne Walker and her low-income tenants. Something along the lines of allowing her to raise rents up to closer to market rate but providing subsidies of some sort for her long-time low-income tenants. It seems extremely unfair that someone struggling to get by is forced to subsidize well-off people with hefty salaries and abundant spending power.


12 people like this
Posted by Longview
a resident of another community
on Jan 12, 2018 at 2:43 pm

Longview is a registered user.

So from reading this article, this kind landlord is allowed by the Measure V petition process to raise her rents more than she is choosing to raise them. And she will be able to raise them again more in the future if she goes through the petition process again. And, her 3% (or so) annual increases will now be on her now somewhat higher rents. I wish the best to this kind landlord. I hope she takes additional increases in the future, as it seems she is allowed by the Measure V petition process.


25 people like this
Posted by PeaceLove
a resident of Shoreline West
on Jan 12, 2018 at 2:52 pm

This article conveniently avoids the elephant in the room. If the U.S. had a healthcare system that was not a sick, exploitive late-stage capitalism horror show this would not be a problem. Like doing a GoFundMe to pay your medical expenses, being forced to raise the rents on your working class tenants to pay for cancer treatments would never be an issue in most of the civilized world. My two takeaways from this article: 1. Jeanne Walker is a stone-cold saint; 2. America is a Third wWrld dystopia with good PR.


12 people like this
Posted by MV Flyer
a resident of Monta Loma
on Jan 12, 2018 at 2:55 pm

I hope the board allows this. She obviously is not trying to gouge her tenants--she's been keeping the rents artificially low than the rest of the area because it seems as though she's kind, and wants people to have a clean place to live. While I'm sure $200 a month increase will stress some or most of the tenants, it's not at all unreasonable to increase it to this level considering comparable apartments are going for $2000+ in the area. Maybe if it's a hardship for some tenants it can ramp up more slowly. The landlord sounds reasonable.


178 people like this
Posted by The Truth
a resident of North Whisman
on Jan 12, 2018 at 3:05 pm

The Truth is a registered user.

As a former Mountain View landlord,the apparent bias of the Voice is troubling. As the first poster noted, the 90% figure used to depict the increase of rents in MV is misleading and downright inflammatory as it is out of context when you use a base rent from the great recession, you include non rent controlled units run by true profiteers (Prometheus et al) and fail to consider upgrades in amenities. Statistics absolutely lie when used out of proper context.

We purchased a building in MV at the end of 2008 and to the beginning of 2017, the base rent if counting the whole rent roll increased 70% (pre roll back). That may sound high, but, this was from a historic low and we spent well over $35,000 per unit to modernize a 50+ year old building. To put another way, the building was in 1960's original condition when we bought it, single pane windows, no dishwasher, original cabinetry, formica counters, everything original, in 2017 every unit had dual pane windows, fully remodeled bath and kitchen with granite countertops, dishwashers etc.

The work was done as original tenants moved out on their own, we never used the 60 day termination without cause option and never raised rent above a single digit %. All new tenants were brought in at rents slightly below market as we chose to be very specific with our screening criteria (compliant with all federal, state and local housing laws), just like an employer who has to pay more salary to attract the best talent, a landlord has to take less rent to compete for the most economically attractive/stable tenants.

In an ordinary free real estate market, people will always move out on their own due to life and job changes. Post rent control, it clear that people will hang on to the rent controlled bargain without regard to their job or life status. This is a problem that further reduces available housing and extinguishes any desire to invest further in the property other than bare minimum to maintain habitability standards. This is not economic theory, but reality from our actual experience.

Because we were proactive and modernized the building, the rents post rent-control were still attractive enough to be able to exit/find someone to buy it. The building was sold last week for 220% of the late 2008 purchase price, not abnormal for a Bay Area single family home, but sort of low for this type of asset due to rent control. This was only possible because significant effort was spent to upgrade and modernize pre rent-control, this approach was not necessarily available to other apartment owners like the Walkers as it takes quite a bit of free cash on hand, energy, business acumen, patience and some luck to get it done right, even then it may not work out well.

The returns we realized were not outstanding considering the improvement in the economy from 2009 to 2017 and we certainly did not gouge anybody along the way, yet, according to the Voice and the Mills Legal Clinic, we are part of the problem I suppose.

That is why many people in our shoes are seeking to get out if they have not already, why put up with this if you can take your money and get a fair "real world" return elsewhere?

Clearly, it is too late for the Walkers. Their property is a half acre lot(from the photo it appears to be 1977 Plymouth St) that under current zoning, could not be redeveloped for more than 7 units (less than current density) and the low rents don't justify a decent valuation. Whoever claimed they could get $6MM is probably baiting them as it is not worth that either as a 10 unit apartment building or buildable land. This is another fine example of the failure of government overreach, or in this case, voter overreach.



8 people like this
Posted by Anke
a resident of North Whisman
on Jan 12, 2018 at 3:09 pm

Anke is a registered user.

"1. Jeanne Walker is a stone-cold saint; 2. America is a Third World dystopia with good PR."

That about sums it up. It didn't used to be this way.


6 people like this
Posted by SchuLaura
a resident of North Whisman
on Jan 12, 2018 at 3:10 pm

Perhaps we can enlist in Rebuilding Together organizatio to help Jeanne Walker with whatever repairs/upgrades she needs done to these units. She is a blessing to those low income residents and she should be offered some kind of help to keep the rents low. And then she should be made an example to the greedy landlords out there who are gouging residents right out of Mtn View and into motor homes.

Web Link


2 people like this
Posted by Anke
a resident of North Whisman
on Jan 12, 2018 at 3:22 pm

Anke is a registered user.

@The Truth, you do not seem to be part of the problem, and you do seem to be a very reasonable landlord. Other Mountain View landlords inflicted those 70% rent hikes without upgrades. It started when the first wave of new techies flocking to our region merged with the wave of folks becoming renters after losing their own homes to foreclosure.


26 people like this
Posted by Long Time Resident
a resident of Old Mountain View
on Jan 12, 2018 at 7:49 pm

People here are calling her a saint. I think that begs the question, what's wrong with a landlord just charging the market rate? As long as it's gradual, there's nothing wrong.

Let's do a hypothetical, different from Ms Walker. Say you're a small landlord and you've worked most of your life holding down a full time job. You are exhausted after 50 years of doing your job each day and after many years you really need to quit. Your back hurts. You're tired. You eyesight is not so good. Maybe you have other medical issues like many seniors. year ago you saved up and now have 6 units and while it gives you a small income after your other job, it's not enough to retire and pay your health costs. You don't want to continue to work like this. If raising your rent, say over a couple of years to market rate would allow you to quit, what's wrong with that? Why should you keep working this extra job, which is a a rent subsidy. The renters get a cheaper home and you can't ever retire. How is that fair?

Voters love a villain. You see it all the time at the national level. It also happens locally.


1 person likes this
Posted by Sam
a resident of another community
on Jan 13, 2018 at 1:53 am

> >A quick search on craigslist just now shows many 1 bedroom apartments in Mountain View renting for much less than this. The range was $2,300-$2,500. So I'm not even convinced rents are that unreasonable.

The vast majority (if not all) of those rentals are in old buildings built in the 1960s-1970s, with poor soundproofing, noisy wall-unit air-conditioners, and no in-unit washer/dryer.

As someone who's lived in various rental markets all over the US, I know a crappy deal when I see one. Personally, I would rather rent a room in a modern condo/townhouse, than pay for an over-priced, outdated apartment.



Like this comment
Posted by David
a resident of Cuesta Park
on Jan 13, 2018 at 4:52 am

Not all landlords lie - just some of the landlords determined to repeal rent control in Mountain View. They do not even need signatures on a petition. Landlords have most city council members in their proverbial pockets. Those council members will put on next November's ballot the repeal of rent control just adopted last November (the soonest date allowed by state law). They may call it REPEAL AND REPLACE. Replace will refer to the tenants they aim to evict. Get ready to rumble.


4 people like this
Posted by Anke
a resident of North Whisman
on Jan 13, 2018 at 9:26 am

Anke is a registered user.

"which is a a rent subsidy. The renters get a cheaper home and you can't ever retire. How is that fair?"

That's the whole point. Some (many) people are not even able to save up to purchase a small rental property to supplement their day job or retirement fixed-income. Some of them are Jeanne Walker's tenants, and she made a compassionate choice to very specifically refrain from making them homeless by spiking her rents. Now she is in need of a compassionate solution herself. I hope our city leaders can find it in themselves to find a solution that both helps Ms. Walker and avoids hurting her low-income tenants.


2 people like this
Posted by John C
a resident of Rex Manor
on Jan 13, 2018 at 11:33 am

78 years old, should be on Medicare ... even Medicare advantage. 300$/mo and low copay. Her apartment complex paid off. Really low prop 13 property taxes. Maintains a reserve; certainly possible now. She is makin a lot more money now without charging market rate. Oh yes ... all that depreciation that can zero out her income tax. Soooo ... what’s the problem?


2 people like this
Posted by Rodger
a resident of Sylvan Park
on Jan 13, 2018 at 11:48 am

This women is needs to be helped and admired. Her current long term tenants should help out by taking care of their own maintenance as far as they can. Example your frig stops working get it fixed, buy an New or used frig, you faucet drips fix it yourself or call a plumber, etc.

She might have to sell if you don’t pledge to help her.

One other idea, help get permission to raise you rent a little plus vote for rent control repeal.


2 people like this
Posted by crocodile-tears
a resident of Shoreline West
on Jan 13, 2018 at 11:56 am

As a human being, I sincerely feel sorry for that person for her health condition. That being said, I find it ludicrous to use her case as an argument for "poor landlords, rent control is so harsh..." Well, landlords, stop playing the violin in the backgrounds. There may be a few exceptions, but truth be told loud and clear, landlords in mountain view and the bay area in general are greedy folks. Not sure what you guys are thinking, but not everybody, including the hitech crowd which i'm part of, find anything close to $3000 for a 1-bedroom a "cheap" or even "reasonable" rent. We are not all working for Google or Facebook who have started that spiral that landlors gladly participate in: higher salries for newcomers, higher rent price, oh rents are higher, need to pay more..." Not everybody has had their salaries increase at the same pace as rents: raise your hands if your compensation has increased by 70% over the mentioned period. And we're not even mentioning the other aspects of cost of living (look at the average price for a lunch in mtv...) So, control wouldn't be needed if landlors were reasonable, I'd even say responsible. But they are not, period. Somebody please brings some sanity to that rent situation!


13 people like this
Posted by The Truth
a resident of North Whisman
on Jan 13, 2018 at 1:56 pm

The Truth is a registered user.

I hope the voters that read this message board pay attention to the actual facts here. People like "crocodile-tears" clearly are part of the "leadership" of the Tenants Coalition and similar political organizations. Their main tactic is to paint all landlords as evil, greedy people out to screw everyone else. That is not the case with the vast majority of the mom and pop property owners. The tenants coalition fought dirty and won. Today, there are numerous examples of 1BR apartments available under $2K on Craigslist in Mountain View and surrounding areas.

If we examine the Walker's case, their property was built in 1961. Buildings this age require extra maintenance, the cost actually increases over time at a rate faster than they have increased rent. Their property tax is low ~$270 per month, but, that is not really relevant when the rent being charged is $900 bucks a month.

The article states she lives in one of the 10 units, this means the monthly gross is around $900 x 9 = $8,100. Subtract the property tax ($270), the multifamily inspection fee and measure v charges ($120), water/sewer/garbage ($700), liability insurance ($290)= at best net monthly income before tax of $6,720, annualized $80,640 at best from that you subtract surprise maintenance items etc. and it is not a lot of cushion, especially when out of pocket on cancer treatments. She may also be paying PG&E as well if it is master metered for gas, common for buildings this age.

The article states they incurred $90k to related to the roof and sewer, which is not uncommon, more than a years worth of net income can be wiped out quickly in buildings this age. Ownership is not all it is cracked up to be.

For sure, this is a case where the property owner is being punished by the existence of the CSFRA and their struggles should not be minimized, mocked or ignored.


8 people like this
Posted by LOL
a resident of Old Mountain View
on Jan 13, 2018 at 2:30 pm

The Truth, is your best argument here that a landlord is earning $80K / year from inheriting a property? I'm fairly certain any of the tenants would trade financial situations in a heartbeat.


Like this comment
Posted by Amused
a resident of another community
on Jan 13, 2018 at 8:06 pm

Mountain View is cancer. The TCE contamination is all over town. It killed my cats and it's killing my girlfriend.


9 people like this
Posted by Old Timer
a resident of Another Mountain View Neighborhood
on Jan 14, 2018 at 12:17 am

The rent increases of older building has never been as high as those rent coalition people says. What is claimed to be rent increase is someone intentionally mixing up the rents of older building with brand new buildings.
The high cost of development, with high permit fees, BMR rules, lack of return of skilled construction workers, and lumber price increase to $460/unit from $300/unit, has created a situation where new building MUST charge at least $3500 to $4000 per unit to make rental business feasible.
At the current pace, unit sizes must be much smaller and density must go up, otherwise no banks will finance the construction.


12 people like this
Posted by Yimby #2
a resident of Another Mountain View Neighborhood
on Jan 14, 2018 at 10:08 am

Anke, you pointed Jeanie Walker to the the Measure V Petition Process.
Please note that it is a time consuming, invasive process.
It is difficult enough for a healthy person to do. I certainly would not wish it
on a person with an illness. Of course, she could pay an accountant to go through her past records to justify a rent increase to the Rental Housing Committee Hearing Officers. But that is a problem too, since she is charging low rents she probably does not have the money to pay somebody. It would be useful to get Jeanie's opinion of the hoops she will be forced to go through to raise her rent, in terms of cost, time. If we step back and look at this, MV now has a $2.5 Million dollar process to make people like Jeanie jump through bureaucratic hoops to make what should be relatively simple rental rate increase decisions. It is a costly and time consuming process. The hearing officers are retired judges, and there seems to be a lot of lawyers involved. They are putting together a database to support the process (as opposed to bunch of cheap spreadsheets). All of this is expensive. Of course there are other opinions on this. Measure V supports will say that the $2.5 M expenditure is well worth the cost to keep those greedy landlords in check. A previous poster made a good point that the uncontrolled rent properties and rent controlled property rental rates are being mixed up. I would suggest that the small mom and pops like Jeanie (who in many but not all cases) have a tendency not to optimize price/profitability to nth degree are being hurt. And the Measure V supporter just say just use the petition process, which is an expensive/time consuming process. I would suggest that unless you actually have to do it, anybody who says it is easy and quick are making statements based on no real world experience. Changing subject a little bit, Measure V for this year grants 3.4% rent increases. But ignores additional expense line items - the $155 per unit fee for Measure V, the increases in water, and garbage. You add this is the real rent increase is 2.4%, a full percentage point less than inflation. The Rental Housing Committee is not using generally accepting accounting principles to measure income and expenses (the are not using an Income Statement which would have captured relevant expenses) and therefore are overstating the rental increase and understating the expenses landlords incur. Their accounting is inaccurate, misleading. The net result is to force landlords into raising rent a full point below what Measure V promised. This is not only unfair, it will lead to under investment in the rental housing stock. In this case, the older apartments that will have the most need for improvements. Many (but not all) supporters of Measure V have good intentions. But what we have here is the law of unintended consequences. I suggest for those who can think reconsider their support of Measure V.


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