News

RHC majority pushes for extra rent increase

Lawyers for rent control committee warn the plan will invite lawsuits

Mountain View's landlords could be granted a bonus 2.6 percent increase on their apartment rents under a plan pushed forward by the Rental Housing Committee on Monday night. The extra rent hike was promoted as a way to balance out a lapse caused by a citywide rent rollback; however, tenant advocates warned that such a move is blatantly illegal under the city's rent control law.

The Rental Housing Committee approved investigating the extra rent increase in a 3-2 vote at its March 26 meeting. Committee members Emily Ramos and Evan Ortiz voted against it.

The discussion focused on a long-simmering issue stemming from the city's Community Stabilization and Fair Rent Act (CSFRA), the voter-approved law that limits most rent hikes to increases in the Consumer Price Index (3.4 percent last year). When the law, also known as Measure V, took effect, apartment owners were also required to roll back their rents to what they were charging in October 2015.

Unsurprisingly, local landlords have been hostile to the idea of rent control, and have complained that, even under rent control, they deserve to charge tenants a little more. If rents can go up only by a percentage tied to inflation, they say, the city has neglected to give them an increase for a 10-month period starting after October 2015. For this period, they said their apartment rents were effectively frozen, which many dubbed an "illegal taking" of their property.

"Right now, we're going to be 10 months behind the CPI forever," said Joe Maydek, a Mountain View property manager. "Just because it's hard to figure out doesn't mean it shouldn't be fixed."

Yet the exact length of time without an inflationary increase is debatable. If an extra rent increase were granted, city legal staff suggested it should be only for the four months spanning from October 2015 to February 2016. That would add up to a meager 0.6 percent increase, which didn't excite anyone. Plus, the attorneys warned that granting even that modest rent increase wouldn't be easy because it shouldn't apply to any tenants who moved in recently. They recommended the best course of action was to not give any rent increase, and to let the problem be sorted out through the program's petition process.

That legal advice wasn't what most committee members wanted to hear. Presenting his own slideshow, committee member Matthew Grunewald insisted that landlords actually deserved permission for a 2.6 percent increase for a total of 318 days when their rents were frozen. Inflation occurs every day, he said, and it was unrealistic for the committee to artificially constrain this effect on apartments.

"Every landlord is due a bankable 2.6 percent increase," he said. "This is the most conservative amount that you could say is defensible."

Critics said that going forward with that plan could violate the CSFRA, which stipulates that tenants receive only one rent increase per year and that it must be less than 5 percent. Under the rent control law, landlords are allowed to "bank" extra rent increases for future years if they didn't adjust their rates in prior years. Grunewald indicated this was how he wanted to solve the inflation lapse issue.

But tenants' lawyers warned the idea was treading on thin ice and could invite a legal challenge. Nan McGarry of Community Legal Services, who is currently representing numerous Mountain View tenants in rent disputes, argued the committee didn't have the authority to grant an extra rent increase. The rent control law only allowed for one annual rent increase, starting on Sept. 1 2017, she said, and prior years shouldn't register.

Committee member Ramos pointed out that landlords were still entitled to keep any increased rent they collected from October 2015 through the end of 2016, when they were still free to set rents as high as they wanted. Ramos pointed out her apartment complex received a hefty rent increase during that time.

"I don't think it's fair to throw that out," she said. "I've seen many of my neighbors move out because their rent has gone up too much."

As in many previous discussions, the Rental Housing Committee showed a deep ideological divide. Grunewald, Tom Means and Vanessa Honey insisted that the CSFRA regulations needed to accommodate the business realities of the rental market -- even if their legal counsel disagreed. The three committee members voted to direct staff to draft plans to allow the additional 2.6 percent increase and bring it back at a future meeting.

On the opposing side, Ramos and Ortiz reminded their colleagues that voters entrusted them to scrutinize rent increases, not to usher in more of them.

"This allows for a substantial rent increase beyond what people were expecting," Ortiz said. "With instances like this, there's going to be even more of a public perception that this board always leans a certain way."

Comments

44 people like this
Posted by Concerned
a resident of Sylvan Park
on Mar 29, 2018 at 3:15 pm

The RHC needs to find an equilibrium. Landlords want more rent and tenants want to pay less. Not easy! It is important that Landlords be incentivized to stay and invest in MV and not move to surrounding cities. Some family-owned apartment buildings have already sold-out to speculators. So the tenant loses! There are loads of massive apartment buildings coming online all over the Valley so market supply should have an upcoming calming effect on rents.


39 people like this
Posted by Beelia
a resident of North Bayshore
on Mar 29, 2018 at 4:11 pm

The majority is just making up laws as they go along. I’ve lost faith in the City Council - they have appointed foxes to protect the henhouse.

Too bad these people weren’t elected instead of appointed, so we could VOTE THEM OUT.


15 people like this
Posted by Soon repealed
a resident of Monta Loma
on Mar 29, 2018 at 8:07 pm

Rent control probably will be repealedin November. The City Council (majority) will put the question on the ballot. The landlords will spend at least $10 million spreading lies. And the landlords will then get HUNDREDS OF MILLIONS OF DOLLARS more EACH YEAR in rents - mostly from new renters (the old renters having been forced to move out of the area).


103 people like this
Posted by Yimby #2
a resident of Another Mountain View Neighborhood
on Mar 29, 2018 at 11:18 pm

1) Did the voters really expect to put landlords behind the consumer price index
by not allowing them to account for inflation during those 318 days?
Probably not.
2) The RHC is ignoring expenses which make the 3.4% CPI rent increase really 2.4% by ignoring expenses of $2.6 M to run the program and increase of garbage & water.
Did voters really intend to do this?
3. A 100 unit apartment complex has to provide 156 pages of paper work to ask for
rent increases because they have been charging below market rates.
Did voters really intend this? Probably not.

Measure V is poor quality legislation and is poorly implemented. Nobody expected or planned for these unintended consequences.Repeal Measure V.


5 people like this
Posted by Everyone Should Get What They Want
a resident of Old Mountain View
on Mar 30, 2018 at 10:28 am

The best solution is two-pronged:

1. let landlords to charge market rates for their properties and
2. cap renters monthly charges at affordable limit based on renter's income.

When 1 > 2, city can pay difference to landlord -- like Section 8.

Then everyone's happy!


136 people like this
Posted by David
a resident of Bailey Park
on Mar 30, 2018 at 1:22 pm

And yet I have lived in the same apartment for over 20 years. I didn't bring the cock roaches or bedbugs with me. Yet hear I am having to pay an exterminator $700 to get rid of them. How is THAT fair?!


7 people like this
Posted by YIMBY
a resident of Another Mountain View Neighborhood
on Mar 30, 2018 at 1:47 pm

Rent control should be repealed, but it can't be as long as Prop 13 is in place since there's a financial incentive for property owners to fight against new housing getting built, causing market pressure to increase rents due to the restricted supply, while owners are shielded from any negatives since their property taxes increase at a capped percentage.

Plus the same arguments made for Prop 13 work for rent control as well. You wouldn't want grandma to be forced out of her apartment and onto the street, would you?


5 people like this
Posted by @Concerned
a resident of Rex Manor
on Mar 30, 2018 at 2:34 pm

Homeowner here:

@Concerned:

>It is important that Landlords be incentivized to stay and invest in MV and not move to surrounding cities.

Why? Landlords on a per-unit basis are corporate entities - not small 8-unit landlords. A corporation is not a human being that participates in the community.

> Some family-owned apartment buildings have already sold-out to speculators.

People die, their kids sell, etc. all the time there will be "family-owned" apartment buildings being sold. FYI Prometheus is owned by a single family. So the largest apartment owner in MV is "family-owned"

> So the tenant loses!

How does a tenant lose if their landlord changes? As a tenant, I never had a personal relationship with any landlord.

> There are loads of massive apartment buildings coming online all over the Valley so market supply should have an upcoming calming effect on rents.

Should..... and *if* the vacancy rate goes up; CSFRA has a provision to be suspended.


4 people like this
Posted by Kyle
a resident of Monta Loma
on Mar 30, 2018 at 8:39 pm

What? With Prop 13, Landlords have no reason to leave. If they want to be exempt from rent control, they can tear down and build something bigger. They were beyond profitable at the rent prices 10-years-ago.

If they want to raise prices freely, build newer, larger, multi-story buildings and they'll be exempt from rent control.


10 people like this
Posted by Soon repealed
a resident of Monta Loma
on Mar 31, 2018 at 9:06 am

That increase is PEANUTS compared to what will happen if Measure V is repealed in November 2018. Rents in affected (older) apartment complexes will go THROUGH THE ROOF. Renter-activists will be evicted. Corporate employers will appreciate clearing out old renters to make room for their new employees.


4 people like this
Posted by The Business Man
a resident of Another Mountain View Neighborhood
on Mar 31, 2018 at 9:27 am

The Business Man is a registered user.

In response to Soon repealed you said:

“Rent control probably will be repealedin November. The City Council (majority) will put the question on the ballot. The landlords will spend at least $10 million spreading lies. And the landlords will then get HUNDREDS OF MILLIONS OF DOLLARS more EACH YEAR in rents - mostly from new renters (the old renters having been forced to move out of the area).”

The City Council cannot place a Charter Amendment ballot question on the ballot. They are limited by the Charter by the following:

“Section 506. - Powers vested in the council.

All powers of the city, EXCEPT AS OTHERWISE PROVIDED IN THIS CHARTER, shall be vested in the council, and said council may establish the method by which any of such powers may be exercised.”

Thus if powers are preempted by the City Charter, as the CSFRA has done, the council is prohibited from interfering with the City Charter as a Whole. The public should be aware of this.

Insofar as the limitations on the city council regarding a ballot measure please refer to section 513:

“Section 513. - Council action.

Legislative action shall be taken by the council ONLY BY MEANS OF AN ORDINANCE, RESOLUTION OR MINUTE ACTION DULY RECORDED IN THE OFFICIAL MINUTES OF THE CITY COUNCIL. (As amended November 3, 1998.)”

It would seem the only way to place a ballot question for a City Charter amendment is to gather the signatures as was done by the Mountain View Tenants Coalition did for Measure V. If this is not done, the November Ballot for this year or any other year cannot contain a Ballot Measure for City Charter Amendment based on the City Council because they are restricted to ordinances and resolutions.

Why doesn’t the public know this?


3 people like this
Posted by Erik Kengaard
a resident of another community
on Apr 1, 2018 at 11:03 am

Rent in the bay area was completely affordable until about 1970. Even a working student could afford rent. What happened?


3 people like this
Posted by YIMBY
a resident of Another Mountain View Neighborhood
on Apr 1, 2018 at 1:33 pm

@Erik

The 1970s are when a lot of exclusionary zoning policies went into affect. When that unsurprisingly caused property values to increase since less supply was being added to offset demand, Prop 13 got passed. And now here we are.


5 people like this
Posted by Confused reader
a resident of Old Mountain View
on Apr 1, 2018 at 6:44 pm

I don't understand the reporting. Would it be possible for the Voice to publish the slideshow referred to in the article as being presented by Mr. Grunewald? As I am reading this article, the claim is that rents "were frozen" for 318 days starting in Oct 2015. I'd like to see the law or regulation he is referring to that supports that claim. I received a large rent increase during that time frame so I'm sure I along with many other renters would want to sue landlords for illegal rent charges if there were a law "freezing" rents for 318 days starting in October 2015.

The CSFRA does not state anywhere in it that annual adjustments are done using the date of October 2015. I don't understand how the city lawyers are reading this incorrectly. One section defines annual adjustments relative to a base amount. Another section defines the base amount, linked to a date, but nowhere is there wording that says the annual adjustment starts from 2015 as a date.

In addition, how can the city lawyers advising the CSFRA committee even think this could pass a legal test in court and not break contract law on my rent and many others' rental contracts. From October 2015 to the vote in November 2016, there was no rent control. I was under a rental agreement contract for a set rent for a set term during that period of time. By stating openly in public that the reason for any increase is to cover this term already in the past and covered by contract law, what is being attempted is to retroactively change a closed contract unilaterally by a party. This would never pass in a court.


7 people like this
Posted by Mark Noack
a resident of another community
on Apr 1, 2018 at 7:55 pm

@Confused Reader

Sure thing! I uploaded Matt Grunewald's slideshow and added a link to the story.

-- Mark


7 people like this
Posted by The Business Man
a resident of Another Mountain View Neighborhood
on Apr 1, 2018 at 9:54 pm

The Business Man is a registered user.

The RHC may have done something with unintended consequences.

If the RHC voted this policy into effect, stating that the rents were in fact “frozen”. According to this story, the relevant part stated:

“That legal advice wasn't what most committee members wanted to hear. Presenting his own slideshow, committee member Matthew Grunewald insisted that landlords actually deserved permission for a 2.6 percent increase for a total of 318 days when their rents were frozen. Inflation occurs every day, he said, and it was unrealistic for the committee to artificially constrain this effect on apartments.

"Every landlord is due a bankable 2.6 percent increase," he said. "This is the most conservative amount that you could say is defensible."”

The story did state:

“Committee member Ramos pointed out that landlords were still entitled to keep any increased rent they collected from October 2015 through the end of 2016, when they were still free to set rents as high as they wanted. Ramos pointed out her apartment complex received a hefty rent increase during that time.

"I don't think it's fair to throw that out," she said. "I've seen many of my neighbors move out because their rent has gone up too much."

Then here is an ugly curveball.

On April 2016, my new landlord raised my rent by $900.00 a month. If in fact the RHC has declared that the rent rollback “froze” my rent all that way back, then I will accept their position.

But, that would mean my rent paid after my rent increase of $900.00 from April 2016 to December 2016 are overpaid rent. Under the CSFRA I am entitled under this new policy to have my overpaid rent from April, 2016 to December 2016 be refunded.

I am sure glad that the RHC made that determination. It saves me the trouble of proving the argument at this time. This would mean that my fellow units and I at my building which had 6 units occupied and entitled to the full rent roll-back are all entitled to a refund for this period of time. My overpayment alone is around $7,000.00.

Again, thank you RHC for giving me this gift.


95 people like this
Posted by Howard
a resident of Monta Loma
on Apr 3, 2018 at 10:44 pm

Howard is a registered user.

Houston, we have a problem is an understatement regarding this rent control law!
It defies gravity when you take property rights away in America.


5 people like this
Posted by The Business Man
a resident of Another Mountain View Neighborhood
on Apr 3, 2018 at 11:04 pm

The Business Man is a registered user.

Howard,

You used in inaccurate statement:

Houston, we have a problem

Origin/etymology Apollo 13 mission
Original form "Uh, Houston, we've had a problem"
Coined by Jack Swigert

"Houston, we have a problem" is a popular but erroneous quote from the radio communications between the Apollo 13 astronaut John ("Jack") Swigert and the NASA Mission Control Center ("Houston") during the Apollo 13 spaceflight,[1] as the astronauts communicated their discovery of the explosion that crippled their spacecraft. The erroneous wording was popularized by the 1995 film Apollo 13, a dramatization of the Apollo 13 mission, in which actor Tom Hanks, portraying Mission Commander Jim Lovell, uses that wording, which became one of the film's taglines.

The words actually spoken, initially by Jack Swigert, were "Okay, Houston, we've had a problem here" (emphasis added). After being prompted to repeat the transmission by CAPCOM Jack R. Lousma, Lovell responded, "Uh, Houston, we've had a problem."

As far as rent control and property rights, rent control under the U.S. Supreme Court does not take away property rights. At least not yet.

So Rent Control is gravity, not the defiance of it


3 people like this
Posted by enuf fibs
a resident of Old Mountain View
on Apr 5, 2018 at 3:05 pm

If that happens I hope some class action lawsuits will be initiated by tenants. Enough of this nonsense. What was voted shoul be enforced by the City instead of making up new rules. Please someone investigate the City Council's actions!


11 people like this
Posted by @yimby
a resident of Another Mountain View Neighborhood
on Apr 6, 2018 at 4:56 pm

Your placing blame on the wrong thing, Prop 13 does a great job in all of CA. The problem here is that corporations keep bringing people from all over the world here. So no matter how much we build the people will still keep coming and yes, people will get priced out.

A lot of senior citizens brought their house here when you were probably not even born, these are the people paying a little lower taxes on property and they are the ones you are against. RENT CONTROL is no way similar to Property taxes. On one, ones owns, the other one rents. BIGGGG Difference my friend. So basically you and your type want to force the older citizens out of their homes so the city can get a few more dollars in there coffer.

Why not look at the real problem and how Unions are destroying our cities with backdoor negotiations on unfundable pay/retirement/and medical benefits and how they steal a portion of govt. employee checks. Just think, that money could be well used within the govt.


Sorry, but further commenting on this topic has been closed.

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