News

Committee picks apart city's rent control law

Long list of changes proposed for future ballot measure

Seeing a chance to rework rent control in the 2020 election, the city's Rental Housing Committee took an opportunity to spitball some ideas for improving the law.

At the Monday, Aug. 13, meeting, committee members expressed enthusiasm for an opportunity to fix various unforeseen problems that emerged from the 2016 law known as the Community Stabilization and Fair Rent Act (CSFRA). But they also hinted at concern that the push to revise rent control could wind up throwing the baby out with the bathwater.

Last month, the Mountain View City Council began preparations for a 2020 ballot measure to amend the city's rent control program. Exactly what revisions they would make remains unclear, but council members have suggested they would like greater power over rent control policies, including the ability to amend the law's language. They proposed streamlining the petition process, clarifying the law's murky status for mobile homes and possibly raising the annual cap on rents.

Some of these ideas elicited a little head-scratching at the Rental Housing Committee's meeting. While the council described rent control as too rigid and inflexible, the law actually had some degree of latitude baked into it, pointed out committee member Emily Ramos. The City Council members would benefit from learning a little about the committee before they start changing its duties, she suggested.

"There's a feeling that the council doesn't really know what we do," Ramos said. "There's a lot of wiggle room where the Rental Housing Committee can adjust things as needed. That's important for the council to know."

Calls to fast-track the petition process could also be tricky. This process allows landlords to request an additional rent increase beyond what is normally allowed if they can prove that they had to make essential repairs or maintenance to their apartments. Ever since the law passed, landlords have complained that the petition review was too cumbersome and required painstaking documentation of all bookkeeping.

For more than a year, the Rental Housing Committee has struggled to facilitate this process, and the new opportunity to rewrite the law didn't make it much easier. Across the board, the rental committee members favored a streamlined process, but they weren't so sure what kinds of petitions should be accelerated. The one exception: everyone agreed that petitions attached to residential seismic retrofits should be swiftly approved, especially if the city makes earthquake upgrades mandatory in the future.

Committee member Julian Pardo de Zela suggested severely reducing the burden of proof on all petitions. In turn, Chairman Matthew Grunewald proposed making petitions approved by default on the condition that the city could later audit any questionable claims.

"The system right now is too punitive, and I don't think that's inadvertent," Pardo de Zela said. "I don't see anything from this except making life miserable for landlords. We've tried one way, so maybe now the pendulum should shift the other way."

A majority of the committee favored extending rental protections to mobile homes parks, a long-sought goal for mobile home residents. Last year, rental housing committee members demurred on including mobile homes because they believed the CSFRA was too vague, and it would spur a legal challenge. But if the city leaders were going to bring the law back to voters, then it made sense to specifically cover mobile homes, Grunwald said.

Several speakers also urged the city to consider looking again at the whether duplexes should be covered under the law. Residents pointed out that multiple duplex properties in Mountain View were operating just like apartments, but they were ineligible for rent control because of a technicality in the policy language.

Committee member Vanessa Honey was firmly against any expansion of rent control coverage, and instead she sought ideas that would limit the financial costs for landlords. She proposed a hard $100 cap on the annual fees collected to fund the rental housing program, and she suggested some of that cost should fall on tenants.

Politically, the push to reform rent control seems destined to struggle at winning allies due to how polarized the issue has become. Tenant advocates have been wary that the city's grab-bag approach to amending rent control would end up watering down the law to the detriment of renters. At a prior meeting, a City Council committee proposed raising the annual cap on rent increases, and giving city leaders some level of authority to change the law as they see fit.

"There's a lot of troubling parts of what's being recommended," said Alex Nunez, a Mountain View Tenants Coalition member. "This is not going to benefit tenants; this is just an opportunity to weaken protections in favor of landlords."

But landlords have been even more hostile in their reaction to the city's possible a ballot measure. With their own ballot initiative planned for 2020, landlord groups see the city's measure as unfair competition that could siphon off voters.

"The fact of the matter is the entirety of CSFRA should be repealed," said Curt Conroy, a Mountain View landlord who frequently spoken on the issue. "Proponents have little sense for what an affront this is to the free market. If they did, they would realize this is one more nail in the coffin for housing development."

The city will attempt the daunting task of trying to bridge those differences next week when they have scheduled a stakeholder outreach meeting.

Email Mark Noack at mnoack@mv-voice.com

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Comments

3 people like this
Posted by The Business Man
a resident of Castro City
on Aug 16, 2019 at 7:52 am

AS far as this story goes, my first observations are:

1. The Committee should have been completely aware of their discretion BEFORE the took the job.

Complaining after the fact is simply demonstrates their lack of qualifications to do this work.

The rules were defined by the CSFRA before they CHOSE to participate.

2. The Committee are not judges, they do not have the legal expertise to understand what DUE PROCESS is under the laws.

They complain that the evidentiary and burden of proof standards are too high. But this has been the accepted standards practiced in California for more than 40 years. Unless they all have certified legal education, who are they to say what burden of proof standards need to be achieved by a petitioner.

And NO ONE can by default allow a petition to be acted on. That would simply destroy the DUE PROCESS standards regarding the petition process.

It would give the Committee years of time to avoid making a decision in the meantime putting the housing market of Mountain View in complete disarray. Most likely no post decision audit would ever be performed.

3. As far as Curt Conroy complains that it is an affront of the free market goes, what happens if AB1482 is signed under law?

Are you going to claim the State law reforms will be an affront as well? Simply put, the Market is subject to any regulations, either by voters or the legislative process.

As long as you are in effect a sponsored representative of the CAA and the CAR, you are free to say what you want.

But you do not have the education or background to make such a statement.

And you can find hundreds of people who do argue your point, but ALL of them have a Conflict of Interest in their works. They in effect get paid by those people that benefit from the "research" performed results in the opinions in support of those people.

THe City should be informed.

stand


142 people like this
Posted by Yimby #2
a resident of Another Mountain View Neighborhood
on Aug 16, 2019 at 11:22 am

Measure V is poor quality legislation which has the un-intended consequences of reducing the housing supply. This exacerbates the housing shortage. Housing shortage plus expanding demand from the High-Tech industry is what is driving up housing prices and rent.

Please note that the High-Tech industry now accounts for much more of the National Gross Domestic Product than it did 10, 20, and 30 years ago. Silicon Valley remain the premier Research and Development area on a planetary basis. Not making enough housing + soaring demand = increased rent and housing prices. This is how the world works. Supply and Demand.

For those who think you can just pick up and re-locate the Silicon Valley eco-system into the middle of nowhere do not understand how Silicon Valley works. It is an eco-system of suppliers/expertise/capital/education which is hard to replicate. Over the last 10 years, every major autonomous vehicle design/mfg. has opened up an R&D lab here. Not in Detroit where it is cheap. Did they want to open up labs here? Nope. They had to/were forced to open up labs here because this is where the eco-system of expertise is. I had the good fortune to be on teams that built some of the largest systems coming out of this valley. Also note that a lot of non-core functions such as break-fix, professional services divisional HQ and pretty much all manufacturing have left the valley. The number of start-ups here is declining also because it is too expensive.

I. Key areas where reform is needed.

1. Include direct price increases in water/sewer/electricity into the yearly allow rent increase
a) There have been two increases in these expenses since measure V implemented
b) Expense recognition of these items have been excluded for political reasons

2. Streamline petition process
a) 70% of housing is 11 units are less (according to Abe-Koga)
b) These are mom and pop operations
c) Mom and Pop operations try to do everything themselves because many can’t afford expense items like bookkeepers. Some of these housing providers have limited understanding of accounting or finance.
d) The current petition requires a lot of record keeping, then organizing into a presentable format
e) I get frustrated by people supporting a lot of government reporting. It takes time/money/expertise to comply with government reporting. And then they ding you if you don’t get it just right. Bigger companies can hire a compliance office with dedicated experts. Mom and Pops do the best they can with what they have. For me, I’d rather spend my time sending a motorized snake down my sewer system to make sure I do not get unplanned outages rather spending a bunch of time keeping records for government.

3. Fee Sharing
a) Fees to support the Petition Process should be split evenly between tenants and housing providers

4. Measure V calls for housing providers to absorb all expenses above 5% inflation rate
a) All expenses beyond 5% inflation rate should be shared between tenant and housing provider
b) At best, this provision of Measure V is very unfair and un-business like and should rescinded
c) At worse, this is an abuse of power. Whoever wrote this provision is seeking to place the entire burden of increased expense on the housing provider? Why would a housing provider want to do business under this kind of governmental rule? Government forcing the private sector to operate at a loss in an inflationary environment? This rule fundamentally conveys the follow message: City of MV want to wants the mom and pop operator to bear a disproportionate burden of increased expenses in an inflationary environment.
d) Some may argue 5% inflation is unlikely. I suggest you pay attention to the following 1) US Federal Reserve -Chairman Jay Powell 2) Secretary of the Treasury – Steve Mnuchin 3) CNBC/MarketWatch 4) Independent Financial Analysts. Net/Net: Increased risk in inflation in context of wide difference between what the Administration is asserting and what the raw economic data is telling us.

5. Housing providers should be allowed to pass on the cost of earthquake retrofit
a) Additional investment of capital into real estate results in more value (earthquake resistance) justifies cost recovery

6. Make it clear in advance what the program will cost.
a) First year it was $2.6 Million dollars- how many people really voted for this?
b) No cost data was disclosed other than “A small fee”
c) “A small fee” is an amateur level of financial planning
d) This level of financial planning would be unacceptable in the private sector

II. I am disappointed by the knowledge or behavior of people who advocated for Measure V.

1. Lack of recognition of the Supply/Demand imbalance is the primary cause of price/rent increases
2. Instead they choose:
a) Demonize housing providers
b) Base their demands on platitudes such as “Housing is a Human Right” which everyone can obviously can agree on but does nothing to solve the problem of supply/demand imbalance.

Lenny Siegal demonizes the housing provider community. Jobs Lopez demonizes the housing provider community. Job Lopez was caught tearing down the campaign signs of someone he opposed, and removing signs from the property of private citizens – he seems to be against a private citizen’s right to free speech. Yet the MV Voice continues to portray him as an activist rather somebody breaking the law and seeking to silence the opinions of others.

At the municipal, country, regional, State, and National level, *shortage* is recognized to be the problem. And that is why Senate Bill 50 was introduced as a means to break the roadblock to increasing supply. Whether you support/oppose SB 50, we should recognize the level of desperation at the State level to increase housing supply to address the core problem: Shortage.

Yet, Lenny and Job have focused on demonizing housing providers. And if you go to their rallies, you will see signs “Housing is a Human Right”. Nothing wrong with stating the obvious. But demonizing housing providers and stating the obvious does not do anything to solve the core problem: shortage.

There is a sub-field of Economics referred to as Econometrics. How is this relevant? The point is you can create mathematical equations that show that the rate of price increases accelerates the more severe a shortage is. We are in a severe shortage situation, and that is why prices gone up so high. This applies to pretty much everything in the marketplace; from firewood, cooking oil, and yes, houses. Price discovery is an important element to a healthy market since it acts as a signal to attract (or repel there is not margin) more investment to alleviate shortage. Of course, modern markets do not act precisely to according to market theory, and that is why the State is hashing out all the different perspectives around SB 50. We should reject the behavior of Lenny Siegal and Jobs Lopez stop demonizing housing providers, and focus on solving the housing shortage.

If Lenny and Jobs was to be constructive, they should help sort out the issues around SB 50, and stop demonizing housing providers.

I was listening to a nice young lady explain how rent control in Berkeley worked out just fine, and gave housing provider enough money to maintain their properties. She pointed out the housing provider went out and got a home equity loan. What she didn’t understand is the reason why you go out and get a loan is because you don’t have enough cash on hand. Furthermore, it adds more debt on top of your primary mortgage. Not good.

I was referred to as a “Liar” by a Measure V supported for merely citing official City of MV cost for
Measure V at $2.6 Million. The poster insisted the cost was just “Just a Small Fee” instead of the more accurate and factual $2.6 M. Is this the level of skill you want advocating for rent control?


The point of this last few stories? The advocates of Measure V seem to be:
1) Focused on wrong things; prefer demonization, opinion suppression instead of working on shortage
2) Limited understanding of how markets work
3) Limited ability to understand the importance of accurately understanding and representing financials
4) They are advocating one-sided policies which are dis-incentives to mom and pop housing providers to stay in business in MV.


To close, Measure V is a poor-quality piece of legislation which needs to be reformed.


4 people like this
Posted by The Business Man
a resident of Castro City
on Aug 16, 2019 at 12:10 pm

In response to Yimby #2 you said:

“ 2. Streamline petition process
a) 70% of housing is 11 units are less (according to Abe-Koga)

b) These are mom and pop operations


c) Mom and Pop operations try to do everything themselves because many can’t afford expense items like bookkeepers. Some of these housing providers have limited understanding of accounting or finance.

d) The current petition requires a lot of record keeping, then organizing into a presentable format


e) I get frustrated by people supporting a lot of government reporting. It takes time/money/expertise to comply with government reporting. And then they ding you if you don’t get it just right. Bigger companies can hire a compliance office with dedicated experts. Mom and Pops do the best they can with what they have. For me, I’d rather spend my time sending a motorized snake down my sewer system to make sure I do not get unplanned outages rather spending a bunch of time keeping records for government.”

I hate to point this out, but there is no registration of ownership data available to establish that these are owned by “mom and pops” groups. The City has never registered ownership attributes regarding the type of housing there is in this City. There is no records to prove in either way that multiple buildings are owned by a corporate owner, like a LLC. Or that “small” corporations are not in fact owned subsidiaries of a “large” corporation.

And if these were managed properly with proper accounting standards the “record keeping” and the ability to “organize” it would in most cases be automated. There are many tools or services that are affordable that will do this. Quickbooks is a good example, and it is significantly cheap. So that is no excuse.

As far as you said:

“ 4. Measure V calls for housing providers to absorb all expenses above 5% inflation rate

a) All expenses beyond 5% inflation rate should be shared between tenant and housing provider

b) At best, this provision of Measure V is very unfair and un-business like and should rescinded”

As many say, the real world is not fair. Cities are not supposed to work to provide insurance that all business will make profits. Not even the Fed Reserve does that. The fact is that if people make bad decisions in their business, no one is supposed to bail them out, not even their customers “tenants”.

You said:

“c) At worse, this is an abuse of power. Whoever wrote this provision is seeking to place the entire burden of increased expense on the housing provider? Why would a housing provider want to do business under this kind of governmental rule? Government forcing the private sector to operate at a loss in an inflationary environment? This rule fundamentally conveys the follow message: City of MV want to wants the mom and pop operator to bear a disproportionate burden of increased expenses in an inflationary environment.

c) Some may argue 5% inflation is unlikely. I suggest you pay attention to the following 1) US Federal Reserve -Chairman Jay Powell 2) Secretary of the Treasury – Steve Mnuchin 3) CNBC/MarketWatch 4) Independent Financial Analysts. Net/Net: Increased risk in inflation in context of wide difference between what the Administration is asserting and what the raw economic data is telling us.”
And what about the power of the CAR and CAA using their power to unregulated housing since 1995, which proved to be a failure. I am sorry, but that situation works both ways. You said:

“ II. I am disappointed by the knowledge or behavior of people who advocated for Measure V. “

So insulting those you oppose is going to motivate them to change their minds? I don’t think so. You said:

“The point of this last few stories? The advocates of Measure V seem to be:

1, Focused on wrong things; prefer demonization, opinion suppression instead of working on shortage”

The CSFRA was never designed to fix that problem, it was “rent stabilization” and nothing more. You said:

“ 2) Limited understanding of how markets work”

The “market” has been broken for 35 years, and Costa Hawkins in 1995 was supposed to fix it. It failed and in forced the state and this city to start taking drastic actions, like Measure V and AB 1482 and more to come you said:

“3) Limited ability to understand the importance of accurately understanding and representing financials”

Is it the customers “tenants” responsibility for that? No it isn’t, the supplier is responsible for that. If themarket is simply exploiting a critical shortage of housing to inflate profits, and policies are established to prevent it, so be it. You said:

“4) They are advocating one-sided policies which are dis-incentives to mom and pop housing providers to stay in business in MV.”

Again, you have no real proof that only “mom and pops” operate the housing in Mountain View. Please have the City require registration of ownership, and make sure they are not false entities owned by larger firms, which is the method used in this country to claim that the majority of business is “small” business.

In effect if ownership of business was tracked, you would find that the “larger” groups own the “small” ones.


38 people like this
Posted by JMM
a resident of Rengstorff Park
on Aug 16, 2019 at 7:52 pm

JMM is a registered user.

This awesome. If someone rents out an RV to "those unfortunate," they don't pay any taxes whatsoever and raise the rent to whatever they want. It's tempting to buy an RV as a rental "property."


Like this comment
Posted by The Business Man
a resident of Another Mountain View Neighborhood
on Aug 17, 2019 at 2:29 pm

The Business Man is a registered user.

Let’s introduce some REAL history regarding the origins of the Housing Crisis of California. It is well accepted that the Housing shortage was born in 1970

This is no coincidence, the federal government had a strong regulations so that affordable housing would be accessible since World War 2, UNTIL the legislation passed in 1965 (Web Link). The history stated that :

“No major legislation changed the basic mechanisms of public housing until the Housing and Urban Development Act of 1965.

This act created the Department of Housing and Urban Development (HUD), a cabinet-level agency to address housing. The act also introduced rent subsidies for the first time, SHIFTING A TREND TOWARDS PRIVATELY CONSTRUCTED LOW-INCOME HOUSING. With this legislation, THE FEDERAL HOUSING AUTHORITY WOULD INSURE MORTGAGES FOR NON-PROFITS WHICH WOULD THEN CONSTRUCT HOMES FOR LOW-INCOME FAMILIES. HUD COULD THEN PROVIDE SUBSIDIES TO BRIDGE THE GAP BETWEEN THE COST OF THESE UNITS AND A SET PERCENTAGE OF A HOUSEHOLD’S INCOME.”

Just about every resource indicates that the Housing Shortage in California started in 1970. (Web Link). This legislation in effect privatized the housing funding and projects nationwide. The legislation was passed under the false impression that the private sector was more efficient and economical regarding providing housing. It took only 5 years to begin the biggest and longest systemic shortage of affordable housing for the state of California.

On top of this, in 1973 Richard Nixon stopped all public housing project funding.

As well as In 1974, The Housing and Community Development Act of 1974 created the Section 8 Housing Program to ENCOURAGE the private sector to provide more affordable housing. VIRTUALLY NO NEW PROJECT BASED SECTION 8 HOUSING HAS BEEN PRODUCED SINCE 1983, but tenant based vouchers are now the primary mechanism of assisted housing. This has been a total failure due to systemic underfunding of the program

On top of this more people became homeless as well after the passage of the 1981 Omnibus Budget Reconciliation Act which cut funding for mental health facilities. THIS PUSHED THE RESPONSIBILITY OF MENTALLY ILL PATIENTS BACK TO THE STATES. In effect, those with mental health problems were made homeless and all future people were also stuck into either homelessness, or being imprisoned regarding the outcomes of not being provided mental health services.

in 1992 with the launch of the HOPE VI program. HOPE VI funds were devoted to demolishing poor-quality public housing projects and replacing them with lower-density developments, often of mixed-income. HOPE VI became the primary vehicle for the construction of new federally subsidized units, BUT IT SUFFERED CONSIDERABLE FUNDING CUTS IN 2004 UNDER PRESIDENT GEORGE W. BUSH.

There have been no significant reforms implemented since but the problem still remains and continues to get worse due to budget cuts to fund housing. THIS MEANS THE COMMUNITY HAS HAD TO STEP UP TO THE PLATE WITHOUT PUBLIC FUNDS TO MAKE PROGRESS ON AFFORDABLE HOUSING FOR THOSE IN NEED WHERE PUBLIC INSTITUTIONS HAVE FAILED TO ADDRESS THE SHORTFALL IN AVAILABLE HOUSING.

This has resulted in the emergence of semi-permanent homeless tent encampments and increased popularity of Tiny Homes. Even though tiny homes are low-cost and have a low impact on the environment, most city’s zoning laws make it difficult to develop a tiny home community even if you have the land.

So when those arguing against rent control try to put the blame of the shortage of affordable housing on rent control. You have to point out that rent control was passed in 1979 as much as 9 years after the origins of the housing shortages.

WHERE WAS THE PRIVATE HOUSING SECTOR DURING THE YEARS OF 1970-1979? WHERE WAS THE PRIVATE HOUSING SECTOR DURING 1980-1995?

They were picking only high profit projects and not producing any proportional affordable housing and have not done so ever since. If the total lack of affordable housing currently is now at 4 million units. And you can establish that 1970 was the birth of the problem, there has been a systemic deficit per year in California of 81,000 units.

Given that the population of California in 1970 was 19,953,134, and since the average occupancy is about 3 per unit then there should have been 6,651,044 units in 1970. To build the additional 81,000 units in the state it would only have been an increase of housing at 1.2%. And if this had occurred there would be nowhere near the deficit of 4 million units.

Then in 1995 Costa Hawkins was passed to supposedly reverse this problem, but since the passage of it in 1995 the housing shortage has in fact accelerated.

SIMPLY PUT, THERE WAS DIRECT CONTROL OVER HOUSING UP TO 1965 USED BY THE FEDERAL AND STATE GOVERNMENTS. THEN THERE WAS NO SHORTAGES OF HOUSING EVEN WITH THE BABY BOOMERS. BUT WHEN PRIVATE INTERESTS CONVINCED GOVERNMENT THEY COULD DO BETTER, THEY WERE A COMPLETE FAILURE.

No one wants to see the real history about this problem.


2 people like this
Posted by Gary
a resident of Sylvan Park
10 hours ago

Gary is a registered user.

The report given to the 3-member City Council subcommittee for this Monday August 19 meeting refers to the last meeting of the Rental Housing Committee (RHC) created by Measure V. The RHC members seem to think they should not be reduced to mere servants of the City Council. The proposed minutes of the first subcommittee meeting indidates that all 3 City Councilmembers on the subcommittee think the City Council should have the authority to amend (or repeal) Measure V. That would be done through a proposed city charter amendment that would either reduce Measure V to an ordinance or, more likely, authorize the City Council to make changes by ordinance. With at least 5 of 7 City Councilmembers opposed to residential rent control, figure any ballot measure proposed by the City Council will probably be a POLITICAL DIRTY TRICK - as was Measure W in 2016. Measure W was an alternative to initiative Measure V that would NOT have actually restricted rent increases. The City Council put Measure W on the November 2016 ballot to draw votes away from Measure V. The Councilmembers sponsoring that POLITICAL DIRTY TRICK in 2016 included Chris Clark who has now volunteered for the current City Council subcommittee.


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