About 1 out of every 20 apartments in Mountain View is delinquent in paying its required fees under the city's rent control law known as the Community Stabilization and Fair Rent Act (CSFRA).
Under Measure V, approved by voters in 2016, every apartment in Mountain View, regardless of whether it is subject to CSFRA, funds the city's rent control program with an annual fee of about $100 per rental unit. This money is the sole revenue source for the $2 million annual budget needed to run the CSFRA program.
According to data obtained by the Voice, about $100,000 in fees remain unpaid, forcing the city's housing department to dip into its reserve fund this year. The unpaid fees are spread between more than 40 property owners. Here is a map of delinquent landlords in Mountain View.
At this point, the exact reason why property owners aren't paying remains a mystery, said Anky van Deursen, the city's CSFRA program manager. Attempts to reach the landlords who haven't paid have been met mostly with silence, and the city has avoided taking legal steps to force compliance, she said.
"So far we haven't had anyone who has explicitly disputed this and told us that they won't pay," she said. "I can't give you an answer right now on what we're going to do since this is a new procedure for us."
The property owner with the largest unpaid debt is Carmel Partners, a San Francisco-based firm that manages the 330-unit "The Village" apartment complex at the San Antonio shopping center. The apartments were completed in 2015 as part of the first phase to transform the shopping center into a high-end neighborhood.
Carmel Partners' debt to the city currently exceeds $40,000, indicating it has not paid any apartment fees for 2019, according to data provided by the city. The debt likely isn't a problem of cash flow. In October, Carmel Partners and its joint partner Merlone Geier announced they were selling off all 330 apartments at the San Antonio shopping center to the Brookfield Property Group, a Manhattan-based investment firm. The sale was for $292 million, nearly double the property's assessed value from when it was completed in 2015. City officials say they are working to contact Brookfield to inform them of the unpaid debt on the property.
Like hundreds of newer apartments in Mountain View, The Village apartments are exempt from the city's rent control law. Under state law, apartments built and occupied after 1995 cannot be restricted by local rent regulations. However, Mountain View regulations still require such properties to pay the annual CSFRA fee even though most aspects of the law don't affect them.
Other large properties that have failed to pay their fees include the 80-unit Redwood Villa apartments at 1981 Montecito Ave., which currently owes more than $22,000. Last year, attorneys representing Redwood Villa filed a lawsuit against the city of Mountain View, arguing that because it is a senior home it should be exempt from the city's rent restrictions and fees. That case remains open in Santa Clara County Superior Court.
The third largest unpaid sum is for the 88-unit Palmetto apartments, located at 2235 California St. As of this week, city housing officials say the property owner, Saratoga Capital, contacted them and said they would pay the debt.
Under city rules, all unpaid CSFRA fees are charged a 1% late penalty per month, a surcharge similar to other city fees. Speaking to the Voice, van Deursen said that if outstanding fees languish for too long, the city could take more forceful measures, such as hiring a collection agency or taking legal action.
Currently, city housing officials send out annual invoices and regular reminders to apartment owners.
According to the CSFRA, landlords who are delinquent in paying their fees could lose their ability to raise rents or evict tenants. If an eviction or rent increase prompts a civil lawsuit, a judge is required to rule in favor of the tenant if the landlord failed to pay the city's CSFRA fees or meet its other requirements. It is unclear whether this provision of the rent control law has ever been exercised by tenants.
The city's Rental Housing Committee has been reluctant to take stronger enforcement measures despite requests by city staff. In October, the city's CSFRA team recommended sending out compliance letters and possibly increasing penalty fees to nudge more landlords to follow the rules. Under the plan proposed by city staff, apartment tenants could receive notification if their landlord is failing to meet their legal requirements.
But three members of the Rental Housing Committee argued that alerting tenants would be an overreach. Committee member Vanessa Honey said she was worried that the scope of the city's enforcement would endlessly expand.
"It's supposed to be a little courtesy letter. I'm not in support of any of this," she said. "We were asked a simple question, and we're making it bigger and bigger."
In an effort to reach a consensus, the Rental Housing Committee watered down the compliance steps so that only landlords are notified of unpaid fees. Honey voted against sending out compliance letters, while committee member Julian Pardo de Zela abstained. Both members also opposed researching other options to encourage landlord compliance.
It was a decision that still rankles other RHC members.
"I'm frustrated with the makeup of this committee," said RHC member Susyn Almond. "There's no will to increase the scope, and now I see that there's also no will to get landlords who aren't complying to do so."