Guest opinion: A redo on rent control | News | Mountain View Online |

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Guest opinion: A redo on rent control

Measure D offers amendments to fix CSFRA flaws

In 2016, Mountain View voters enacted rent control (known as the Community Stabilization and Fair Rent Act) to address housing affordability. While somewhat effective, it was written behind closed doors by a small group of renters and concerned citizens without public input and placed on the ballot through signatures. Predictably, the campaign for the CSFRA was very divisive for our community, and the result was imperfect.

The city has worked diligently to faithfully implement the CSFRA over the last three years without burdening taxpayers. Despite our best efforts, the measure has faced lengthy and expensive legal challenges and repeal efforts.

Based on feedback from residents, renters and housing providers, it has become clear that a handful of amendments are necessary, as we have seen:

•Housing affordability remains a major issue, and prices continue to rise.

•More than 700 affordable apartments have been demolished and replaced by high-priced condos or townhomes, and this trend continues.

•Under the current law, base rent increases can reach 5%.

•Property owners refuse to invest in earthquake-proofing older apartments.

•An unelected rent board can pay themselves a salary.

•The City Council is powerless to remove rent board members for misconduct.

As a result of these issues, wealthy landlords have placed their own "fix" to rent control on the November 2020 ballot. Their measure was also written behind closed doors and, if passed, would indefinitely suspend rent control, putting thousands of families at risk of displacement.

As your mayor, one of my duties is to build consensus and find solutions to difficult problems so our community remains strong and united. The landlord measure is an overreaction that our community should not accept.

To ensure that rent control isn't repealed, the City Council placed Measure D on the March ballot to limit repeal efforts or legal challenges, set stronger guidelines for the conduct of the Rental Housing Committee, incentivize seismic and sustainability upgrades, and create a pathway to cover mobile homes.

Unlike the other measures, Measure D was debated and reviewed by the public over several months. As with most compromise measures, not everyone likes it. Some renters and property owners oppose this measure, but many renters and property owners believe it is a fair compromise that fixes significant flaws while preserving the most effective elements of the CSFRA.

Measure D would accomplish the following:

•Preserve the essential elements of the current rent control measure and better address affordable housing.

•Permanently prevent the Rental Housing Committee from paying themselves.

•Ensure property owners invest in seismic safety improvements to their buildings without excessive costs to their renters.

•Further limit rent increases to no more than 4% annually (current law is 5%).

•Ensure the City Council can remove Rental Housing Committee members for misconduct.

•Clearly state that landlords or their representatives cannot be a controlling majority of the Rental Housing Committee. If no qualified non-resident property owners apply, non-residents who own property in Mountain View may serve.

The council and I approached key landlord and tenant groups to support a compromise. In a major victory, key property owners have reluctantly agreed to support Measure D and withdraw all support for their November measure if Measure D is approved in March. This is a major concession that most said could not be achieved.

Given the divisive turmoil emanating from Washington, D.C., we don't need another landlord measure dividing Mountain View renters and property owners in November. Passing the Measure D compromise in March will avoid another fight in November and for years to come.

Please join us in preserving our community's rent control law by addressing its flaws, strengthening its most successful provisions, and avoiding a costly and bitter campaign this fall. Please vote yes on Measure D in the March 3 primary.

Margaret Abe-Koga is mayor of Mountain View.

Community.
What is it worth to you?

Comments

9 people like this
Posted by Steven Nelson
a resident of Cuesta Park
on Feb 7, 2020 at 2:53 pm

Dear Mayor MAK,
Yes, it is good that this Opinion be recirculated. It fails to explain why some of us, even recent former Republicans do not think it is the reform needed. It seems to me, to be a 'Democratic suburbanite' argument from a wealthy, Harvard educated, residential property owner. Any per year allowed increase, not tied to the local Consumer Price Index, starts to seem to many of us, predatory.
I like to generally put my money where my mouth is. SO I hope everyone can read the simple and clear arguments made on the "NO on D" door hanger that the residents (both renters and owners) will be receiving over the next several days. There are volunteer distributed - not mailed using funds from the California Apartment owners' lobby groups. Volunteer opposition, many hands, and a few more generous $$ donors like myself.
Let the Public Policy CLASH begin in full!

Steven Nelson, donor to the NO campaign


18 people like this
Posted by Old Mtn Biew
a resident of Old Mountain View
on Feb 7, 2020 at 3:26 pm

This actually seems like a reasonable compromise now that it’s laid out like that..... I’m not in favor of rent control but some sort of smarter law is clearly necessary. Being able to do seismic retrofitting and splitting the cost of that without some onerous bureaucratic process is clearly lacking in the current law. People should not be paid much if anything to serve on the rent board
In my view.

I’m actually impressed at the effort by the major to hammer out a compromise that seeks a middle ground. There are people who will take extreme positions and reject any changes but this in my mind is the hard and sometime thankless work that being a leader and not a political warrior requires. You have to find middle ground and a lot of people want vilify the other side and offer nothing. That’s not governing. that’s where we are in Washington now.

Now let’s see that good spirit used in other contentious areas of town politics...


66 people like this
Posted by Ok
a resident of Sylvan Park
on Feb 7, 2020 at 3:51 pm

“More than 700 affordable apartments have been demolished and replaced by high-priced condos or townhomes”
Promoting of the home ownership should be a good thing. Creating an artificial shortage of new homes will only cause the prices to go higher.


93 people like this
Posted by Gladys
a resident of Old Mountain View
on Feb 7, 2020 at 4:49 pm

Dear Mayor,

If the voters reject Measure D, they are saying they do not want capitol improvements done to any apartment buildings. No means No. They just want as cheap a housing that is possible. This comes with consequences, they know that and they rejected it, if it fails.

If Measure D fails, then so should any "mandatory" seismic retrofit ordinance.

Pay attention all council members.


5 people like this
Posted by The Business Man
a resident of Castro City
on Feb 7, 2020 at 5:54 pm

In response to Gladys you said:

“If the voters reject Measure D, they are saying they do not want capitol improvements done to any apartment buildings. No means No. They just want as cheap a housing that is possible. This comes with consequences, they know that and they rejected it, if it fails.

If Measure D fails, then so should any "mandatory" seismic retrofit ordinance.

Pay attention all council members.”

But the STATE law requires the seismic work to be completed and NOT the City Council.

The law was amended in 2013 1 and you can read it it is called:

“SECTION 1. Section 19160 of the Health and Safety Code is amended to read:” and is found here (Web Link)

Thus your idea that the City Council is a critical enforcement factor is false. Without compliance with the state laws, the buildings are not able to be operated at all.

The City Council simply has to comply with the state laws in this matter.

And what about the landlord about to possibly go to jail for attacking their tenants, didn't you read the story written here (Web Link)

The fact is that her co-conspirator has plead no contest to a felony crime, thus she is also subject to the same criminal act.


7 people like this
Posted by Long-time MV renter
a resident of Old Mountain View
on Feb 7, 2020 at 6:17 pm

As a long-time MV renter and a voter for the CSFRA, I see some merits in the compromises of Measure D. However, I will be voting against it solely for the change in capital improvements. Under the CSFRA, capital improvements that were not for meeting applicable local codes affecting health and safety were explicitly barred (this text still remains in Measure D under Section 1710 (a) (3), if a landlord under Measure D were to ask for a rent increase under that Section. However, Measure D now adds a loophole, a bypass in Section 1710 (e) for Increases for Specified Capital Improvements, and in paragraph 1710, (e), (1) (c), opens the door to any type of improvement that "significantly extends the useful life" of the property. This is a subtle but significant change. There are general capital improvements on properties that are part of owning the property and these will now be passed on to renters - i.e. hidden rent increases. For example, any homeowner knows they have to replace their roof every so often, perhaps every 10 to 15 years. This is something a landlord also knows they need to do to their property every so often and should have been put into the normal cash-flow analysis of the property for the base rent. Think ten years ago before the CSFRA - did renters get special increases to their rents to cover re-roofing a property? No, it is part of owning the property. But Measure D now allows a loophole that this type of repair (or others such as updating irrigation, etc) can now be charged as an "add-on" to renters because these type of long-term projects that used to be part of owning a property don't qualify for the exception of "could have been avoided....by maintaining..timely repairs" in the measure's text. No wonder the California Apartment Association is backing this measure. There is now an out for all kinds of "temporary" rent increases. Remember the days when baggage was considered part of your airline ticket purchase but now you pay for every bag, special seating, early boarding, etc. on planes? This is what Measure D is going to do. It will set the 4% annual limit but let a new back door that was explicitly barred under the CSFRA to be used for landlords to do capital improvements that they should do anyway as part of owning the property (and likely get tax breaks as capital improvements) and pass them on to renters. Imagine if every time you took a Lyft or Uber, the driver charged you not only for the ride, but also charged you a tire-wear fee and an oil-change fee. Pretty sneaky Mayor and CAA, but you're not getting my vote.

And to Gladys, I am the exception to the "rule" of your comment, that renters don't want capital improvements. I am fine with paying for capital improvements that directly relate to maintenance and safety (e.g. earthquake retrofits), but I object to paying for capital improvements that are currently part of landlord's cash flow analysis and moving those charges from their books onto the backs of renters.


7 people like this
Posted by Dave C
a resident of Slater
on Feb 7, 2020 at 7:50 pm

Some of these arguments are a bit of a stretch. Like the mailer I received from the California Apartment Association (representing the wealthy landlords who you claim to be protecting us from), the argument that this new law will "lower" rent increases to 4% is a bit disingenuous. Sure, theoretically, rent increases could be higher under the current law, but we've seen over the last few years that increases have hovered around 3.5%.

The argument that the rent control board can pay themselves a salary, is, in my mind, a scare tactic. Just because it's possible doesn't mean it would be done. I think you know as well as anyone that it would be highly unlikely and politically untenable.

Another worry about this new law I have is that landlords can pass on capital improvements to their tenants. What doesn't fall under that? Landlords already make a profit from our rents, and capital improvements are part of the cost of doing business. Arguments surrounding this fall into this false narrative that rent control means landlords just leave their properties to deteriorate, which is not the case. In the years since rent control has been enacted, the apartment complex I live in has improved gym facilities, built a brand new clubhouse, and is currently working on installing new EV chargers. Apartment owners still have to compete with one another, and rent control is not stopping them from doing so.


16 people like this
Posted by Hmmm
a resident of Another Mountain View Neighborhood
on Feb 8, 2020 at 4:35 am

Only thing rent control is good for is to restrict more new apartments. Those who say landlords are rich are as ignorant as the law is communist. Think about it, you put restrictions on what people can charge for a rental unit, the less investors will want to invest in apartments. If the govt wants to control rent, i suggest it build it's one apartments and control rent, not burden others when the economy is the best control for rent.


10 people like this
Posted by @Hmmm
a resident of Martens-Carmelita
on Feb 8, 2020 at 8:15 am

The landlords spent $250,000 paying for signatures for their initiative, and they've already contributed about $150,000 to support Measure D. Yeah, I think they're rich.


4 people like this
Posted by The Business Man
a resident of Castro City
on Feb 8, 2020 at 11:32 am

In response to VOTE YES or Hmmm you said:

“Only thing rent control is good for is to restrict more new apartments.”

NO it does not. In fact SB330 will prevent the loss of them for at least 5 years. The fact is that the CURRENT operators in the market hate the idea of having to compete to build. Currently they do not because the market has no real competition at all. It exploits the market shortages it created starting in 1970. You also said:

“Those who say landlords are rich are as ignorant as the law is communist.”

I would like you to prove otherwise. My current landlord overspent by a factor of 350% to buy my old 10 unit building with no amenities fro $5 Million. Does that sound like a poor investor? You said:

“Think about it, you put restrictions on what people can charge for a rental unit, the less investors will want to invest in apartments.”

That depends on the concept of “INVESTMENT”? If you mean long term housing development, that hasn’t been happenoing in California since 1970. If your talking about people trying to get rich quick by “FLIPPING” or “MARKET EXPLOITATION” that is not the proper definition of “INVESTMENT”. This is just a smokescreen. You said:

“If the govt wants to control rent, i suggest it build it's one apartments and control rent, not burden others when the economy is the best control for rent.”

Please look at the history of rent control in the U.S> It has been used even by the Federal Government here is just one part of one resource that discusses this history:from Wikipedia (Web Link) :

History

In the United States during World War I, rents were "controlled" through a combination of public pressure and the efforts of local anti-rent-profiteering committees. Between 1919 and 1924, a number of cities and states adopted rent- and eviction-control laws. Modern rent controls were first adopted in response to WWII-era shortages, or following Richard Nixon's 1971 wage and price controls. They remain in effect or have been reintroduced in some cities with large tenant populations, such as New York City, San Francisco, Los Angeles, Washington, D.C., and Oakland, California. Many smaller communities also have rent control — notably the California cities of Santa Monica, Berkeley, and West Hollywood[10] — along with many small towns in New Jersey. In the early 1990s, rent control in some cities, such as Boston and Cambridge, Massachusetts, was ended by state referenda.[11] When Cambridge banned rent control, the city realized a 20% increase in new development and an increase in property values, according to a study by the MIT Center for Real Estate.[12]”

And this article from the Cornell Law review “Aspects of Federal Rent Control” Written by John F. McArthy, (Web Link) the same “ANTI-COMMUNIST” Senator which simply states it is appropriate for this kind of market regulation it goes on to say :

“ASPECTS OF FEDERAL RENT CONTROL

JOHN F. MCCARTHY

Generally, the necessity for some type of residential rent control is conceded. Likewise, the desirability of continued control for some time after the war, at least until new construction has effected a near normal renting market, is accepted.' With real estate the basis for much of our wealth, federal control of residential rents is a restriction of primary importance.

At the same time, many lawyers, confronted by the numerous wartime laws and regulations, often have not had the opportunity to become familiar with rent control. This article seeks to give certain general information about the program and to discuss some problems which, in the writer's experience, sometimes have been puzzling. More specifically, after a general review of the applicable statute and reulations, this article will discuss the constitutional bases for federal control of residential rents; compliance with the applicable statutory requirement concerning general fairness and equity of regulations; review of regulations and orders issued thereunder, including satisfaction of the requirements for due process in such proceedings.

THE APPLICABLE STATUTE-THE EMERGENCY PRICE CONTROL ACT OF 1942, As AMENDED

The Emergency Price Control Act of 1942, as variously amended, 2 established the Office of Price Administration and provides for an Administrator thereof. Sections 2 (b) and 2 (d) of the Act direct the designation of so-called defense rental areas, viz., areas where defense activities have resulted or threaten to result in increases in rents for housing accommodations inconsistent with the purposes of the Act, and the issuance of regulations or orders concerning such accommodations within those areas establishing maximum rents, restricting evictions of tenants, and regulating or prohibiting speculative or manipulative renting or leasing practices. The sections contain'various standards to guide the Administrator in issuing regulations or orders.3 Among other things, he is directed, so far as practicable, to ascertain and give due consideration to rents on a date, not earlier than April 1, 1940, which do not reflect increases inconsistent with the purposes of the Act, and to make adjustments for relevant factors of general applicability, including property taxes and other costs. The regulations must be generally fair and equitable. Thus it will be seen that federal control of residential rents is not geographically universal, but is restricted to defense rental areas. However, at the present time, most populous areas have been subjected to control.4
The Act also establishes elaborate procedures for review of regulations and orders, which will be discussed in further detail later, and provides several sanctions to enforce compliance, a matter not within the scope of this article.i”

The Article also states:

“CONSTITUTIONALITY

The United States Supreme Court has decided that the war powers conferred on the Congress by the Constitution amply sustain the right to control residential rents as expressed by The Emergency Price Control Act of 1942, as amended. 10 The Court might have reached the same result on the basis of the monetary powers of the Constitution." The validity of continued federal control of residential rents, even for some period after the termination of the war, can be sustained by reference to the same powers.12

The present day application of the war powers conferred on the Congress course, obvious. The use of those powers to uphold continued control for some period after the termination of the war is, at first, perhaps less clear, but equally sound. For some period after the war, because of the shortages of materials and labor caused thereby, there will remain an acute housing shortage, with the danger of sharply rising rents and post war inflation and collapse. It will be remembered that after World War I; and as a result of conditions caused thereby, there came a great price and rent rise with the collapse of the late 20's. Under the war powers, the Congress has the right to legislate concerning evils which have resulted from the conflict, and, to that end, continue its control of residential rents. As stated in Stewart v. Kahn,13 "In the latter case the (war) power is not limited to victories in the field and dispersion of the insurgent forces. It carries with it inherently the power to guard against the immediate renewal of the conflict, and to remedy the evils which have arisen from its rise and progress. . . . It would be a strange result if . . . Congress, which had the power to wage war and suppress the insurrection, had no power to remedy such an evil, which is one of its consequences." 14 To the same effect are Hamilton v. Kentucky Distilleries Co.' 5 and Ruppert v. Caffey.16

The application of the monetary powers' conferred on the Congress by the Constitution is found on the basis that from those powers the Congress has the right to maintain a sound and stable currency. That is inherent in the constitutional power "to coin money and regulate the value thereof." Likewise it is the basis of the powers "to lay and collect taxes" and "to borrow money 'on the credit of the United States." Obviously, a rent rise will contribute to a general inflation and a correlative decrease in the value of the dollar. That may mean a debasement of the national currency and considerable difficulty in laying and collecting taxes and borrowing money. Under the monetary powers, the Congress has the right to continue its control of residential rents to aid in preventing those results. As was said in Veazie Bank v. Fenno,17 involving a tax on state bank notes, admittedly to drive them from circulation, "Having thus in the exercise of undisputed constitutional powers undertaken to provide a currency for the whole country, it cannot be questioned, that Congress may, constitutionally, secure the benefit of it to the people by appropriate legislation. To this end, Conby the Constitution to sustain the right to control residential rents is, of

And finally:

“GENERAL FAIRNESS AND EQUITY OF REGULATIONS

As has been seen, the Emergency Price Control Act, in Section 2 (b) thereof, requires that regulations for the control of residential rents, issued by the Administrator, be generally fair and equitable. That requirement has raised several troublesome questions. Among them are what comparative time periods are to be used and whether specific groups among landlords are to be treated separately.

It now seems settled that by the requirement under discussion, current returns to landlords must compare not unfavorably with returns for some pre-war year which did not reflect changes in rents inconsistent with the purposes of the Act, probably 1939.21 The period of original construction or the time of purchase is rejected as probably abnormal, viz., a period of inflation or of degression. If, on the other hand, without compulsion, for the returns of 1939, landlords were willing to own and rent their properties, then regulations which afford them similar returns cannot be generally unfair or inequitable. At least such has been the reasoning of the courts.

In Spaeth v. Brown 22 the Emergency Court of Appeals pointed out, "Congress clearly authorized the Administrator to stabilize rents at the level at which they stood in the particular area in question on the most recent date which did not reflect increases resulting from defense activities. It did not intend that all rent control should be suspended until rentals reached the higher levels of an earlier generation."2' In Madison Park Corporation v. Bowles2 the same court concluded, from the legislative history of the Act, that Congress intended "to permit business a yield or profit sufficient for its sustenance in a state of efficiency and for reasonable development and expansion" and that this objective "usually will be obtained by permitting profits which the industry was willing to accept prior to defense activities.' '26 Currently, in 315 West 97th Street Realty Co. v. Bowles2 6 the Court approved the cases just cited and said, "The complainants' second contention is that the regulation is not generally fair and equitable because it prevents landlords from realizing the profits which they normally enjoyed before the impact of defense activities. The Administrator concedes the appropriateness of this test of the Validity of the regulation and indeed urges that it is the only practicable way to measure the fairness of the return which landlords will realize on their investment. This Court has upon several occasions given tacit approval to such a test.... The test of the historical return has been applied by the Administrator in price control also. By the use of the socalled industry earnings standard he has permitted price increases in order to compensate for those cost increases which an industry could not absorb without impairment of its normal peacetime earnings .... It may well be that in earlier decades landlords did receive rates of return in excess of that enjoyed in 1939 .... 1939 was the last full calendar year which could be described as a peacetime year. It, therefore, appears to be the logical year to use for comparison. By 1940, the war in Europe had begun to show its effects in the economy of the United States, so that it would not be accurate to describe it as a normal peacetime year."

It further seems settled that the regulations, to be generally fair and equitable, need not afford such returns to each individual landlord. 27 On the contrary, the Office of Price Administration contends that it is sufficient that, in any defense rental area, average returns of all landlords subject to a regulation, taken as a whole, be not unfavorable. As against that, in 315 West 97th Street Realty Co. v. Bowles, just discussed, the Emergency Court of Appeals has held that the regulations must be fair and equitable to each typical, distinguishable segment of housing accommodations. It said, "Although it is true, as a general rule, that a regulation must be judged by its effect on the industry as a whole, there may be occasions when a typical segment of the industry may call for distinctive treatment. . . . Upon, the same principle, the validity of the regulation here in question (for housing for the New York City Defense Rental Area) must be determined separately with respect to its effect upon each of the three distinct groups (housing renting under $30 per month, from $30 to $99.99 per month, and $100 or over) into which the rental housing accommodations of the New York City Defense Rental Area are found to fall." In view of the different sections and accommodations within each area and the different factors affecting each, there is considerable logic to the Court's position. However, such a result will place a tremendous added burden on the administrator of the program.”

SO NO MORE RED BAITING ON THE SUBJECT


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