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Landlords up in arms over potential changes to Mountain View's rent control regulations

Rent-controlled apartments in Mountain View could see a reduction in future rent if concessions are granted in the lease. Photo by Veronica Weber.

Property owners came out in full force to Mountain View's Rental Housing Committee meeting last week, protesting what they call an unfair and illegal proposal that would suppress future rent increases if concessions are granted to tenants.

In recent months, the committee's housing staff has flagged ambiguity in the way the city handles rent concessions, discounts and other freebies that landlords offer to entice tenants to move in.

Because perks mean tenants are paying less in total rent during the first term of the lease, it's possible that it must carry over as the "base rent" going forward. That base rate for rent-controlled units then factors into how much landlords can raise the rent in the future.

City housing staff are asking the committee to approve a new regulation clearly stating that these concessions do affect the base rent, which can have huge implications on monthly rent going forward. For example, if an annual lease says the base rent is $3,000 for a tenant moving in, but they got the first two months for free, the base rent for future lease agreements going forward is actually capped at $2,500. plus the rate of inflation.

This isn't just a theoretical problem. Housing staff are currently working on 15 cases in which either a landlord or tenant has been stumped on how to handle this, according to Anky van Deursen, program manager for the city's Community Stabilization and Fair Rent Act (CSFRA). Although this hasn't been a widespread problem in the past, it's possible that the high vacancy rate during the COVID-19 pandemic caused a surge in landlords offering perks in order to fill vacancies.

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Numerous landlords blasted the idea at the May 23 meeting, calling it a faulty interpretation of CSFRA that would harm both property owners and tenants alike. They argued that concessions will effectively end under these new regulations and make it harder for property owners to attract new tenants, while at the same time renters will have to weather higher move-in costs.

Curt Conroy told committee members that landlords have already dealt with the bruising effects of the pandemic, including lower rents and high vacancy rates, and that "temporary aberrations" like rent reductions should not lead to permanent changes in future rent. Local property owner Jeff Zell said the staff recommendations are heavily biased against landlords and that "millions of dollars" are at stake, adding that there are clear grounds for litigation if the proposal moves forward.

Joshua Howard, vice president of local government affairs for the California Apartment Association, said the city is at risk of destabilizing Mountain View's rental community and potentially forcing landlords to retroactively recalculate rents based on new rules.

"What you're considering tonight is a reckless regulation," Howard said.

Despite multiple accusations that the proposed rule changes are against the law, housing staff stood by its interpretation. Under CSFRA, the initial rental rate is defined by the amount of rent actually paid by the tenant for the initial term of the tenancy, according to a staff report. This is distinct from other terms like "stated rent," "asking rent" or "contract rent."

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When asked how legally risky the proposal was, attorney Karen Tiedemann said she wasn't concerned and believed the city would prevail in court, adding that she and the rest of the housing staffers were surprised by the onslaught of legal threats.

"We did not anticipate the response to it, but in terms of risk, we would not have proposed it if we thought it was a risk," Tiedemann said. "Or we would have at least pointed out the risk."

In a community feedback sessions prior to the May 23 meeting, property owners insisted that concessions are clearly temporary and not indicative of future rents or discounts, and do not serve to mislead tenants into paying for more than they bargained for. It can also be a handy tool for tenants relocating from another apartment to avoid getting charged rent for both the lease that's ending and the new lease.

Tenants, meanwhile, argued that the actual market rate of a unit should take into account any reductions that helped fill the vacancy, and that property owners always have the option to simply lower the rent – instead of relying one one-time concessions – in order to attract tenants. They also argued that concessions and the possibility of rent hikes can be a loophole to circumvent the purpose of rent control in Mountain View.

Committee member Emily Ramos said regardless of where the committee lands in terms of including or excluding concessions from the base rent, the city badly needs to clear up the confusion. Right now landlords and tenants are claiming CSFRA is unambiguous in terms of whether waived rent is included, but both groups are coming to entirely different conclusions.

"When both sides say that the piece of language is clear as day and they are very opposite definitions, it's not clear as day. And that is on us to clarify it," she said.

Committee member Matt Grunewald was skeptical about the staff's recommended changes to lower base rents based on concessions, and said that the city would be eroding what has been common practice in the rental housing market for the first five years of rent control in Mountain View. He said it's likely that the result will be rent concessions will simply go away, and asking rents are unlikely to go down significantly as a result.

"I don't think it's going to benefit tenants," Grunewald said, referring to the possible loss of one-time concessions.

Rental Housing Committee members did not formally approve the proposed regulations at the meeting, instead taking a series of straw votes to guide development of the rules. Committee members voted 5-1, with committee member Julian Pardo de Zela opposed, that new regulations are needed to least clarify whether rent concessions should be calculated in the base rent.

Committee members also asked housing staff to consider options for how retroactive these rules should be. Unless specified, it's possible that tenants could seek lower rental rates based on concessions that happened five years ago when rent control was enacted.

Though a small tweak, the committee also agreed that tenants missing rental payments – either due to COVID or failing to pay – should not be included in the calculation of the base rent.

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Kevin Forestieri
Kevin Forestieri is an assistant editor with the Mountain View Voice and The Almanac. He joined the Voice in 2014 and has reported on schools, housing, crime and health. Read more >>

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Landlords up in arms over potential changes to Mountain View's rent control regulations

by / Mountain View Voice

Uploaded: Tue, May 31, 2022, 1:47 pm

Property owners came out in full force to Mountain View's Rental Housing Committee meeting last week, protesting what they call an unfair and illegal proposal that would suppress future rent increases if concessions are granted to tenants.

In recent months, the committee's housing staff has flagged ambiguity in the way the city handles rent concessions, discounts and other freebies that landlords offer to entice tenants to move in.

Because perks mean tenants are paying less in total rent during the first term of the lease, it's possible that it must carry over as the "base rent" going forward. That base rate for rent-controlled units then factors into how much landlords can raise the rent in the future.

City housing staff are asking the committee to approve a new regulation clearly stating that these concessions do affect the base rent, which can have huge implications on monthly rent going forward. For example, if an annual lease says the base rent is $3,000 for a tenant moving in, but they got the first two months for free, the base rent for future lease agreements going forward is actually capped at $2,500. plus the rate of inflation.

This isn't just a theoretical problem. Housing staff are currently working on 15 cases in which either a landlord or tenant has been stumped on how to handle this, according to Anky van Deursen, program manager for the city's Community Stabilization and Fair Rent Act (CSFRA). Although this hasn't been a widespread problem in the past, it's possible that the high vacancy rate during the COVID-19 pandemic caused a surge in landlords offering perks in order to fill vacancies.

Numerous landlords blasted the idea at the May 23 meeting, calling it a faulty interpretation of CSFRA that would harm both property owners and tenants alike. They argued that concessions will effectively end under these new regulations and make it harder for property owners to attract new tenants, while at the same time renters will have to weather higher move-in costs.

Curt Conroy told committee members that landlords have already dealt with the bruising effects of the pandemic, including lower rents and high vacancy rates, and that "temporary aberrations" like rent reductions should not lead to permanent changes in future rent. Local property owner Jeff Zell said the staff recommendations are heavily biased against landlords and that "millions of dollars" are at stake, adding that there are clear grounds for litigation if the proposal moves forward.

Joshua Howard, vice president of local government affairs for the California Apartment Association, said the city is at risk of destabilizing Mountain View's rental community and potentially forcing landlords to retroactively recalculate rents based on new rules.

"What you're considering tonight is a reckless regulation," Howard said.

Despite multiple accusations that the proposed rule changes are against the law, housing staff stood by its interpretation. Under CSFRA, the initial rental rate is defined by the amount of rent actually paid by the tenant for the initial term of the tenancy, according to a staff report. This is distinct from other terms like "stated rent," "asking rent" or "contract rent."

When asked how legally risky the proposal was, attorney Karen Tiedemann said she wasn't concerned and believed the city would prevail in court, adding that she and the rest of the housing staffers were surprised by the onslaught of legal threats.

"We did not anticipate the response to it, but in terms of risk, we would not have proposed it if we thought it was a risk," Tiedemann said. "Or we would have at least pointed out the risk."

In a community feedback sessions prior to the May 23 meeting, property owners insisted that concessions are clearly temporary and not indicative of future rents or discounts, and do not serve to mislead tenants into paying for more than they bargained for. It can also be a handy tool for tenants relocating from another apartment to avoid getting charged rent for both the lease that's ending and the new lease.

Tenants, meanwhile, argued that the actual market rate of a unit should take into account any reductions that helped fill the vacancy, and that property owners always have the option to simply lower the rent – instead of relying one one-time concessions – in order to attract tenants. They also argued that concessions and the possibility of rent hikes can be a loophole to circumvent the purpose of rent control in Mountain View.

Committee member Emily Ramos said regardless of where the committee lands in terms of including or excluding concessions from the base rent, the city badly needs to clear up the confusion. Right now landlords and tenants are claiming CSFRA is unambiguous in terms of whether waived rent is included, but both groups are coming to entirely different conclusions.

"When both sides say that the piece of language is clear as day and they are very opposite definitions, it's not clear as day. And that is on us to clarify it," she said.

Committee member Matt Grunewald was skeptical about the staff's recommended changes to lower base rents based on concessions, and said that the city would be eroding what has been common practice in the rental housing market for the first five years of rent control in Mountain View. He said it's likely that the result will be rent concessions will simply go away, and asking rents are unlikely to go down significantly as a result.

"I don't think it's going to benefit tenants," Grunewald said, referring to the possible loss of one-time concessions.

Rental Housing Committee members did not formally approve the proposed regulations at the meeting, instead taking a series of straw votes to guide development of the rules. Committee members voted 5-1, with committee member Julian Pardo de Zela opposed, that new regulations are needed to least clarify whether rent concessions should be calculated in the base rent.

Committee members also asked housing staff to consider options for how retroactive these rules should be. Unless specified, it's possible that tenants could seek lower rental rates based on concessions that happened five years ago when rent control was enacted.

Though a small tweak, the committee also agreed that tenants missing rental payments – either due to COVID or failing to pay – should not be included in the calculation of the base rent.

Comments

Seth Neumann
Registered user
Waverly Park
on May 31, 2022 at 2:45 pm
Seth Neumann, Waverly Park
Registered user
on May 31, 2022 at 2:45 pm

figuring concessions as part of the base rent is a great way to teach landlords to never cut anyone a break! Landlords will have to decide if the lost revenue of an unoccupied unit is more than the potential lost revenue by lowering the rate for future increases. Not a good way to encourage the fullest use of scarce housing! This will also discourage future investment in housing here as property owners know there will be continuing efforts to expand the scope of rent control.


JustAWorkingStiff
Registered user
Another Mountain View Neighborhood
on Jun 1, 2022 at 11:20 am
JustAWorkingStiff, Another Mountain View Neighborhood
Registered user
on Jun 1, 2022 at 11:20 am

I don't trust the competency of the rental housing committee
It is clear what is going on from a practical stand point.
These are standard marketing/sales activities, that have been going on forever.

All they are doing is making the obvious complicated and wasting everybodys time
Maybe they have too much time on their hands
And they don't care how complicated and convoluted they make things for other people

Sheesh


LongResident
Registered user
another community
on Jun 1, 2022 at 2:01 pm
LongResident, another community
Registered user
on Jun 1, 2022 at 2:01 pm

This clarification is obvious. Standard marketing is to trick people not to realize what they are paying. The average monthly rate would factor in any free months. It doesn't matter if it makes landlords stop offering these tricky discounts. They hadn't offered them for a long time anyway.


SRB
Registered user
St. Francis Acres
on Jun 1, 2022 at 6:08 pm
SRB, St. Francis Acres
Registered user
on Jun 1, 2022 at 6:08 pm

Always good to bring more transparency to pricing.
Don't quite understand the landlords' objection. If backloading the yearly rent (first 1,2 months free) is a such a great incentive for renters, wouldn't the suggested clarification make it an even greater one?


JAFO
Registered user
Castro City
on Jun 1, 2022 at 6:59 pm
JAFO, Castro City
Registered user
on Jun 1, 2022 at 6:59 pm

When local landlords abuse their tenants and do not repair their properties correctly, then they have nothing to complain about.

David Avny of 184 Centre Street was harrassing my 60+ old female neighbor so badly her husband had to protect her. On top of this he downgraded the property value of the building by $1.1M with the county but expects to be paid the same rent as the original value. The CSFRA clearly does not allow this to occur under the diminished value standards.

In the end you have a lot of landlords complaining that they cannot abuse tenants in Mountain View. GOOD!!!


Jeremy Hoffman
Registered user
Rengstorff Park
on Jun 1, 2022 at 9:51 pm
Jeremy Hoffman, Rengstorff Park
Registered user
on Jun 1, 2022 at 9:51 pm

Huh. Reminds me of one of those cases that hinges on the placement of a comma.

As I see it, the point of renter protections is to correct the imbalance of power between landlords (who are managing a business) and tenants (who need a roof over their head to sleep under), by protecting tenants from unexpected or egregious behavior by landlords.

But if a landlord says "rent is $3000/month, but I'll give you the first two months free"... How can the tenant possibly be surprised that the base rent is $3000?

That said, Randy, I like how you're thinking about loopholes. I think your example of "11 months free, then $36,000/month for the last month" is farfetched -- the tenant would just move out after 11 months! But you're right, suppose a landlord said, "the rent is $4000, but I'll give you a 25% discount for at least one year" and then, next year, said, "I'm not raising the rent, but I'm ending the discount." That would be a 33% rent increase in flagrant violation of the Community Stabilization and Fair Rent Act. So maybe "actual rent paid" is the only objective measure.

Maybe it would be best to clarify the "actual rent paid" rule going forward, but not retroactively five years. Or maybe that opens up the city to litigation for treating different landlords differently...

The need to work out all of these kinks is an argument against this sort of local rent control measure. We're spending a lot of time and money in our city of 80,000, and it feels like we're reinventing the wheel.


Randy Guelph
Registered user
Cuernavaca
on Jun 1, 2022 at 10:08 pm
Randy Guelph, Cuernavaca
Registered user
on Jun 1, 2022 at 10:08 pm

When breaking a lease in California, the landlord does need to try to rerent the home, but the tenant is liable for the missed rent if they cannot. With one month left on the lease, it's unlikely the landlord would find a tenant willing to rent for $36K, so the tenant breaking the lease would be on the hook for it.

It was an extreme example, but it's pretty obvious this would be exploited by landlords to effectively nullify rent control (which is why they were so organized to prevent the RHC from explicitly closing the loophole).


lan
Registered user
Monta Loma
on Jun 2, 2022 at 9:02 am
lan, Monta Loma
Registered user
on Jun 2, 2022 at 9:02 am

Would never rent from a landlord who offers concessions. Concessions are misleading and though might provide a small incentive to rent an apartment, over the long term, if the tenant likes the apartment and stays for several years, one month's free rent does not amount to much. I'd rather (as I am now) seek to rent an apartment from a landlord/management company that seems to have some integrity and a modicum of respect for renters. But these types of landlords are getting harder to come by in Mountain View.

FYI - rent control, a favorite topic related to housing in Mountain View. Our illustrious building owner has now raised the rents for new tenants 50% above market rate for some of their units in Mountain View. In my current building, the turn over rate is extremely high as the services are not that great; and management of the building, and the people who live here, is almost nil.

We are fighting for available housing for many Mountain View residents who do not work in tech, who do not have high incomes to be able to buy property in Mountain View. Many of us want to live in a community where we feel safe in our homes and free from market greediness. And I mean greed. Not fair increases in rent; outright greed. But this is not a value of many who buy up multifamily properties, who view buildings, and tenants, as objects to increase their wealth. This is the ethos of my current landlords; we as tenants exist to add to their bank accounts.

The Mountain View Rental Housing Committee is fighting on behalf of many residents in Mountain View. Are they perfect? No. But they are fighting the good fight for the culture and community of Mountain View.


JAFO
Registered user
Castro City
on Jun 2, 2022 at 10:28 am
JAFO, Castro City
Registered user
on Jun 2, 2022 at 10:28 am

David Avny of 184 Centre Street Mountain View and any landlord that goes to the county to have their property values decreased for tax purposes AUTOMATICALLY is required to see a rent reduction under CSFRA due to the provision described as “

(c)PETITION FOR DOWNWARD ADJUSTMENT — DECREASE IN HOUSING SERVICES OR MAINTENANCE. A decrease in Housing Services or maintenance, or deterioration of the Rental Unit beyond ordinary wear and tear, without a corresponding reduction in Rent, is considered an increase in Rent. “

So if for example a property originally taxed at $4.95M is currently taxed on the basis of $3.85M a reduction of $1.1M or 28%, the rent must be reduced by a rate of 28% because the LANDLORD DECLARES that the value of the unit dropped. This was not done by a tenant, but the LANDLORD themselves. In effect just by making the property tax adjustment, the LANDLORD proves the value of the property is by default A DECREASE IN HOUSING SERVICES. The only defense is to have the property re-evaluated back to the original tax basis.


JAFO
Registered user
Castro City
on Jun 2, 2022 at 10:53 am
JAFO, Castro City
Registered user
on Jun 2, 2022 at 10:53 am

[Post removed due to poster making multiple posts in a row.]


JAFO
Registered user
Old Mountain View
on Jun 5, 2022 at 4:04 pm
JAFO, Old Mountain View
Registered user
on Jun 5, 2022 at 4:04 pm

[Post removed due to poster making multiple posts in a row.]


JAFO
Registered user
Old Mountain View
on Jun 6, 2022 at 12:40 pm
JAFO, Old Mountain View
Registered user
on Jun 6, 2022 at 12:40 pm

[Post removed due to poster making multiple posts in a row.]


JAFO
Registered user
Old Mountain View
on Jun 7, 2022 at 1:44 pm
JAFO, Old Mountain View
Registered user
on Jun 7, 2022 at 1:44 pm

[Post removed due to poster making multiple posts in a row.]


JAFO
Registered user
Old Mountain View
on Jun 8, 2022 at 10:15 pm
JAFO, Old Mountain View
Registered user
on Jun 8, 2022 at 10:15 pm

[Post removed due to poster making multiple posts in a row.]


lan
Registered user
Monta Loma
on Jun 9, 2022 at 12:46 pm
lan, Monta Loma
Registered user
on Jun 9, 2022 at 12:46 pm

@JAFO

I get you're upset, but you can't stop slamming this guy. This is not helping you, or your neighbor.


JAFO
Registered user
Castro City
on Jun 9, 2022 at 1:18 pm
JAFO, Castro City
Registered user
on Jun 9, 2022 at 1:18 pm

Ian,

David Avny of 184 Centre Street Mountain View cannot deny FACTS and HISTORY, this conduct is something we all know will have consequences.

He had the false impression to try to claim in a legal form that there are NO WRITTEN REPAIR ISSUES when in fact there is a a current CSFRA petition number TPB2022-158192 which has yet to be acknowledged by David even though the deadline passed on May 15, 2022. Some people do not have any understanding of what they do is NOT PRIVATE.


JAFO
Registered user
Old Mountain View
on Jun 10, 2022 at 1:31 pm
JAFO, Old Mountain View
Registered user
on Jun 10, 2022 at 1:31 pm

[Post removed due to poster making multiple posts in a row.]


JAFO
Registered user
Old Mountain View
on Jun 11, 2022 at 10:33 am
JAFO, Old Mountain View
Registered user
on Jun 11, 2022 at 10:33 am

[Post removed due to poster making multiple posts in a row.]


JAFO
Registered user
Old Mountain View
on Jun 11, 2022 at 1:14 pm
JAFO, Old Mountain View
Registered user
on Jun 11, 2022 at 1:14 pm

[Post removed due to poster making multiple posts in a row.]


LongResident
Registered user
another community
on Jun 12, 2022 at 4:06 pm
LongResident, another community
Registered user
on Jun 12, 2022 at 4:06 pm

All this discussion of 184 Centre street caused me to look it up in the county assessor's portal. It looks like it is 1/3 acre of land which is worth on its own about $4 Million, even should the building need to be razed. The old building is not really part of the value excepting that it can be used as rental property given the older aged buildings until such time as it might be razed. The rent amount is set based on keeping the landlord from (seeing the value of) doing the redevelopment. The rent amount doesn't determine the value.

It's a testimony to all the land speculation that has gone on in there area owing to Google and other commercial investment, but it sure makes a tough case for the rent control regulations. The land is what has the value basically, not the rental income.


JAFO
Registered user
Old Mountain View
on Jun 12, 2022 at 6:06 pm
JAFO, Old Mountain View
Registered user
on Jun 12, 2022 at 6:06 pm

LongResident,

With regards to David Avny of 184 Centre Street. You should report the value correctly here. The SCC tax appraisal states the LAND was worth only $2.4M and NOT $4M. The Building WAS at one point $2.55M but is now only $1.45M. That is in effect PROOF that he let the building lost 45%. All you need to do is look at this website here (Web Link Search 184 Centre St and click the option called VIEW FULL DETAIL. And that results in the breakdown of land and structural values.

Why would anyone want to rent a property structure that lost 45% of values in only 6 years?


LongResident
Registered user
another community
on Jun 12, 2022 at 11:34 pm
LongResident, another community
Registered user
on Jun 12, 2022 at 11:34 pm

This is an incorrect interpretation. The property is NEVER downgraded based on a decline in value in any given year, UNLESS it has suffered damage/loss of some sort or the market for the type of property has dropped. The apartment market hasn't suffered any such reduction here. The breakdown between land and improvements is not hard and fast. If the market suffers decline it will affect both pieces the same way. Most likely some case was made that the price paid at the time of the last sale was incorrectly interpreted and it took several years for this to be agreed to.

Checking the payment history, one can see that there were some hiccups in setting the value of the property based on the sale in 2016. It looks like the value was set too high when the supplemental bill was issued and paid in 2017 and then this took a few years to resolve.

The assessed value is not a good proxy for the actual property value owing to the fact that it is fixed based on the 2% Prop 13 allowed increase added on to the transfer price and the fact that the assessment takes at least an extra year following the sale and often takes more time still to settle following any appeal to the interpretation of the sale contract. Most likely there was some complicated piece to the sale value that interfered with the assessor being able to accurately see the price.

But in any event, it's not unusual for an older building to have an understated land value owing to the need to put some value on the near-worthless building. I.e. of the building were to collapse, the land value would take over an support the overall value even with no building. An acre of land in Mountain View has been worth over $10 Million for some time now and it has gotten up to $12 Million lately.


JAFO
Registered user
Old Mountain View
on Jun 13, 2022 at 6:28 am
JAFO, Old Mountain View
Registered user
on Jun 13, 2022 at 6:28 am

Longresident,

Actually you are right and wrong on 3 fronts.

First, the purchased price is ASSUMED to be the property value under Property Tax laws, which of course means David Avny really got the property at an inflated values for some reason. The original Tax Basis prior to his purchase was $1.5M. The Real Estate agents TRIED to sell the property for $7M But eventually had to settle for $5M

Second, during the Covid impact the property values dropped by as much as 42% for a studio from 2019 to 2022, 81% from 2018 to 2021, and 67% from 2018 to 2021. This is what is called a correction. Because as we still are today, most workers here are Work From Home, and do not need to work in the office, and that is still not a situation that is correcting given Covid is spreading worse than ever at this time.

Third, On top of that I have documented the structural problems with the building David Avny manages at 184 Centre St in the video here (Web Link And also demonstrated the attempts to deceive the City in the testimony (Web Link and the documents here (Web Link

So before you go and try to explain to the readers here that everything is fine, you better read the documents and watch the videos, especially at time mark 25:00 on behalf of the City, At time mark 1:24:00 the work done on the balcony was testified as good for 4-5 years, in less than 1 year the work is already indicating failure.


JAFO
Registered user
Old Mountain View
on Jun 16, 2022 at 9:31 pm
JAFO, Old Mountain View
Registered user
on Jun 16, 2022 at 9:31 pm

Please Mountain View, pass a anti-harassments ordinance like Concord seen here (Web Link

"The new ordinance prohibits landlords from engaging in harassment including but not limited to failing to provide services agreed to in the lease, changing a lease partway through its term, failing to perform required repairs and maintenance in a timely manner, abusing their right to enter a tenant’s unit, attempting to force a tenant to vacate a unit through intimidation or other means, and interfering with a tenant’s right to join a tenant’s union. Landlords who violate the ordinance may be sued by their tenant. If the tenant wins, the landlord may be forced to pay between $2,000 and $5,000 per violation — plus an additional $5,000 if the tenant is elderly or disabled."


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