Mountain View inched a little bit closer to establishing its new rent-control program and deciding how to settle the myriad disputes it is expected to generate.
At a Thursday, June 8, meeting, the city's rental-housing committee began the first of several planned discussions for establishing a new system for adjudicating disputes on rent increases. This is of key importance for both landlords and tenants, since it would be one of the only ways to raise apartment rents at a higher rate than the city's new rent-control ordinance sets as the standard, which is based on increases in the local Consumer Price Index (CPI).
Every landlord and property manager speaking at the June 8 meeting stressed that simply tying rent-controlled apartments to the CPI would be insufficient for their various expenses. For next year, that allowable rent increase has been capped at 3.4 percent.
There was a feeling of deja vu as many of the same concerns and arguments spanning years of the debate over rent control were trotted out. A large showing of tenants and other rent-control advocates reminded the committee that the new law is the result of a brutal seven-year period when average rents throughout Mountain View nearly doubled. Landlords and property managers warned that the new restrictions would fall hardest on landlords who had previously tried to keep their units affordable. Meanwhile, many in attendance wanted better data to distinguish who is acting in good faith.
Many of these concerns are supposed to eventually funnel into a new process involving city hearing officers who will review cases that aren't directly addressed in the language of the Community Stabilization and Fair Rent Act (CSFRA). Both landlords and committee members hinted this program could see a flood of petitions, especially from property owners seeking to notch up rent on their units higher than 3.4 percent.
Joe Maydek, an apartment manager, said he expected to petition for 11 of his 14 units to receive a higher increase. He pointed out that he needed to recover revenues after a citywide roll-back on apartment rates to October 2015 levels had reduced his tenants' rents by about $500 each. Many other landlords are likely to do the same, he warned.
"I'm pointing this out to you so you have some numbers to anticipate what's going to happen," he said. "Even if the petition fees are passed to the (property owners), I think they would see the value in doing it."
Landlords, tenants or any authorized advocate can make a case for why rents need to change by filing out a petition form, which eventually should be available on the city's website. As part of filing this paperwork, a petitioner can also provide documentation, witnesses or expert testimony to support the case. Of all the groups, landlords seeking to raise their apartment rents seem to have the highest burden of proof. They would need to provide the city with 16 pieces of information, including years of income and expense statements for each apartment building.
“We're not reinventing the wheel; we're trying to streamline this and use the best practices from other jurisdictions,” explained City Attorney Jannie Quinn.
To review and rule on these petitions, Mountain View staff suggested that the city hire trained attorneys, preferably with experience working as judges or arbitrators. But that level of experience won't come cheaply -- each hearing officer will cost from $600 to $1,250 per case, depending on the size and complexity.
It remains unclear how this money will be collected. City staff say it could be paid directly by whoever files a petition, or it could be taken from the general fee that will be levied on all affected apartments in the city. That fee has not been established yet.
City staff indicated that many cases probably won't rise to a full hearing. A previous city program of mediation resolved about 87 percent of conflicts between landlords and tenants, according to city housing staff. When you get people sitting around the table, the success rate for reaching a compromise is high, said Emily Hislop, a case manager with Project Sentinel, which provides the city's mediation services.
"In our experience with mediation, when you get people facing each other, then landlords get a chance to show all their expenses for water, garbage, everything," she said. "That way, tenants who might feel like their landlords are taking every opportunity to raise rents, then they can see where they're coming from."
For that reason, Hislop and others in the field suggested that many disputes could be settled early on without the need for a formal meeting with a paid hearing officer.
The Rental Housing Committee reviewed only an early draft of the planned petition process, which will revised and brought back for the next committee meeting on June 19. At the meeting, the committee will also discuss establishing standards for a "fair rate of return" for landlords, which would guide how hearing officers review petition cases.
City housing officials say the petition process, hearing officers and fair rate of return guidelines will likely be bundled together for final approvals at the July 10 meeting.
In a related discussion, the committee decided not to take action on a proposed citywide 0.6 percent rent increase to cover the period between October 2015 and February 2016. City staff originally proposed this increase because they say this time period was not reflected in CSFRA language. However, tenant advocates warned this rent increase would be illegal.
On Thursday, city staff signaled a change of heart, and they urged the committee to hold off on any decision for now. City Attorney Quinn suggested that the committee first establish its processes and return to the issue at a later date.
In a 4-1 vote, with Chairwoman Vanessa Honey opposed, the committee agreed to table the discussion.