Mountain View's Rental Housing Committee on Monday approved a program for landlords to adjust rents on severely underpriced apartments, one of the final decisions needed to implement the city's new rent-control law.
Committee members tried to keep things simple by picking a program based on federal housing data, similar to that of other California cities with rent-control programs. Even so, the Monday, Aug. 28, meeting was possibly the committee's most complicated session so far. Committee members as well as public speakers repeatedly expressed bafflement over a series of complex options and how each one would affect the local rental market.
The big topic of the night was setting a so-called "Vega Adjustment," a mandatory program for any city with rent control in California. The name derives from a 1990 state appellate case, Vega v. City of West Hollywood, that revolved around an elderly landlord who hadn't raised rents for about 20 years and was later blocked from increasing them by her city's rent-control law.
It was exactly the kind of cautionary tale that rent-control opponents in Mountain View have long been warning about -- the considerate landlords who kept rents low would end up being hurt the most by the government's attempt to fiddle with the housing market.
But the silver lining for landlords is that, thanks to the Vega case, rent-control cities in California now have to establish a system to resolve these rare situations.
For Mountain View, that meant the committee on Monday was tasked with defining what "disproportionately low" actually meant. To set this baseline, most other rent-control cities looked to a fair-market housing price index published by the Department of Housing and Urban Development (HUD). This is the same data used to calculate Section-8 housing vouchers.
A landlord seeking a Vega adjustment could instead use the HUD index price as a baseline, if the index price is higher than the rent that was charged in 2015. The committee agreed at an earlier meeting that 2015 would serve as the base year for comparisons in cases when landlords petition to raise rents higher than the annual increase tied to the Consumer Price Index.
But many pointed out these HUD numbers seemed unrealistically low -- for example: a Santa Clara County studio apartment was determined to cost $1,213 per month, and a two-bedroom unit was listed as $1,809. Any renter would be extremely lucky to find an apartment in Mountain View for that cost. Landlords hoping for a Vega adjustment would have to prove they were charging less than those amounts in 2015.
"These HUD numbers, on their face they don't seem accurate," said committee member Julian Pardo de Zela. "Why would we adopt one set of numbers that don't seem representative of Mountain View?"
For that reason, committee member Tom Means at the last meeting pitched his own alternate system that he promised would be more precise. Any apartment unit would be considered severely underpriced if it was two standard deviations lower than the average for the property, he proposed. The city's consultants credited this idea being better tailored to individual properties, but it also required some college-level math to figure out. Means was absent from the Monday meeting.
Late in the evening, Chairwoman Vanessa Honey admitted that she didn't understand how Means' idea worked, and she suspected she wasn't the only one in the room who felt overwhelmed. She proposed a simpler system -- just take the HUD index and add on an extra 20 percent.
"My conscience will not let me vote for the HUD formula," she said. "It's so low."
Her idea didn't win much support, and her detractors said that would be tantamount to a giveaway to landlords. Committee member Emily Ramos pointed out that last month the committee had tweaked a pricing system to be extra generous for landlords. The HUD rents were based on survey data, meaning that these low rents actually did exist in Mountain View, she said.
In a 3-2 vote, with Means absent, the committee approved using HUD data for individual unit adjustments, which staff described as the simplest option. Honey and Pardo de Zela voted against it.