In an effort to stave off gentrification and preserve the remaining affordable housing in Mountain View, city officials are working on an unusually direct approach: Buy up housing at risk of being bulldozed.
City Council members agreed Tuesday to back a plan in which the city would buy and rehabilitate aging, rent-controlled apartments at risk of being bought and redeveloped into expensive for-sale homes. The approach is one of several under consideration after the city reluctantly allowed several older apartment complexes to be razed.
Estimates from last year found that Mountain View was on pace to lose an average of 127 rent-controlled apartments each year to redevelopment that council members say is largely impossible to stop. Housing projects that meet the city's zoning rules have been allowed to slip through the approval process regardless of how many so-called naturally affordable apartments are demolished.
Starting last year, the city began exploring the possibility of outright buying existing rental stock when it comes up for sale, potentially rehabilitating the property and preserving it as a public asset for the city. The program could start small, like a 100-unit pilot, or shoot for something more ambitious like a 1,500-unit program, according to city staff.
Council members, though supportive of the idea, were uneasy about setting a target unit count. Councilman Chris Clark said the city should start small and be opportunistic, particularly while the market is down, but was reluctant to hold himself to a specific number of apartments.
"I'm fine setting a goal, but we're tiptoeing into this," Clark said. "As much as I would love to jump to a world where tomorrow we own a whole bunch of properties, I don't think that's going to happen. We don't really know what we're doing, frankly."
Councilman Lucas Ramirez said he supported the idea as one possible tool for preventing displacement in the city, but that he prefers opportunities to create new affordable housing over keeping older apartments on the market. There are also fewer ways to finance a preservation or rehabilitation project, he said, limiting how far the program can go toward buying properties on the market.
"I would rather expand the pool of resources for all affordable housing initiatives, including new construction, rather than dedicate a source of funding to acquisition and rehab," Ramirez said. "That strikes me as a better use of public funding."
While the idea won support from the council during the Sept. 22 study session, the big unanswered question was how to pay for it all. Early estimates found the city would have to pay about $300,000 per unit, which would mean the city's lightweight 100-unit pilot would need a $30 million subsidy and the 1,500-unit program would cost $450 million.
Where that money would come from is a mystery. The city's housing fees, exacted on new development, have been completely exhausted, as have in-lieu fees for developers that cut a check to the city instead of building required affordable units. Another option is Measure P, the city's 2018 business tax measure that is expected to generate $5.9 million each year, but most of that money has been locked into other uses.
In the lead-up to that election, city council members pledged to devote 80% of Measure P funds to transportation improvements and only 10% for housing. By the latest estimates, that means only about $400,000 to $600,000 each year, far short of funding the ambitious program. Clark said the council made a promise to the public in how the money would be spent, and that he wasn't willing to go back on it.
Another option is to simply come to voters for help. City Council members unanimously agreed to at least explore some type of ballot measure to generate money for the city's displacement strategies. Mayor Margaret Abe-Koga pointed to a now-outdated poll that found residents would be willing to pass a parcel tax for housing purposes, and said it may be the best way to query support for buying apartments at risk of redevelopment.
"If this really is a community priority then why not have the community participate in helping to fund those opportunities?"
Councilman John McAlister, a longtime proponent of buying older apartments at risk of redevelopment, said the city needs to think outside of the box for ways to fund the program, and floated the idea of using rental income from city-owned apartments to finance the acquisition program. He pushed back against staff's suggestion that the city simply buy and pass off apartment properties to a nonprofit, and said there's nothing wrong with the city being a landlord.
"It looks like we're doing the same-old same-old," McAlister said. "It hasn't worked and it probably won't work because you still have limited funds."
The city arguably has plenty of time to work on its anti-displacement measures. A new state law that took effect this year, SB 330, halts the kind of redevelopment projects that council members have lamented in recent years. The law requires that no housing proposal can lead to a reduction in housing units, and that the developer must offer a deed-restricted affordable housing unit for every demolished rent controlled unit.
The law sunsets in 2025, but until then is expected to halt virtually all redevelopment projects that would raze apartments protected under Mountain View's rent control law. City officials say it would take a huge increase in density or a reduction in parking requirements in order to make any such project pencil out.
"The conclusion is that SB 330 requirements will likely render most, if not all, redevelopment projects that would require the demolition of existing residential units infeasible while the law is in effect," according to a city staff report.
City Council members agreed to consider ways to keep some of SB 330's protections in place once the law expires.