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Mountain View City Council approves plan to replace rent-controlled apartments with low-income units

Redevelopment projects that bulldoze rent-controlled apartments will be reserved for low-income tenants going forward, under a new city policy. Photo by Magali Gauthier.

The Mountain View City Council voted unanimously Tuesday to approve a new policy in which rent-controlled apartments that are demolished for redevelopment must be replaced with units affordable to low-income residents.

The move means that newly built housing replacing older, rent-controlled units won't be subject to the city's rent control law, but will instead be deed-restricted to be affordable for families making up to 80% of the area's median income. The benefit, according to city staff, is that the units would not make the jump to market-rate prices that normally comes with vacancy decontrol. With vacancy decontrol, once a rent-controlled unit becomes vacant, landlords may charge the next tenant market-rate rent.

The decision at the Sept. 13 meeting was narrow in scope. State law already requires developers to replace so-called "protected" units bulldozed during redevelopment with affordable housing, which includes deed-restricted units, rent-controlled apartments and units occupied by low-income families within the last five years.

Mountain View does have discretion, however, in deciding whether apartments subject to rent control but occupied by high-income earners should be replaced by either rent-controlled units or deed-restricted units, the latter locking in rents at a rate much lower than the average asking rent in the city.

City housing staff supported the deed-restricted approach, pointing out that newly built apartments subject to rent control can still be priced initially at market rate, which is likely to be "considerably higher" than what was charged before redevelopment.

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Data collected by the city shows renting a two-bedroom apartment subject to rent control costs an average of $3,156 per month, whereas an unprotected unit would cost an average of $5,223. By comparison, an apartment subject to a deed restriction would cost $2,965.

Housing advocacy groups urged the council to adopt the policy as a means to preserve the city's shrinking affordable housing stock. Joan MacDonald, writing on behalf of Advocates for Affordable Housing, said the displacement of low-income residents and reversion of units to market rate means it's only a matter of time before the city loses its affordable units.

"We urge you to accept the staff recommendation to require new related affordable units to be deed restricted in perpetuity so that affordable housing is not lost," MacDonald wrote.

Members of the League of Women Voters of Los Altos and Mountain View also supported the policy, but worried that the city may not be doing enough to ensure low-income units are replaced appropriately under Senate Bill 330. For units in which the prior tenants' income is unknown, the state law requires Mountain View to do some digging using U.S. Housing and Urban Development (HUD) data to estimate the "likely income" of previous tenants. Kevin Ma, speaking on behalf of the league, said the data used to make those determinations is out of date and may not fully capture how many units were occupied by low-income renters.

City Council members swiftly supported the proposed policy with little deliberation, calling out the need to preserve affordable units.

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"To have subsidized units in perpetuity that are income-qualified is very important to me, and so I think this is a good decision," said Council member Margaret Abe-Koga.

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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Mountain View City Council approves plan to replace rent-controlled apartments with low-income units

by / Mountain View Voice

Uploaded: Wed, Sep 14, 2022, 1:52 pm

The Mountain View City Council voted unanimously Tuesday to approve a new policy in which rent-controlled apartments that are demolished for redevelopment must be replaced with units affordable to low-income residents.

The move means that newly built housing replacing older, rent-controlled units won't be subject to the city's rent control law, but will instead be deed-restricted to be affordable for families making up to 80% of the area's median income. The benefit, according to city staff, is that the units would not make the jump to market-rate prices that normally comes with vacancy decontrol. With vacancy decontrol, once a rent-controlled unit becomes vacant, landlords may charge the next tenant market-rate rent.

The decision at the Sept. 13 meeting was narrow in scope. State law already requires developers to replace so-called "protected" units bulldozed during redevelopment with affordable housing, which includes deed-restricted units, rent-controlled apartments and units occupied by low-income families within the last five years.

Mountain View does have discretion, however, in deciding whether apartments subject to rent control but occupied by high-income earners should be replaced by either rent-controlled units or deed-restricted units, the latter locking in rents at a rate much lower than the average asking rent in the city.

City housing staff supported the deed-restricted approach, pointing out that newly built apartments subject to rent control can still be priced initially at market rate, which is likely to be "considerably higher" than what was charged before redevelopment.

Data collected by the city shows renting a two-bedroom apartment subject to rent control costs an average of $3,156 per month, whereas an unprotected unit would cost an average of $5,223. By comparison, an apartment subject to a deed restriction would cost $2,965.

Housing advocacy groups urged the council to adopt the policy as a means to preserve the city's shrinking affordable housing stock. Joan MacDonald, writing on behalf of Advocates for Affordable Housing, said the displacement of low-income residents and reversion of units to market rate means it's only a matter of time before the city loses its affordable units.

"We urge you to accept the staff recommendation to require new related affordable units to be deed restricted in perpetuity so that affordable housing is not lost," MacDonald wrote.

Members of the League of Women Voters of Los Altos and Mountain View also supported the policy, but worried that the city may not be doing enough to ensure low-income units are replaced appropriately under Senate Bill 330. For units in which the prior tenants' income is unknown, the state law requires Mountain View to do some digging using U.S. Housing and Urban Development (HUD) data to estimate the "likely income" of previous tenants. Kevin Ma, speaking on behalf of the league, said the data used to make those determinations is out of date and may not fully capture how many units were occupied by low-income renters.

City Council members swiftly supported the proposed policy with little deliberation, calling out the need to preserve affordable units.

"To have subsidized units in perpetuity that are income-qualified is very important to me, and so I think this is a good decision," said Council member Margaret Abe-Koga.

Comments

Longtime resident
Registered user
Waverly Park
on Sep 14, 2022 at 3:48 pm
Longtime resident, Waverly Park
Registered user
on Sep 14, 2022 at 3:48 pm

Council just poured concrete on the current housing stock... this move likely locks in current housing stock, at current conditions. I'd love to see a financial plan, given construction and financing costs, that actually 'pencils out' for tearing down a rent-controlled apartment to build more housing. I bet it's now super difficult to make any projects work, which means they won't happen.
My only guess is you'd have to 2x or 3x the number of units to get enough market rate units to 'pay for' the deed-restricted housing (assuming that is allowed).
Glad I didn't invest in Mountain View apartments....


Seth Neumann
Registered user
Waverly Park
on Sep 14, 2022 at 5:20 pm
Seth Neumann, Waverly Park
Registered user
on Sep 14, 2022 at 5:20 pm

seems like the City just agreed to build some BMR housing for ~$1M/unit. Who will invest that much to build rent controlled housing? Seems like we're locking in the old housing stock which will inevitably deteriorate. I think the law of unintended consequences is going to bite us here.


JAFO
Registered user
Old Mountain View
on Sep 15, 2022 at 9:13 pm
JAFO, Old Mountain View
Registered user
on Sep 15, 2022 at 9:13 pm

Given the SB330 and even more housing laws likely to pass, it appears that the City had no choice.

In fact the State has prioritized law enforcement regarding housing, and this city cannot ignore state laws. I think that unfortunately the PRIVATE housing industry has cost cut itself to only market premium housing and neglected its existing units so badly that you wind up with them self destructing.

As a standard of practice if a building is over 40 years old, it should have been replaced already. The fact that no one wants to build cost effective affordable housing is the problem. As I point out.

If you expect to sell only 93 octane gas in a city, then you are not going to sell ANY gas in the city. And what is worse is the layoffs and the higher interest rates are going to crash any values of housing , it is a WORLDWIDE problem.


sfcanative
Registered user
Whisman Station
on Sep 18, 2022 at 6:06 pm
sfcanative, Whisman Station
Registered user
on Sep 18, 2022 at 6:06 pm

Perhaps with no other choice, Mountain View once again shoots itself in the foot.

So glad I got the <unceremoniously bleeped> out of Mountain View multifamily housing five years ago.

Does anyone else find it ironic that the city's open door to unbridled business expansion over the past decade (without an increased housing requirement) has led to a horrific housing situation and now the companies they courted are pulling up stakes and moving elsewhere?

When will the planning department be down to one plan checker with nothing to do?


JAFO
Registered user
Old Mountain View
on Sep 19, 2022 at 5:52 pm
JAFO, Old Mountain View
Registered user
on Sep 19, 2022 at 5:52 pm

Well, now that treasury bonds are likely going to reach 4.5%, they are already at 3.8% and if the fed rate increases by .75% you know it will, and the market cap for housing is only 4.4%, say goodbye to all the "investor" and "speculative" purchases of housing. Because when you buy a treasury note bond it has NO RISK, and housing is a very tedious and detail oriented business. Also with the dropping inventory AND demand making it so a Santa Clara County real estate agent might get 2 home sales a year with dropping prices, that market is going to see a lot of dropping out. Many real estate agents are going to have to quit.


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