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Council backs competing rent-control measure

Original post made on Jul 15, 2016

A thin majority of the Mountain View City Council on Thursday night backed plans for an alternate rent-control ordinance as a challenge to a citizen-backed measure they described as vague and inflexible.

Read the full story here Web Link posted Friday, July 15, 2016, 1:51 PM

Comments (29)

Posted by Rodger
a resident of The Crossings
on Jul 15, 2016 at 2:31 pm

Why stop at rent control lets control grocery, restaurant, services, etc prices that way we can offend everyone and shut down the town.
Rent control is the taking of property and should be voted down!

Posted by Vote No
a resident of Cuernavaca
on Jul 15, 2016 at 3:00 pm

Let's hope both measures fail resoundingly and we can move on to other topics (Your Voice would become thinner). Only concern is that confused voters feel they need to pick one or the other.

Also hope that the "no" side is organized and has responsible leadership writing ballot arguments and spearheading simple messaging.

Posted by It'll be OK
a resident of Old Mountain View
on Jul 15, 2016 at 3:02 pm

San Francisco passed Rent Control ordinance a long time ago, and now they don't have any problems with rents being too high!

Posted by Alan L.
a resident of Cuernavaca
on Jul 15, 2016 at 3:12 pm

The question is extremely difficult to resolve. As an example, if we had a rent control measure that specified certain qualifications required prior to eviction, who sets them?--The obvious ones (eg.failure to pay etc.)have no opposition, but what do you do if tenant X says that tenant Y makes so much noise as to make life unbearable---that he/she should be evicted? Who decides what "too much" is? ---tenant X? The landlord? TWO tenant X's? half of all the tenants? two thirds? 100%? A special commission? (if so, who gets on it?)

Having said that, it does seem to me that rental property owners should be regarded as having an implied contract with tenants that their rent will not be raised above cost of living plus appropriately amortized cost of renovations so long as they remain tenants in good stead. Beyond that, if a tenant moves out, then the landlord may charge whatever he wants, and government stays out of his business.

I know of several businesses that no longer are able to hire workers, as the commute from an affordable place to live to the workplace is simply too difficult. This is terrible for all in the community. If you want to hire individual workers, you had better heavily care about that prospect.

Posted by Gladys
a resident of Old Mountain View
on Jul 15, 2016 at 3:42 pm

@Alan L.

In 2001 market rent for a 1 bedroom apartment was $1500, in 2003 it was $850 with 30% vacancy for 5 years.

Many apartment owners lost millions of dollars and their property from 2002 thru 2010 because they did not save enough cash reserves to get them thru the bad times, and did not have the income to qualify to refinance their loan which you can not go longer than 10 years on a commercial loan.

How are you supposed to go from an artificial low rent level of $850 with CPI increase of 2% and qualify for a loan? You can not do it!

CPI increase does not reflect actual cost increases what workers are charging to do work on properties.

The city of Mtn. View had several projects go out for bid and they came back 50% higher than the inflated city estimate that they had. They have been put on hold.

You will have these older apartment buildings, the owners will stop doing any improvements to their properties and only do just enough to repair things. Just like what happens in all the other rent control city's like East San Jose, East Palo Alto, Hayward, Oakland, San Leandro, etc.

How come your are O.K with capping rental owners income because you know several businesses who no longer can find workers because it is unaffordable to live here, why do not these businesses pay the workers a living wage so they can afford to live here?

Do not pass this problem onto one group of people when everybody living here has created this problem.

Posted by ann
a resident of another community
on Jul 15, 2016 at 4:10 pm

how is it even LEGAL for a government to tell a property owner what they can charge for rent for their own did they get such a is privately owned property...not government owned...if the government wants to control it....then buy it.....oh yes ....but then they would be using our taxpayers dollars...cheaper to steal it from the property owner. government has no business in the real estate market...they will just mess it up...tend to schools, police and fire..let the free market be free

Posted by Alan L.
a resident of Cuernavaca
on Jul 15, 2016 at 4:25 pm

Gladys---I'm sorry, but your post shows little understanding of the various situations you comment on.

First, you did not even read my post accurately. If you had, you would have seen that I did provide compensation to property owners for repairs or upgrades.

Second, although I have personally lost millions due to market perturbations, (and poor management) I can tell you that proper management, and avoidance of over leveraging avoided significant losses for many owners. If rental property owners avoided borrowing too heavily on their properties, they didn't lose them, and they recouped their lower incomes with turnover in ensuing years. A properly managed property did not need heavy increases in rent structure in order to survive. Most rent control cities do have a provision in them for cost of repairs (unfortunately often not allowing a short enough recapture period to cause owners to want to repair). But that is insufficient. It is wrong to tell a propery owner that he cannot improve his/her property if so desirous. Improvement should be encouraged.

Finally, your comment about paying workers enough so that they can live within the stratospheric rent increases we have seen means doubling or tripling what they currently get paid---ain't gonna happen, Madam. Worker class is worker class, and society needs them, but unskilled worker pay (and in our current Silicon Valley economy even some skilled labor pay)has always been, and will always be at the lower to lower middle end of the scale.

The only comment you made that was accurate was stated incorrectly---"everybody living here" did NOT create the problem. What did create it was everybody COMING here---the huge influx of highly paid people that was brought in to our hi tech industry, plus a monumental increase in "worker people" coming in from other areas to provide the needed support for the former.

I'm sure you probably mean well, but please get your facts more accurately.

Posted by Alan L.
a resident of Cuernavaca
on Jul 15, 2016 at 4:36 pm

Ann--- I fully agree that it would be nice to be totally free, but that would mean no government would decide where to put roads, or parks, or solicit companies to locate where the government wanted. Perhaps that would be better, but I doubt it (and would run right out to get my six shooter to protect my property). Everything is inter-related and intertwined. We are definitely NOT free, and you shouldn't select only those parts of being free that you support. It is all a balance, and if we want the Googles, the Intels, the YouTubes, the Costcos etc etc etc to locate here, then we need to deal with the results.

Posted by Gladys
a resident of Old Mountain View
on Jul 15, 2016 at 5:00 pm

@Alan L.

Sir, you do not know what you are talking about with regards to financing a rental property.

1-They have requirements that there can be no more than 10% vacancy's, more than that is a no go.

2-It is a ridicules thing to say just give lower prices on goods and services and you will not have any problems. The banks underwriters will tell you, based on their math and their formula what is needed on a property to perform so it can qualify for a loan. If you have any business before a lender on a commercial loan you would know that.

If a lender has a poor performing property in front of them, they will say that the borrower does not know what he is doing and will deny a loan to him, otherwise the bank would fear taking over a poor performing asset and having to deal with it.

Posted by Scary results
a resident of Martens-Carmelita
on Jul 15, 2016 at 5:50 pm

Could the MV Voice be any MORE slanted? I doubt it. They call the vote a "thin majority" - when the "Yes" votes are double what the "no" votes are - and go on to favor the side of their ex-employee who is a leader in a competing measure. The Voice gets more and more irrelevant to the public.... and more of a very slanted mouthpiece for their buddy.

Then a poster states that San Francisco has had rent control for a long time "and they have no problem with rents being too high". RIDICULOUS. Either he was being sarcastic, or he is living in dreamland.

I commend the Council for putting something on the ballot that is more rational, and can be amended when parts don't work. The more severe ballot measure for outright rent control is frightening in that it would take ANOTHER VOTE to change even one sentence. That type of undemocratic restriction is a nightmare - along with their "gun to the head" attitude towards building owners. It is just plain unfair and wrong to be so selfish and inflexible.

I lived under rent control in San Francisco long ago - it was a nightmare then and is even more so today. Do you really want to see neighborhoods, that have become now so much more livable, become trashy and unkempt? Do you want your property values to drop all over the city because owners cannot afford to maintain their buildings and results in negative effects to YOUR property?
Rent Control is not a long term fix - it is a long term nightmare for every citizen in this city. VOTE NO to both measures!

Posted by Anon
a resident of Rex Manor
on Jul 15, 2016 at 6:08 pm

"government has no business in the real estate market"

If government has no business in the real estate market, then I suppose you oppose all the roadblocks that city council has thrown in the way of landowners wishing to build more apartments? Funny how the same homeowners who don't want government enacting rent control will turn around and beg the government to block someone from building new apartments on his/her own land. Or that the same homeowners who oppose rent control will gladly accept property tax caps and mortgage interest deductions from the government.

Posted by Gary
a resident of Sylvan Park
on Jul 15, 2016 at 6:21 pm

While the 4 councilmembers in support of an alternative measure principally (if not exclusively) want to use it to defeat the initiative, we will still need to read what they have the City Attorney write into the measure. If the measure provides for binding arbitration but does not protect tenants from pre-emptive eviction (i.e., eviction instead of a rent increase) or if the law could be amended by a pro-landlord City Council promptly after the election, both the alternative measure and the politicians behind it should be rejected as disingenuous.

Posted by El Mountain View
a resident of Old Mountain View
on Jul 15, 2016 at 7:02 pm

Let's hope both proposals get soundly rejected, but I'm worried because people who want something for free will always show up in large numbers.

If either measure passes, how can it not end badly if this town is less expensive than the towns right next to us? If the rent in Fremont or Milpitas gets higher why would you not try to move here?

Posted by Alan L.
a resident of Cuernavaca
on Jul 15, 2016 at 10:06 pm

@Gladys --- Please find someone who is very familiar with banking, security analysis, and loan policies. If you were to do so, you could learn how the banking world works, whom they lend to, from whom they get personal guarantees, and what the parameters are that they care about.

I have personally dealt with local as well as international banking institutions, with over four bank presidents directly, together with at least a dozen different senior real estate bank loan executives. I have borrowed (in separate loans) at least $100,000,000.00 in the aggregate, built over four hundred homes, and at least $10,000,000 in rental properties.

I am not posting this info to boast, as I grossly mismanaged all of that, but I want you to see the paucity of your information. Please do not react with knee jerk opinions until you are the expert you seem to think you are.

Good luck with your studies. I am through with this thread.

Posted by Gladys
a resident of Old Mountain View
on Jul 16, 2016 at 9:37 am

@Alan L.

Every 10 years I have to refinance my loan, for my rental in Mtn. View.

In 2010 I barely was able to get a new loan, as most lenders said no. I came as close to loosing my property as any one could without actually losing it, even with a conservative LTV ratio.

I had a friend that was one of the owners who bought the apartments at 2235 California St. in 2000. They paid $17,000,000 for it. By 2003 the rents collapsed 45% with 30% vacancies. They went thru all their cash reserves paying bills, several million dollars, could not get any new loans to keep going and they lost their building about 5 years later, which sold for $10,000,000.

The new buyer had a high down payment and was able to get a loan, but he had the same problem with cash flow because our valley was still in a recession.

He had to sell the property in 2009 for $5,156,000

In an 8 year period you had 2 property owners who lost $12,000,000 in addition to their cash reserves.

This was happening all over the valley at the time, yet not one newspaper wrote any story's about it.

All these people pushing for rent control are so selfish that they do not care that people who purchase these properties lose everything they have.
These loans today are recourse loans and if you default they will go after all your other assets to recoup their money.

Alan, I do not believe what you say, I do not believe you. What I have stated is all true and I leave it up to people to look into these issue's themself's and they can judge for themselves.

Posted by Vote No
a resident of Cuernavaca
on Jul 16, 2016 at 5:02 pm

Here's a likely unintended consequence of these measures:

The "friendly" landlords, who have not jumped their rents to keep pace with the market, may now sense a "last chance" between now and November to raise rents, or otherwise be forever locked into tiny bumps and never catch up to market.

Renters in those situations would be hurt, even if the measures go on to fail.

Posted by Real issue
a resident of Another Mountain View Neighborhood
on Jul 16, 2016 at 5:10 pm

Let's see... Landlords use low interest loans to take control of rentals and then charge the tenants the maximum rent possible. Since housing supply has been artificially restricted, they are simply profiting off the hardworking renters and providing zero value. It seems that since the artificially high cost rent is driving out all but the wealthy, they are ruining our community.

As was suggested elsewhere, if we want to continue to restrict supply, then we must have some sort of price control. That would provide balance.

Posted by @Real issue
a resident of Another Mountain View Neighborhood
on Jul 16, 2016 at 6:41 pm

It would be nice for someone like yourself, would actually have some common sense with how a business works, and our community as well, and respect the fact that we all have rights, equal rights, and just because you have a mob rules mentality does not make it right.

1-Apartment loans pay higher interest rates than do residential properties.

2-Your side keeps bashing landlords but if there would not be any landlords you would be living on the streets. How would your diversity argument work out then.

3-I bet you can not produce one spreed sheet that would show the P&L statement from an apartment building to prove your biased claims.

4-You only picked the easiest target to apply your price control to. This outside group that wrote and funded this initiative only targeted the 3 cities on this side of the bay that had more renters than home owners. Why you ask? Because homeowners always vote these down for the negative effects it has on a city.

5-If you deny claim #4, prove it to me. Did you object to the city raising the water rate 10%? Did you object to the city raising the sewer rate 19%? Did you object to the city raising the trash rate 10%? Did you object to the city raising another 10% for new recycling service? The city just did it. Why did you not go out and say no? It should only be CPI 2%.

6- What other services did you try to put price controls on to keep costs down for apartments?

7-You have that Ortez guy who works for Google and is pushing this rent control, did you or anyone else try to take away Google's employees Xmas bonuses and put that in a fund for the low income people? I understand that the bonus paid is 10% of their salary. That would pay a lot of people's rent.

8-There is no such thing as "artificially high cost of rent" The landlords did not create the problem. Our area is built out and there is no more land available to build on. Mtn. View has become a very desirable place where people want to come and live in, and not cities like East Palo Alto, East San Jose, Oakland, Hayward, San Leandro.

Residential property values in Mtn. View are up 70% in the last 5 years. All properties have gone up here and that makes everything more expensive.

If people start leaving as opposed to moving here, then you would see these values go down, and that will happen again when the next recession starts.

Posted by @Real issue
a resident of Another Mountain View Neighborhood
on Jul 16, 2016 at 6:45 pm

One other thing, when I got out of school I had a roommate for many years in a one bedroom apt.

There is nothing wrong with doing that today. Even if you had 3 people splitting the rent today it would be $650 per person.

Posted by Gary
a resident of Sylvan Park
on Jul 16, 2016 at 7:17 pm

"Vote No" (above) gives voters (especially affected tenants) an additional reason to vote YES. But look. The article is about a plan by landlord-endorsed councilmembers to defeat the initiative by adding a competing measure to the ballot. If the competing measure would not help tenants or could be repealed weeks after the election, it should not get much support. The trick is to draw some votes away from the initiative to ensure that the initiative does not get a majority of the votes cast. On the other hand, if the competing measure would actually help tenants and only it gets a majority of votes cast, then the landlords' chosen councilmembers will have damaged their chief supporters: the landlords of the 14,000 affected units.

Posted by Alan L.
a resident of Cuernavaca
on Jul 16, 2016 at 10:47 pm

@Gary --- I said I was through with this thread, but the amount of emotion charged BS that you spout makes me come back (briefly). "The landlords' chosen council members"??? Jus how the hell did the landlords do that? Multiply their few votes? Bribe otherwise honest citizens to vote for the council hopeful that the landlord approved of? Bribe the council member directly? Burn down the appropriate ballot boxes?

You don't like paying higher rents---me neither, but I don't jump up and down and scream inane comments to try and prove my incorrect point. You shouldn't either.

Posted by Gary
a resident of Sylvan Park
on Jul 17, 2016 at 12:24 am

Six of the 7 councilmembers (including the 4 behind the competing measure trick) were endorsed as candidates by a landlord advocacy group. All six placed the endorsements on their own campaign websites and received financial contribution directly and (for some) indirectly from landlord groups. The groups were the Mountain View Housing Council and the California Apartment Association (Tri-County). Most voters probably had no idea those are landlird advocacy groups. So these councilmembers certainly were "chosen" by landlords. I would not know how many landlords were eligible to vote in Mountain View or did vote here. Currently, business entities are not given the right to vote. So some landlords were ineligible as non-humans.

Posted by Alan L.
a resident of Cuernavaca
on Jul 17, 2016 at 10:22 am

Gary--- Well said, but there is a difference between "chosen" and "endorsed". The landlords did not cause the election of the council member, nor create their desire to be on the council. It is one thing to say "I like that person" and another to conspire to get that person elected.

I find it fascinating (and depressing) that the posts here that spew emotional rants are the ones most supported by the readers. Rational discourse does not seem to be the rule of the day.

Posted by Gary
a resident of Sylvan Park
on Jul 17, 2016 at 12:53 pm

I do not know the extent to which the support of organized landlords "caused" anyone's election. I used the word "chosen" - not elected. In any event, candidates who disclosed being open to rent control or a law requiring "just cause" for eviction were not endorsed by any landlord advocacy group. Nor did any of the six Councilmembers ever claim as candidates to support or even be open to any form of rent control or "just cause eviction." The point is that these councilmembers want to defeat the initiative and likely do so without providing any alternative that actually protects renters from steep rent increases or unjust evictions. Any alternative measure will need to be evaluated on its own merits. But there is just no reason to expect anything useful from these landlord-endorsed Councilmembers. And by the way, I have never advocated passage of the initiative. Personally, I will want to see the alternative measure and any other action taken by the Council. But the mediation ordinance was and is a scam (because it does not bar preemptive evictions) and anything else proposed or adopted by this City Council majority will need to be examined very closely.

Posted by Et Al
a resident of Another Mountain View Neighborhood
on Jul 17, 2016 at 3:39 pm

Ladies and Gentleman,

What you see is the start from the proponents of rent control to discredit anyone associated with being anti-rent control and the apartment association. They know there will be an anti campaign coming and rather than debating their rent control measure and the negative effects it will have on the entire city, they rather deflect those other issues and just call the other side names.

Posted by Alan L.
a resident of Cuernavaca
on Jul 17, 2016 at 5:04 pm

It seems Gary and I are not in much disagreement with each other. It is true that rental property owners, if originally making a decent return on their investment at any point in time, are reaping a probably unjust reward as unrestrained rent increases abound. So are home owners---the difference being that the homeowner unless (in my view stupidly) taking advantage of property value increases to borrow more, has to wait until he/she sells the property to take advantage of price increases. The landlord, without some sort of damper, sees the price increase advantage relatively quickly---each year that the lease is renewed. And further, (especially from the big corporate rental managers) a renter can't get a long term lease at any cost. So, a damper needs to be devised to try to moderate indiscriminate rent increases while not interfering with normal buy/sell market behavior. This can be accomplished by a control of rents that discourages indiscriminate increases while permitting market forces to control pricing in the larger sense. It cannot mean that renters get a good deal, or that landlords do whatever they want. In the process of creating such a rule, a huge set of parameters need to be dealt with. For just a silly example, what if a landlord detests one of the renters, who trashes nothing, pays the rent on time, and takes good care of the apartment, but argues with the landlord at every chance meeting, spits on the ground when they see each other outside, sticks his tongue out at the landlord's kids, and tells everyone possible that the landlord is a pig. Do you want to prevent the landlord from exercising his personal right to get rid of the offender? Since the offender didn't do any "bad" things as described in most rent control ordinances, it is likely that the poor landlord would be stuck. How in the world can governmental power be used to tell the landlord he can't kick the bum out? Conversely, the large imbalance of places to live here vs people wanting to do so places landlords in the position of demanding most anything they want from a tenant, including increasing rent every year. If you want an example of demands, read the multipage (30 or so) lease the Prometheus group forces people to sign if they want to rent one of their apartments. The lease (and I don't exaggerate) basically says that Prometheus can make any noise, infringe on the useability of any apartment, demand that the tenants push all their belongings against the walls (including standing beds on end) and refuse to compensate the tenants for any of this. It controls other aspects of living in one of their managed apartment while seeing to it that Prometheus can't be sued for any of the infringements. So, you angry, demanding, tenants right advocates---come up with something fair, and I might pat you on the popo, and---Apartment owners--tell me how you can be adequately compensated for allowing your properties to be used as living quarters for strangers, while allowing you to get the benefit of capitalistic market driven forces in this governmentally controlled dearth of free markets, and you can get a pat, too. But neither of you get much respect if you continue to bleat "me first, me first">

Posted by Gary
a resident of Sylvan Park
on Jul 17, 2016 at 5:06 pm

Some opponents of the initiative will surely continue to resort to name calling. That is different from truth telling. And the truth is that six members of the city council opposed to rent control and any law requiring any just or good cause for eviction cannot be trusted to now adopt or even propose a law that would actually (except perhaps briefly) control rent increases for existing tenants (beyond the "right to lease" law) or restrict preemptive evictions. A law that can be amended or repealed by such a City Council promptly after the election, of course, would be a hoax. But we shall soon see.

Posted by Fed Up
a resident of Old Mountain View
on Jul 17, 2016 at 7:10 pm

What the market will bear is fine for luxury items, but homes, food, gasoline, and medical care, (and as a die hard progressive I'll add education), are NOT commodities they are necessities.

If Mountain View hadn't become a popular place to live - property owners would be content with any rental income they received, pre-Google Mountain View was quite low rent.

There is no reason that rents SHOULD go up more than the rate inflation.

If you are fortunate enough to be an owner - count your blessings, and please, be kind.

(By the way - it seems that most of the comments here were written by the same person, they are written in the same timbre and the names lack creativity.)

Posted by Alan L.
a resident of Cuernavaca
on Jul 17, 2016 at 10:23 pm

Fed up---To begin with, how about using your name, rather than an emotional pseudonym? Truth is usually better, and emotional rants do not serve anything.

Second, you are incorrect in posing a criterion that certain items can be capitalistically controlled by market forces, and others not so. You simply do not understand market forces and how they have provided us with both freedom and a high standard of living. If you want to see the results of your proposed controls, you should study the progress of the Soviet Union's provision of a superior life style to its populace.

Third, you do not know enough about apartment ownership. There are many many reasons for rents to go up more than inflation. You should study the field.

Fourth, governmental control (if applied judiciously) may be a necessity of a free society. That does not extend to acquisitive mandates.

Finally, "fed up" is not any more creative than many other pseudonyms we see here, used by people afraid to be known.

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