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Rental committee set to decide on landlords' profits tonight

Original post made on Jul 10, 2017

Mountain View's Rental Housing Committee on Monday night is set to decide on "fair rate of return" standards for thousands of apartments in the city. The decision will lay down the guiding principles for how much profit landlords are entitled to gain from their properties.

Read the full story here Web Link posted Monday, July 10, 2017, 1:20 PM

Comments (30)

Posted by Croc Dundee
a resident of another community
on Jul 10, 2017 at 2:52 pm

From there, the committee can move on to create a budget for Mountain View residents, such as no more than 3% of income may be spent on cable tv, no more than 5% on shoes and clothing, no less than 10% for charitable contributions. Oh, what a wonderful world that we are creating.


Posted by Rodger
a resident of Sylvan Park
on Jul 10, 2017 at 3:14 pm

What a joke these clowns are going to decide on other people's property profit. It's enough to turn a life long democratic into a republican.

We need to get rid of this crazy affront to property rights!!


Posted by Fair for all!
a resident of Monta Loma
on Jul 10, 2017 at 3:18 pm

Their salary increases should most definitely be tied in to this. Then again, not sure they're deserving of any increases, period!


Posted by Another old guy
a resident of Sylvan Park
on Jul 10, 2017 at 3:30 pm

Just the headline on this article shows what is so wrong, wrong, wrong in MV and many CA communities. The very idea that a committee, worse, a government-appointed one, can and should set profits of a private enterprise.

I'm so glad to have pulled out of Mtn. View (both rental property and philanthropy) last year, now that a majority of decisions have decided that use of government coercion is how to get what they want. I'd like to see how well it works out in the long term, but I probably won't live long enough. All I can say to the young idealists (most of whom don't understand that landlords and other sellers compete with other landlords and sellers, not with their customers) is, I hope it works out for you.


Posted by Ed
a resident of Old Mountain View
on Jul 10, 2017 at 4:01 pm

Swell. Now that we've effectively removed a big chunk of real estate from the open market, worsening the supply-demand imbalance that's driving rents up in the first place, as a bonus we'll waste time and money on hearings and petitions and lawsuits over the meaning of the word "fair" from now until the end of time.

Maybe when we're done trying to repeal basic laws of economics at the ballot box, we can try something that might actually help. Like, say, modernizing our current 1950s-style zoning to allow a certain amount of new housing and commercial space along with any new office projects.


Posted by The Business Man
a resident of Another Mountain View Neighborhood
on Jul 10, 2017 at 6:26 pm

The Business Man is a registered user.

I hate to remind you but the CSFRA RHC is empowered to make the decisions it makes until the CSFRA is repealed in the next election.

The CSFRA is a Market force under the Porters 5 forces model of the markets (Web Link), and I quote:

Bargaining power of customers[edit]

The bargaining power of customers is also described as the market of outputs:

the ability of customers to put the firm under pressure, which also affects the customer's sensitivity to price changes. Firms can take measures to reduce buyer power, such as implementing a loyalty program. The buyer power is high if the buyer has many alternatives. THE BUYER POWER IS LOW IF THEY ACT INDEPENDENTLY E.G. IF A LARGE NUMBER OF CUSTOMERS WILL ACT WITH EACH OTHER AND ASK TO MAKE PRICES LOW THE COMPANY WILL HAVE NO OTHER CHOICE BECAUSE OF LARGE NUMBER OF CUSTOMERS PRESSURE.

Potential factors:

BUYER CONCENTRATION TO FIRM CONCENTRATION RATIO

There is a high buyer to low firm concentration ration in Mountain view

DEGREE OF DEPENDENCY UPON EXISTING CHANNELS OF DISTRIBUTION

There is NO DEPENDENCY in this market, no one supplier has any special power in Mountain View, if the supplier does not want to do business here, they can leave, BUT THEY CANNOT TAKE THE BUILDINGS WITH THEM.

BARGAINING LEVERAGE, PARTICULARLY IN INDUSTRIES WITH HIGH FIXED COSTS

Given that most of these buildings under CSFRA are old enough to be already paid for, except for those who gambled on buying a property paying any price the property was sold for. In that situation, the buyer was aware that they could LOSE THEIR SHIRT, if they made a mistake.

BUYER SWITCHING COSTS RELATIVE TO FIRM SWITCHING COSTS

The buyers acting as a sold group in Mountain View reversed this factor and took control of the market away from the “FIRM”.

BUYER INFORMATION AVAILABILITY

When the Citizens of Mountain View collectively shared information, and had other resources provide guidance and advice, this SHIFTED the bargaining power away from the “FIRM” and placed it into the hands of the “BUYERS”

FORCE DOWN PRICES

Again, the Citizens of Mountain View got together to “FORCE” the price controls as a very large and organized “COLLECTIVE BARGAINING UNIT” that the “FIRMS” refused to negotiate with. Thus the CSFRA was proposed and adopted. It is the “FIRMS” fault for not negotiating in good faith.

AVAILABILITY OF EXISTING SUBSTITUTE PRODUCTS

Again, any particular “FIRM” owning property are not “CRITICAL ASSETS” the ownership of properties in Mountain View are fluid, they can change at any time, thus no “FIRM” has any “PRIVILEGE” over the market, they simply have to adjust to it.

BUYER PRICE SENSITIVITY

Clearly, the CSFRA was an expression of price sensitivity of the tenants of Mountain View, and they took proper political and constitutional action in accordance to their needs. This was required because no good faith negotiations were provided to the buyers. They tried for more than a year to do this, but the “FIRMS” simply said there will be no negotiation.

DIFFERENTIAL ADVANTAGE (UNIQUENESS) OF INDUSTRY PRODUCTS

When it comes to apartments, there is practically no uniqueness regarding an apartment anywhere in the state on California. Thus the “FIRMS” cannot substantiate their claims of the values of the “INDUSTRY PRODUCTS” in Mountain View.

RFM (CUSTOMER VALUE) ANALYSIS

This is the process that is occurring in the CSFRA Rental Housing Commission. The “FIRMS” simply have to substantiate their claims under the rules defined in the CSFRA.

THE TOTAL AMOUNT OF TRADING

Trading issues would only be valid if there was some proof of value that can be made in this situation. However, Real Estate appraisals’ are not “SCIENTIFIC” they are simply opinions that either the buyer can be convinced is valid, or the buyer can agree to it for the purchase, but cannot rely on it after the purchase. Once a purchase is done, that appraisal is invalid, it cannot be used to establish the value of the property under California Law.

In Conclusion, the “FIRMS” made their case to the voters on November 8th, 2016, and failed. The “FIRMS” are not entitled to any special protections in the market. AND THE MARKET DOES DICTATE THE VALUE OR EARNINGS OF ANY FIRM IN THE CITY OF MOUNTAIN VIEW. THIS IS THE CURRENT SITUATION, AND UNTIL THE CSFRA IS REPEALED< THE FIRMS SIMPLY MUST GET USED TO IT.


Posted by Retroactive Rollback Effective Date
a resident of Old Mountain View
on Jul 10, 2017 at 6:44 pm

Have they addressed the actual effective date being December and timing of remuneration to affected renters?


Posted by Taxation to fund bureaucracy
a resident of Another Mountain View Neighborhood
on Jul 10, 2017 at 6:54 pm

Have a look at 7.1 on the agenda tonight, the City plans to incur $861k to be recovered from landlords to start funding the bureaucracy to manage this idiotic measure. First you artificially cap rents in old buildings then you add an additional tax. This needs to be repealed at the next opportunity, it is not consistent with the values and norms of America and does not address the problem.

Web Link


Posted by Mt View Neighbor
a resident of North Whisman
on Jul 10, 2017 at 7:40 pm

How can we repeal this?


Posted by bejpqnav
a resident of Old Mountain View
on Jul 10, 2017 at 8:26 pm

Determining a "fair rate of return" is a complex topic with considerable nuance. I would humbly suggest that the committee look into hiring a consultant from Venezuela who can provide expert advice on the effective implementation of price controls.


Posted by Red hat logic
a resident of Cuesta Park
on Jul 11, 2017 at 2:57 am

Our local Trumpeteers have their heads in the sand once again. The voters have spoken. MV supports rent control. The courts have spoken. It's legal. So, in the next election, feel free to put an initiative on the ballot to repeal the measure. Otherwise, I would suggest leaving our fair city and move someplace with similarly like-"minded" people.


Posted by YIMBY
a resident of Another Mountain View Neighborhood
on Jul 11, 2017 at 8:06 am

Renters have had to deal with continual rent increases due to rising property costs caused by homeowners blocking new housing development in this city (all the while protected from the resulting property tax increases via Prop 13). If you guys had supported more housing development to offset rising property costs then this wouldn't have happened. You caused this.


Posted by Old timer
a resident of Another Mountain View Neighborhood
on Jul 11, 2017 at 8:11 am

Mountain View will become Berkeley!
Large rent stabilization board, crazy city fees, additional special property taxes,, dilapidated buildings, homeless everywhere on once nice business streets, impossible parking, dirty streets, homeless doping and in the McDonalds.

Sad situation of history to be repeated...



Posted by USA
a resident of Old Mountain View
on Jul 11, 2017 at 12:33 pm

USA is a registered user.

The Dear Leader has instructed the Peoples Committee to send those running yellow dogs to re-education camp.


Posted by USA
a resident of Old Mountain View
on Jul 11, 2017 at 12:44 pm

USA is a registered user.

@Rodger "What a joke these clowns are going to decide on other people's property profit. It's enough to turn a life long democratic into a republican."

People in the blue bubble wonder how anyone could possibly vote for Trump. It is things like this that build up over time that finally push people over the line.

Trump did not happen because of the Russians, hanging chad, or whatever is this week's excuse. Trump happened because of Democrats and other liberals pushing these ridiculous solutions instead of solving real problems.


Posted by RMV
a resident of Rengstorff Park
on Jul 11, 2017 at 12:47 pm

Many of us see that a little differently:

"Renters have had to deal with continual rent increases due to a torrent of newcomers as the inevitable result of city council allowing office development to far outgrow what our region can support. If we had elected a city council who care about the city and not just about their own personal profits then this wouldn't have happened. We caused this."


Posted by The Business Man
a resident of Another Mountain View Neighborhood
on Jul 11, 2017 at 3:15 pm

The Business Man is a registered user.

[Post removed; please stay on topic]


Posted by YIMBY
a resident of Another Mountain View Neighborhood
on Jul 11, 2017 at 6:50 pm

@RMV

Yeah, many of you think that the population of Mountain View hit perfection once you moved in, and started pulling up the ladder rather than building to accommodate a growing and healthy economy for the generation after you.


Posted by RMV
a resident of Rengstorff Park
on Jul 11, 2017 at 7:53 pm

Many of us want to leave something better for the next generation than the sardine lifestyle.


Posted by LOL
a resident of Old Mountain View
on Jul 11, 2017 at 8:03 pm

How generous of you, RMV, to make that decision for them. Better for them to have no place at all to live in Mountain View than a place and living style you personally don't like.


Posted by ktpi
a resident of Whisman Station
on Jul 11, 2017 at 9:02 pm

It's exactly this kind of government bloat that kills industry. I can't sympathize with giant property management companies who are raking in the dough, but this isn't the right approach at all. It's going to make the problem much worse!


Posted by RMV
a resident of Rengstorff Park
on Jul 11, 2017 at 9:49 pm

@LOL wait a sec. Are you telling us you embrace living in an 8x20 space sandwiched between hundreds of others like it with round the clock gridlock, just so long as you have your tech job?


Posted by YIMBY
a resident of Another Mountain View Neighborhood
on Jul 12, 2017 at 1:45 am

@RMV

Oh, how thoughtful of you to preserve Mountain View the specific way you prefer it. That's so much better than building *gasp* tall buildings. I'm sure everyone who's being priced out of the area and unable to afford a down payment savings knows that it's all worth it simply to not have Mountain View suffer an apartment complex.


Posted by YIMBY
a resident of Another Mountain View Neighborhood
on Jul 12, 2017 at 1:49 am

@RMV

Also, way to dump on everyone living in an apartment complex. Not everyone can afford to own a detached single family home, and no one is too good to live in an apartment.


Posted by The Business Man
a resident of Another Mountain View Neighborhood
on Jul 12, 2017 at 3:58 am

The Business Man is a registered user.

RMV,

I concur, the city government has failed in its work to effectively develop the city.

Any urban development must be "MULTI-FACETED" growth of jobs projected by commercial or industrial development must require an equal amount of residential resources. This disparity is a significant cause of the problems in the bay area as a whole, so the city of Mountain View is one of many problem local governments.

USA,

I would agree with you if ANY party would have a effective solution to ANY problem. I personally am a registered "INDEPENDENT" I have read many books discussing politics like "America: What Went Wrong"(Web Link), "America: Who Stole The Dream"(Web Link), "Bait and Switch (Web Link), "Crimes of the President" (Web Link)

All of these have a common problem, BOTH POLITICAL ORGANISATIONS are not out to solve problems but to perpetuate their own political and economic powers. Unfortunately our government is for sale as a retail politic, and until this mechanism is restored, there is NO WAY OUT. This all got started when the "Fairness Doctrine" (Web Link) was struck down
by the FCC:


Posted by LOL
a resident of Old Mountain View
on Jul 12, 2017 at 5:40 am

@RMV, some of us actually get off our butts and walk or bike places. There's never any gridlock when you travel that way. Give it a shot, exercise is good for you.


Posted by Rent stabilization is procommunity
a resident of Rex Manor
on Jul 12, 2017 at 8:03 am

For those complaining about rent stabilization,

1. The previous situation was horrible for the 14000+ Households now protected by csfrc.
2. The courts have spoken
3. CAA has stated in a sf chronicle article in April, that maybe they should have pushed for more housing.
4. Invoking "berkeley " as if it is something horrible means nothing to me, and i have lived in mv for 20 years. I literally don't know what you are talking about.
5. Csfra has a failsafe suspension provision
6. The landlord profits headline is incorrect, it is the minimum profit guaranteed by csfra, better managers well get higher returns


Posted by RMV
a resident of Rengstorff Park
on Jul 12, 2017 at 9:15 am

@LOL and @YIMBY, oh the assumptions we make about people. You've got me all figured out, haven't you? ;-)

@Business Man, yes I absolutely agree that the problems are regional. What happens in one city most definitely affects the whole region. When one city decides to give carte blanche to office development but refuses to add housing, the imbalance is felt far beyond the city limits. A decade ago, the Mountain View city council declared outright that Mountain View was a business-centric city, not a residential city. A few forward-thinking people raised an eyebrow and asked where all those new workers were going to live, but their concerns fell on deaf ears. At first the consequences were felt primarily in SF and on 101 because the first several rounds of newcomers moving here for tech jobs preferred to live in SF where the cool kids live. But then SF became untenable as it filled up, plus people started deciding that cool or not, they'd rather to live closer to work.


Posted by Berkeley grad
a resident of Cuesta Park
on Jul 12, 2017 at 10:07 am

@Rsip item #4 I lived in Berkeley for 4 years in the early 1970's. It is simply a college-centered town, with a high number of short-timers (undergraduate and graduate students). There was problem with housing crowding (demand and supply) even 50 years ago.

I liked living, renting and studying in Berkeley! It was a life choice. It was not an LA suburb, it was not a dance urban city, it was not the cheapest place to get an education.

MV at that time was, I think, dominated by a single defense contractor - Lockheed- that had loads of cash coming in (Cold War) to hire engineers to design submarine missiles, and later communicate with military satellites it designed through "The Blue Cube" and large dish antennas down by 101/237. So, along with the growing semiconductor industry (Intel was also started in MV down by 101) lots and lots of "worker apartments" were constructed down along California Ave.

We have a jobs/housing imbalance and (some) city leaders that recognize this. The old school city leaders (Lockeed manager-types) have been phased out (mostly), but the housing problems -like Berkeley's- will continue as long as we are a globally-successful commercial community. Like Berkeley, as a globaly-successful university community, will always have some type of housing problem to be worked on.

Thank you Rental Committee members, for your service to our community. And Best of LUCK!


Posted by @Berkeley grad
a resident of Rex Manor
on Jul 13, 2017 at 1:13 am

Thanks. I grew up in a university town and it was awesome. Lots of cool culture events.

the people invoking "berkeley " make it sound like the scary boogie man.

When i have gone up to Berkeley, it seems like a cool funky town. Palo alto and mountain view should be more like Berkeley then!

Still don't get why Berkeley is so scary. They should be saying "south central LA". Of course the problem with saying "south central la" is that "south central LA " does not have rent stabilization.



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