Rental Housing Committee Update February 2018

News from the Mountain View Rental Housing Committee

Background:
On November 8, 2016, the residents of the City of Mountain View voted to adopt Measure V, also known as the Community Stabilization and Fair Rent Act (CSFRA), to stabilize rents and to provide just cause eviction protections for certain rental units in Mountain View.
Effective December 23, 2016 rent levels and rent increases for covered rental units built before February 1, 1995 must comply with the CSFRA. As of this writing, single family homes, condominiums, and duplexes, are not covered by the CSFRA.
For more background go to the Mountain View website:
http://www.mountainview.gov/council/rental_housing_committee/default.asp

Rental Housing Committee Meeting 2/12/2018
This evening the Rental Housing Committee met to address the following issues:
The RHC agreed for the staff to proceed with the process to select an information technology vendor to develop an IT system to effectively implement the CSFRA.
They also agreed to authorize an amendment to services with Project Sentinel for the remainder of Fiscal Year 2017-2018 in a ‘not to exceed contract’ of $364,800.
They created a uniform Relocation Assistance and First Right of Return policy under the CSFRA as a policy guide for the Environmental Planning Commission and City Council.
The tenant will have a First Right of Return for a period of 10 years with no punitive damages.
The tenant will have a First Right of Return for a period of 5 years at the lawful rent in effect when the notice was delivered, plus annual adjustments.
The tenant will have a First Right of Return for a period of 2 years to seek actual and exemplary damages from a landlord who withdraws a unit from the rental market but then re-rents the unit within that stated period.
Because the ‘ethics’ of some of the members of the board have come into question more than a few times it was decided that the RHC would adopt the same ‘Code of Conduct’ that the Mountain View City Council follows. A vote was taken and all members agreed.

Rental Housing Committee Meeting 2/26/2018
The RH Committee maintained and reaffirmed its decision not to cover Mobile Homes under the CSFRA. The Committee’s attorneys agreed with them and are now offering advise on how to support this decision even though they had previously recommended against this judgement.
Tenants for the Mobile Home Alliance are seeking a lawsuit against the City of Mountain View.

— Tamara Lewis, Observer

Rental Housing Committee Update January 2018

Background:

On November 8, 2016, the residents of the City of Mountain View voted to adopt Measure V, also known as the Community Stabilization and Fair Rent Act (CSFRA), to stabilize rents and to provide just cause eviction protections for certain rental units in Mountain View.

Effective December 23, 2016 rent levels and rent increases for covered rental units built before February 1, 1995 must comply with the CSFRA.  As of this writing, single family homes, condominiums, and duplexes, are not covered by the CSFRA.

For more background go to the Mountain View website:

http://www.mountainview.gov/council/rental_housing_committee/default.asp

Rental Housing Committee Meeting 1/22/2018

The Rental Housing Committee (RHC) met this evening to proceed on advice from Mountain View’s Legal Team with establishing regulations to apply the CSFRA to Mobile Home Park Spaces.

This however did not occur as the motion was defeated in a 2-3 vote perhaps based partly on a letter that had been recently received by the RHC from an attorney representing one of the largest Mobile Home Parks in the City.  This letter implied future litigation if these regulations were to proceed. 

The Legal Team once again reminded the committee that their advice is to cover Mobile Home Parks under CSFRA although the law never specifically mentions ‘mobile homes’ and that none` of the exemptions listed in the CSFRA applied to mobile homes.

The committee was firm with their decision rejecting the legal advice and suggested that rather than include the Mobile Home Park Owner/Tenants in the CSFRA that they should campaign for their own measure and use language that specifically covers Mobile Homes.

The RHC decision brought angry comments from the Mobile Park Tenants who stated thy had no choice but to sue the City.

—Tamara Lewis, Observer

Rental Housing Committee Update November 2017

Rental Housing Committee Meeting 11/6/2017

The focus of this meeting was the hot topic of the Rental Housing Fee question. Should it should be paid 100% by the Landlords, split 50/50 between Landlords and Tenants or strictly ‘passed through’ to the Tenants?  One of the new attorneys, Karen Tiedeman, who will be working with the Rental Housing Committee stated that the CSFRA is clear in its writing that the fee be charged to Landlords.  Other Jurisdictions that have allowed a ‘pass-through’, base it on authorizing legislation which specifically includes this rule which in this case is non-existent.

Many Landlords disagreed and spoke up not only about this but also once again stating that the fees are just too high when comparing them to other California cities with Rent Control.

Some of the members of the Rental Housing Committee agreed with the Landlords and, further, that the CSFRA is not clear in its writing. With fresh discussions breaking out and a  3-1 vote, the committee agreed to draft a letter to the Mountain View City Council to request the City pay $1 Million as part of the Rental Housing Committee’s budget. 

This discussion will be continued December 4, 2017.

 — Tamara Lewis, Observer

Housing Committee Update October 2017

News from the Mountain View Rental Housing Committee

Background:

On November 8, 2016, the residents of the City of Mountain View voted to adopt Measure V, also known as the Community Stabilization and Fair Rent Act (CSFRA), to stabilize rents and to provide just cause eviction protections for certain rental units in Mountain View.

Effective December23, 2016 rent levels and rent increases for covered rental units built before February 1, 1995 must comply with the CSFRA.  As of this writing, single family homes, condominiums, duplexes, and mobile homes are not covered by the CSFRA.

For more background go to the Mountain View website:

http://www.mountainview.gov/council/rental_housing_committee/default.asp

Rental Housing Committee Meeting 10/23/2017

Unfinished Business

Rental Housing Committee Fiscal Year 2017-2018 Budget and Rental Housing Fee

With the adoption of Measure V, a new program with dedicated resources was created in the City of Mountain View which requires independent funding for its operation.  The Rental Housing Committee (RHC) must establish a budget for implementing the provisions of the CSFRA and the staffing to accomplish this.

On October 9, 2017 the RHC confirmed a budget which was a ‘best estimate’ proposed by the City staff in the amount of $2,590,915 which included these items: staffing, general operating costs, 3rd party professional services, an IT system and a one-time reimbursement of the City’s advanced funding.

To fund this budget, the landlords of roughly 16,788 Mountain View rental units will initially be charge $155 per unit per year.

The City recommended that this Budget and Rental Housing Fee be approved.  With much discussion between all members of the RHC, Legal Staff and City Staff, eventually the RHC approved this budget.

Public Hearing

The public was not at all happy with this decision and once this budget and rental fee was adopted by the RHC the line was quickly forming to speak their 3 minutes directly to the committee with their opinions:

Budget much too large, salaries for staff are excessive, RHF is too high and who should actually pay this fee varied from 100% Renters to a 50-50% shared split Renters-Landlords etc., etc.

Upon hearing these very passionate opinions the committee did recommend that they continue this discussion at the next meeting.

New Business

Rental Housing Committee Meeting Schedule

Schedule as presented was adopted.

— Tamara Lewis, Observer

News from the Mountain View Rental Housing Committee August 2017 July – September 2017

News from the Mountain View Rental Housing Committee

Background:

On November 8, 2016, the residents of the City of Mountain View voted to adopt Measure V, also known as the Community Stabilization and Fair Rent Act (CSFRA), to stabilize rents and to provide just cause eviction protections for certain rental units in Mountain View.

Effective April 5, 2017, rent levels and rent increases for covered rental units, built before February 1, 1995 must comply with the CSFRA. Single family homes, condominiums, and duplexes are not covered by the CSFRA.

For more background go to the Mountain View website:

http://www.mountainview.gov/council/rental_housing_committee/default.asp

Rental Housing Committee Meeting 07/10/2017

The meeting was called to order at 7:00pm, roll call taken, minutes approved from the previous meeting, and then for the next hour oral communication from the public was heard by the committee which included any subject that was not on the agenda.  These subject matters were broad in nature however many pertained very closely to the issues of rent stabilization and the community.  This part of the meeting and its’ hour long time span is mentioned in this report only to emphasis the importance of this subject to the people.

The first item on the agenda of unfinished business from the June 19th meeting began when further modifications were made to the Petition and Hearing Processes which will now be formally changed by the Staff so that by the next meeting these procedures can be either be adopted or once again revised.

The next item on the agenda was to determine a ‘Fair Rate of Return’ standard for the landlords.  This is very important in that it could allow the landlords to raise rents higher then what is allowed under the CSFRA by petitioning the city with a list of rising expenses that resulted in declining revenues in the past years.  ‘Expenses’ is the key word and defining this word was tonight’s issue.  Per the CSFRA, expenses can include property tax, ongoing maintenance costs and certain improvements to the property, and further, this law has given discretionary powers to the RH Committee for determining additional expenses that could also be included.  This evening the RH Committee staff presented an expanded list of numerous expenses that they felt should be considered as part of the landlord’s petition package which then brought many people in attendance of this evening’s meeting, wanting to voice their opinion.  This generated hours of discussions from both renters and landlords articulating their views very passionately, very intensely and sometimes very volitively.

No decision was made this night and at about 12:00am the Rental Housing Committee was adjourned to reconvene again on July 24, 2017

Rental Housing Committee Meeting 07/24/2017

This meeting was called to order at 7:00pm with a packed room of both renters and landlords.

Unfinished Business –

6.1

Because little was accomplished at the previous meeting of 7/10 the discussion went immediately to the ‘Unfinished Business’ of the evening’s agenda which continued the discussion of regulations for the Petition and Hearing Process and defining a Fair Rate of Return Standard for the landlords. 

With the guidance and approval of the legal team, the staff presented their recommendations for the above to the committee, however one of the members wished to propose a different approach in defining the Fair Rate of Return Standard.  Rather than using the suggested CPI ‘All’ index which follows costs that he felt did not accurately reflect housing profits, he proposed using the index specific to the rental housing market which would/could overestimate the numbers. 

This generated lengthy discussions and other proposals from each of the RHC members.  The legal team listened and cautioned of potential litigation as the suggestions drifted away from the original recommendations that had been challenged and tested in other courts.

Further discussions and other alternatives were offered however when the vote was taken this new proposal of using the rental housing market index was approved by a decision of 3-2.

Upon hearing this outcome the public in the courtroom made it clear they were unhappy with this decision and were quite vocal.

6.2

RHC acknowledged that they have received the report from the Mountain View City Council for reimbursement of advanced funding.  The RHC was designed to run independently of the City and will pay for its’ own costs by annual fees from the rent-controlled apartments.

New Business –

7.1

The effective date of Measure V is in question:

After Measure V passed in the November election, December 23, 2016 was the effective date for the measure to be enacted.  That date is now in question because of a lawsuit that was filed 2 days before the law was to take effect. 

The lawsuit brought a temporary restraining order which blocked the measure for about 4 months.  Finally on April 5th a court lifted this suspension and since that date the City of Mountain View has informally accepted April 5th as the implementation date for Measure V

Renters and landlords now see different dates for Measure V’s effective date and attorneys for both are requesting clarity from the RHC committee and all are heading to court.

Rental Housing Committee Meeting 08/24/2017

This meeting was called to order at 7:00pm, roll call was taken and minutes were approved.

Oral Communication from the Public was presented passionately by both renters and landlords and among numerous subjects included some of the following concerns: one renter has filed a lawsuit against his landlord for overpayment, mobile homes should be covered under Measure V, landlords have no incentives to upgrade or improve their properties with the CSFRA in place.

New Business-

7.1 Introduction of Budget Process – Ms. Kong, Mountain View’s Finance and Administrative Services Director presented a report reconfirming that any upfront costs that the RHC was currently generating and that the City was covering, would be fully reimbursed through this committee’s proceedings.  Early in October City Staff will present an RHC proposed budget to this committee for approval by October23rd.   

Unfinished Business-

6.1 Adopt Regulations for a Vega Adjustment Standard to be incorporated into the Fair Return Standard

This standard was to help landlords who had kept their rents at or below market rates and   now because of Measure V the rent roll back is hurting these landlords the most and causing ‘disproportionately low rents’.

Defining ‘disproportionately low rents’ is part of the Vega Standard so the City Staff looked to other rent control cities for their approach to this definition and found some of the cities have used data from HUD, the Department of Housing and Urban Development.  Their data is used to help in the definition and as a baseline calculate Section-8 housing vouchers.

Some members of the RHC stated using HUD data for this application is not acceptable and pointed out that these numbers seemed unrealistically low and although in some parts of Santa Clara County they may be accurate, they are not accurate in Mountain View. 

A few other approaches were suggested, some extremely overly complicated which produced further discussions.  All members of the RHC voiced their concerns pertaining to this complex issue but as the evening wore on a vote was taken and approved using HUD data for individual unit adjustment.

Rental Housing Committee Meeting 09/11/2017

This meeting was called to order at 7:40pm, roll call was taken and minutes from July24, and August 28th were approved.

Oral Communication from the Public – the subject discussed tonight was that some of the landlords are now passing thorough the utilities to the renters as part of their rent.

Unfinished Business –

9.1 Consideration of Establishing the Effective Date of the Community Stabilization and Fair Rent Act – The RHC deliberated and announced they had decided the effective date of this act is December 23, 2016

New Business-

10.1 Proposed Information Technology System including Database/Registry – Due to the scope and breadth of the CSFRA, implementation could require a reliable well-functioning IT system and currently all cities in California with Rent Stabilization programs use one. 

An IT system will require up front capital and ongoing operating costs.  To the extent that a system is not implemented or is not sufficiently robust, it is likely that greater staffing resources will be needed to handle the various tasks of the CSFRA.

Because of the potential expense, could there be other departments that could also benefit from this program?

The staff will bring to the next meeting additional information for the RHC’s consideration

10.2 Proposed Staffing Plan – After the report was given and discussion was concluded the following proposed staffing plan was approved:

  • 1 Program Manager
  • 2 Administrative Analyst I/II
  • 1 Office Assistant II

10.3 CSFRA Fee Methodology and Program – After the report was given and discussion was concluded the RHC approved:

Setting the same fee for both full and partially covered units.  This methodology would treat Fully and Partially Covered Units the same and establish the same fee for both types of covered units under the CSFRA that would recover the cost of the program. To ensure full funding of CSFRA program the Rental Housing Fees for a total of 16,788 Covered multi-family rental units would amount to the FY 2017-18 Budget divided by the total amount of units. This calculation is simple and easy to implement.

— Tamara Lewis, Observer

News from the Mountain View Rental Housing Committee June 2017

Background:

On November 8, 2016, the residents of the City of Mountain View voted to adopt Measure V, also known as the Community Stabilization and Fair Rent Act (CSFRA), to stabilize rents and to provide just cause eviction protections for certain rental units in Mountain View.

Effective April 5, 2017, rent levels and rent increases for covered rental units, built before February 1, 1995 must comply with the CSFRA. Single family homes, condominiums, and duplexes are not covered by the CSFRA.

For more background go to the Mountain View website:

http://www.mountainview.gov/council/rental_housing_committee/default.asp

Rental Housing Committee Meeting, 6/8/2017

The meeting was called to order at 7:00pm

The RHC listened to input from tenants and landlords. Key outcomes from the meeting include:

There will be individual stakeholders meeting for the tenants and landlords next week.  The Rental Housing Committee Staff will attend and will summarize these forums at the June 19th RHC meeting.

RHC Staff will continue to work on the Regulations for the Petition Process for Individual Rent Adjustment.

RHC Staff presented beginning criteria for a Hearing Officer and a Mediation Officer.

The person will be an independent contractor

A third party ‘Project Sentinel will be used to facilitate this process.

Cost of position – Further information from staff to be forthcoming

Meeting adjourned around 11:00pm

Stakeholders Meeting ‘Fair Return Standard’

Meeting for Landlords held 6/12/2017

Meeting for Tenants held 6/14/2017

As established in the RHC Meeting of 6/8/2017 a Stakeholders Meeting for both the tenants and the landlords was to take place separately to create a methodology for determining a ‘Fair Return Standard’ that could be used during the landlord’s petition process for modifying rents upward if necessary.  These meetings took place on 6/12/2017 and 6/13/2017.

This methodology for a ‘Fair Return Standard’ should include the following:

Could be objectively applied

Is understood by both parties so that decisions can be based on predictable outcomes

Is consistent with the current CSFRA established guidelines

Three (3) potential ‘Fair Return Standards’ were offered. See staff report online at:

http://mountainview.gov/civicax/filebank/blobdload.aspx?BlobID=22966

    • Maintenance of Net Operating IncomeMNOICPI Adjustment – Most commonly used standard in California.  Once establishing the NOI, (Property Income minus the operating expenses for the base year of 2015), this number is then increased by an inflationary index which increases with changes in the Consumer Price Index, CPI, or some portion there of between the base year and the petition year.

Issues

Confirmation of the operating expenses for base and petition years

Landlords may have incomplete records of operating expenses

Operating Expenses do not always vary with inflation indexes.  Example –  a one-time expenditure of a new roof can impact the determination for a rent increase

    • Maintenance of Net Operating IncomeMNOI – Ratio Adjustment – Allows for rent increases in proportion to increases in qualified operating expenses. The Base year factor however is different in that it can be any year including the 12 months prior to the petition year.
    • Fixed Return on Investment – This is a variation on the fair return standard that was developed to regulate utilities and later adopted by some mobile home parks. A ‘deliberative body’ identifies a Minimum standard rate of return for the landlord’s investment of between 4-12%.  The chosen number is then multiplied by the value of the property resulting in the Minimum NOI. To determine whether the landlord is receiving a fair return, the Property Expenses are subtracted from the Property Income resulting in Net Operating Income excluding debt service.  If the Minimum Annual NOI is lower than the Net Operating Income the landlord would be entitled to increase the rents.

Issues

Different rates of return lead to disparities in the rents that can be charged

Determining valuation of property could be ‘fair market value’ which would require an appraisal, which would increase administrative cost and subject rent increases to market swings.

Landlords – preferred ‘Fixed Return on Investment’, must have universal definitions, use standard formulas to determine Operating Expenses, provide a list of items with their lifespans

Tenants – preferred ‘MNOICPI Adjustment, what process will be used to evaluate property…should it be a standard formula, if a rent increase is required for a one-time expense example new roof once it is paid for should the rent return to its’ previous value?

The Rental Housing Committee staff will summarize these meetings for discussion at the Monday June 19th RHC meeting.

Rental Housing Committee Meeting, 6/19/2017

The meeting was called to order at 7:00pm

The Rental Housing Committee Staff presented a summary of the two separate Stakeholder Meetings, one for the Tenants and one for the Landlords that were held last week.  These meetings were to determine one standard out of a potential of 3 options, to be agreed upon for a ‘Fair Rate of Return’ for the Landlords in accordance with Measure V.  The Tenants chose ‘MNOICPI Adjustment’ and the Landlords chose ‘Fixed Return on Investment with modifications.

After reviewing the summary of the meetings the RHC Staff recommended the MNOICPI Adjustment standard as it is widely used in nearly all the California rent controlled cities and when a petition is presented, offers the simplest calculations for the hearing officers and the RHC.

The landlords disagreed and felt very strongly about their position and their chosen option in that the MNOI-CPI only allows for a minimal (this year 3.4%) yearly percentage rent increase.  With the roll back of rents to 2015 levels, increasing operating costs, extra repairs or maintenance issues some of the landlords will no longer be turning a profit and then a Fair Rate of Return is no longer applicable.

Most of the RHC members could not all agree after listening to the very passionate discussions on both sides however one member encouraged the committee to adopt the option that the staff had recommended so that this process could continue to move along without further delays.  There is no perfect option but he argued that this is a good choice and changes can and probably will be made as the procedure unfolds.

The vote was taken and by 3-2 the MNOICPI Adjustment option was chosen as a standard for the ‘Fair Rate of Return’.  The RHC Staff will draft a full policy of this standard and bring it bring it back to the committee to the next meeting early in July.

For more detailed information on Fair Return Standard from the public:

http://www.mountainview.gov/civicax/filebank/blobdload.aspx?BlobID=23110

Meeting adjourned around 11:30pm

—Tamara Lewis, Observer

Mountain View Rental Housing Committee Update June 2017

News from the Mountain View Rental Housing Committee

Background:

On November 8, 2016, the residents of the City of Mountain View voted to adopt Measure V, also known as the Community Stabilization and Fair Rent Act (CSFRA), to stabilize rents and to provide just cause eviction protections for certain rental units in Mountain View.

Effective April 5, 2017, rent levels and rent increases for covered rental units, built before February 1, 1995 must comply with the CSFRA. Single family homes, condominiums, and duplexes are not covered by the CSFRA.

Key Provisions:

1.   Rent Rollback:

a. For tenancies commenced on or before Oct. 19, 2015, the allowable rent 

is the rent in effect on Oct.19, 2015, 

b. For tenancies commenced after Oct. 19, 2015, the allowable rent

is the rent the tenant paid at the start of the tenancy.  

 2.   Allowable General Annual Rent Increases

In September of each year, including 2017, landlords may increase rents in an amount equal to the percentage increase in the Consumer Price Index (CPI) over the prior year (as determined by the Rental Housing Committee). On May 22, 2017 the Rental Housing Committee announced that the annual general adjustment of rent for 2017 is 3.4%. This rent increase for covered units is allowed to take effect starting September 1, 2017. Landlords must provide tenants with at least 30 days’ advance written notice of such rent increase. A rent increase is only allowed if landlords are in compliance with all provisions of the CSFRA.

 3. Initial Rent Levels and Rent Increases for New Tenants

Landlords may set the initial rents for new tenancies if the prior tenant voluntarily vacated the Rental Unit or was evicted for a just cause. After a tenant moves in, rent increases are limited to the annual general adjustment.

4. Eviction protections applicable to Covered and Non-Covered Rental  Units

Just cause is required for evictions from Rental Units with an initial certificate of occupancy prior to April 5, 2017. Just cause reasons include a tenant’s failure to meet the obligations of a rental agreement, non-payment of rent, and demolition of the unit or owner move-in, subject to limitations in the Law. Any notice to terminate a tenancy for just cause must state with specificity the basis of the termination. Certain just cause evictions require tenant relocation assistance and compliance with other provisions.  Please refer to the CSFRA for the full provisions.

City Council appointed the following people to be on the Rental Housing Committee:

Chair Vanessa Honey, Vice-Chair Evan Ortiz

Committee Members: Matthew Grunewald, Tom Means, Emily Ramos, Julian Pardo de Zela (alternate)

Rental Housing Committee Meeting, 5/22/2017

The meeting was called to order at 8:00pm

Oral Communications from the Public began.  Most of the public communication was from landlords. Below are some sample comments.

  • The regulation states that landlords should refund over payments because of roll back since January 2017.  Landlords questioned how that would be monitored.
  • A previous Councilman, who had been against Measure V, commented that it was going
  • to be difficult to manage
  • Landlords who kept rent at below market rates will be hurt the most
  • Rental property expenses (water, sewer, electricity, garbage, and repairs) are going up but rent income will not.
  • Measure V benefits some people that may not need it.

Action taken:

  • Committee adopted an annual general adjustment of rent 3.4% for 2017, however, landlords wanted 6%.
  • Committee adopted ‘Rules of Conduct’ similar to Mountain View City Council’s.

For future meetings:

  • Committee will be discussing ‘What is a fair rate of return for landlords’
  • Committee will be schedule two Stakeholder meetings, one for Tenants, one for Landlords.  They will be posted on the city website and will ask the audience to be ready to answer a list of perhaps 3 prepared questions.

Meeting adjourned 11:15pm

— Tamara Lewis, Observer