There are lots of examples of regulations of prices and land use for the asserted betterment of the community. There is plenty of space in foothills all around the Bay Area for far more housing (ownership and rental) but the powers-that-be do not want to go there. That very government restriction on land use adds to the housing shortage and pushes up the price of homes and rental units. Landlords here are profitting greatly from government regulation of land use.

It's easy to see that rent control ordinances exacerbate the problem.

Ordinances begin by saying "there is a housing shortage" as justification for the need to control rents. Nearly all ordinances (NYC, Santa Monica, SF, Mountain View) then go on to say that the ordinance will expire when the vacancy rate in a year exceeds 5%. So housing shortage is defined by a low vacancy rate. If the vacancy rate rises, then by the logic of the ordinance, there is no more shortage and the ordinance is no longer necessary.

The problem is that whenever a rent control ordinance is enacted, the vacancy rate FALLS as turnover plummets. This means that rent control makes the problem, as defined in the measure itself, worse and self-perpetuating.

I thought the justification for rent control was exploding rents? Sure, it's because there's not enough housing, but that's not the specific reason people want rent control. People want it for the same reason people wanted Prop 13: housing costs were increasing too fast. Now, rather than just build more housing, people voted to cap costs with a measure that exacerbates the situation, reduces turnover, and really just makes the whole underlying cause of the initial housing cost increase worse. Rent Control and Prop 13 are two sides of the same coin. You either have both or you have neither.

Apple:

You are correct when you say:

"The problem is that whenever a rent control ordinance is enacted, the vacancy rate FALLS as turnover plummets. This means that rent control makes the problem, as defined in the measure itself, worse and self-perpetuating."

But you fail to discuss the responsibility of the private industry to increase supply, especially when that industry has unrestrained profit ability because newer supply in California is not subject to rent control due to Costa Hawkins. In fact, the CSFRA CANNOT effect the properties younger than 1995. THAT is why the vacancy rates do not improve. Please read this as well:

Landlords argue:

RENT CONTROL UNFAIRLY HURTS THE HARD WORKING LANDLORD COMMUNITY AND ONLY TEMPORARILY BENEFITS THE CURRENT TENANTS. They benefit weather (SIC, whether) or not they even need the assistance. MOST OF MY TENANTS ARE DUAL INCOME HOUSEHOLDS EACH WELL INTO THE 6 FIGURE INCOMES. Now if were talking about the janitors and school teachers that benefit our community as a whole to by living here then that is a community issue that needs to be shouldered by the whole community not just the landlords...

What I find as a business person insulting is the premise that IF one works hard and EARNS their large paycheck because they are highly skilled and had to invest in themselves to achieve it, that some property owner is ENTITLED to a portion of that money. THAT IS NOT BUSINESS. THAT IS FEUDALISM. ITS IS DEFINED AS:

feudalism

The system of political organization prevailing in Europe from the 9th to about the 15th centuries having as its basis the relation of LORD TO VASSAL (see vassal 1) WITH ALL LAND HELD IN FEE (see fee 1) and as CHIEF CHARACTERISTICS HOMAGE, the service of tenants under arms and in court, wardship (see wardship 1), and forfeiture (see forfeiture 1)( Web Link

Thus the tenant is treated like a VASSAL of the landlord or LORD, and the LORD determines that the earnings of the VASSAL are due to the LORDS' efforts. The LORDS’ feel entitled to a proportion of earnings from the VASSALS’. This is simply FALSE.

Those VASSALS’ who have worked hard and invested their own money and work to have work skills that are in reality SUPERIOR to those LORDS’, thus justifying their earnings. The LORDS’ did not provide them any assistance to the VASSALS’ achievements and abilities at any time. THUS THE VASSALS’ DO NOT OWE A DEBT TO ANY LORDS’. The LORDS’ complain that they should be ENTITLED to any earnings they wish, but they cannot base that argument on their VASSALS’ earnings. IF THEY WISH TO HAVE HIGHER EARNINGS, THEY MUST PROVIDE SUPERIOR SERVICES AND COMPETE AMONGST THEMSELVES FOR IT.

To simply claim that their VASSALS’ must pay them their FEES as a CHIEF HOMAGE of THEIR NOBILITY, is a very unrealistic idea. Owning an apartment building doesn’t warrant a LORDS’ (or landlord) an American Nobility, since there is no such thing. And further, isn’t that a tax? More specifically, is this is a PRIVATE tax? Isn’t private taxation not allowed in the US? This attitude is what caused the “VASSALS’” of Mountain View to use their political rights and responsibilities to act to create the new rules of LORD and VASSAL relationship. Thus the CSFRA was born.

The fact is if this was not the prevailing practice, the CSFRA would be unnecessary. There would have been a mutually beneficial relationship between the LORDS’ and VASSALS’.

The community cannot be expected to bear the burden of the LORDS’ misbehaviors, misconducts, or misjudgments, under Alan Greenspan’s MORAL HAZARD doctrine, that rests solely on the investors or owners of a business. Please do not insult us in claiming that it is the VASSALS’ fault the LORDS’ are in this situation?

The LORDS’ must step up and solve their own problems. Under Costa Hawkins, they were given unfettered freedom of making profit since 1995 to increase market supply and failed to do so. This is the basis of the incentive of a LORDS’ investment to increase supply. This should be all that it should take. What is happening is the LORDS’ demand tribute and gifts in order to develop by the public. The public simply cannot do that, it would be viewed as a corrupt practice by the VASSALS’ and the politicians would be subject to intense criticism.

The rules or regulations regarding land zoning and development have not changed significantly or at all since the 1970s, except for environmental impact, pollution, and traffic impact. But those were created because there was just reason to do so in any case, it was because those areas had established problems because they were not regulated. So claiming that “regulations” are impairing the private sector in increasing supply is simply not the truth.

THE FACT IS THAT DEVELOPERS ARE REQUIRED TO TAKE ON THE GAMBLE OF LOSSES, IF THEY ARE ALSO IN FACT ENTITLED TO AS MUCH PROFIT AS THE MARKET WILL BEAR. THE PRIVATE SECTOR WANTED THE GOVERNMENT OUT OF RENT REGULATIONS AND GOT IT IN 1995, BUT IT IN TURN IS SOLELY RESPONSIBLE FOR ITS FAILURE TO COME THROUGH WITH AMPLE SUPPLY.

Rent Control is price control. Prop 13 is tax control. It doesn't seem the same to me. I wouldn't mind if we set price controls on real estate. Can I lock in a 1999 price on something with 1/4 acre in Los Altos? Perhaps, I can accept something a little bit smaller in Palo Alto, but I want a 1996 price because there was a good run-up from 1996 to 1999.

Troll,

So far I think you are just over critical of yourself.

I do not argue rent control is price control.

I just feel like the situation was brewing for at least as much as 5 years. The older apartments were being bought from very sneaky real estate agents claiming that the investments were proper regarding prices that the buyers paid. My building for example, which is older than 50 years, was sold for $4.95 Million, but the Santa Clara County Tax Assessment was $1.15 Million at the time of sale. I just noticed it was advertised with fireplaces and an elevator. This building doesn't have them.

At the same time though, the buyers could have been more careful. If they looked up the tax assessment on the web, they surely should have demanded that the highest price above the assessment before purchase should have been 25%. In my buildings situation it should have been bought at $1.5 Million at the highest. That is because it is an 11 unit basic structure. If it were either a long term investment or a "flip" it will cost quite a bit to upgrade the property.

But instead, it looked like buyers simply jacked up rent to cover costs of purchase. In my case my new landlord rose my rent $900./month. Realize the property didn't change at all. If this pattern was used in even only 25% of older building purchases in Mountain View, you can see a large unsustainable price hike was occurring.

This is exactly what happened in the 2007 home real estate bubble. But that situation was fixed, but it solution was not applied to all residential business. That was another major mistake.

The end of rent control. Silicon Valley battlefield. Prices fixed by largely production costs. Because of the high demand for rentals in the super cities of Silicon Valley, New York, London and Paris the best and brightest want to live in these places bidding up the price of real estate. It is not the evil landlords who are gouging it is the cost of building new available rentals. Those who want fixed rental rates are the evil doers as they thwart the production of new property development (higher density). Now don't start swearing at me, swear at a basic economics textbook. Even the press which plays Hamlet most of the time is catching on in Santa Rosa. Google and the other search engines put at your fingertips what you should have remembered from your high school economics classes (a required subject). More to come if I get my blog with the Palo Alto/Mountain View online.
George Drysdale a social studies teacher (always) and land economist

Mr. Drysdale,

With all due respect, even if the cost of the development is high, Costa Hawkins virtually guarantees that the unfettered profit after development should be a good enough incentive to build at whatever the cost.

The industry has had 20 years to prove it can do a superior job in providing ample supply of apartments. IT HAS FAILED.

I already pointed out that the industry demands tribute for simply doing what it should be doing on its own. Build Baby Build. But instead it complains that they are not given the tribute to do so.

As far as Santa Rosa, I have been trying to find polls regarding the predictions. They seem to not exist. I would not be surprised that the CAA has done polling, but they are quiet regarding the results. This is a bit coincidental because the same thing happened in Mountain View, they kept their polls "confidential".

We are going to have to wait. But since the industry has a record of only winning 50% of the time in ballots, 0% in the recent court activity, it simply can go either way, and it will not demonstrate any significant improvement in their performance.

Where you have rent controls you have housing shortages. Investors are a fickle bunch, they can always but Apple stock, etc. Developing apartment houses are a long drawn out process. Investors therefore must receive ample rewards. Rent controls put out a sign: don't,invest here. Government in California is no source of investment capital. They must be concerned about unfunded pensions, etc. Rent controls are the single greatest impediment to developing rentals in California because those who get price fixed rents become a hugely parasitic. Over time it is not the poor who get the price fixed rentals but the well to do. This is up on the internet, almost 100 pages by now. That's why rent controls are the most studied subject in economics which is almost entirely concerned about price (price theory).

Geroge Drysdale social studies teacher (always) and land economist

Mr. Drysdale:

You stated:

“Where you have rent controls you have housing shortages. “

“Developing apartment houses are a long drawn out process.”

“Investors therefore must receive ample rewards. “

“Rent controls put out a sign: don't,invest here. “

Rent controls are the single greatest impediment to developing rentals in California because those who get price fixed rents become a hugely PARASITIC.

With all due respect, you fail to disclose the fact that Costa Hawkins prevents rent control for new buildings after 1995. Please understand this: RENT CONTROL LAWS AT THIS TIME HAS NEVER BEEN AN IMPEDIMENT IN CALIFORNIA AS LONG AS COSTA HAWKINS IS THE LAW.

Mr. Drysdale is assuming that these rent controls are universal, they are not. Now if AB 1506 is passed, and Costa Hawkins is repealed, then Mr. Drysdale will have a good point. But the state currently forbids any rent controls on buildings built after 1995 as of now regarding Costa Hawkins. It appears his comment is addressing an entirely different issue regarding what current rent controls are in California. SO THERE IS NO IMPEDIMENT TO ANY INVESTMENT IN THIS MARKET AS OF NOW.

And as far as tenants are parasites, that is simply very insulting. As I pointed out earlier:

Those VASSALS’ who have worked hard and invested their own money and work to have work skills that are in reality SUPERIOR to those LORDS’, thus justifying their earnings. The LORDS’ did not provide them any assistance to the VASSALS’ achievements and abilities at any time. THUS THE VASSALS’ DO NOT OWE A DEBT TO ANY LORDS’. The LORDS’ complain that they should be ENTITLED to any earnings they wish, but they cannot base that argument on their VASSALS’ earnings. IF THEY WISH TO HAVE HIGHER EARNINGS, THEY MUST PROVIDE SUPERIOR SERVICES AND COMPETE AMONGST THEMSELVES FOR IT.

Mr Drysdale, landlords at this time have done NOTHING to contribute regarding the increase in wealth by tenants earning it in California. THAT OCCURRED DUE TO BUSINESS DEVELOPMENT THAT HAS OCCURRED DUE TO INVESTMENT IN ENTIRELY DIFFERENT BUSINESSES. The apartment industry simply has attached itself to that activity to make money.

IT DOES NOT WORK TO ATTRACT HIGH SKILLED WORKERS AND DOES NOT EMPLOY THEM. I simply disagree with you because your claim seems to apply to the landlords and not the tenants. What you are promoting is that a person can expect THEIR SHARE of wealth earned by another WHO DID NOTHING TO CONTRIBUTE TO THAT SITUATION.

I hate to ask you, but is THAT the definition of a PARASITE?

Do no harm argues?

“The truth is that when you sign a contract that provides housing at the property owners expense He is certainly entitled to a portion of your paycheck. You have the choice of living close or far away from your workplace. That choice will determine the cost of your lodging. That is YOUR choice. No landlord is required to provide housing YOU feel is affordable within walking distance to your employment. Where did you ever get the idea you are entitled to that? “

I do not say I am entitled to it, but when your business is to strategically provide overpriced items alone into a market, you must be prepared for the results. The industry has planned it so that the tenants are like drivers that need gas, and the only kind of gasoline you offer and price is the 93 octane when the vehicles only need 87. If you looks at the Bay Area Government Association website reports, the industry chose to push only the products it wants to sell. This is not just in Mountain View but the entire Bay Area. Which are high end products only, thus forcing prices to be higher because of market manipulation.

“This entitlement mentality is unfair to those who have worked hard, taken risks, endured the ups and downs of the market and provided housing for decades. We all make choices and there are certainly natural consequences to every choice. High rent is the natural consequence of living in the middle of Silicon Valley.”

With all due respect, you fail to disclose the fact that Costa Hawkins prevents rent control for new buildings after 1995. Please understand this: RENT CONTROL LAWS AT THIS TIME HAS NEVER BEEN AN IMPEDIMENT IN CALIFORNIA AS LONG AS COSTA HAWKINS IS THE LAW.

And as far as tenants having the entitlement mentality, that is simply very insulting. As I pointed out earlier:

Those VASSALS’ who have worked hard and invested their own money and work to have work skills that are in reality SUPERIOR to those LORDS’, thus justifying their earnings. The LORDS’ did not provide them any assistance to the VASSALS’ achievements and abilities at any time. THUS THE VASSALS’ DO NOT OWE A DEBT TO ANY LORDS’. The LORDS’ complain that they should be ENTITLED to any earnings they wish, but they cannot base that argument on their VASSALS’ earnings. IF THEY WISH TO HAVE HIGHER EARNINGS, THEY MUST PROVIDE SUPERIOR SERVICES AND COMPETE AMONGST THEMSELVES FOR IT.

IN FACT PROPERTY OWNERSHIP SKILLS AND VALUE ARE VASTLY LESS VALUABLE THAN THE WORK THE PEOPLE WHOM THEY CLAIM ARE THE “ENTITLEMENT” GROUP DO IN THE VALLEY. IN FACT PROPERTY OWNERSHIP IN THE BAY AREA REGARDING APARTMENTS HAS NOT CONTRIBUTED TO THE WEALTH OF THE VALLEY, IT HAS WORKED TO TAKE IT AWAY. MOST ARE OWNED BY THOSE WHO DO NOT LIVE IN THE CITY THEY OWN THE PROPERTY IN. IT IS THE “HIGH-TECH” WORKERS THAT MADE THE VALLEY AND NOT APARTMENT DEVELOPMENT.

Do no harm, landlords at this time have done NOTHING to contribute regarding the increase in wealth by tenants earning it in California. THAT OCCURRED DUE TO BUSINESS DEVELOPMENT THAT HAS OCCURRED DUE TO INVESTMENT IN ENTIRELY DIFFERENT BUSINESSES. The apartment industry simply has attached itself to that activity to make money.

THE APARTMENT INDUSTRY DOES NOT WORK TO ATTRACT, DEVELOP, OR SUPPORT HIGH SKILLED WORKERS AND DOES NOT EMPLOY THEM. I simply disagree with you because your claim seems to apply to the landlords and not the tenants. What you are promoting is that a person can expect THEIR SHARE of wealth earned by another WHO DID NOTHING TO CONTRIBUTE TO THAT SITUATION.

I hate to ask you, but is THAT the definition of an ENTITLEMENT?

!996? 1999? You seem to be having a side conversation with someone not here.

Rent Control in MV is not "rent setting". Landlords determine each tenant's initial rent - CSFRA is very explicit about this.

MV has "Rent Stabilization" i.e. the percentage increase is limited, for a tenant.

I don't usually agree with the "The Business Man", however his talk about the feudal system's percentage of the take is a reasonable example.

Wrt any overarching universal statements, both sides need to relax a bit. Landlords that were jackng up prices constantly and living close to the edge will have problems. Landlords without a capital reserve fund will have problems when capital expense pop-up.

But for landlords operating as a real business, they will adjust and deal with the issue - same as they would any other business change. And yes, that means that some will sell, some will redevelop and some will not install granite countertops in units.

"Vacancy rate will fall!"

Is this a bad thing? Or a good thing? Currently the vacancy rate for 1995 and older units is less than 1%. (Talk to the RHC staff to get more recent numbers). So are you saying that 1% is good?

Certainly from a landlord's perspective, a low vacancy rate is great .. "beggers can't be choosers".

From the tenants' perspective not so much.... but ONLY if the prospective tenant can afford the rent asked. It does a tenant no good to have a high vacancy rate but every apartment is 2x as much as the tenant can afford on their salary.

But this conversation is ignoring the other parties impacted by the large rent increases, the small business owners in MV supported Measure V(CSFRA) because they kept on losing workers who moved away because of the rent increases.

Those great restaurants all need to pay workers enough to keep them - and the rent increases were cause THOSE business owners to be bleeding.

So the landlords were doing more than causing tenants to move out, they were causing real harm to OTHER BUSINESS OWNERS.

[Post removed due to disrespectful comment or offensive language]

My apologies if I made my gas station statements over simplified

My example was over simple, I will try to address the situation with real information from the Bay Area Governments association own analysis

Santa Clara Rental Housing Needs Allocation results

Very Low (0-50% AMI) Income, the RHNA = 13,878, Permits Issued =3,798 Percent of RHNA Met = 27%. Low (50-80% AMI) Income, the RHNA = 9,567, Permits Issued = 2,692, Percent of RHNA Met = 28%. Moderate (80-120% AMI) Income the RHNA = 11,007, Permits Issued = 2,371, Percent of RHNA Met = 22%. Above Moderate (120%+ AMI) Income the RHNA = 25,886, Permits Issued = 35,962, Percent of RHNA Met = 139%. In Total the RHNA = 60,338, Permits Issued = 44,823, Percent of RHNA Met = 74%

So if you look at the proportion of housing in the county the Very Low Income apartments are 23%, the Low Income apartments are 16%, the Moderate Housing are 18% and the Above Moderate Income apartments are 42% in Santa Clara County.

Now if you take the gasoline example Santa Clara County, this would mean that 42% of the gas stations only sell 93 gas, 18% would sell 91 gas, 16% would sell 89 gas, and only 23% sell 87 gas. And realize once one car buys gas from the station, in this example, that station has a limited supply, and that one customer must stop buying gas from it for another to start.

That means that almost half the apartments in the valley are “Luxury”, when the report shows that is clearly NOT NEEDED. It indicates a surplus of 39%. As far as the public is concerned they cannot rent the apartment they want when there is a lack of the ones they want. Thus you have a manipulated situation.

As far as Mountain View goes it is far worse:

Very Low (0-50% AMI) Income, the RHNA = 571, Permits Issued =237 Percent of RHNA Met = 42%. Low (50-80% AMI) Income, the RHNA = 388, Permits Issued = 28, Percent of RHNA Met = 7%. Moderate (80-120% AMI) Income the RHNA = 488, Permits Issued = 4, Percent of RHNA Met = 1%. Above Moderate (120%+ AMI) Income the RHNA = 1,152 , Permits Issued = 2,387, Percent of RHNA Met = 207%. In Total the RHNA = 2,599, Permits Issued =2,656, Percent of RHNA Met = 102%

Now if you take the gasoline example for Mountain View, this would mean that 44% of the gas stations only sell 93 gas, 19% would sell 91 gas, 15% would sell 89 gas, and only 22% sell 87 gas.

That means that almost half the apartments in Mountain View are “Luxury”, when the report shows that is clearly NOT NEEDED. It indicates a surplus of 107%. As far as the public is concerned they cannot rent the apartment they want when there is a lack of the ones they want. Thus you have a manipulated situation.

This is a more realistic picture, but it still demonstrates as the Valley and the City are concerned,

Business Man, I am curious if you filed a demand letter / suit to your landlord demanding refund for rent from January to April. Are there any resources to help with this other than looking for an attorney?

I honestly would not be considering this, but since my landlord has been and continues to be a jerk, feels like the right thing to do.

Drekin1

I have been advised by the Stanford Community Law Clinic to wait for them to issue a demand letter before I proceed into court. This is good news because even though I know WE ARE justified to a refund for the simple reason was that the filing of the case in Santa Clara Court was just a stalling tactic.

I still find it incredulous that the situation developed the way it did. But I find it comforting to know that the SCLC is going to advocate for us regarding this matter. To me, they seem to be an elite team that knows how to get the laws acted on the right way. I only wish is that in the future this situation is never repeated.

The City of Mountain View could be argued as committing mass grand theft. How? Please read the following:

Theft (also called larceny) is a crime against property in California. To prove theft, a prosecutor must establish the defendant's intent to permanently take or withhold the property owner's possession or right to the property -- in other words, the specific intent to steal. Theft can take on many forms depending on the type of property taken as it can involve:

Personal property; Money; Real property; or The value of labor or services.

Sometimes, it can take place entirely without the owner's knowledge. However, theft can also occur where an owner entrusts property to another for a temporary or ongoing purpose and the recipient then fails to return the property when due.

Theft is either classified as petty theft or grand theft in California, a difference that depends on the value of the property. Generally, grand theft exists where the property is valued above $950, but there are some exceptions, such as where the property is taken from the victim's person or where the property taken consists of a firearm.( Web Link

So when the City of Mountain View CHOSE to not enforce the CSFRA on the date designated (December 23rd, 2016) by agreeing not to without a court judgment of unconstitutionality or illegal application, anyone whose loss of overpaid rent is greater than $950 total can argue that the City committed grand theft to you.

This enabled the landlords to unlawfully collect overcharged rent. The City Attorney should have known that this criminal action would result. In fact the City is acting as a criminal accessory BEFORE the fact because it took an action in VIOLATION OF THE CITY CHARTER AS OF DECEMBER 23, 2016. Even if the TRO was signed on December 22nd, since it was not court ordered, it had no effect on December 23rd. If the court even did issue the TRO the court could not prevent enforcement of law based on the following:

A California court will not prevent government officials from enforcing a law unless the law is unconstitutional or if enforcement of a valid law is done illegally. [Code of Civil Procedure Section section 526; Civil Code Section 3423(d); Alfaro v. Terhune (2002) 98 CA4th 492, 500; Novar Corp. v. Bureau of Collection & Investigative Services (1984) 160 CA3d 1, 5] (Web Link

Since a TRO is the same as an injunction in California, the signed document on December 22nd, would in fact be preempted by the CSFRA Charter on December the 23rd except IF THE COURT RULED THE CSFRA WAS UNCONSTITUTIONAL OR WAS ILLEGALLY APPLIED. But this did not occur.

Thus the City and the City Attorney by NOT protecting the tenant’s regarding their legal rights, became accessories in grand theft for every tenant who lost more than $950. For overcharged rents since December 23rd, 2016.

I am seriously considering filing a grand theft charge with the City of Mountain View Police Department against my landlord. From what I understand this will put the prosecution in the hands of the County. And since the County Court could not prevent the enforcement of the CSFRA, the prosecutors are not allowed to consider the TRO a legal defense. And the City Attorney cannot interfere with a criminal prosecution.

But since the City Attorney acted against the City Charter after December 23rd, 2016, it has enabled a possible criminal complaint against the City for directing the landlords to act contrary to the law and continue to overcharge rent.

The greatest land swindle in dollar terms in American history. That best describes rent control in California with rent control on mobile home parks most noticeable. It is now common knowledge that rent controls are bad. It is the prime example of why no price fixing in the first days of a basic economics class. I'm trying to get my blog going with the Palo Alto/Mountain View online as it's just so interesting in it's details. It takes a teacher and land economist to go through how awful rent controls are. I think Mr. Johnson of Embarcadero Media is afraid of the people in the Buena Vista fiasco. Students of economics phone up and find out.

Geroge Drysdale social studies teacher (always) and land economist T

Back at it with your usual disinformation again?

All that (supposed) education, and you still put out the same tired nonsense.

He's not going to reply. All our good friend george a social studies teacher and land economist does is post rambling screeds into the ether. I'd be surprised if he's actually been either of those things, since he never responds to people or demonstrates the ability to have a debate. Just wait for the next rent control article, where he'll post the same vacuous content.