I think the Council is definitely on the right track with the linkage concept. I have advocated for this approach in the past and am glad to see that it is going to be used.

Again I implore the City Council to quit screwing our schools. We all want to have a great city, so how is having over crowded schools going to make that goal a reality? Please make Mountain View an attractive place to live for reasons beyond being close to work. That's really a consolation prize in life.

As I reminded the City Council right after the East Whisman study session, the state government is about to preempt cities and counties (currently the most populuos 15 counties in Senate Bill 50) and empower developers to build 4-8 story condos or apartnents (their choice) with little or no onsite parking throughout most of Mountain View. I suggested the Council infill with less- onerous housing projects without further delay. Such an approach could lessen the likelihood that SB 50 will pass and be signed into law - but I predict SB 50 or a similar bill will be signed into law this year. If local "leaders" across California are so foolish or impotent as to not launch a referendum petition and win in a satewide vote thereon, at least developers will be challenged to assemble the land needed for the residential midrises in Mountain View. Of course, SB 50 would just be the beginning of the end of local control over land use. Later bills would continue the erosion of local control unless and until city and county "leaders" circulate and get approved by voters a state constitional amendment giving cities and counties (for unincorporated parts of a county) some land use authority the state government cannot simply ignore. I have proposed some constitutional language. But where are true "leaders" elected to city councils and county boards of supervisors? I will keep a lookout.

Building the future Mountain View Money drain and slum.

Simply put, the LOCAL controls of land management has for more than 20 years has proven to be poor if not worse.

the definition of insanity is continuing to do the same thing over and over again expecting a miraculous improvement.

THe local controls are NOT COMPENTENT to do this kind of activity.

THe State Government MUST protect the rights of the CITIZENS. And in a CRISIS like this, any it is quite CONSTITUTIONAL to force both INCLUSIONARY housing requirements and for local governments be forced ot meet the well known UNMET regional housing needs.

THe City has yet to show any possibility on it's own to achieve the RHNA as reported for more than 15 years.

WHEN the City does, the City will be legally not under such State legal control, but only then.

I commend Council for sticking to their guns on housing jobs balance.

@Bored M:

Schools are not a fixed resource. We residents live here, and pay taxes for living here. It is the job of the city to provide infrastructure for its residents. If more housing brings more children, we have to expand school capacity. I live across the street from Landels, and see the improvements going on over there every day. We have no shortage of space for schools, and if the city could find a way not to pay several times the market rate for construction, we could have plenty of classroom space.

Hard to think of any private enterprise that serves customers, would object to serving more customers. More customers means lots more money. How does a school district get away with such nonsense and cry foul.

In response to Consumer Demand please reflect on this.

Let’s use some real calculations to prove this wrong regarding the claim that the high cost of building makes it impossible to provide affordable housing. I have heard that most projects cost $700,000 to per unit for an apartment to be constructed in Santa Clara.

Let’s understand that that construction will have a lifetime from 50-60 years. Thus you can right off do math to divide the cost by the number of years to establish the annual cost of the unit. But I will go even further by showing an example regarding affordable prices and their results.

Say it is $700,000 to build a 1 bedroom 650 square foot. If you look at that information you can state that $1,077 per square foot for building lifetime.

Say that it could cost another $3,000 annually to maintain that single unit, which adds $6 per square foot for the year.

So first you divide that the lifetime cost by 50 years for the lifetime, which costs $22 for each year and add the yearly $6 you come to a total of $28. Per square foot per year

You divide that by 12 months and the monthly cost per square foot is $2.33.

That means you will break even on a 650 square foot apartment with a rent of $650 times 1.8 which comes to $1,516 a month.

Now let’s say that the owner wants to get a 20% profit on the monthly rent, then that rent should come to only $1,820 per month. THAT’S a TOTALLY NEW UNIT. THAT IS AFFORDABLE HOUSING FOR THIS AREA. Because if the goal proportion of earnings for rent is 30% of earnings than a person would need to earn $6,066 a month. Which comes to $36.40 an hour for all earners in the unit. There could be 2 in a one bedroom apartment which means the earnings if both earn the same would be only $18.20/ hr per workers.

So it is possible to make a significant profit with a rent as low as $1,820 a month, and realize if the rent is increased an annual rate of 3%, that profit does not decrease. Also I took into account operating costs on the specific unit annually so that has been already been accounted for.

What is amazing is the average rent for a 650 sq. foot apartment is $2,533 a month. What makes Mountain View so expensive? If a new unit can make 20% profit at $1,820, then this doesn’t seem to explain what explains the current prices other than price manipulation due to the critical shortage of housing, or collaboration between the current providers to prevent cost competition.

SIMPLY PUT, THERE IS PLENTY OF OPPRITUNITY TO BUILD AFFORDABLE HOUSING EVEN AT $700,000 PER UNIT BUILDING COST.

The fact is that if builders would build affordable units they would make a significant profit even if the cost is based on the disproportionate cost of what is likely a luxury unit.

THERE IS NO EXCUSE FOR AFFORDABLE HOUSING TO BE BUILT IN THE SANTA CLARA COUNTY AT ALL.

Business Man,
New development requires a 5% return on cost to be financable. No investor or lender looks at a 55 year horizon, it’s net income upon completion divided by all in costs. You cannot get anywhere close to 5% at the numbers you have quoted, and further the fixed and variable expenses per unit are about 15,000 per unit per month unless you are assuming no property tax which is not a good assumption. Affordable housing requires subsidies, either from market rate housing, office development, or land owners giving their land away, or state/county/city funds. That’s the reality.

In response to Some better info youy said:

“New development requires a 5% return on cost to be financeable.”

I clearly showed that I proposed a 20% Profit. You said:

“No investor or lender looks at a 55 year horizon, it’s net income upon completion divided by all in costs.”

Simply put those investors have unrealistic and irrational expectations. There is always a lag time regarding building and break even in every business. NO ONE can or should expect break even in a project for at least 10 years. Any attempt to force this on the market is market manipulation. You said:

“You cannot get anywhere close to 5% at the numbers you have quoted, and further the fixed and variable expenses per unit are about 15,000 per unit per month unless you are assuming no property tax which is not a good assumption.”

NO THAT’S JUST MAKING UP STORIES. You are trying to say that it costs $180,000 dollars a year to maintain a single unit of an apartment? Talking about just making up stories. Please provide a valid breakdown regarding that cost? If a unit is new, than it should not require any significant maintenance.

Now looking at the model you describe, say you want to pay $180k per unit, and that your costs are based on a 5% profit margin. I will propose that it might cost as much as $3,000 a year for supplies, perhaps $3,000 for utilities realistically, and maybe as much as $2,000 for taxes and fees per unit. That means the rest is the cost of the personnel managing the unit. So lets subtract the 5% margin from the $180,000 which leaves $172,000.

Let’s say that you pay a local manager yearly $70,000. Let’s just say your apartment only has 10 units, than that cost would come to $7,000 per unit.

So let’s subtract that from the $172,000 which leaves $165,000.

Now let’s look at the typical mortgage on a 10 unit apartment. My apartment for example when it contains only 10 units was bought for $5,000,000. A mortgage payment based on that would be $26,000. Which comes to $312,000 for the building or $31,200 per unit

So let’s subtract that from the $165,000 the Mortgage cost of that building which is $133,800.

So let’s look at your markup rate which is the total expenses from your proposed cost per unit. That is the sum of all the costs subtracted by the proposed budget you stated by the proposed budget you stated which is $133,800/$180,000 which is 74% markup.

Normal retail markups are as much as 100%, but those products are expected to depreciate over time, in some cases lose all value in a matter of at most 7 years. Real Estate APPRECIATES in value. That is why it expects only a 5% markup as you just described.

So let’s be generous and allow a 10% markup to accommodate your ROI and calculate. The monthly expense I calculated is $180,000 – $133,800 for annual cost which comes to $46,200. You add 10% to the actual costs I described and the cost per unit per year is with your 10% profit should be 10%+ $46,200 a unit a year which $50,820.

That is based on a 30 year Mortgage, thus after 30 years the Mortgage payment goes bye bye. That means after 30 years the mortgage payment is gone. Thus the yearly upkeep would drop to $24,820.

With the mortgage cost you divide the annual cost by twelve to get the monthly cost upkeep with the 10% profit which comes to $4,235. Without the mortgage payments that cost drops to $2,066.

But there is another factor, that there are federal and state tax credits and deductions of these expenses. At minimum there is a federal tax credit of 9% for affordable housing which will drop the monthly upkeep to $3,853 with mortgage and $1,880. On top of that there is the interest tax deduction which reduces the cost another 4.3%. That would drop the cost to $3,687 with mortgage.

This is clearly way below your claim.

“Affordable housing requires subsidies, either from market rate housing, office development, or land owners giving their land away, or state/county/city funds. That’s the reality.”

I just pointed out that your claims of cost are inflated and just not substantiated. Thus your whole argument makes no sense.

Business Man,
Why don’t you invest some of your own capital in an affordable housing development in Mountain View and report back to everyone on how it turned out. Or successfully raise capital from others using your basis for returns. If you have, cite specifics and enlighten us. If you haven’t, you need to admit you don’t know what you are talking about.

Oh business man,
Expenses are 15k per year per unit. Not month. If the value of a unit is as you have suggested, just the taxes alone are 8k per unit per year. So figure out your debt service on constructing a project at 700k per unit and holding rents at affordable levels and you will easily see there is no positive cash flow, and no one will take the risk of investing in apartment development without positive returns on day one. If you will, please do!

In response to Some better info you said:

“Why don’t you invest some of your own capital in an affordable housing development in Mountain View and report back to everyone on how it turned out.”

I am currently responsible for protecting the lives of hundereds of thousands of people worldwide. That is my Job. My specific skills and abilities are very rare. So if I left simply because you want me to do so, I can put many lives in jeopardy, including yours. You said:

“Or successfully raise capital from others using your basis for returns.”

Again, I have much more important matters to deal with. You said:

“If you have, cite specifics and enlighten us. If you haven’t, you need to admit you don’t know what you are talking about.”

Whereas you have provided no basis for your claim at all? Now that is an interesting argument. You said:

“Expenses are 15k per year per unit. Not month.”

So are you saying it is a one time expense, or a yearly expense, make it clear. Otherwise you are not providing better information at all. You said:

“If the value of a unit is as you have suggested, just the taxes alone are 8k per unit per year.”

What is a unit to you, is it an apartment unit or a building? Your implication is it is per apartment unit. That does not seem to be viable. For example my apartment before being bought for 4.5 times its value had a tax bill of only $13,000 annually, or $1,300 per apartment unit annually. The new buyer can go to the county and get the property reassessed so that the “ASSUMED” value is NOT the purchased value. This is completely in the control of the new owner. Whose responsibility is that? In effect this buyer set himself up to fail by not negotiating the fair value of the property, which caused his taxes to be raise by a factor of 4.5 times. You said:

“So figure out your debt service on constructing a project at 700k per unit and holding rents at affordable levels and you will easily see there is no positive cash flow, and no one will take the risk of investing in apartment development without positive returns on day one. If you will, please do!”

I already did so. But lets do some more correction. A recent article disclosed that a current project which costs $49 million produces 70 apartments.

So let’s look at the mortgage cost which is a down payment of 10% or $4,900,000 and a monthly payment of $234,314.91. Lets take into account the down payment which prorated would be $13,611 so the monthly bill would be $247,925. Now you divide that by 70 units and you get a cost per unit of $ 3,541. Monthly. No given that these are studio apartments seem to indicate that there is a lot of price gouging going on in this project.

The fixr website (Web Link">Web Link states that the average cost to build an apartment unit is:

“With mid-range materials, a normal foundation with full basement, efficient doors and windows, all appliances, and "turnkey" finishing would run at an average of $64,575 to $86,100 per unit to complete. This does not include acquisition of the land, however.”

So let’s calculate the cost of building 70 units based on $86,100 per unit which comes to $ 6,027,000.

The land value in Mountain View is estimated at $9,000,000 for a lot the size of .8 acres. The lot in question is only .6 acres. So let’s prorate that cost based on proportion which comes to $6,750,000.

What about the design costs? Based on Fixr (Web Link">Web Link the typical cost is $1,900,000.

What about the fees to build, the Fxr site (Web Link states it costs $430 for Building permit, $18,000 for Demolition, $23,000 for New Space Addition, $82,000 for a Home Theater Addition, $1,200 for Blueprints Submission, $4,000 for the Home Addition Design, $5,300 for Home Addition Framing, $12,000 for Mudroom Addition. Let’s just go for broke and pay for it all which comes to $145,930.

So if you take all that I researched, the project should have come to a total of $12,922,930. Given that the project cost in the report states it will cost $49,000,000, that must mean that the overhead cost on this project excluding my cost breakdown is $36,077,070. Where is that money going?

Now if you take the total I researched get the Mortgage cost it comes to 10% or $1,292,293 and a monthly payment of $ $62,373.34. Let’s take into account the down payment which prorated would be $3,590 so the monthly bill would be $65,963. Now you divide that by 70 units and you get a monthly cost per apartment unit of $942.

The property Tax rate is 0.025 per $100 of the Property value, let use my cost numbers and that would come to $3,231 per month on the property, or $46. Per apartment unit.

Let’s just allocate $4,000 a year for apartment maintenance per unit, which comes to $333.00 a month

Lets just allocate $70,000 year for onsite management (they get a free apartment) then that cost per unit per month would be $70,000 divided by 12 divided by 69 which is $83 a month.

The average utility cost for California is $303 per month. So you divide that by 70 and you get $5 per apartment unit.

The total costs in my model would be $942 + $46 + $333. + $83 + $5 = $1409 to break even on this kind of project using reasonable cost research.

So if you want a 20% profit on a unit you should be able to charge $1691.

This breakdown indicates that the City doesn’t do any research to determine the real costs. They take anyones word regarding how much it costs even if it has a $36,077,070. Markup with no independent means to justify it. They have a 73% markup for “overhead” costs?

To continue the train of thought.

This breakdown indicates that the City doesn’t do any research to determine the real costs. They take anyone’s word regarding how much it costs even if it has a $36,077,070. Markup with no independent means to justify it. They have a 73% markup for “overhead” costs?

The only answer is that this is theft. Many of these people involved are going to simply take that additional money and put it in their pockets and expect all of us to pay for their debt that they put in their pockets. The community and the City cannot take part in this ridiculous theft. The fact is this scam is allowed because no one in the City Government requires justification of the budgeting.

This is the method of which causes the high cost of living in California. You have people scamming the system so they can have everyone else pay for the money they stole

Now many will criticize my work, but it was researched, and so far no one has provided any breakdown to compare my work to theirs, and what resources are they using for their “cost” estimations.

To continue the train of thought.

This breakdown indicates that the City doesn’t do any research to determine the real costs. They take anyone’s word regarding how much it costs even if it has a $36,077,070. Markup with no independent means to justify it. They have a 73% markup for “overhead” costs?

The only answer is that this is theft. Many of these people involved are going to simply take that additional money and put it in their pockets and expect all of us to pay for their debt that they put in their pockets. The community and the City cannot take part in this ridiculous theft. The fact is this scam is allowed because no one in the City Government requires justification of the budgeting.

This is the method of which causes the high cost of living in California. You have people scamming the system so they can have everyone else pay for the money they stole.

There is an example I show that can define this as a crime it was in the story “Jury Convicts New York Man in Mortgage Fraud Scheme” on January 30, 2017 Here (Web Link

Specifically it is a crime to file mortgage loan applications with false information to be submitted to lending institutions in connection with the purchase of residential properties located within the Eastern District of New York. These applications CONTAINED FRAUDULENTLY INFLATED PURCHASE PRICES, as well as false information about the assets and income of the purchasers of the properties, MANY OF WHOM WERE BEING COMPENSATED AS PART OF THE SCHEME TO ACT AS STRAW PURCHASERS. The defendant and his co-conspirators also provided false down payment checks to make it appear as if the straw purchasers and the other borrowers had made down payments in connection with the purchase of the properties, which was a condition of the lending institutions for issuing the mortgage loans.”

When sentenced by United States District Judge Eric N. Vitaliano, Bayfield faces a sentence of up to 20 years in prison.”

Another story “Real Estate Agent and Mortgage Broker Sentenced to Prison” on July 12, 2016:

Timothy R. Bradley, 41, formerly of Toledo, Ohio, now of Cary, North Carolina; and Martha E. Ednie, 54, Toledo, Ohio, were each sentenced to 30 months in prison for their roles in a $1.5 million conspiracy to defraud several banks. Both defendants worked in the real estate business.

This story involved “TO OBTAIN FRAUDULENT MORTGAGE LOANS BY CONCEALING THE TRUE PURCHASE PRICE OF THE UNDERLYING PROPERTIES FROM BANKS MAKING THE LOANS, ACCORDING TO COURT DOCUMENTS.” The fact is that if the true cost of this project is sufficiently different it will force the borrower to report “THE TRUE PURCHASE PRICE WAS REPRESENTED BY AN “ADDENDUM” TO THE REAL ESTATE CONTRACT, WHICH LOWERED THE PURCHASE PRICE.” If it in fact lowers the cost of this project, and it can be determined that it was known before obtaining the construction loans it will place the lenders “THEY WERE LOANING THE HOME PURCHASERS BETWEEN 82 PERCENT AND 135 PERCENT OF EACH HOME’S VALUE BASED ON THE ADJUSTED ADDENDUM PURCHASE PRICE, ACCORDING TO COURT DOCUMENTS.”

So if it is criminal to obtain a mortgage where the property value borrowed is only 35% over the real value. The current project cost based on my research is $13,000,000. But the loans for construction are reported to be $49,000,000. That is 276% over the actual costs of construction. So this project is clearly a scheme to defraud the lenders. Construction loans convert to mortgages, and the loans can only cover the construction costs. It looks like instead of getting a fair rate of return by operating the new units, they are collecting a large amount of money BEFORE the units are built. And on top of that they will claim they are entitled to an “OPERATING” profit based on the money they already collected.