City of Mountain View Rent Stabilization Program Annual Report FY 2018-19

City of Mountain View Rent Stabilization Program Annual Report

FY 2018 – 19

Welcome We are pleased to share with you our Annual Report for Fiscal Year 2018-19 which highlights the activities and major milestones of the City of Mountain View’s Rent Stabilization Program.

This report allows us the opportunity to take a step back and appreciate the amazing amount of work and effort poured into the Program to get it up and running in a compressed amount of time. We are incredibly grateful for the direction of the Rental Housing Committee and the support of the Mountain View community, the incredible staff at City Hall, and our professional services contractors, who have all helped to shape the Program from the ground-up.

Our daily efforts are directed toward ensuring that everyone affected by the Community Stabilization and Fair Rent Act (CSFRA) and the Tenant Relocation Assistance Ordinance (TRAO) are able to find answers to their questions and get the help they need. We are focused on providing excellent public service to all community members in a thorough, efficient and respectful manner.

We believe these efforts empower our landlord and tenant community to understand their rights and responsibilities so that disputes are prevented and a high level of compliance with the law can be reached. Please stop by, call us or attend one of our workshops or clinics to learn more about our program and the services we provide.

With Warm Regards, Anky van Deursen, Patricia Black, Andrea Kennedy and Dianne Jardinez

Executive Summary i

2

− Timeline − Highlights of Fiscal Year 2018-19 − Housing in Mountain View − Rent − Vacancy Rates

Rent Stabilization Program − Program Overview − Budget and Staffing

Program Activities 5

11

− Petitions − Outreach − Noticing − Tenant Relocation Assistance

Looking Ahead − Fiscal Year 2019-20

13 Appendix

2010 2010

2011

•

2012

•

2013

2014

2015

City experiences uptick in projects demolishing old structures and developing new complexes City Council adopts Tenant Relocation Assistance Ordinance (TRAO) to help lower income households with moving costs, paying deposits and securing replacement housing when displaced from certain rental units

Early 2015 •

Tenants request City Council address rise in rents and increase in displacements

Late 2015 •

City Council holds study session to discuss policies to address high rent increases and displacement, including Rent Stabilization, Right to Lease Ordinances, and Dispute Resolution Programs

2016 Early 2016 •

City Council adopts Right to Lease Ordinance limiting the frequency of rent increases

Mid 2016 •

2017

Late 2016

Early 2017 • • •

Judge denies preliminary injunction Council appoints Rental Housing Committee Committee and staff begin implementation of CSFRA

Mid 2017 • • •

•

City implements Rental Housing Dispute Resolution Program to establish a non-binding dispute resolution program for rent increases over 7.2% Petitioners submit signatures to City to put Measure V, a rent stabilization initiative, on the November ballot

City Council repeals the Right to Lease Ordinance and Rental Housing Dispute Resolution RHC adopts budget for Fiscal Year 2017-18 RHC adopts first Annual General Adjustment of 3.4%

• • •

Voters approve Measure V City Council adopts Just Cause Urgency Ordinance to protect renters from eviction before Measure V takes effect December 23 – Effective date of CSFRA; preliminary injunction postpones implementation

Late 2017 • •

City holds workshops for landlords and tenants Petitioners begin to file petitions for individual adjustment of rent

2018 Early 2018 • •

2019 Early 2019 • •

First phase of online portal allows landlords to register properties and request exemptions Council appoints new RHC members to four year terms

Mid 2019 • •

•

i

RHC adopts budget for Fiscal Year 2019-20 RHC adopts Annual General Adjustment of 3.5% for Fiscal Year 2019-20 City Council Subcommittee formed to review potential amendments to the CSFRA

City holds first petition hearing Hearing officer decides first petition in favor of petitioner

Mid 2018 • • • •

RHC hears and decides first appeal of a petition RHC adopts budget for Fiscal Year 2018-19 RHC adopts Annual General Adjustment of 3.6% for Fiscal Year 2018-19 RHC adopts tenant hardship regulations; first Tenant Hardship Petition filed with the City

Late 2018 • •

RHC reviews and adopts changes to Upward Adjustment of Rent Petition Regulations CSFRA information sheets required to be given by landlord to new tenants and with rent increases

FY 2018-19 Highlights Accomplishments

Rent Stabilization Program

− Adopted 5 Regulations and 7 resolutions − Implemented Tenant Hardship Petition Procedures − Implemented Tenant Buyout Procedures − Created the online rent portal for landlords

Fiscal Highlights − Maintained fiscal conservancy for second year in a row

Program Highlights − Refined petition and hearing process

− Continued trend in being under budget

− Updated forms and templates to better assist landlords and tenants

− Achieved desired reserve amounts

− Tracked Banked Rent Increase Notices

− Lowered Annual Rental Housing Fee for second year in a row

− Published 12 monthly activity reports

− Adopted the 2019 Annual General Adjustment of rent

− Published 2 bi-annual newsletters

ii

City of Mountain View Rent Stabilization Program Annual Report FY 2018-19 Executive Summary The City of Mountain View’s Rent Stabilization Program implements the Community Stabilization and Fair Rent Act (CSFRA), a voter approved measure (Measure V, 2016), that stabilizes the community by reducing rental housing turnover in certain rental units.

Program staff provide the following services to the Mountain View community: 1. Answer questions related to the CSFRA and tenant/landlord rights and responsibilities

What homes are covered by the CSFRA? Most apartment buildings with 3 or more units are covered by the CSFRA. Units provided or subsidized by the government are not covered.

2. Conduct community education and outreach efforts including facilitating workshops and clinics, and creating and distributing a variety of outreach materials 3. Administer and oversee the petition and hearing process for rent adjustments

Fully Covered

Partially Covered

Built before 1995

Built between 1995 and 2017

4. Monitor “just cause” eviction noticing and other mandatory noticing 5. Implement the Tenant Relocation Assistance Ordinance (TRAO) 6. Perform policy research for consideration by the Rental Housing Committee (RHC) and the City Council 7. Coordinate and prepare Rental Housing Committee agendas, minutes, and reports

iii

 Both rent stabilization and eviction protections apply

 Only eviction protections apply

13

50

854

143

51

44

RHC Meetings Held

Staff Reports Written

Public Inquires Made

Households Received TRAO Assistance

Petitions Processed

Workshops and Events Attended

Rent Stabilization Program Annual Report FY 2018-19 Executive Summary Housing in Mountain View

16,438 18,918 1,130

36,486 Housing Units1

Single Family Homes and Duplexes1

42%

58%

Owner Occupied

Rental Unit

Median Home Values Millions

(in Millions)5 $3 $2.1M $2

$1

$-

$872K

Single Family Home Condo

Span of CSFRA Coverage

Ownership vs. Rental Units4

Apartments1

Mobile Homes2

606 Residents Experiencing Homelessness3

16,163 Apartments*

71% of apartments in Mountain View are fully covered by the CSFRA *1,197 units are subsidized and exempt

iv

Rent Stabilization Program Annual Report FY 2018-19 Executive Summary Rent in Mountain View Average Market Rent (FY 2009-10 through FY 2018-19)6 $5,000

$4,217

$4,000

Rental Households in Mountain View7

All Units 12%

$2,987

$3,000 $2,000 $1,000

13%

$2,373 $1,656

$2,658

$1,631

$0

Fully Covered Units Partially Covered Units

6% 10% 14% 46% 0%

20%

40%

60%

41% make less than $100k per year

40%

Mountain View residents have experienced a significant increase in market rent from FY 2009-10 through FY 2018-19. On average, market rent for apartments increased by 80% and for fully covered units, market rent increased by 63%.

In FY 2018-19, market rent averaged $2,658 for fully covered units and by the end of Q2 of 2019, it was $2,715. For partially covered units, market rent averaged $2,987 per month during FY 2018-19.

55%

Average Market Rent of Fully Covered Units6 $2,715

$2,800 $2,700

pay more than 30% of income on rent

pay more than $2k per month on rent

$2,600 $2,500

7%

$2,437

13%

$2,400

26%

$2,300

23%

$2,200

14% 18% 0%

v

20%

40%

Rent Stabilization Program Annual Report FY 2018-19 Executive Summary Vacancy Rates in Mountain View Average Vacancy Rates (FY 2009-10 through FY 2018-19)6 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0%

All Units

Fully Covered Units 4.9%

4.4%

4.8% 3.4%

3.9%

Partially Covered Units

One indicator of a healthy rental market is vacancy rate. Healthy rental markets have an annual vacancy rate of 5% or above. From FY 2009-10 through FY 2018-19, the average vacancy rate for all apartments in Mountain View remained below 5% and for FY 2018-19 was 4.4%. The vacancy rate for fully covered units also remained below 5% and for FY 2018-19 was 3.9%. The vacancy rate of partially covered units experienced more volitility when new units came on to the market, however, once stabilized, the vacancy rate dropped back below 5% and for FY 2018-19 was 3.4%.

62%

Average Vacancy Rates of Fully Covered Units6

of all rental units have turned over since 20157

6% 5%

4.4%

3.7%

38.0%

4%

23.8%

3%

22.8%

2%

13.0%

1%

1.8%

0%

0.5% 0%

10%

20%

30%

40%

vi

Program Overview Program staff work with tenants and landlords to achieve the three main goals of the CSFRA.

1.

Stabilize rents − Rent increases are limited to a certain percent every year o This percent is known as the Annual General Adjustment o 2018-19 AGA: 3.6% − Only one rent increase can be given every 12 months − Tenants can request rent decreases through the City managed petition process

Provide eviction protections

2.

− “At-will” evictions are no longer allowed − Tenants can only be evicted for 9 “just-cause” reasons − Landlords must notify tenants in writing of the reason for eviction − Landlords are required to provide relocation assistance for certain no fault evictions for eligible tenant households

Ensure a fair rate of return on investment for property owners

3.

− Vacancy decontrol allows landlords to set rents at market rate upon vacancy; once a new tenancy starts, the rent is again subject to the AGA − Landlords can request rent increases above the allowed annual general adjustments through the City managed petition process

2

Budget Revenue by Fiscal Year

The Rental Housing Committee establishes an annual budget for the Rent Stabilization Program based on expenses incurred during the prior Fiscal Year and staff projections of expenses for the upcoming Fiscal Year.

Program revenue for FY 2018-19 was $1,887,007 with a re-budget transfer from FY 2017-18 of $286,166 for a total operating budget of $2,185,366. Program revenue for FY 2019-20 is projected to be $1,547,300 with a re-budget transfer from FY 2018-19 of $453,108 for a total projected operating budget of approximately $2,000,408.

The Program is fully funded by the Rental Housing Fee which is charged annually to landlords of fully and partially covered units.

The Rental Housing Fee was $124 per unit for FY 2018-19 and will be $101 per unit for FY 2019-20.

Millions

Program Revenue $3.0 $2.5

$2.4M

$2.0

$1.9M

$1.5

$1.5M

$1.0 $0.5 $0.0

$.3M

FY 2017-18

Re-budget from Prior FY

Millions

Expenditures by Fiscal Year $2.5 $2.0

$1.7M

$1.5

Rental Housing Fee

3

$124 per unit

$1.5M

FY 2018-19

94% of all invoices were paid in FY 2018-19

Expenditures by Type $17,500

$519,060

$183,435

$302,957

$2.0M $273,459

$0.5 FY 2017-18

FY Revenue

$198,562

$1.0

$0.0

FY 2019-20 (Projected)

FY 2018-19

Program Expenditures Program expenditures for FY 2018-19 were $1,494,973; $453,108 less than projected, allowing for a re-budget transfer to the operating budget of FY 2019-20. Expenditures were lower than projected due to understaffing of key positions and fewer petitions being filed than anticipated.

FY 2018-19

$.5M

FY 2019-20 (Projected)

Staffing City Administration Legal Services General Operating Expenditures Professional Services Capital Outlay

Staffing The Rental Housing Committee

From left to right: Nicole Haines-Livesay, Susyn Almond, Vanessa Honey, Chair Matt Grunewald, Vice-Chair Emily Ramos, Julian Pardo de Zela

In FY 2018-19, the City Council appointed two new committee members (Susyn Almond and Julian Pardo de Zela) and an alternate (Nicole Haines-Livesay) to the Rental Housing Committee for a four year term.

Rental Housing Committee

Program Staff While overseen by the Rental Housing Committee, the Rent Stabilization Program is part of the City of Mountain View’s Housing and Neighborhood Services Division of the Community Development Department.

Four full-time staff members, with the assistance of two 3rd professional services agencies, implement the CSFRA under the direction of the RHC.

The Rental Housing Committee (RHC) oversees the implementation of the CSFRA. The RHC is an integral part of the City government and is the first Committee in the City to have powers and duties independent from the City Council, the City Manager, and the City Attorney.

The RHC provides direction to the Rent Stabilization Program and other City staff, legal counsel, and professional services who all work together to implement the law.

Legal Counsel (Goldfarb and Lipman)

Program Manager (1FTE)

Analyst I/II (1 FTE)

Analyst I/II (1 FTE)

Mountain View Rental Housing Helpline and Hearing Administration (Project Sentinel)

3rd Party Tenant Relocation Assistance (Associated Right of Way Services)

Office Assistant (1 FTE)

4

Program Activities

Develop and Implement Policies

Manage the Petition Process

Educate the Community

The Rental Housing Committee is tasked with issuing rules and regulations for administration and enforcement to further the purpose of the CSFRA.

Landlords and tenants of fully covered units can request rent increases or decreases through the City managed petition process.

Staff prepare analysis and research for regulations to be considered by the Rental Housing Committee and implement procedures and processes upon adoption.

Petitioners are required to complete a form, provide evidence to support their petition, serve the petition on the people affected, and file it with the City.

Program staff work closely with Project Sentinel to increase community awareness and understanding of the rental protections and related services available for landlords and tenants in Mountain View.

To date nine regulation chapters have been adopted, including regulations for the Petition and Hearing Process, the Annual General Adjustments of Rent, Tenant Buyout Procedures, and regulations for New and Additional Occupants.

Staff also provide input on policy options and implement the Tenant Relocation Assistance Ordinance and other tenant related policies.

5

Once filed and accepted by Program staff, an independent hearing administrator coordinates the hearing and/or settlement process in conjunction with settlement conference facilitators and hearing officers who draft the settlement agreement or issue a formal decision on the petition.

Staff support this goal by focusing outreach and education efforts on three primary objectives: developing consistent materials to clearly communicate the CSFRA; increasing engagement to better inform and assist the community; and improving program efficacy, efficiency, and compliance to improve transparency and foster trust.

Monitor Required Noticing

Oversee Tenant Relocation Assistance

Design and Implement the Online Rent Portal

Landlords and tenants of both fully and partially covered rental units are required to file a copy of specific notices with the City.

The Tenant Relocation Assistance Ordinance (TRAO) requires landlords to offer tenant relocation assistance for no-fault terminations.

If displaced households meet income eligibility requirements as outlined by the TRAO, they receive financial assistance and relocation support to help them move.

Program staff collaborate with 3Di, Inc., to develop and implement a database management system for landlords and tenants. This portal will be rolled out in four phases.

Landlords must file a copy of termination notices, banked rent increase notices and tenant buyout notices; while tenants must file a copy of additional occupancy notices. These notices can be filed through the online portal or delivered directly to City offices. Failure to submit termination notices can be used as an affirmative defense in an unlawful detainer or other action brought by the Landlord to recover possession of the rental unit.

Staff reviews each notice for completeness and maintains a record of formally submitted notices.

Rent Stabilization Program staff administer the ordinance in conjunction with Associated Right of Way Services, a tenant relocation agency.

The relocation agency provides tenant support throughout the relocation process including information detailing their rights, updates on the status of their termination, assistance with filing a benefits application and distribution of relocation funds for qualifying households.

During FY 2018-19, two phases were launched, providing landlords a single online platform to set up an account, input and change owner and property information, request exemptions, opt in for e-mail communications, and submit required notices with the City.

When a landlord files a required notice online, Program staff review the submission for completeness and accept the notice as formally filed with the City. The landlord then receives a letter of acceptance via email.

In the future, landlords and tenants will be able to file petitions through the portal; and landlords will be able to file all required documentation for property redevelopment under the TRAO. A multilingual platform is also in development.

6

In-Depth: Petitions Manage the Petition Process Landlords and tenants of fully covered units can request rent increases or decreases through the City managed petition process.

Rent Increase Petitions

Mountain View Mediation Program

Landlords can file a petition with the City if they are unable to maintain a fair rate of return on their investment at current rent levels. Petitions may affect the rents for all units on a property at the same time and are often based on unusually low rents and high expenses, including capital improvements.

The Mountain View Mediation Program assists the Rent Stabilization Program by providing free mediation and conciliation services to landlords and tenants in Mountain View. These services help people come together to talk about and potentially solve their disputes in a controlled environment with the help of trained volunteer mediators.

Rent Decrease Petitions Tenants can file a petition for a rent decrease for multiple reasons: 1.

2.

3.

4.

5.

6.

7.

Payment of unlawful rent (Petition A) Rent increase greater than the AGA (Petition A) Rent rollback not provided (Petition A) More than one rent increase in a 12 month period (Petition A) Violation of health and safety or building codes (Petition B) Reduction in services or maintenance (Petition B) Undue tenant hardship (Petition C)

3

85 days

Landlord Petitions

Average duration of petition process from acceptance through Hearing decision

51

------------

48

Petitions filed

Tenant Petitions

Petitions by Type

Petition Outcomes 40

40 29

30

FY 201718

13

FY 201819

13

10 3

7

36

FY 201718

30 20

20

0

In FY 2018-19, they helped to resolve 180 issues for rental properties in Mountain View, reducing the number of petitions filed with the City.

6

5 0

0

10 0

8 5

FY 201819

6 3

5 2

2

2

0

In-Depth: Outreach Educate the Community Program staff work closely with Project Sentinel to increase community awareness and understanding of the rental protections and related services available for landlords and tenants.

Rent Stabilization Program Outreach

31

Major projects completed during FY 2018-19 include: creating and distributing bi-annual newsletters; redesigning outreach materials with easier-to-understand content; reformatting all petition forms based on input from community members and staff experience; and increasing the number of workshops facilitated and community events attended.

Forms, templates and materials created

4

39

Brochures developed and translated

Workshops and clinics facilitated ------------

12

249

Website pages created and maintained

Community members participated

8 Mailings including two newsletters

39 MyMV updates and print and online ads

Mountain View Housing Helpline Project Sentinel runs the Mountain View Rental Housing Helpline which serves as the first point of contact for most inquiries related to the Program, the petition process and general assistance about rent stabilization in Mountain View.

Information Requests Other CSFRA

The Helpline received 854 information requests in FY 2018-19.

306

Rent Increases

235

Terminations

177

Tenant Petition

98

Landlord Petition

22

Roll Back

16 0

100

200

300

400

8

In-Depth: Noticing Monitor Required Noticing and Just Cause Eviction Submittals Required Noticing Landlords and tenants of both fully and partially covered rental units are required to file a copy of certain notices with the City.

Landlords are required to notice tenants in writing and file a copy of the notice with the City of the following:

Tenants are required to notice landlords in writing and file a copy of the notice with the City of the following:

1. Banked Rent Increases 2. Terminations (Evictions) 3. Tenant Buyouts

1. Additional Occupants

305

999

1

0

Banked Rent Increase Notices filed

Termination Notices filed

Tenant Buyout Notice filed

Additional Occupant Notices filed

Just Cause Eviction Submittals Tenants living in a fully or a partially covered unit can only be evicted for 9 “just cause” reasons.

Landlords can no longer terminate tenancies “at will” or at the end of a lease unless one of the nine reasons apply. Before terminating a tenancy for at-fault reasons (excluding Failure to Pay Rent), landlords are required to first give a Notice to Cease to the tenant to provide an opportunity to address the issue. For no-fault reasons, the Tenant Relocation Assistance Ordinance may apply.

No-Fault Terminations 200

20

192

150 100

86

50 0

At-Fault Terminations

6 0

0 1

0 0

FY 201718

15

FY 201819

5

FY 201718

12

10 4 1 1

0

0 0

0 0

FY 201819

899 Failure to Pay Rent Termination Notices filed in FY 2018-19 ------------

1539 Failure to Pay Rent Termination Notices filed in FY 2017-18

9

In-Depth: Tenant Relocation Oversee Tenant Relocation Assistance Program The Tenant Relocation Assistance Ordinance (TRAO) requires landlords to offer tenant relocation assistance for no-fault terminations. If displaced households meet income eligibility requirements as outlined by the TRAO, they receive financial assistance and relocation support to help them move.

$899,106 Total amount paid in relocation assistance in 2018

7

151

143

Properties applied for redevelopment permits

CSFRA-covered units affected

Households received assistance (includes previously filed properties)

------------

$12,663 Average amount of assistance received per household

Relocation Data for Vacated Households (by Calendar Year) 45

42

40

Mountain View

35 30

28

28 24

25

Bay Area

24

20 Within CA

15 10 5 0

8

7 2

1

7

6 2

1

2

Outside CA 0

0

Of the 301 households that relocated due to redevelopment of TRAO covered units from 2015 through 2018, 182 reported where they moved. Of the 182 households that reported their new address, 104 (57%) households moved out of Mountain View and 26 (25%) of those households moved out of the Bay Area altogether. 119 households that relocated did not report their new address.

10

FY 2019-20 Looking Ahead During Fiscal Year 2019-20

Rent Stabilization Program

The City of Mountain View’s Rent Stabilization Program will: − Continue to oversee the Community Stabilization and Fair Rent Act, the Tenant Relocation Assistance Ordinance, provide policy analysis to strengthen housing policies, and implement any program changes. − Implement an annual public education program and continue to increase awareness and compliance with the Rent Stabilization Program. − Publish monthly statistical overviews of program activity. − Develop the online Rent Registry into a powerful tool for landlords and tenants to be able to comply with the CSFRA.

Contact Us City of Mountain View Rent Stabilization Program ph: (650) 903-6136 email: rhc@mountainview.gov address: 298 Escuela Ave. Mountain View, CA 94040 mountainview.gov/rentstabilization

Mountain View Rental Housing Helpline ph: (650) 282-2514 email: csfra@housing.org (habla español)

11

2018 Early 2018 • •

City holds first petition hearing Hearing officer decides first petition in favor of petitioner

Mid 2018

2019 Early 2019 • •

First phase of online portal allows landlords to register properties and request exemptions Council appoints new RHC members to four year terms

Mid 2019 • • •

RHC adopts budget for Fiscal Year 2019-20 RHC adopts Annual General Adjustment of 3.5% for Fiscal Year 2019-20 City Council Subcommittee formed to review potential amendments to the CSFRA

• • • •

RHC hears and decides first appeal of a petition RHC adopts budget for Fiscal Year 2018-19 RHC adopts Annual General Adjustment of 3.6% for Fiscal Year 2018-19 RHC adopts tenant hardship regulations; first Tenant Hardship Petition filed with the City

Late 2018 • •

RHC reviews and adopts changes to Upward Adjustment of Rent Petition Regulations CSFRA information sheets required to be given by landlord to new tenants and with rent increases

Late 2019 •

• • •

California State Legislature adopts AB 1482, an anti-rent gouging and just cause eviction protection law California State Legislature adopts SB 330, a housing crisis law that requires rent stabilized apartments be replaced if demolished RHC provides recommendations to City Council regarding potential CSFRA amendments City Council votes to place CSFRA amendments on March 2020 ballot

2020 Early 2020 • •

State laws AB 1482 and SB 330 go into effect City of Mountain View residents vote on CSFRA amendments

12

Appendix 1

State of California, Department of Finance, E-5 Population and Housing Estimates for Cities, Counties and the State — January 1, 2011-2019. Sacramento, California, December 2019; United States Census Bureau, American Community Survey, 2018: ACS 1-Year Estimates Data Profiles retrieved from https://data.census.gov/, December 2019.

2

City of Mountain View, Mobile Home Park Survey, 2019.

3

Applied Survey Research (ASR), Santa Clara County, Homeless Count and Survey Comprehensive Report, 2019.

4, 7

United States Census Bureau, American Community Survey, 2018: ACS 1-Year Estimates Data Profiles retrieved from https://data.census.gov/, December 2019.

5

Zillow Market Research, Median Home Values retrieved from https://www.zillow.com/mountainview-ca/home-values/, June 2019.

6

Costar Realty Information, Properties in Mountain View, Multi-family Rental Property Market Data, retrieved from https://product.costar.com/search/all-properties/, December 2019

13