Dear Council-person:
We read (https://www.menlopark.org/1399/Proposed-tenant-relocation-assistance-or
[https://www.menlopark.org/1399/Proposed-tenant-relocation-assistance-or]) with dismay the efforts from City of Menlo Park Council
to impose the Tenant Relocation Assistance Ordinance. We believe this will discriminate against new tenants moving into the area,
and in favor of existing tenants, while giving the landlords no incentive to invest in the property refurbishment and upgrades,
while driving down rental real estate values, driving out landlords/ investors from this already high rent area with already very
poor yields on the existing properties.
We believe that any type of 'well-intentioned' interventions from bureaucratic agencies invariably make a bad situation worse
because the bureaucrats do not understand the dynamics of rental process and how many risk and cost factors make owning and
renting apartments a barely worthwhile activity. We believe the City of Menlo Park to be utterly oblivious of the deleterious
effects the City rental ordinance is going to have on the very demographic of tenants that it is intended to help. I can
understand the temptation of favoring the majority class (i.e., the tenant base) at the expense of the landlords because of sheer
number disparity. However, consider the following likely consequences as free market forces act to 'balance the scales':. 1.
Overall living conditions will deteriorate- tenants will know that without substantial proof of their neglect, landlords will
have to spend significant amount of money to remove them from the property, and any eviction action may require investment of
personal time and resources from landlord (both my wife and I work full time so we earn enough to pay the bills - the rent
barely covers the cost and mortgages for the properties), which will be another deterrent to legal action from landlords,
making tenants violate as many of the lease terms they can with impunity. With limited opportunity to recover the investments
made in keeping the property in the best possible shape, the landlords are likely to choose to let the condition of the rental
properties gradually deteriorate, causing a death spiral (sub-standard but un-evictable tenants + low rents = poor quality of
apartments + poor living conditions). Keep in mind that there is a very big grey area between Class A property and Class C
property, which may be perfectly habitable and check all boxes to meet minimum habitability requirements, but the quality of
life is obviously much worse in poorly kept properties.
2.
Quality of neighborhoods will deteriorate -Good neighborhoods will ultimately be crowded with badly behaving but 'unevictable'
tenants resulting in a general deterioration of the quality of life of these neighborhoods due to the nuisance such tenants
can cause with impunity.
3.
Market failure resulting in reduced supply of rental apartments: Existing landlords will simply choose to move back into their
own properties, or sell and move out, and the desirability for owning the regulated duplexes will also go down for potential
investors resulting in property value reductions. This will impact city / county revenue resulting in loss of critical
services to the very people who are the neediest (the indigent and poor). In fact, we expect the duplex market to collapse as
a result of this ordinance because we believe that to be only a stepping stone to full-blown rent control (which was
unsuccessfully attempted before.)
4.
Landlords will become extra selective in terms of finding tenants:Today, as conscientious landlords, we try to give the
benefit of the doubt to prospective tenants to enable them to avail of the best possible option they can afford by looking at
not just their credit score, employment history but income, savings, their past rental record etc, to findall the reasons WHY
the tenantSHOULDqualify to rent our apartment. An attitude change from the City of Menlo Park will definitely make us pause to
consider the downsides of renting to a borderline qualified tenant (marginal credit, low liquidity and marginal income with
difficult prior credit history) more conservatively, leading to some of these tenants missing out on the opportunity to rent
our property and build their credit. When you add up cumulative actions of all of the landlords in Menlo Park, this will
invariably result in all the marginal tenants (exactly the kind that the ordinance is intended to help) missing out on renting
the property. There is a wide range of factors that can be uniformly applied to prospective tenants, and ultimately it's up to
the landlord's discretion as to which of the qualified tenants to offer the apartment to. Landlords are therefore likely to
use the conservative approach to offer only the most qualified tenants the apartments, and if they cannot find such tenants,
either keep the property vacant until they do find them, or sell and quit the San Jose market altogether.
So, as you can see, the policy of putting restrictions on landlords over conditions under which the tenants can be evicted is
going to result in
1. falling property values (resulting in falling property taxes and reduced city services for the needy),
2. poor conditions of the properties,
3. poorer qualify of life of the neighborhoods and
4. overall reduction of stock of available duplexes to marginally qualified tenants as landlords apply stricter selection
criteria (credit scores, incomes, stability, rental record etc) for tenants,
5. this will be further exacerbated by some landlords converting their rentals (duplexes etc) to their primary residences and
some just quitting the market altogether by taking their business to areas without landlord restrictions.
I also have the following concerns and suggestions:
1) All residential owner-occupied properties should be out of relocation assistance mandate, which is 1-4units as
[http://units.as/]City of Hayward has done. So, restrict this ordinance for 5 units or more. Four units properties can be owner
occupied and then 3 tenants can gang against owner and abuse owner.
2) If the owner returns to occupy one unit of the property, it should be exempt from this type of tenant relocation assistance
mandate
3) Nicest landlords who did not increase rent for many years or who accepted very low rents compared to market rent should be
allowed to increase rent at least counties section 8 level payment equivalent. and is exempt from payment if tenants decide to
move out and taking the money to put down payment to buy a house where as landlord will go bankrapt or will be in serous financial
hardship if they continue to subsidize the rent substantially. Just try to get an honest answer to this question: How many of the
rental properties considered to be the focus of this ordinance currently have rents at market and how many have subsidized rent?
Why should a landlord continue to subsidize the rents and why should they be penalized to bring the rents to market?
4) Menlo park has high percentage of retirees and all their life they worked hard and bought the only place they have (May be
fourplex+) as owner occupied rental. They should be exempted from this. So 1-4 units owner-occupied properties are out of scope.
)5 How will city protect elderly kind landlords from vicious 3 tenants in a 4 plex where tenants know that elderly landlord cannot
afford to pay relocation assistance so landlord can not evict them. Where is the accountability for tenants? City only seems to
want to punish the landlords.
6) All rental properties that are under Tenant Relocation Assistance should be considered for Property tax equivalent to
Historical property tax and property tax should be frozen at these levels. We see this issue with 4 stakeholders: (1) Large
employer (e.g., Facebook) causing the widespread displacement of subsidized tenants from rental properties in its vicinity (2)
Tenants being displaced (3) Large and small / individual Landlords who own and maintain the rental properties to tenants, follow
the rules, pay property taxes and (4) City of Menlo Park which collects the property taxes and funds the pension plans. It seems
that of the four stakeholders, landlords are being imposed with barriers to allow moving the below-par tenants out with
restrictions, so that tenants who cannot otherwise afford to pay the rents get to stay at subsidized rents, and no imposition on
Facebook, the root cause of this issue and no sacrifice from the City of Menlo Park in terms of taking a haircut on pension
contributions (make them 401k, for example). So, where is the justice in only punishing the hardest working segment of this
stakeholder group who puts their money at risk, their lives on hold to serve the tenants and are left holding the bag when tenants
leave to have to pay the relocation assistance.
If the City of Menlo Park makes the goals and objectives of this exercise of restricting landlords explicitly known, then perhaps
a solution set that does not help one stakeholder class at the expense of the other can be found. Clearly the path that the City
is on to restrict landlord options and force certain decisions on them such as the ones being proposed appear more designed to
hurt the landlords than help the tenants (even if they aren't, that's exactly the effect they will accomplish).
Please understand that I empathize with City Council's position and intentions and do acknowledge that certain landlords engage in
unreasonable price gouging and unjustifiable rent increases, and such tendencies ought to be curbed because a vibrant city indeed
has an obligation to provide equal access to the diversity of tenant base. However, perhaps market-based approaches encouraging
landlords to provide affordable housing, increasing the supply of affordable housing,putting some of the burden of affordable
housing on the area employers (e.g., Facebook )who cause continual quality of life issues such as congestion and traffic, could be
workable. I believe the City of Menlo Park has a huge opportunity to show to the world sustainable affordable housingsolutions
that are built upon public/private partnerships rather than ordinances and regulations. I believe that with your experience and
leadership to the City of Menlo Park, you are uniquely positioned to bring the broad stakeholder coalition and stimulate positive
action, that could ultimately become a benchmark and a shining example of how to do this right. I sincerely believe this.
Thanks for your attention,Ruby
