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Fwd: Do not impose Tenant Relocation Assistance Ordinance

From: domainremoved <Sunil>
Date: Wed, 3 Oct 2018 00:44:01 -0700

Dear Council-person:

We read (
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 find *all
   the reasons WHY *the tenant *SHOULD *qualify 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 1-4 units 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 bankrupt 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. Also, the minimum
household income standards required / recommended for this ordinance make
most of the homeowners themselves qualify for such an assistance. How many
people in Menlo Park - the legacy landlords - make $300,000 household
income? Can they really be considered 'low income' by any stretch of the
imagination? Do they need any help finding another place to stay? The whole
scheme seems to be to fleece the landlords or homeowners.

If the City of Menlo Park makes the real 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 arbitrary rent increases, which is exacerbated in the
East Menlo Park neighborhoods abutting Facebook campus, 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 deterioration 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 housing solutions
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,

Sunil Chhaya
Received on Wed Oct 03 2018 - 00:43:26 PDT

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