A measure that aimed to rescind Mountain View’s voter-approved rent control ordinance has failed to qualify for the fall 2018 ballot, but may still have a shot in 2020.
The landlord-backed group called Measure V Too Costly hired signature-gatherers to help collect the 5,150 names needed to qualify the initiative, but failed to submit any to the city in time to get it on the November ballot.
Measure V Too Costly spokeswoman Laura Teutschel has yet to return a call for comment, but other news outlets are reporting that the campaign was several hundred names short of the threshold. Signatures collected this year, however, can be used to qualify the measure for the 2020 election.
Mountain View voters authorized rent control with the passage of Measure V in 2016. The local measure inspired similar grassroots, tenant-led initiatives throughout the Bay Area in the year to follow.
But a coalition of landlords vowed to overturn the Mountain View ordinance that caps annual allowable rent increases to 3.6 percent. The landlord-led group hoping to overturn the rent cap by yet another ballot measure have led a spirited campaign that has also drawn criticism from the Mountain View Tenant Coalition, the Mountain View Mobile Home Alliance and the local chapter of the Democratic Socialists of America.
“Landlords were attempting to repeal Measure V in this year’s signature gathering effort,” Shanti Singh, a coordinator for the nonprofit Tenants Together, said in a press release. “Many voters felt misled by the pro-landlord signature gatherers and rescinded their signatures, and luckily the effort did not gather the signatures they needed.”
Mountain View City Clerk Lisa Natusch confirmed that nearly 300 people filed signed signature withdrawal forms with the city because they didn’t want their name associated with the proposed repeal measure.
“Paid signature gathering companies are compensated per valid signature they collect,” Singh explained. “It’s normal to see something like a $4 to $7 rate per signature, but the landlord lobby in Mountain View was offering $40, which is unheard of. Because of that, activists as far away as San Francisco had a hard time gathering signatures for homelessness prevention and other ballot measures.”
Pro-renter activists celebrated news that the landlord measure would be delayed, if not called off altogether. On the Mountain View Tenants Coalition Facebook page, commenters commended each other for opposing the effort to overturn Measure V. Others talked about how they felt duped into signing the initiative to repeal it.
“I was one of those who was tricked into signing,” Mountain View resident Shanna May Bengtson said. “Thankfully, I saw a FB post about the sneaky tactics and sent in my signature recall form. Thank you for educating me, MVTC and concerned citizens!! I will be more diligent in my research efforts before signing things in the future.”
Fellow Mountain View denizen Jill Rakestraw said it took a lot of work to fight the anti-rent stabilization campaign.
“Behind the scenes were weekly meetings, email threads for notifying others when paid signature gatherers were in front of local stores, and volunteers walking in the heat to post fliers at every residence in town,” she said in another Facebook comment.
Why would anyone in Mountain View want to get rid of Rent Control?
1) It motivates landlords to convert units/SFH/duplexes to owner-occupied, which gets rid of renters (whom homeowners secretly hate). With the conversion of the population from renters to owners, property values go up as a 500 sq ft unit can sell for $1M. When a mini-studio goes for a million, that drives up everything else to unheard of new heights. Think about how much a 10K lot with some tired duplex on it is worth? I heard someone refer to RC as “permanent gentrification” once, seems like a perfect qualification.
2) Those renters that are there get unnaturally cheap rent, at the cost of new arrivals and fellow “vulnerable(s)” who don’t have a place to live. “I got mine, who are you?” They forget that they are one late payment away from $3000 a month rent, that’s the cost of getting something you didn’t earn.
3) Many (not so nice) landlords like rent control, because some (nice) landlords get in over there head in a downturn and foreclose, then those (not so nice) landlords come in and buy it. I think before they were bought out, Equity Residential owned half of EPA. Look for private equity to sweep in on the next cycle.
The only people that don’t want rent control are the ones who would like the opportunity to live in Mountain View and the people that have been kicked to the curb over the past few years as this misguided and unnecessary battle was waged. Since they don’t live there, how could they matter?
Rent control, one more way the rich get richer and the poor have to move.
Excellent analysis, Mr. Kulak.
I never thought of it this way, but the FINITE number of rental property owners in Mountain View comprise a “virtual cartel”.
It is clearly in the interest of the cartel in a tight market to further constrain the supply of rental properties. And rent control constrains supply.
News bulletin: there is a relationship between supply, demand, and price.
If demand is increasing, and supply is limited, prices go up.
As Yogi Berra once famously said: “You can look it up.”
Repealing Costa-Hawkins would cartel racketeering on steroids; the feds would be justified in bringing a RICO case on it. And the people it will squeeze the most will be the ones fighting the hardest for it.
CA education for ya’!
Do you also oppose Prop 13 for the same reasons?
It is interesting that Prop 13 and the rent control initiatives of the 1970s are somewhat politically connected, as is stated below, Jarvis worked as an LA Apartment Assoc lobbyist at the time.
Interesting cut from Wikipedia:
“Regarding the motives of Jarvis in promoting Proposition 13 and the role its passage had in rent control subsequently being enacted in most large cities in California, Greg Katz has written: “There was little doubt from his rhetoric that Howard Jarvis, who penned Prop. 13 with his on-again-off-again political ally Paul Gann, hated taxes of all kinds. But his intentions were, at best, turbid; Jarvis was at the time employed by the Los Angeles Apartment Owners Association as a lobbyist. In a fundraising letter to the landlords that employed him, he claimed, ‘We are the biggest losers’ if Prop. 13 fails. (Not to mention: The “Yes on 13” headquarters were located in a Los Angeles Apartment Owners Association office.) He tried to persuade renters to vote for Prop. 13 by saying it would drive down rents, by decreasing the property taxes that landlords paid. Post-13 news reports found rents weren’t going down, despite Jarvis’s promises – apparently, landlords were just pocketing their property tax savings. That revelation prompted many of the rent controls still in effect around California.” San Francisco community activist Calvin Welch has stated: “Jarvis was the father of rent control.”
I won’t argue that Prop 13 drove Santa Monica to rent control, as that was a cynical way to curb development, but SF, SJ, and others I think it is safe to say Prop 13 had an impact, as it passed in 1978 and a lot of RC happened in 1979.
Anyway, is Prop 13 a good or bad thing? It depends on the level of commitment by homeowners to limit state spending. Clearly, that is not happening. What is happening is that CA is spending massive amounts of money, but they are getting it from different sources, sales tax, gas tax, income tax. Sales tax and gas tax are brutally regressive (especially when combined with $15 minimum wage and Urban Growth Boundaries), but that is a different evil and a different post. If one asks a rich person would they rather pay income tax or wealth tax (which is what property tax is), clearly income tax is preferred. Prop 13 absolutely jacks up property values if the services that come with being a resident are paid out of the poor’s pockets and super-rich’s paychecks (the top 180K households fund 50% of the CA income tax or the whole budget – I can remember which). If all that money had to come from property taxes, valuations would be greatly diluted by the negative cash flows. San Antonio TX has a property tax rate of around 2.25% and buying a house is pretty accessible.
The super-rich don’t mind paying high state income tax because it is easier to control local politicians than ones in DC. They pay $1 and get $10 in value back. Even progressives like Councilmember Jimenez fight to protect Open Space and the UGB. And, of course, S< used to be tax deductible from the IRS. To drive from SJ to SF on 280 and see all that low- to no- density land use, while people in his district are paying 50%+ of their pay to rent should be heartbreaking to him, but it’s not. High state income tax on the super-rich, along with a buffet line of regressive taxes, in exchange for higher property values that Prop 13 enable is the California Bargain. Or it was the CA Bargain, we will see how S< deduction elimination goes.
So CA homeowners are using political leverage to create a positive (relative to them) spread between the price and value of their house, in essence taking unearned profit which is conveniently tax-deferred and in some case tax-exempt. This, to me, is classic rent-seeking, which is a bad thing.
I remember during the vote on prop 13 that my mom was telling me that it was a trojan horse and Jarvis was just representing commercial interests under a populist guise. My father was for prop 13–so my parent’s vote was split.
It’s almost painful to contemplate the naivety of anyone who believed that reduced prop taxes would result in landlords reducing rents as Jarvis claimed it would–yeah sure, that’s the way the world works…
Maybe the “superrich” aren’t that effected by a high income tax as their properties in desirable locations are worth millions, but speaking as someone who was probably in that (or on the periphery) of the 180K of taxpayers paying most of the income tax on at least a couple of occasions, I can tell you that the less than “superrich” do care and this is esp. true if one isn’t property rich.
Ultimately, the fact that I could easily be paying three, four, or more times the property tax of my neighbors in any new peninsula city I relocated to dissuaded me from trying to upgrade my housing situation (I did own a home) and was an encouragement to leave the state as I did–at least I’m now in the same tax situation as my neighbors–which feels much fairer.
Mr Nobody, Thank you for the response, it is good to hear about this from people who lived it, I have only read about it.
I think when people push these referendums they sell them any way they can. However, to expect landlords to cut rent with no market pressure is fantasy land no matter the cost restructuring. With no real control group, no one can say how much more rents would have gone up in the absence of Prop 13, the late 1970s were pretty tough days with stagflation and all. The market pressure didn’t kick in until the 80s. If RC activists would have waited it out to the early 80s with Volkerism, the market would have push rents down to the bare minimum costs would allow. I also believe, and can spell out the logic if you like, that rent control keeps rents higher in downturns because landlords just will keep them vacant when rents drop 20%-30%, knowing that they will just pop back up in a year or so with constrained supply. But again, without a control group handy, I can’t prove it.
Even if Prop 13 had a split roll set-up, where rental property was levied at a higher rate, that extra cost would ultimately be paid by tenants. Moreover, it would incentivize conversion from tenant-occupied to owner-occupied units. I see this in some counties in Idaho, where rental units are charges about 50% more than owner-occupied. Inventories are tight and rent is high relative to home valuation. Nobody likes renters, especially local governments.
I still stand by my argument that Prop 13 as it exists today is rent-seeking by homeowners since they are not willing to vote in local and state officials who align spending with property tax income. Pushing the burden of funding self-serving spending levels to consumers and heavy gas users in an attempt to salvage property values is poorly designed tax structure at best, and straight up fleecing of the poor at worst.
Don’t mess with Proposition 13! Keep it wholly intact. Property tax collections are way too high already, the county can’t keep up with figuring out where and how to spend it all.
> I still stand by my argument that Prop 13 as it exists today is rent-seeking by homeowners since they are not willing to vote in local and state officials who align spending with property tax income.
I don’t follow this argument. It doesn’t make sense to blame homeowners for NOT voting in fiscally responsible politicians.
Homeowners are a minority. Rental property owners are a minority. The essence of “democracy” is that the MAJORITY rules. (“Progressives” don’t believe in “constitutional rights” or “rule of law”.)
The MAJORITY wants free things and they want other people (“the rich”) to pay for it. The MAJORITY is quite happy to vote in politicians who will promise to steal from future generations to deliver free things today.
Renters constituted 46% of the CA population in 2016, up from 41% in 2005. Thus homeowners in CA where 59% of the population only 13 years ago, trends have been floating up, but 55%-59% owners is a fair estimate for 1978 to 2018. Please supply me data if you have any to contradict, I am very interested in these things.
One data point I found was 72% of CA homeowners vote in elections versus 61% of renters. Both seem high to me, but the point is homeowners are more likely to vote than renters, which fits in with my understanding of the two demographics.
Homeowners have been the population majority and were more likely to vote, thus the political majority has lied with them for the duration since Prop 13 passed. If homeowners were willing to use that political power to couple Prop 13 revenue with sound fiscal spending required for such a tax structure, it wouldn’t be rent-seeking, it would be civic responsibility.
Since they have not voted for politicians/referendums that ensure spending is kept in line with prop 13 revenues, instead pushing sales tax up to 9%-10% in many populated areas and the highest gas taxes in the country to pay for demanded services, they are rent-seeking as they know increases in property tax would result in diminished property values and instead stick it to the poor.
One has to be consistent. If voters want low taxes they can’t demand services those taxes can’t pay for. And in the case of CA democratic power is with homeowners.
> Thus homeowners in CA where 59% of the population only 13 years ago, trends have been floating up, but 55%-59% owners is a fair estimate for 1978 to 2018.
This can’t be true. I’m not even sure that 59% of the population are adults.
There must be some qualifier. Maybe, 59% of adults, or 59% of voters.
But even 59% of voters sounds high. It it were true, a property tax increase would NEVER pass.
In 2005 is was 59%, in 2016 it was 54%.
Trends are not good, because homeowners won’t let anyone build and is why I argue to build build build and convert convert convert. If the state was 55% renters, they would vote in all kinds of ridiculous things around prop 13. And they wouldn’t push it on to landlords, because they know renters will ultimately be the one paying it. The myopic and cynical greed of CEQA, UGB, Open Spaces, Inclusion Fees, Rent Control, and the rest of the welfare for the rich policies the CA homeowners love to cram down our throats will blow up in their face once this place reaches a demographic tipping point. When they are paying 2%-3% of assessed value and getting reassessed every 5 years, then they will start complaining about Sacramento spending and a lot of those 180K households that pay half the budget will take their companies to Austin. It will be too late then. But since they can push all this waste off on to sales tax now, why do they care when they drive a Telsa (subsidized by the state and charged at work), shop at Whole Foods (and pay no sales tax) and their house is worth $2000/sqft?
> In 2005 is was 59%, in 2016 it was 54%.
54% apparently refers to “Household Rental Fraction”.
This is not the same as 54% of the population or 54% of voters.
Likely, “Owner Households” are larger than “Rental Households”, and also, “Rental Households” have a higher percentage of non-voters: transients, non-citizens, children, etc. etc.
Nonetheless, the decline in home ownership is a troubling trend.
When renters become 99% of households, only the Feinsteins and the Zuckerbergs will live in their “own” homes.
And the “progressive” obsession with “fairness” and willingness to regulate and control housing will assure that housing in America will look more and more like housing in the Bronx or in East Germany.
Not sure I follow the logic of higher property taxes for current home owners resulting in lower property values. After all, whomever is going to buy their home when they (or their trust) sell it is going to be paying tax on basically the FMV of the home. So it really makes no difference to the buyer if the seller has been paying a tax on 10% or 70% of the home’s FMV–that’s irrelevant to them.
My theory is as follows and is just a theory based on my experience. I never thought we would get to these price levels and my thinking is in cash flow and investment based, not tax shelter nor emotionally driven purchase based. If you do not sell your home, you are not affecting assessed values. The FMV of properties is an aggregate of the marginal comparable sales. The buyer’s ability to buy, that is access to capital, availability of down payment, etc drives the market prices or the FMV.
When you get a loan for a house, the bank underwriters will look at the size of the downpayment and calculate the debt service of the loan principal. The amount of debt service they are willing to risk is a function of the buyer’s income and costs associated with owning the house. They get a debt to income ratio and decide whether or not to give the loan. So the amount of down payment one would have to come up is tied to the property tax, insurance, HoA, etc of that property. If property taxes were much higher than current levels, a higher down payment would be required and subsequently, the size of the addressable market would shrink. As the addressable market shrinks, the lower demand would drive down the market price.
Ok, makes sense. BTW, my cousin bought a house in NJ recently. Nice big home on one acre lot (he commutes one hour train to work at the Empire State Bldg.), and his property tax is about $24K on a $850 purchase price–wow! I’d think for that the schools must be great there, but he sends his daughter to private school.
Steve, I understand your misunderstanding, you think taxes are to fund services and you probably think Democrats are just non-racist Republicans. That’s 20th-century think. Taxes aren’t for services anymore, they are for Distributive Justice. And as CA lurches farther Left, parents pay $100Ks to indoctrinate their children, renters overtake owners, Feinstein is replaced by De Leon, Pelosi is replaced by Cortez and the Rubicon will be crossed. Better have your money out of Rome, Caesars coming and this is no country for old centrists.