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Compromises needed in EPA, not a moratorium

Original post made by Diana Diamond, Palo Alto Online blogger, on Jan 9, 2008

One of the liveliest city council meetings in the area occurs each Tuesday night in East Palo Alto, where decisions are frequently made for political rather than practical reasons, and where emotions run strong and tempers frequently flare.

This past Tuesday night I watched the EPA council on our local cable channel as council members unanimously decided to impose a moratorium until June 30 on any rent increases of more than 3.2 percent.

The hastily-put-together ordinance was clearly targeted at Page Mill Properties, who recently purchased some 1,600 rental units in the city. In late November, the developer notified tenants of a rent increase – an average of 9 percent with most ranging from $36 to $150 a month. Page Mill was going to use the increased rents to spruce up the units and provide more safety.

In the process of purchasing the units, the city issued to Page Mill “Certificates of Maximum Rent” which allowed the developer to increase rents up to 37 percent. But when tenants complained of the average 9 percent increase, the city’s Rent Stabilization Board stepped in and said only a 3.2 percent increase was allowed. Page Mill complained and the argument wound up in the council’s lap.

There were several of what I would “irregularities” that occurred at Tuesday’s council meeting, as the council pushed uncompromisingly for a moratorium on rent increases.

Last week the emergency moratorium proposal was turned down by a 3-0-1 vote; 4 votes were needed for adoption.

This week the ordinance was not listed on the agenda as an emergency ordinance. An ordinary ordinance requires a 72-hour advance public notice and requires a 30-day wait to become effective. Tuesday’s freeze ordinance was placed on the agenda with less than a 72-hour notice. Page Mill challenged the untimely notification, but the council went ahead and adopted the freeze, suddenly labeling it an emergency ordinance and making it effective immediately.

Councilmember Ruben Abrica, who lived in one of the units with his brother, claimed he didn’t have a conflict of interest and voted for the rent freeze, although Abrica’s name is allegedly on the 10-year-old lease.

The certificates of maximum rent were ignored by the council, since the freeze it enacted stipulated rents could be raised no more than 3.2 percent.

And Page Mill claimed that the city may have acted illegally since it is adopting an ordinance that affects the rent stabilzation ordinance adopted by a popular vote, and that only another popular vote can amend the ordinance. The council didn’t seem to care.

I sympathize with the tenants who are suddenly confronted with rent increases they were not expecting. But I also know that Page Mill has said it would help out those with limited incomes who could not pay the full increase.

Many of the apartment residents have complained about the conditions in their units – rats and vermin, sinks that did not work, stoves that weren’t operating properly. If Page Mill will spruce up these apartments, the tenants might enjoy the better living conditions. And while a 9 percent average increase can hurt, some rental increases are probably warranted – a 3.2 percent increase is a bit unreal in today’s world.

It will now be up to the courts to settle these issues – a costly undertaking for both the city and the developer. Too bad compromises could not have occurred around a conference table instead of in a courtroom. A moratorium is not a solution.

Comments (7)

Like this comment
Posted by Jeremy Loski
a resident of Ventura
on Jan 9, 2008 at 11:57 am

Page Mill Properties is a perfect example of "capitalism without kindness". Anyone who can run a spreadsheet knows that EPA is currently undervalued, but when a private company buys out 1600 *rental* units, filled with persons who are at best middle income, and begin to raise rents to a point where the current tenants are financially challenged, is just plain selfish, and not in the interest of our community.

In fact, we need to see rent control on this side of 101, as well. I have recently seen rather small, one-bedroom units in Palo Alto going for $1800-2100 per month. That's too much, especially given the fact that residential landlords who own property here are pretty much guaranteed a handsome return on their investment, solely from property appreciation.

My hope is that Page Mill properties loses in court, and that they are forced to fix the dwellings that they purchased, instead of using the misfortune endured as a result of the gross negligence of the prior landlord (who should be sued by East Palo Alto for violating tenets of lease agreements). The prior landlord should be made to contribute toward repair, no question.

Like this comment
Posted by Citizen
a resident of Midtown
on Jan 9, 2008 at 3:15 pm

Jeremy - if landlords get such a great return on rentals, you should become a landlord. Lets do the math - a crappy beedroom, 1 bath house in midtown Palo Alto sells for only $1.2 million (roughly). If you borrow $1 million and put down $200,000, your monthly principal, interest and property taxes will be only $7550. Since you can rent this property for about $2750 a month, you should get rich in no time.

I also love your line "the prior landlord should be made to contribute toward repair, no question" - do you offer post-sale warranties when you sell your used car to someone else?

Like this comment
Posted by Jeremy Loski
a resident of Ventura
on Jan 9, 2008 at 3:20 pm

Citizen, Let's get real here; this is about multi-dwell buildings, and the kind of renter abuse visited by slumlords. Slum lords like Page mill properties, and its predecessor.

As for the prior landlord, given the egregious condition of the properties, that landlord had been in long term violation of contracts (leases) with tenants. That landlord should be sued for damages, and/or have his/her name published in the newspaper. Shame on those who make a profit at the expense of those who are most vulnerable. The latter are the sickest portion of our society, and deserve to be called out.

Like this comment
Posted by Walter_E_Wallis
a resident of Midtown
on Jan 9, 2008 at 3:55 pm

Atlas shrugged.
Perhaps EPA taxpayers should offer to make up the difference between the owner's asking price and the tenant's idea of a fair rent. They may well, like Half Moon Bay, wind up paying it anyway. Or let the city buy the property at market and then set rents compassionately.

Like this comment
Posted by EPA
a resident of East Palo Alto
on Jan 9, 2008 at 4:25 pm

Slumlords should not be welcome, ever.

Like this comment
Posted by R Wray
a resident of Palo Verde
on Jan 9, 2008 at 10:05 pm

Looks like the 3.2% limit on rent increases has been the problem all along. This is not capitalism; it's statism. And statism has never been "kind".

Like this comment
Posted by Walter_E_Wallis
a resident of Midtown
on Jan 10, 2008 at 2:05 am

"Slumlords should not be welcome, ever"
Slumlords are the absolutely certain result of rent control. Always. Through recorded history. Fountainhead was wrong. Check the record in Chicago and in Hunters Point-Bayview.

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