Rental Housing Committee

CITY HALL City of Mountain View 500 CASTRO STREET Minutes Rental Housing Committee Committee Members Honey, Ramos, Pardo de Zela, Vice Chair Grunewald and Chair Ortiz Monday, August 27, 2018 7:00 PM Council Chambers - 500 Castro St. 1. CALL TO ORDER The Meeting was called to order at 7:00 p.m. 2. ROLL CALL Present: 5- Chair Ortiz, Vice Chair Grunewald, Committee Member Honey, Committee Member Means, and Committee Member Ramos Absent: 1- Alternate Pardo de Zela 3. MINUTES APPROVAL 3.1 Approve the minutes for June 18, 2018 RHC Meeting MOTION: M/S - Ramos/ Means - to approve the minutes for June 18, 2018 RHC meeting. Yes: 5- Chair Ortiz, Vice Chair Grunewald, Committee Member Honey, Committee Member Means, and Committee Member Ramos 4. ORAL COMMUNICATIONS FROM THE PUBLIC Curtis Conroy expressed concerns on the legal contrivement of the petition process. Steven Goldstein stated his confidence in the petition process with due process for all parties concerned. David Avny expresses his wish for the system to allow rent increases for property tax costs. City of Mountain View Page 1 Rental Housing Committee Minutes August 27, 2018 5. PUBLIC HEARING 5.1 Appeal(s) of Hearing Officer Decision(s): CSFRA Case 17180002, 141 Del Medio Ave., Mountain View, CA Karen Tiedemann, Special Counsel, Goldfarb and Lipman, presented an oral presentation and responded to questions. PRESENTATION AND ARGUMENTS BY PETITIONER-APPELLANT-LANDLORD Elizabeth Lindsay PRESENTATION AND ARGUMENTS BY RESPONDENT-TENANTS Margaret McBride REBUTTAL BY PETITIONER-APPELLANT-LANDLORD Elizabeth Lindsay REBUTTAL BY RESPONDENT-TENANTS Nan McGary SPEAKING FROM THE FLOOR WITH COMMENTS: Curtis Conroy Steven Goldstein MOTION 1: M/S - Ramos/Otriz - (also accepting friendly amendments by Ortiz regarding section "A2", "B" and "J" and Grunewald regarding section "G" and "H" below) To adopt the following portions of the tentative appeal decision described below with clarifications as indicated below to Sections "G" and "H": A. 1 The Decision of the Hearing Officer that junior one-bedroom units shall be valued as "efficiencies" for purposes of Regulation Chapter 6, Section G(3) (Vega Adjustment) is affirmed. B. The Decision of the Hearing Officer calculating the base year adjusted gross income is remanded to be reconsidered if any adjustments are necessary resulting from other items in the decision remanded to the Hearing Officer. C. The Decision of the Hearing Officer calculating petition year adjusted gross income is remanded to the Hearing Officer for the limited purpose of showing the calculation of the petition year adjusted gross income with appropriate reference to evidence in the record that supports such calculation. D. The Decision of the Hearing Officer to exclude California Apartment Association membership renewal costs is modified to state that such costs are not a business license fee; the expense is remanded to the Hearing Officer for the limited purpose of re-categorizing the costs as one or more types of operating expense based on a preponderance of the evidence in the record. E. The Decision of the Hearing Officer calculating the base year management expenses is affirmed. However, the Hearing Officer may recalculate the base year management expenses if any adjustments are necessary resulting from other items in the decision remanded to the Hearing Officer. F. The Decision of the Hearing Officer calculating the petition year management expenses is remanded to the Hearing Officer for the limited purpose of calculating the presumed reasonable management expenses in accordance with Regulation Chapter 6, City of Mountain View Page 2 Rental Housing Committee Minutes August 27, 2018 Section E(1)(g) and verifying whether petition year management expenses submitted in the Petition are greater than or equal to the presumed reasonable petition year management expenses. G.1 The Decision of the Hearing Officer calculating base year ordinary repair, replacement, and maintenance costs is remanded to the Hearing Officer for the purpose of reviewing the appropriate categorization of salary expenses as ordinary repair, replacement and maintenance expenses versus management expenses and for the purpose of: (1) including or excluding all or a portion of salary/labor costs based on a preponderance of evidence in the record; and (2) clarifying whether a preponderance of the evidence in the record supports the exclusion of identified expenses as either reimbursed or reimbursable pursuant to Regulation Chapter 6, Section E(2)(d). G.2. The Decision of the Hearing Officer calculating petition year ordinary repair, replacement, and maintenance costs is remanded to the Hearing Officer for the purpose of reviewing the appropriate categorization of salary expenses as ordinary repair, replacement and maintenance expenses versus management expenses and for the purposes of: (1) including or excluding all or a portion of salary/labor costs based on a preponderance of evidence in the record; and (2) clarifying whether a preponderance of the evidence in the record supports the exclusion of identified expenses as either reimbursed or reimbursable pursuant to Regulation Chapter 6, Section E(2)(d). H.1 The Decision of the Hearing Officer calculating base year capital improvements is remanded to the Hearing Officer for the limited purpose of explaining the basis for the determination that the pavers were not a necessary costs and were unrelated to electrical wiring issues and to what extent the cost of the pavers are included and excluded from capital improvements with reference to the exclusion of over improvements in Regulation Chapter 6, Section F(2)(d). H.2. The Decision of the Hearing Officer calculating petition year capital improvements is remanded to the Hearing Officer for the limited purpose of explaining why the elevator expenses were excluded from capital improvements and clarifying whether and to what extent the parking lot resurfacing is an eligible capital improvement as well as the inclusion of any re-calculated base year capital improvements that carryover to the petition year. I. The Decision of the Hearing Officer calculating total base and petition year operating expenses is remanded to the Hearing Officer for the limited purposes of: (1) incorporating the calculations and revisions described above; and (2) clarifying whether a preponderance of the evidence in the record indicates that the $1,100 check to P.W. Stephens Environmental may have been counted twice. Yes: 5- Chair Ortiz, Vice Chair Grunewald, Committee Member Honey, Committee Member Means, and Committee Member Ramos MOTION 2: M/S - Grunewald/ Honey - To modify the tentative appeal hearing decision regarding section "A2" as described below: A.2 The Decision of the Hearing Officer that the Appellant-Landlord met its burden to rebut the presumption that base year gross income provided for a fair return but that a preponderance of the evidence supports Respondent-Tenants' position that a Vega Adjustment is unnecessary for the landlord to receive a fair rate of return, fails to ensure fairness, and is otherwise contrary to the purposes of the CSFRA is remanded to the City of Mountain View Page 3 Rental Housing Committee Minutes August 27, 2018 Hearing Officer in order for the Hearing Officer to provide further clarification on the evidence supporting the decision as well as clarification on the weight given to the evidence submitted by the Appellant-Landlord rebutting the evidence submitted by the Respondent-Tenants regarding the condition and location of the units subject to the Vega adjustment. In reconsidering the Vega adjustment the Hearing Officer should only consider the units that are appropriately subject to a Vega adjustment as set out in Table 4 of the Tentative Decision provided to the RHC. Yes: 4- Chair Ortiz, Vice Chair Grunewald, Committee Member Honey, and Committee Member Means No: 1- Committee Member Ramos MOTION 3: M/S - Means/ Honey - To modify the tentative appeal hearing decision regarding section "J" as described below: J. The Decision of the Hearing Officer to equally allocate any rent increase allowed under the maintenance of net operating income calculation is remanded, for the Hearing Officer to explain why the allocation of the rent increase equally among all units at the property supports the interest of justice and provides the Appellant-Landlord with a fair rate of return. Yes: 4- Vice Chair Grunewald, Committee Member Honey, Committee Member Means, and Committee Member Ramos No: 1- Chair Ortiz 6. UNFINISHED BUSINESS - NONE 7. NEW BUSINESS 7.1 CSFRA Information Technology System IT Director Jensen presented an oral presentation and responded to questions. SPEAKING FROM THE FLOOR WITH COMMENTS: No public comments were received. MOTION: M/S - Means/ Ramos - To authorize the Program Manager or other designee to execute an agreement with 3Di, Inc. for the development of an IT system to implement the Community Stabilization and Fair Rent Act (CSFRA) in an amount not to exceed $85,000 for FY 2018-19. Yes: 5- Chair Ortiz, Vice Chair Grunewald, Committee Member Honey, Committee Member Means, and Committee Member Ramos City of Mountain View Page 4 Rental Housing Committee Minutes August 27, 2018 7.2 CSFRA Project Manager Hiring Process Assistant Community Development Director Chen presented an oral presentation and responded to questions. SPEAKING FROM THE FLOOR WITH COMMENTS: Joan MacDonald The RHC heard a presentation regarding the Project Manager hiring process and provided feedback on the attributes and key skills desired for the Project Manager position. 7.3 RFP Process Legal Services Associate Planner Van Deursen presented an oral presentation and responded to questions. SPEAKING FROM THE FLOOR WITH COMMENTS: No public comments were received. MOTION: M/S - Ramos/ Honey - to approve requirements related to selection of a legal services provider through a Request for Proposals process to assist the Rental Housing Committee with ongoing implementation and administration of the Community Stabilization and Fair Rent Act. Yes: 5- Chair Ortiz, Vice Chair Grunewald, Committee Member Honey, Committee Member Means, and Committee Member Ramos 7.4 RFP Process Administrative and Hearing Process Services Associate Planner Van Deursen presented an oral presentation and responded to questions. SPEAKING FROM THE FLOOR WITH COMMENTS: No public comments were received. MOTION: M/S - Ramos/ Honey - to approve requirements related to selection of an administrative and hearing process services provider through a Request for Proposals process to assist the Rental Housing Committee with ongoing implementation and administration of the Community Stabilization and Fair Rent Act. Yes: 5- Chair Ortiz, Vice Chair Grunewald, Committee Member Honey, Committee Member Means, and Committee Member Ramos 7.5 Contract for legal services for the first six months of Fiscal Year 2018-19 Associate Planner Van Deursen presented an oral presentation and responded to questions. SPEAKING FROM THE FLOOR WITH COMMENTS: Curtis Conroy Joan MacDonald MOTION: M/S - Means/ Ramos - to authorize the Program Manager or other designee to execute an agreement with Goldfarb & Lipman LLP for legal services related to the Community Stabilization and Fair Rent Act for the first six months of Fiscal Year 2018-19 City of Mountain View Page 5 Rental Housing Committee Minutes August 27, 2018 in an amount not to exceed $ 100,000. Yes: 5- Chair Ortiz, Vice Chair Grunewald, Committee Member Honey, Committee Member Means, and Committee Member Ramos 7.6 Contract for administrative and hearing process services for the first six months of FY 2018-19. Associate Planner Van Deursen presented an oral presentation and responded to questions. SPEAKING FROM THE FLOOR WITH COMMENTS: No public comments were received. MOTION: M/S - Ramos/ Honey - to authorize the program manager or other designee to execute an agreement with Project Sentinel for administrative and hearing process services related to the CSFRA for the first six months of FY 2018-19 in an amount not to exceed $197,500, as follows: a. Administrative support services ($62,500) b. Facilitators ($10,000) c. Hearing Officers ($125,000) Yes: 5- Chair Ortiz, Vice Chair Grunewald, Committee Member Honey, Committee Member Means, and Committee Member Ramos 7.7 CSFRA Monthly Status Report June/July 2018 The RHC heard a presentation regarding the CSFRA monthly status report for June 18, 2018. 8. COMMITTEE/STAFF ANNOUNCEMENTS, UPDATES, REQUESTS, AND COMMITTEE REPORTS Committee member Tom Means announced that he would be submitting a formal resignation letter and would not attend any further RHC meetings because he is relocating to another city. 9. ADJOURNMENT - At 11:10 p.m., Chair Ortiz adjourned the meeting to the next RHC Committee Meeting to be held on Monday, September 24, 2017 at 7:00 p.m. in the Council Chambers, 500 Castro Street. City of Mountain View Page 6