Rent Control in Mountain View? City Council Says No. Again.

From the Silicon Valley Association of Realtors Friday Facts Publication, March 18, 2016

For the second time, the Mountain View City Council voted to oppose any artificial caps on the ability of property owners to raise rents. By a 5-2 vote, the City Council rejected a binding arbitration proposal. Instead, they adopted an innovative new approach to reducing displacement while preserving the ability of property owners to run their business.

The council voted last year to oppose rent control in any form. Despite that vote, the council decided to examine how binding arbitration would work. Under the proposed ordinance, the City Council would determine the maximum allowable percent rent increase per year. Rent increases would be limited to once per year. Only buildings with three or more units built before February 1, 1995 would fall under this ordinance. If the property owner did raise rents above the limit, the tenant would have the right to take them to mediation, followed by binding arbitration. The arbitrator, who may have no experience in real estate, would be given the power to determine whether the rent increase was “reasonable.”

Under the new proposed ordinance, which will likely go into effect in April, the council would instead set a cap of annual rent increases to 7.2 percent and limit the number of rent increases to two per year. If a property owner raises the rent above that amount, the tenant can request mediation from the City, followed by non-binding arbitration. At no point will the City require the property owner to limit the rent increase.

This new approach gives the tenant and property owner an opportunity to explain both their positions and work to a mutual agreement. It also gives both parties the chance to hear from a third party whether the rent increase seems reasonable. Market rates, as well as improvements to the building, can be considered by the arbitrator.