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DOWDALL LAW OFFICES A PROFESSIONAL CORPORATION ATTO R N EYS AT LAW City Council of the City of Santa Ana City of Santa Ana September 16, 2021 Page 11 Instead of preserving housing, city will put landlords in a position to decide if being cut off from revenue needed to operate property in the usual professional manner will mean that economic survival calls for closure. "Because it is a mathematical certainty that the formula results in a continuous erosion of purchasing power, the results must be tested to determine whether confiscation has in fact occurred." (Fn. omitted.) Ocean Ave. Assocs. v. City of Indio, No. E055509, 2014 Cal. App. Unpub. LEXIS 7552, at *36 (Ct. App. Oct. 21, 2014) Eventually, the entity operators without individual responsibility will come to own the properties — the owners who thrive on distressed low income and low maintenance product. Historically, that development signals a deflation of the investment market, and the nature of housing falls to considerations for conversion of use, blight clearance and governmental urging for re -development. Because the net effect of MNOI which diminishes maintenance of NOI is to be forced out of business. Most likely, property will be sold, shuttered and demolished before an insolvency filing would be sought. The buyers of distressed property are forced to contend with and atone for the sins of their predecessors. And this approach to the treatment of property owners sends a clear message that their efforts will not be welcomed, much less allowed to be made with new revenue for property operations. Somehow, there is an implicit and false sense somehow that income properties will be maintained despite a cash deficit-- with the personal resources of the owners. It may believed that they will invest personal wealth into operations and diminish their portfolio position. But this is a false reality: no successful investor "throws good money after bad." The message of hostility creates a dampening of enthusiasm, and even greater reactive belt -tightening to operations. Less rent, and less housing product over the course of time. Less interest or care about the availability of housing becomes a city policy by default where insufficient cash is provided to run properties. Just look at any city with stringent mobilehome park rent controls. Unless: the intermediary the agency— creates within its powers of discretion, a fair result that allows the property to thrive. Of course, losing money is subject to financing, but still, assuming conventional financing: The history of the CPI shows why it is a "political animal" and not an accurate financial tool by which to judge the real effects of inflation on property management operations. — In the 1980s, the Bureau of Labor Statistics switched from using house prices to equivalent rental prices in calculating homeowner inflation. — The Bureau of Labor Statistics also shifted to a model in which consumers are assumed to switch some of their purchases within narrowly defined categories from items that -11-