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Home My WebLink AboutCC_2019-04-23_MinutesCITY OFATASCA DERO CITY COUNCIL MINUTES Tuesday, April 23, 2019 City Hall Council Chambers, 4th floor 6500 Palma Avenue, Atascadero, California (Entrance on Lewis Ave.) City Council Regular Session: 6:00 P.M. REGULAR SESSION — CALL TO ORDER: 6:00 P.M. Mayor Moreno called the meeting to order at 6:01 p.m. and Council Member Fonzi led the Pledge of Allegiance. ROLL CALL: Present: Council Members Fonzi, Funk, Newsom, Mayor Pro Tem Bourbeau and Mayor Moreno Absent: None Staff Present: City Manager Rachelle Rickard, Administrative Services Director Jeri Rangel, Public Works Director Nick DeBar, Police Chief Jerel Haley, Community Development Director Phil Dunsmore, City Attorney Brian Pierik and Deputy City Manager/City Clerk Lara Christensen PRESENTATIONS: 1. Proclamation recognizing the Atascadero Kiwanis 50 year anniversary The City Council presented a Proclamation to the Atascadero Kiwanis on the occasion of their 50 year anniversary. Atascadero City Council April 23, 2019 Page 1 of 7 2. Presentation by SLOCOGIRideshare about Commuter Challenges in May 2019 including Bike to School Day (May 8th) Bike to Coffee Day (May 11 th) and Bike to Work Day (May 17th) Jackie Mansoor, Air Pollution Control District gave a presentation on behalf of Rideshare regarding Commuter Challenges coming in the month of May. A. CONSENT CALENDAR: 1. City Council Draft Action Minutes — April 9, 2019 ■ Recommendation: Council approve the April 9, 2019 Draft City Council Meeting Minutes. [City Clerk] 2. March 2019 Accounts Payable and Payroll ■ Fiscal Impact: $2,578,619.40 ■ Recommendation: Council approve certified City accounts payable, payroll and payroll vendor checks for March 2019. [Administrative Services] 3. 2019 Pavement Resurfacing Project Construction Award ■ Fiscal Impact: $592,000.00 ■ Recommendations: Council: 1. Award a construction contract for $502,665 to American Asphalt South, Inc. for the 2019 Pavement Resurfacing Project (Project No. C2018R03). 2. Authorize the City Manager to execute a contract with American Asphalt South, Inc. for $502,665 for the construction of the 2019 Pavement Resurfacing Project. 3. Authorize the Director of Public Works to file a Notice of Completion with the County Recorder upon satisfactory completion of the project. [Public Works] 4. Alcoholic Beverage Control (ABC) License for On-site Alcohol Sales at 5840 Traffic Way "Raconteur Room" (Type 42 Lice nse)(Dole/TSAM LLC) • Fiscal Impact: A slight positive fiscal impact expected from increased sales tax. ■ Recommendation: Council adopt Draft Resolution finding that a public convenience would be served by allowing the issuance of a Type 42 ABC, On -Sale Beer and Wine for Public Premises License for Raconteur Room, a bar located at 5840 Traffic Way. [Community Development] 5. Adopting a List of Projects for Fiscal Year 2019-2020 Funded by SB1 ■ Fiscal Impact: None. ■ Recommendation: Council adopt Draft Resolution adopting a list of projects to be funded with Road Maintenance and Rehabilitation Account revenues from SB1 (The Road Repair and Accountability Act of 2017) for Fiscal Year 2019-2020. [Public Works] MOTION: By Mayor Pro Tem Bourbeau and seconded by Council Member _ Fonzi to approve the Consent Calendar. (#A-3: Contract No. 2019- 003, #A4: Resolution No. 2019-012, #A5 Resolution No. 2019-013) Motion passed 5:0 by a roll -call vote. Atascadero City Council April 23, 2019 Page 2 of 7 UPDATES FROM THE CITY MANAGER: City Manager Rachelle Rickard gave an update on projects and issues within the City. COMMUNITY FORUM: The following citizens spoke during Community Forum: Margi Bauer, Geoff Auslen, William Vega, Peter Burns, Randal Sears, Clyde Sneider, Kelly A., Betty Lightfoot (Exhibit A), Karen Levanway (Exhibit B) and Kim Chang Mayor Moreno closed the COMMUNITY FORUM period. B. PUBLIC HEARINGS: 1. Title 9 and Title 11 Planning and Zonin_q Text Amendments - Annual Code Update (ZCH19-0023) ■ Ex -Parte Communications: ■ Fiscal Impact: Potential savings of staff time. ■ Recommendation: Council introduce for first reading, by title only, the Draft Ordinance amending the Atascadero Municipal Code, Title 9 Planning & Zoning, Section 9-1.110 Public hearings, Section 9-3.330 Nonresidential district allowable land uses, Sections 9-3.340 through 9-3.345 and 9-3.348 through 9-3.349 Property development standards, Section 9-6.112 Farm animal raising, Section 9-6.174 Seasonal or temporary sales, Section 9-12.104 Required approvals and Title 11 Subdivisions, Section 11-4.06 Noticing of planning commission hearing on tentative map and determining this Ordinance is exempt from review under the California Environmental Quality Act. [Community Development] As this item was continued from the April 9, 2019 Meeting, Council Member Newsom noted that due to the potential conflict of interest disclosed, she was recusing herself from the discussion and vote for this item. Community Development Director Dunsmore gave the presentation and answered questions from the Council. Ex Parte Communications All Council Members noted receiving an email from attorney Sophie Treder. PUBLIC COMMENT: The following citizens spoke on this item: Sophie Treder and William Vega Mayor Moreno closed the Public Comment period. MOTION: By Council Member Fonzi and seconded by Council Member Funk to introduce for first reading, by title only, the Draft Ordinance amending the Atascadero Municipal Code, Title 9 Planning & Zoning, Section 9-1.110 Public hearings, Section 9-3.330 Nonresidential district allowable land uses, Sections Atascadero City Council April 23, 2019 Page 3 of 7 9-3.340 through 9-3.345 and 9-3.348 through 9-3.349 Property development standards, Section 9-6.112 Farm animal raising, Section 9-6.174 Seasonal or temporary sales, Section 9-12.104 Required approvals and Title 11 Subdivisions, Section 11-4.06 Noticing of planning commission hearing on tentative map and determining this Ordinance is exempt from review under the California Environmental Quality Act. Deputy City Manager/City Clerk Christensen read the title of the Ordinance: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ATASCADERO, CALIFORNIA, AMENDING THE ATASCADERO MUNICIPAL CODE, TITLE 9 PLANNING & ZONING, SECTION 9-1.110 PUBLIC HEARINGS, SECTION 9-3.330 NONRESIDENTIAL DISTRICT ALLOWABLE LAND USES, SECTIONS 9-3.340 THROUGH 9-3.345 AND 9-3.348 THROUGH 9-3.349 PROPERTY DEVELOPMENT STANDARDS, SECTION 9-6.112 FARM ANIMAL RAISING, SECTION 9-6.174 SEASONAL OR TEMPORARYSALES, SECTION 9-12.104 REQUIRED APPROVALS AND TITLE 11 SUBDIVISIONS, SECTION 11-4.06 NOTICING OF PLANNING COMMISSION HEARING ON TENTATIVE MAP AND DETERMINING THIS ORDINANCE IS EXEMPT FROM REVIEW UNDER THE CALIFORNIA ENVIRONMENTAL QUALITY ACT (ZCH19-0023) Motion passed 4:0 by a roll -call vote. Newsom abstained. Council Member Newsom returned to the dais at 7:37 p.m. C. MANAGEMENT REPORTS: 1. Sphere of Influence Review • Fiscal Impact: None. ■ Recommendation: Council review the City's Sphere of Influence and provide staff with feedback towards a future Sphere of Influence and City/County MOU update. [Community Development] Community Development Director Dunsmore introduced the staff report and answered questions from the Council. David Church and Mike Prater of LAFCO also presented and answered question from the Council. PUBLIC COMMENT: The following citizens spoke on this item: None Mayor Moreno closed the Public Comment period. The City Council reviewed the City's Sphere of Influence and provided feedback to LAFCO staff to look at the four Sphere of Influence Study Areas and provide additional information on these areas to Council at a future meeting. Atascadero City Council April 23, 2019 Page 4 of 7 2. Amendment to the Contract Between the City Council of the CitV of Atascadero and the Board of Administration of the California Public Employees'_ Retirement System (CaIPERS) ■ Fiscal Impact: None. ■ Recommendations: Council: 1. Adopt Draft Resolution of Intention to approve an amendment to the contract between the City Council of the City of Atascadero and the Board of Administration of the California Public Employees' Retirement System; and 2. Introduce for first reading by title only. the Draft Ordinance authorizing the Mayor to execute an amendment to the contract between the City Council of the City of Atascadero and the Board of Administration of the California Public Employees' Retirement System. [City Manager] Deputy City Manager Christensen gave the presentation and answered questions from the Council. Administrative Services Director Rangel also answered questions from the Council. PUBLIC COMMENT: The following citizens spoke on this item: None. Mayor Moreno closed the Public Comment period. MOTION: By Mayor Pro Tem Bourbeau seconded by Council Member Funk to adopt Draft Resolution of Intention to approve an amendment to the contract between the City Council of the City of Atascadero and the Board of Administration of the California Public Employees' Retirement System. Motion passed 5:0 by a roll -call vote. (Resolution No. 2019-014) MOTION: By Mayor Pro Tem Bourbeau seconded by Council Member Newsom to introduce for first reading by title only, the Draft Ordinance authorizing the Mayor to execute an amendment to the contract between the City Council of the City of Atascadero and the Board of Administration of the California Public Employees' Retirement System. Deputy City Manager/City Clerk Christensen read the title of the Ordinance: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF ATASCADERO, CALIFORNIA, TO APPROVE AN AMENDMENT TO CONTRACT BETWEEN THE BOARD OF ADMINISTRATION OF THE CALIFORNIA PUBLIC EMPLOYEES RETIREMENT SYSTEM AND THE CITY COUNCIL OF THE CITY OF ATASCADERO. Motion passed 5:0 by a roll -call vote. Mayor Moreno recessed the meeting at 8:41 p.m. Mayor Moreno reconvened the meeting at 8:49 p.m. with all present. Atascadero City Council April 23, 2019 Nage 5 or 3. Santa Lucia Road Pavement Rehabilitation Construction Award ■ Fiscal Impact: Total project funding of $1,005,000.00 • Recommendations: Council: 1. Award a construction contract for $720,527 to Souza Engineering Contracting, Inc. for the Santa Lucia Road Pavement Rehabilitation Project (Project No. C20171303). 2. Authorize the City Manager to execute a contract with Souza Engineering Contracting, Inc. in the amount of $720,527 for the construction of the Santa Lucia Road Pavement Rehabilitation Project. 3. Authorize the Director of Administrative Services to appropriate an additional 5425,000 in Local Transportation Fund (LTF) balance toward the Santa Lucia Road Pavement Rehabilitation Project. 4. Authorize the Director of Public Works to file a Notice of Completion with the County Recorder upon satisfactory completion of the project. [Public Works] Public Works Director DeBar gave the presentation and answered questions from the Council. PUBLIC COMMENT: The following citizens spoke on this item: Marcel Schade Mayor Moreno closed the Public Comment period. MOTION: By Mayor Pro Tem Bourbeau and seconded by Council Member Fonzi to: 1. Award a construction contract for $720,527 to Souza Engineering Contracting, Inc. for the Santa Lucia Road Pavement Rehabilitation Project (Project No. C2017R03). 2. Authorize the City Manager to execute a contract with Souza Engineering Contracting, Inc. in the amount of $720,527 for the construction of the Santa Lucia Road Pavement Rehabilitation Project. 3. Authorize the Director of Administrative Services to appropriate an additional $425,000 in Local Transportation Fund (LTF) balance toward the Santa Lucia Road Pavement Rehabilitation Project. 4. Authorize the Director of Public Works to file a Notice of Completion with the County Recorder upon satisfactory completion of the project. Motion passed 5.0 by a roll -call vote. (Contract No. 2019-004) D. COUNCIL ANNOUNCEMENTS AND COMMITTEE REPORTS: The following Council Members made brief announcements and gave brief update reports on their committees since their last Council meeting: Mayor Moreno 1. County Mayors Round Table Atascadero City Council Api i6 23. 2019 Page 6 of 7 Mayor Moreno noted that the proposed closure of the County Clerk's satellite office in Atascadero came as a surprise and she sent a letter out in opposition to the closure to — the Board of Supervisors. She encouraged the rest of the Council, if they are so inclined, to also send a letter opposing the closure. Mayor Moreno mentioned that the Block Party scheduled for May 4th on Entrada has been cancelled. Mayor Pro Tem Bourbeau 1. City of Atascadero Finance Committee 2, Integrated Waste Management Authority (IWMA) Council Member Fonzi 1. SLO Local Agency Formation Commission (LAFCo) Council Member Funk 1. City of Atascadero Finance Committee 2. League of California Cities — Council Liaison Council Member Funk noted that she sent a letter off in support of the H.E.A.P. funding request by the City of Paso Robles and ECHO. Council Member Funk also noted that the next League of California Cities dinner will be held in the City of Paso Robles and she encouraged her colleagues to RSVP and attend. Council Member Newsom 1. City of Atascadero Design Review Committee E. ADJOURN Mayor Moreno adjourned the meeting at 9:24 p.m. 7E7 PAR 11Y:. K. Ehrilanager/ o Lar uty City pity C!erk The following exhibits are available for review in the City Clerk's office: • Exhibit R — Mobile Home Rent Stabilization Documents • Exhibit B — Mobile Home Rent Stabilization Documents APPROVED: May 14, 2019 Atascadero City Council April 23, 2019 Page 7 of 7 Rent Stabilization Statistical report prepared by Kent Groseclose Rancho Del Bordo 10025 EI Camino Real Atascadero, CA 93422 Information presented by Betty Lightfoot (805) 461-9055 Average Income At Move -in (Start) vs Current $56,666.61 $68,000.00 $46,315.00 $64,187.23 $42,500.00 -0-_ S.INCOME ----C.INCQME 1990-20DO 2000-2010 2010.2019 Years Moved -in (Respondents) 6A(ki A q.t2,. ILI $80,000.00 'W, 325.00 a, $30,000.00 $20,000.00 $10,000.00 SOM 1978-19% (4) Average Income At Move -in (Start) vs Current $56,666.61 $68,000.00 $46,315.00 $64,187.23 $42,500.00 -0-_ S.INCOME ----C.INCQME 1990-20DO 2000-2010 2010.2019 Years Moved -in (Respondents) 6A(ki A q.t2,. ILI Rent Stabiliaiation Statistical report prepared by Tent Groseclose Rancho Del Bordo 10025 El Camino Real Atascadero, CA 93422 Information presented by Betty Lightfoot (805) 461-9055 Average Rent -00 $835.89 $818.80 sm.98 $BW_ .75 .03 $413D.00 $ 00 f j $200.0[1 $100m $0.m 1979.1990 (4) 1990-2000 2000-2010 2010.2419 (9) '(20) (47) Years 61oved-In (Reswrtdents) f MOVE -1N --*— CURRENT Rent Stabilization Statistical report prepared by Kent Groseclose Rancho Del Bordo 10025 El Camino Real Atascadero, CA 93422 Information presented by Betty Lightfoot (805)461-9055 6 BULLETIN 1 eai ossibilities A P R I L? 01 9 More people over 60FUNDING GAP, but less money o 100°fo CN o 60+ population OAA appropriation ' 8Q change since 2001 change since 2001, inflation adjusted m 60 - C 40 0 '20, -P-. 0 JCL l 2n r f. fj 2000 2005 2010 2015 2020 SOURCE: AARP PUBLIC POLICY INSTITUTE. 2019 �"--��-'•""....,�..-v..r.�-..�...f.....ri.--4Y. ...-�.-...-�..�-.-�.-�.�v.-mow...-- •�.......�...�-�-.-�.�..-.--.. _.--� �..-._«��.-....-.�-..tip.-....--.,.�-e tip-. �... 6 BULLETIN 1 eai ossibilities A P R I L? 01 9 z3 tq Date Notes Parks Spaces Increase Vacancy Committee Adopted Ordinance Name and Reference CountlCity By Control Grover 1987- 3 140 Graduated Yes 5% City Ordinance Grover Beach Beach 12 CPl Appointed Mediator Morro Bay 1986- Revised 15 641 75% CPI 125% CPI 2-2-3 Ordinance Morro Bay 08 2004 Non - Permanent Resident 10-16% Cap Marina ##1 2011- 5 399 100% CPI 5% Every Rent Ordinance Mobile Home Rent Stabilization 11 2 Years Administration Chapter 5.72 Pismo 1981- 2 412 Lesser of Yes 10% City Ordinance Pismo Beach Beach #2 04 6% or 75% Administration CPI San Luis 1988- 15 1,551 100% CPI Yes 10%, Hearing Obispo 06 to 5%, if 1x in 3 Officer City #3 Higher, Years .75 of Difference San Luis 1988- does not 39 2,408 60% CPI Yes 10% Rent Review Obispo 06 apply to Board County incorporated entities. Initiative San Luis Obispo City Initiative San Luis Obispo County #County/Cit Date Notes Park Spaces Increase Vacancy Committee Adopted Ordinance Referent y s Stabilization 10- Control By Name e East Palo 1983 Fair Practice Indio -03 6 528 75% CPI No Initiative Commission Rent Lesser of Alto -11 4 274 Board Yes Initiative Stabilization Program 1988 Mobilehome propositi Escondido 30 3,585 Board Yes City Council Initiative Rent Control -06 Ordinance on K Fairfield 1984 -11 9 883 Board No 1-1-3 Ordinance Rent Mobile Home Chapter Fontana 1987 10 684 100% CPI No Administrati Ordinance Park. Space 14, -02 Rent Article on Stabilization III Fremont 1987 Greater $10 Hearing Mobile Home Chapter -02 3 732 or 70% CPI Yes Officer Ordinance Space Rent 9.55 Stabilization Rent Fresno 1987 30 3,942 Review Yes 1-1-3 Ordinance -12 Commissio n 1987 Rent Gardena -04 27 1,156 Mediation, No 3-3-3 Ordinance Arbitration Gilroy 1987 4 336 Less of 5% No Ordinance -05 or 80% CPI 2002 10%1-5 4-4-0 Meet Goleta -06 4 500 75% CPI Years and Confer Ordinance Arbitration Grover 1987 Graduated City Beach -12 3 140 CPI Yes 5% Appointed Ordinance Mediator 1979 Rent Hawthorne -06 11 327 Mediation No Rent Board Ordinance Board L f 1980 esser o Hayward 1916 2,160 3% or 60% No Ordinance _02CPI to 8% Hemet 1979 9 20 2,805 Board No 1-1-3 Initiative 1989 Repealed Lesser of 0 /0 Hollister -05 1994 1 235 8or 80% No 1-1-3 Ordinance CPI Title IX Humboldt 2017 Mobile Home - County -01 42 1,095 100% CPI Yes 5% Ordinance Rent Division Stabilization 10- 9101 1984 Fair Practice Indio -03 6 528 75% CPI No Initiative Commission 1994 Lesser of Rent La Verne -10 8 1,762 No 7% or CPT Ordinance Administrati California Rent Stabilization Ordinances (RSOs) #County/Cit Date Notes Park Spaces Increase Vacancy Committee Adopted Ordinance Referent y s Control By Name e Alameda 1990 Automatic Board of Mobile Home 22 712 Yes Ordinance Park Rent 90-71 County -09 to 5% Supervisors Stabilization 1992 8%/75% Azusa -01 6 548 CPI No Ordinance Beaumont 198 4 8 459 Hearing No 2-2-1 Ordinance Benicia 197 8 4 317 Hearing No 2-2-1 Ordinance 1984 Mobile Home Chapter Calistoga 5 569 Hearing No I-1-3 Ordinance Park Rent 08 Stabilization 2.22 1981 Rent Review Chapter Camarillo 4 747 Hearing No 1-1-3 Ordinance Mediation -12 10.50 Commission 1979 Repealed Lesser of Capitola _ 11 2011-08 8 623 5% or 60% Yes City Council Ordinance CPT 1982 Rent Carpinteria 7 866 75% CPI Yes Stabilization Ordinance -03 Commission 1979 Revised Mobilehome Carson -08 2018-04 28 2,565 Board Yes 2-2-3 Ordinance Space Rent 79-485U Control Cathedral 1982 Mobile Home City -00 10 2,064 75% CPI Yes 0-0-5 Initiative Rent Control 48 Ordinance Chino 198 3 5 554 66% CPI No 1-1-3 Ordinance Chula Mobilehome Chapter Vista 31 3,600 Park Space 9.50 Rent Review Cloverdale 1986 4 165 Board Yes 10% 0-0-3 Ordinance -08 Rent Clovis 1978 6 582 Review No 1-1-3 Ordinance sio n Colton 1690 8 916 60% CPT No Ordinance 1994 80% CPI or Hearing Mobile Home Chapter Concord 01 11 1,446 5% Yes 10% Officer Ordinance Parks Rent 15.105 Stabilization Cotati 1919 3 106 Board Yes Arbitration Ordinance Daly City 106 0 1 501 Board No 1-1-3 Ordinance Delano 1984 Repealed 310 50% CPI Yes 1-1-3 Initiative -11 1994 #County/Cit Date Notes Park Spaces Increase Vacancy Committee Adopted Ordinance Referenc y s Control By Name e on Lancaster 193 5 27 2,584 Board Yes 1-1-3 Initiative Lompoc 1983 7 654 75% CPI to No 2-2-1 Ordinance -12 10% Lesser of Los i988 3-8% 10% or Rent Angeles ^03 57 6,696 Based on Comp Adjustment Ordinance City CPI Rent in Commission Park Los Gatos 1980 2 137 100% CPI $25 or Mediation, Ordinance -10 or 5% Average Arbitration Malibu 1991 2 527 75% CPI Yes 10% Ordinance Marina 20110 5 399 100/o CPI 5% Every Rent Administrati Ordinance Mobile Home Chapter Rent -11 2 ,hears 5.72 on Stabilization Merced 1a 82 3 574 Hearing No 2-2-1 Ordinance Milpitas 1992 3 521 50% CPI orAverage City Council Ordinance -08 8% Rent 10% Mobile Home Modesto 2007 9 1,400 100% CPI Every 5 Hearing Ordinance Rent Chapter 10 Years Board Stabilization 19 Program 1985 Lessor of Montclair -11 8 620 6% or 6% No 2-2-1 Ordinance CPI With Moreno 1987 7 $09 Lessor of %Limit Committee Ordinance Valley -07 or 65% CPI Park or Resident Morgan 1983 Hill -08 9 875 75% CPI Yes 1-1-3 Ordinance 125% CPI Non - Morro Bay 1986 Revised 15 641 75% CPI Permanen 2-2-3 Ordinance -08 2004 t Resident 10-15% Cap Napa 1983 Repealed221,605 8% Cap 1-1-5 Ordinance -12 1985 Oakland 1980 3 49 Automatic No Ordinance -09 5% 1982 Lesser of Manufactured Chapter Oceanside -06 20 2,401 8% or CPI yes 0-0-5 Ordinance Home Fair 16B, 82 - Practices 87 1983 Revised Lesser of Yes 15%, Hearing Oxnard -03 1998 25 2,780 CPI or 4% Average Administrati Ordinance Space on, Rent #County/Cit Date Notes Park Spaces Increase Vacancy Committee Adopted Ordinance Referenc y s Control By Name e Rent Review Board Pacifica 1991 Lesser of -09 Palm 1986 Desert -00 Palm 1980 Springs -04 Redlands 1985 Palmdale -10 on 1987 Paramount -07 Petaluma 1994 -02 Pismo 1981 Beach -04 Pleasanton 13 Lesser of 02 Rohnert 1992 Pomona -05 Rancho 1982 Mirage -07 Redlands 1982 CPI -12 Rialto 1992 -03 Riverside 1983 County -08 Rocklin 1982 Lesser of -05 Rohnert 1987 Park -12 Salinas 1990 Administrati -10 San 1984 Bernardino -09 San 1970 1 93 75% CPI No Ordinance Mobile Home 4 676 75% CPI Yes 5 Picked Ordinance Rent Control 456 Program 0-0-5 Ordinance Rent Control 14 2,242 75% CPI Yes CPT or 15 1,455 Arbitration No Award 17 1,228 100% CPI No Lesser of 9 1,006 100% CPI No or 6% 1-1-3 Ordinance 2-2-0 Ordinance Mobilehome Park Space Chapter Arbitration Ordinance Rent 6.50 Stabilization Program 124 12,376 100% CPI No 3 384 Lesser of City CPI 2 412 6% or 75% Yes 10% Administrati Ordinance 11 1,437 CPI on 8% Cap Lesser of To 25% 1,487 4% or 75% No 4 412 100% CPI in 5 years 2-2-1 Ordinance or 5 /o 19 1,836 Mediation No Hearing Ordinance Board 6 882 75% CPI Average 1-1-5 Initiative Rent Lesser of 6- 8 684 9% or 75% No 0-0-3 Ordinance CPI Rent 12 1,425 Review Yes 0-0-5 Ordinance Commisslo n 124 12,376 100% CPI No 3 384 Guaranteed No CPI 5 1,314 75% CPI or Yes 4% Cap 11 1,437 75% CPI or No 8% Cap Lesser of 16 1,487 4% or 75% No CPI 1 56 4-7% or Yes Mobile Home Parks Rent Chapter 2-2-1 Ordinance Stabilization 5.75 Procedures 1 and up Ordinance 5 Initiative Mobile Home Chapter Ordinance 9.7 Rent Review Ordinance Board Ordinance Ordinance #County/Cit Date Notes ParkSpacesIncrease Vacancy Committee Adopted Ordinance Referenc y s Control By Name e Francisco -06 60% CFI 1985 3-7% or Mobilehome Chapter San Jose -07 70 11,435 75% CPI Yes Ordinance Rent 17.22 Ordinance San Juan 1979 7 1,209 100% CPI Yes 2-2-1 Ordinance Mobile Home Article 9 Capistrano -03 Rent Control 100% CPI San Luis 1988 to 5%, if Yes 10%, Hearin Obispo -06 15 1,551 Higher, .75 1x in 3 Officer Initiative City of Years Difference San Luis Obispo 1988 39 2,408 60% CPI Yes 14% Rent Review Initiative County -06 Board San 1980 17 3,216 CPT or NOI With Rent Review Ordinance Marcos -11 Limit Commission San 1990 1 397 3-7.5% or Yes Ordinance Raphael -04 CPT Mobilehome Santa 1984 10%1-5 and Recreational Title 26, Barbara -08 5 232 75% CPI Years Arbitration Ordinance Vehicle Parks Chapter City - Residents' 26.04 Rights Santa Barbara 1994 19 2,161 75% CPI 10%1-5 Arbitration Mobilehome Ordinance Chapter County -09 Years Rent Control I l A Manufactured Santa 1990 100% GPI, Home Park Chapter Clarita -12 15 2 070 6% Cap No Ordinance Rent 6.42 Adjustment Procedures Santa Cruz 1979 50% CPI, Hearing Mobilehorne Chapter County -01 36 2,212 Pass Yes Officer Ordinance Rent/Sale 22.01 Through Stabilization Santa 1979 Monica -04 3 283 Board No Initiative 1984 Lesser of 10%1-3 Santa Paula -06 9 838 7% or 75% Years 0-0-3 Ordinance CPI 2004 104% CPI ' Mobilehome Chapter Santa Rosa 00 15 2,198 U to 6% Up Yes Arbitration Ordinance Rent Control 6-66 Program Mobile Home Santee 12 2,328 Ordinance Park Rent Chapter Control 2.44 Ordinance Scotts 1980 5 527 75% CPI Yes 0-0-5 Ordinance Valley -11 Sebastopol Revised 6 173 100% CPI No Arbitration Ordinance 4County/Cit Date Notes Park Spaces Increase Vacancy Committee Adopted Ordinance Referenc y s Control By Name e 1992-08 Rent Simi 1983 6 354 Review No Ordinance Valley -03 Commissio n Totals: 1,39144,12 4 1 (g, Ll — Ci d 5� f (�u-'ill �,1 c-,L.lY 1 � Mobilehome Sonoma 1987 51 3,736 100% CPI Yes Arbitration Ordinance Park Space Article County -06 Rent XIX Stabilization Thousand 1980 Revised Designated Yes 10- Rent Review Oaks -07 2011 8 897 15% P Board Ordinance an 2011 Original 100% CPI, Mobilehome Chapter Ukiah -02 2010-10 23 1,043 o 5% Cap or Yes 10% Arbitration Ordinance Rent 8 Less Stabilization Union City 1980 3 918 90% CPI or Yes Ordinance -05 7% Max Upland 1985 Revised 6 866 80% CPI or Yes Arbitration Ordinance -12 1992 7/o Max Vacaville 1977 12 1,126 Graduated No 0-0-3 Ordinance -12 CPI Vallejo 102 2 17 1,990 5% No 1-1-3 Ordinance Ventura 1981 Lesser of Rent Review Cit y -06 18 1,087 7% or 75% Yes 15% Board Ordinance CPI Social Ventura 1983 Revised Security Mobile Home 24 1,421 Yes 15% 0-0-3 Ordinance Park Rent 4452 County -02 2014-06 COLA 2%- Control 8% Watsonvill 1989 70% CPI or Mobile Home Chapter 5 717 No Ordinance Park Rent e 03 5% Stabilization 3 West 1984 Lesser of 5- Human Covina -09 2 265 9% or No Resources Ordinance 100% CPI Committee Windsor 1992 5 567 100% CPT, No Arbitration Ordinance Rent Chapter -08 6% Cap Stabilization 1 Mobilehone 1994 Annual 80% CPI, Rent Review Park Rent Chapter Yucaipa -12 42 4,425 i '% Cap Commission Ordinance Stabilization 15.20 Onlyase Program Totals: 1,39144,12 4 1 (g, Ll — Ci d 5� f (�u-'ill �,1 c-,L.lY 1 � Seniors Facing Drastic Rent Increases at Rancho La Paz Mobile Home Park - Fullerton D... Page 1 of 8 FULLERTON'S ONLY INDEPENDENT NEWS - EST. 1978 - YEAR 41 %L;/Ftd1erton Observer 1.(1L':11. N1:11 S Seniors Facing Drastic Rent Increases at Rancho La Paz Mobile Home Park BY EDITOR ON MARCH 10, 2019 • i. 1S COMMENTS It's a tragically familiar story for many Californians. You receive notice that the home you are renting has been sold and the new owners are dramatically increasing the rent, because there is no rent control and, under California law, there's no limit on the amount rents may be increased. Property owners are protected by Prop I3. Renters have no such protection. For most folks who cannot afford the new rent, they simply move. But what if you are a senior on a fixed income or social security? And what if you live in a mobile home park where you actually own your home, but must pay rent in the form of"lot fees"? If the new owner dramatically increases your lot fees, what are your options then? These are the questions that hundreds of senior residents of the Rancho La Paz mobile home park in Fullerton and Anaheim are now facing. On February 28, over 380 residents of Rancho La Paz received word that the mobile home park had been sold, and the new owners were increasing rents by an average of $300 per month for residents who were paying around $680 per month—a 44 percent increase. ok EA file:IIID:IDocumentslRaecho%20del%20BordolData%20for%2UDrdinancelSeniors%2OFa... 4/23/2019 I Seniors Facing Drastic Rent Increases at Rancho La Paz Mobile Home Park - Fullerton 0... Page 2 of S II€�I ' .• ear . � ss ■i Y 1ra.rrra out so, 1110111.111 D ....r. Mumma �111111111■rf. "Since this is a senior park and most of the seniors here live on fixed incomes this is a travesty," said one resident of Rancho La Paz, "We have people so frightened they are talking about suicide." Most of the mobile home owners are on fixed incomes and over 70 years old. Some are still paying a mortgage on their mobile homes, and the lot increase puts their living expenses above what they can afford on Social Security. Residents are also still responsible for their own utilities. According to the notice residents received, if they call a Mr. Michael Cirillo of Star Management (the property management company) there may be some assistance up to $200 for those who can't afford the increase and qualify. file:IIID:IDocumentsIRancho%20del%2OBordolData%20for%200rdinancelSeniors%2OFa... 4/23/2019 Seniors Facing Drastic Rent Increases at Rancho La Paz Mobile Home Park - Fullerton 0... Page 3 of 8 "However calls to that number have not been answered and many residents are panicking," said one resident who lives at the park and has been trying to find help for her neighbors. The Observer also tried to contact Mr. Cirillo and Star Management, and his various other companies including one that buys up mobile home parks across several states, and another which purchases and resells mobile homes. Observer attempts to contact Cirillo by both phone and e-mail, have received no response to date. In desperation, one resident contacted local elected officials of both cities, and reached out to the California Mobile Home Assistance Center, and Orange County Fair Housing, among other agencies. So far only Anaheim Councilmember J. Moreno and Fullerton Councilmember Ahmad Zahra have returned the resident's call for help saying they would Iook into it. The residents are holding a meeting on the topic on March 20 at 6pm at the Rancho La Paz clubhouse. Orange County Fair Housing, reached for comment, told the resident and the Observer that "the notice appears to comply with California's Mobilehome Residency law. Under Civil Code §798.30 rent can be increased without limit by way of a 90 -day notice, provided that any such increase is also consistent with the provisions of any fixed -term lease that may be in place. Unfortunately, without any restraints on rent increases put in place by the local government the park operators can increase rents to levels that they believe the market will bear without consideration of the ability of the current residents to pay those increased rents. Mobile homes, once thought to be a portion of the housing stock considered as affordable, are now becoming out of reach to many people in the same way as apartments and for sale properties" "It's obviously a very disturbing trend in Orange County where we're seeing significant rent increases in apartments, and now also in mobile home parks, which have traditionally been more affordable housing," said Cesar Covarrubias, Executive Director of the Kennedy Commission, a local group that advocates for affordable housing. According to Covarrubias, "There would have to be a local measure, or a city would have to see this as a crisis and then enact a local ordinance that would allow for some measure of control over the rents." Both Fullerton and Anaheim contracted with the Fair Housing Foundation in Long Beach fnr matters concerning fair housing. The Observer contacted that agency for a comment but did not receive a call back by press time. The notice sent to residents claims that with the increase, the lot rents will stiII be "substantially below the fair market value for housing and amenities of the same quality." A quick check of lot fees in the area found them ranging from $500 to $1,250. According to a resident with the increase the fee to rent the lot beneath their homes will cost park residents from $1,000 to over $1,500 depending on whether they live on the Anaheim or more expensive Fullerton side. Many residents fear that they will have to sell their homes and move though selling and moving out in 90 days seems an impossible task even if they could find another affordable option in this area where but low income housing is hard to find, However, an interested buyer is waiting in the wings. The very same Michael A. Cirillo of Star Mobilehome Park Management may be in charge of future sales of units at the park if the elderly homeowners are forced to sell. His company shares a Santa Ana address with M. A. Cirillo & Associates, and Star Mobile Home Sales Inc. All the corporations list Michael Cirillo as president. In addition, Cirillo is a partner in Pacific Current Partners LLC which file:IllD:lDocumentslRancho%20del%20BordolData%20for%2OOrdinancelSeniors%2OFa... 4/23/2019 Seniors Facing Drastic Rent Increases at Rancho La Paz Mobile Home Park - Fullerton 0... Page 4 of 8 buys up and operates mobile home parks in Las Vegas, Nevada, Utah, and California (where it has purchased 25 mobile home parks througout the state including Orange County cities of Anaheim and Placentia). According to the notice from Star Management and Paracorp, LLC (the agent for the new owner Peace Ranch LLC}, "We are a long -tern, `buy and hold' park ownership and need to increase park revenue to maintain our plan for continuation of the community." New owner Peace Ranch, a Limited Liability Company registered in Delaware in January 2019, but has no website. However, its agent Paracorp LLC is also the agent for a Peace Ranch LLC registered as a foreign company in 20 18 with address 1830 E. Sahara Dr., Ste 114, Las Vegas, Nevada 89104. The legality of this situation is being researched by the Observer. The plight of the Rancho La Paz residents perhaps speaks to the Iarger need for rent protections in California, especially for seniors and those on fixed incomes. At the March 18 Anaheim Council meeting, there will be a presentation and discussion regarding rising rents and affordable housing. Protect local journalism — please subscribe to the print edition of the Fullerton Observer. Our online edition is free, but we depend on print subscriptions from readers. Annual subscription is only $35/year. It only takes a minute Click Here To Subscribe .Thank you for your support for the Fullerton Observer. Click here to view a copy of th"wifediflbw."i!MWA%server.com/current-e-editionl) ot-eategorylpri nt-subscriptionsl) file:IIID:IDocumentslRancho%20del%2OBordolData%2dfor%20DrdinancelSeniors%20Fa... 4/23/2019 Mobile Home Park Rent Stabilization Ordinance Title 25 What is this service? The County has a rent control ordinance that applies to mobile home parks. It applies to residents who have a month-to-month space rent agreement rather than a long term lease. The county code is known as Title 25 - Mobilehome Rent Stabilization. Title 25 limits the yearly rent increase on a mobile home space to 60% of the cost -of -living index (i.e., to 60% of the Consumer Price Index, or "CPI"). A mobile home park owner can apply for a larger rent increase. But he must demonstrate that the cost of operating the mobile home park exceeds the amount that the park earns even with the rent increase. Any increase in government fees (i.e., county, state and federal fees) can "pass-through" directly to the residents without approval from the County's Mobilehome Rent Review Board. m ORDINANCE NO. 199 AN ORDINANCE OF THE CIT)'OF MORRO BAY REPEALING, AMENDING, AND REENACTING C'HAP'TER 5.32 OF"rl€I= 11ORRO 13AY is 1UNICIPA 1, CODE {1IOBILEIIOi1IE AND RECREATIONAL VEHICLE PARK RENT s,rABILIZATION ORDINANCE) "I.HE QTYCOUNCIL CITY OF IIIORRO BAY, CALIFORN€:k 11'HI'sREA5, in No►•enibcr 1986, the Cit} Council adopled Ordinance No. 294 which codified the i►lobilelionic and RecreLitional'-chicle Park Rein 5tahiiirati,nl Ordinance its containcli in Chapier 5.32 of(lle'Morro Ba) ,11unieipal Code; and WHEREAS, [it Aril 2003, the [.'ilk CoUllCilaulh1.1w.0 l the creation of :,n Ad I roc SUbCOillrnitter. 10 re►'iCW lhc• aforementioned Niohilehomc and Reereatianal Pellicle 11'ark Relit Stabilization Ordinance; and 11'jI€•:R['AS. such Ad I[oc Subconlin111ecConsisted ofIcil ►utinL, nlerliber:, 11►eof►►llonI ►►err- Selcc10d by park mvIl rs and i I v c flfv:IIom H'er'e seIek:IcLi 1) %.. park rcsicicnts; an►I 11'!Il:131:�ti. the Ad HOC SUbC'U111t11i1lCC ,ltic.t iillCCr, tints Mlil made nurncrol,iti recomnlcniiations for chanr,cs tsl the c�isli11 �IONICls,mac and 1tccrc:nional Pellicle lark Kern Stabilization Ordinance: and 1ti'1IEI EAS. a I I len menkcrs uftlie A 1 Floc St,hem!rmiuCe un.lnirllously appniveii lire liFill l draft of [lie it]mchcd rev isiolis in the 1\lob iIdIonic and Recreational 1'e1,ic Ie 11ark Rcnl Stab iIi?alioii Ordinance. C•hapier 5.3= of ilic 1lww B -.iv Municipal Cade" and 11'IIk:RFAS• C'il►' Council desil'es lig imp1cn,enl Mlle revisions to the Mollilclloilic and lkccrcruioilal Vehicle Park Rent StahiIizauori Onfinaiw,,. CIiaptcr i..3? ol'Ilie ,llarro 13s\' Municipal Cody. NOW, THEREFORE, 11I N, CITY COUNCIL OF TIM CITY OF MORRO BAY DOES ORDAIN AS FOLLOWS: C:llaptcr 5.:32 of tilt INJOrro Bay'Municipal Code is herelly repcitied. arae:riled, and reeni mcd to react as follov--s' H 0 � ro f3�/ fa -r -j-< [ley& S e,.bl l t 2-afie�4) Curr ngac-c Chapter 5.32 MOBILEHOME AND RECREATIONAL VEHICLE PARK RENT STABILIZATION Sections: 5.32.010 ]Findings and purpose. 5.32.020 Definitions. 5.32.030 Exemptions. 5.32.040 Mobilehome rent review board--Established—Members---Terms. 5.32.050 Mobilehome rent review board—Powers and duties. 5.32.060 Residential rent increase limitations. 5.32.070 Increases upon change of occupancy. 5.32.080 Information to be supplied to tenants. 5.32.090 The rent dispute resolution process. 5.32.100 Standards of reasonableness to be applied to rent increases. 5.32.1 l0 Obligations of the parties. 5.32.120 Rights of a "tenant -to -be." 5.32.130 Tenants' right of refusal. 5.32.140 Retaliatory acts—Tenants' right to organize. 5.32.150 Solicitation of any petition by the park owner is without force or legal effect within city's program. 5.32-160 Nonwaiverability. 5.32.170 Penalties and remedies. 5.32.180 Rights of affected tenants reserved. 5.32.190 Tenant complaints. 5.32.200 Severability. 5.32.010 Findings and purpose. In November 1986, the city council adopted Ordinance No. 294, a mob ilehome and recreational vehicle park rent stabilization ordinance providing a formula for maximum annual rent increases and providinga proce- dure for hardship exceptions. the provisions of which were set forth in former Chapter 5.32 of this code. The findings and purpose set forth in Ordinance No. 294 referred to the fallowing conditions: A. There is presently within the city a shortage of spaces for the location ofexIsting mob ilehomes and recreational veli icles. Because ofthis shortage, there is a very low vacancy rate. B. Within [lie city there area number ol'persons who reside permanently in units which today meet the legal definitions of recreational vehicles. Often these persons subsist on low fixed incomes and are unable to af- ford standard housing. C. Because of the hi -h cost and impracticabi lily of moving rnobilehomes, the potential for damage re- sultirig therefrom, the requirements relating to the installation of rnobilehomes, including, permits. building, re- quirements. landscaping and site preparation. the lack of alternative home sites for mob iIchome residents. and the substantial investment ot'mobiIchome owners in such homes, it is necessary to protect the owners of mobile - homes from unreasonable rent increases. while at the same time recognizing the need of park ox4ners to receive a suitable profit on their property with rental income Sit #f icient to cover increases in the costs of repair. insurance, maintenance. utilities. errtployec services_ additional amenities, and other costs of operation, and to receive a fair return on their property. D. However, it is recognized that a rent stabilization ordinance must be fair and equitable for ail parties and must provide appropriate incentives for mobilehome park operators to continue their parks profitably and to upgrade and improve mobilehome parks, as well as to attract additional investors for new parks. In April of 2003, the city council established a mobilehome rent stabilization subcommittee to review and consider amendments to the ordinance. The subcommittee consisted often members: five park owners and five tenants. The subcommittee held fifteen meetings to cons ider changes to the ordinance and received public com- ment. At the end of the meetings the subcommittee unanimously approved the recommended changes to the or- dinance and submitted them to the city council. The city council hereby finds that the conditions stated in subsections A through ❑ of this section still ex- ist, therefore, the purpose of the city council in enacting these provisions is: to prevent an exploitation of the shortage in vacant mobilehome spaces in the city. to preserve affordable ]'rousing as prescribed by the city's gen- eral plan/housing element, to provide mobilehome park owners a guaranteed rate of annual space rent increase that more accurately reflects the rate of inflation given their usual expenses, and to establish an improved process for providing mobilehome park owners a fair return on their property in those cases where the guaranteed annual space rent increase provided by these provisions proves to be insufficient. (Ord. 499 (part), 2004) 5.32.020 Definitions. For the purposes of this chapter, certain words and phrases are defined as follows: "Affected tenants" means those tenants whose space is not covered by a valid lease meeting, the require- ments as outlined in Section 798.17(b) of the California Civil Code or otherwise legally exempt from local rent control regulation as set forth in Section 798.2 1, oras set forth in Section 5.32.030 of this chapter. Affected ten- ants are to be notified that a space rent increase is to become effective. For purposes of providing notice of the increase, each space subject to a rental increase shall be deemed to have only one "affected tenant' for adminis- trative convenience to the part: owners. The reference to "alI affected tenants- will refer to one representative tenant from each space subject to the proposed rental increase. "Base rent" means the authorized space rent plus any rent increase allowed under Section 5.3 2.060 or any rent adjustment attributable to an increase upon change ofoccupancy as provided in Section 5.32.070. Base rent does not include rent increases for capital expenses or capital improvements. "Capital improvements" means those improvements that materially add to the value of the property and appreciably prolong its useful life or adapt it to new uses, and which may be amortized over the useful remaining life of the improvement to the property. The tern "capital improvements" does not include those costs assoc iated with the normal maintenance and upkeep of facilities and premises which were reasonably intended to be part of consideration provided by the mobilehome park as rent. Substantial rehabilitation of the park that is necessitated as a result of the park owner's neglect, permissive waste, deferred maintenance or acts of God shall not be re- garded to be capital improvements to the extent that the), restore facilities and premises to the conditions rea- sonably bargained 1'or by the mob iIchonte park tenants. Proposed capital improvements claims must set forth an amortization table spreading the cost ofthe improvement over its proven useful life. Rents based on such costs, if approved, must be separately itemized on the monthly rent invoice. In addition. the beginningdate upon which such rents may be imposed and the ending date upon which such rents may no longer be imposed, must be stated on each monthly rent invoice submitted during the time such rents are charged to the tenant. Monthly rent shall be decreased for such amortized capital improvement expenses at the end of the amortization period. Failure to do so shall be regarded to be an unauthorized increase in rent. Capital improvements must be for the primary benefit, use and enjoyment of the tenants of the entire park, and costs must be allocated overall beneficiaries of the improvement. "City manager" means the city manager of the city of Morro Bay or his or her designee. "Consumer Price Index" means the Consumer Price Index for All Urban Consumers Los Angeles, Long Beach, Anaheim Area, published by the U.S. department of Labor. Bureau of Labor Statistics. "Debt service costs"' means the periodic payment or payments due under any security or f inaticing device which is applicable to the mobilehome park including any fees. commissions, or other charges incurred in ob- taining such financing. "Housing service" means a service provided by the owner related to the use or occupancy of a mobilehome space. which is neither a capital improvement nor substantial rehabilitation as those terms are defined in this chapter, including but not limited to. repairs, replacement, maintenance, painting, lighting. heat. water, laundry facilities, refuse removal, recreational facilities. parking, security service, and employee services. -J ust and reasonable return on the property" means there is a range of rents which cou Id be allowed in any one mobilehome park suh.ject to this chapter. all of which could be characterized as al lowing a "just and reason- able return." There is no one precise formulation. rather, there are a variety of formulations which produce a zone of reasonableness. "Maintenance and operation expenses" means all expenses incurred in the operation and maintenance of the mobilehome park, including but not limited to: real estate taxes, business taxes and fees, insurance, sewer service charges. utilities, janitorial services, professional property management fees, pool maintenance, exterior building and grounds maintenance, supplies, equipment, refuse removal. and security services or systems- - Mobilehome" ystems."Mobilehome" means a structure designed f'or human habitation as defined by Section 798.3 of the California Civil Code, provided, however, that recreational vehicles, as defined in Section 799.29 of the California Civil Code and Section 180 10 of the California Health and Safety Code, which have occupied the same mobilehome or recreational veil icle park space continuously for nine months or more shall be consid- ered mobilehomes. "Mobilehome park" or "recreational vehicle (RV) park" means an area of land where two or more mobile - home or RV sites are rented. or held out for rent, to accommodate mobilehomes or RVs used for human habita- tion. This rent stabilization chapter shall apply to those spaces in recreational vehicle parks that are continuously occupied by an affected tenant for nine months or longer. "Mobilehome park owner' or "owner" means the owner. lessor. operator or manager of a mobilehome park. "Mobilehome rent review board" or "hoard" means [fie mobilehome rent review board established by this chapter. "Mobilehome space" means any site within a mobilehome park located in the incorporated areas of the city intended, designed. or used forthe location or accommodation of a mobilehome and any accessory structures or appurtenances attached thereto or used in conjunction tlierewiIh except "new construction" as defined by Civil Code Section 798.45. The term "mobilehome space" shall also include, for purposes of this rent stabilization ordinance, rentable spaces within mobilehome parks which have been occupied by a "recreational vehicle" as defined by Civil Code Section 799.29 continuously for a period of nine months or more. "Mob iIchonlc tenant ' or"tenant ' means any person entitled to occupy a mob ilehcnnc within a mobilehome park pursuant to ownership ofthc mobilehome. "Net operating income" means gross income less operating expenses. All operatingexpenses must be rea- sonable. Whenever a particular expense exceeds [lie normal industry or other comparable standard, the park owner shall bear tate burden of pro4 ing the reasonableness of [he expense. To the extent that the board finds any such expense to be unreasonable. (lie board shall adjust the expense to reflect the normal industry or other com- parable standard. "Nonpermanent resident" meads any tenant who does not meet the criteria set firth for a permanent resi- dent. "Party" means any affected mobilehome tenant and/or owner involved in proceedings under this chapter. "Percent change in Consumer Price Index" means the annual percent change in the Consumer Price index ("CPI"), calculated to the nearest tenth, for the twelve-month period from September through August. "Permanent resident" means any person who manifests intent to live or be located in a mobilehome park on more than a temporary or transient basis. Presence in a mobi lehome park for two hundred seventy days or more in any twelve-month period shall establish permanent residence, or meeting at least half ofthe fol lowing criteria shall establish permanent residence within a mobilehome park: I . Address where registered to vote: 2. Location of employment or place of business; 3. Attendance of dependents at a primary or secondary school, 4. Not receiving a homeowner's exemption for another property or mobilehome in this state nor having a principal residence in another state; 5, DMV license address; 6. Mailing address, 7. Vehicle insurance address: 8. Bank account, 9. IRS address. 10. Local club/association membership. "Rent increase" means any additional space rent demanded of or paid by a tenant for a mobilehome space including any reduction in housing services without a corresponding reduction in the amount demanded or paid for rent. "Space rent" means the consideration, including any bonus, benefit, or gratuity, demanded or received by mobilehome park owner for or in connection with the use or occupancy of a mobilehome space or any housing, services provided with the mobilehome space, but exclusive of ( l ) any amount paid for the use of the mobile - home, (2) security deposits and special amortized. or I i m ited rent increases. (3 ) user fees for services or facil ities which may be utilized at the option of the affected tenant and are not included in monthly space rent, and (4) utility charges for those mobilehome parks which charge affected tenants separately, whether or not the mobile - home homes are individually metered. "Substantial rehabilitation" means that work done by an owner to a mobilehorne space or to the common areas of the mobilehome park, exclusive of a capital improvement as that term is defined in this chapter, the value of which exceeds two hundred dollars and which is performed whetherto secure compliance with any state or local law or to repair damage resulting, from fire, earthquake, or other casualty or natural disaster, to the extent such work is not reimbursed by insurance. "Tenant -to -be" means a person who is not currently a tenant in a mobilehome park but is a prospective mo- bilehome space tenant who desires the use of mobilehome space as defined in this chapter and has presented himself or herself to the park owner as such and who would not be exempt tinder any of the provisions set forth in Section 5.32.030. (Ord. 499 (part), 2004) 5.32.030 Exemptions. The provisions of this chapter shall not apply to the following tenancies in mobilehome parks: A. Mobilehome part: spaces rented for nonresidential uses; B. Mobilehome parks managed or operated by the United States Govemmcnt, the state of California, or the county of San Luis Obispo-, C. Tenancies which do not exceed an occupancy of thirty days and which do not contemplate an occu- pancy of more than thirty days, D. Tenancies exempt from rent regulation by federal or state law or regulation, including but not limited to, tenancies governed by Civil Code Sections 798.17 rental agreements and 798.21 not principal residence; E. Mobilehome parks which sell lots for factory -built or manufactured ]lousing, or which provide con- dominium ownership of such lots, even if one or more homes in the development are rented or leased out. F. Mobilehomes that are owned by the park owner. G. Spaces that are vacant or become vacant after the effective date of the ordinance codified in this chapter are, upon subsequent occupancy, exempt from this chapter. -Vacant.- for the purposes of this section. means that the park owner has lawfully obtained the rights to occupancy of a space through, for example, the purchase of a mobi lehome from a mobi lehome owner, eviction or abandonment. This exemption does not apply ifan affected tenant sells to a third party. This exemption shall apply only where the park owner, prior to enter- ing into a rental or lease arrangement with subsequent homeowners, gives written notice that the unit or space is not subject to Morro Bay Municipal Code 5.32. The notice shall be in substantially the following form: THE MOBILEHOME SPACE OR UNIT SPECIFIED BELOW IS NOT SUBJECT TO RENT CONTROL. UNDER THE MORRO BAY MUNICIPAL CODE. BECAUSE THE MOBILEHOME SPACE OR UNIT SPECIFIED BELOW IS NOT SUBJECT TO RENT CONTROL, THE LAND- LORD MAY RAISE THE. RENT WITHOUT ANY LIMITATION OR REVIEW BY THE CITY OR OTHER GOVERN MENTOR ADMINISTRATIVE AGENCY. YOU ARESOLELY RESPONSI- BLE FOR INFORMING YOURSELFOF YOUR RIGHTS ANDOBLIGATIONS IN THIS MAT- TER AND FOR PROTECTING YOURSELF AGAINST FUTURE RENT INCREASES. I HEREBY ACKNOWLEDGE THAT I HAVE READ AND HAVE RECEIVED A FULLY COM- PLETED COPY OF THIS NOTICE PRIOR TO ENTERING INTO A RENTAL OR LEASE AR- RANGEMENT INVOLVING THE BELOW DESCRIBED MOB ILEHOME SPACE OR UNIT. (Ord. 499 (part), 2004) 5.32.040 Mobilehome rent review board---Established—Members—Terms. A. There is established a mobilehome rent review board consisting of seven members. B. The city manager shall appoint a staff member to be Iiaison and secretary to facilitate the formation of the board. The secretary shall maintain an accurate public record ofthe activities and official actions of the board. C. The mob ilehome rent review board shall be comprised of: two Morro Bay mob ilehome park owners: two Morro Bay mobilehome affected tenants (one permanent and one nonpermanent). and three individual members residing; in San Luis Obispo County who are neither mobilehome park owners nor mobilehome tenants, nor have any financial interest (as defined by state law) in any mobilehome park. The first flour hoard members shall be chosen by lottery frorn a Iist ofcandidates. The first four board members shall not have a stake or finan- cial interest in the disputc. The list ofcandidates shatI include all park ow tiers and any affected tenants who have volunteered to serve on the board. The three at -large members shall be mutually acceptable to the first four members. D. Hoard members shall not be compensated for their services as such, but may receive reimbursements as provided by the city budget for traveling. E. The formation of the board shall occur upon receipt of a written petition as set forth in Section 5.32.090 and shall continue until a formai written statement of decision is rendered by the board. (Ord. 499 (part), 2004 ) 5.32.050 Mobilehome rent review board—Powers and duties. Within the limitations provided by law, the board shall have the following powers and dirties: A. To receive, investigate, hold hearings on and renderopinions upon a dispute relating to this mobile - home and recreational vehicle park rent stabilization ordinance, B. To make or conduct such independent hearings or investigations as may be appropriate to obtain such information as necessary to cavy out its duties, and C. To render after every rent review hearing a written report concerning its activities, holdings, actions, results of hearing, and all other matters pertinent to this chapter which may be of interest to the public in general. (Ord. 499 (part), 2004) 5.32.060 Residential rent increase limitations. A. Except as provided in subsections C and D of this section, from and after the effective date of the ordinance codified in this chapter, the space rent payable for use or occupancy of any mob ilehome space shall not be increased within twelve months of the effective date of any preceding rent increase. Base rent increase shall not exceed: I . Seventy-five percent of the percentchange in the Consumer Price Index for permanent residents; or 2. One hundred twenty-five percent of the percent change in the Consumer Price index for nonperma- nent residents who are not exempt from this chapter pursuant to Civil Code Section 798.21. B. Any dispute as to whether an affected tenant is a permanent or nonpermanent resident or is exempt from this chapter pursuant to Civil Code Section 798.21 shall be resolved pursuant to Section 5.32.190 and the tenant shall have the burden of proof to prove that he or she is a permanent resident or is not exempt from this chapter. C. An owner shall be exempt from this section and the need to meet and canter as set forth in Section 5.32.090 if the owner is able to obtain written consent of sixty-six percent of all the affected tenants in the park agreeing to the increase in space rent to an amount greater than allowed in this chapter once each year. D. In the event an owner wishes to increase the rent payable for any mobilehome space within the twelve-month period more than the amount permitted in subsection A of this section and the owner cannot ob- tain the consent of sixty-six percent of the affected tenants, a mandatory meet -and -confer meeting shall auto- matically be required to show good cause why such an increase is necessary. E. Any notice of rent increase given by an owner pursuant to this section shall be given in writing at least ninety days before any rent increase is to take effect. F. A notice of rent increase incorporating within it a proposed orcompleted capital improvement which is not otherwise authorized as a pass-through pursuant to Civil Code Section 798.49 must be claimed within twelve months of the completion of the project or construction or the owner's receipt of the final billing for same, whichever occurs later. (Ord, 499 (part), 2004) 5.32.070 Increases upon change of occupancy. Notwithstanding the twelve-month limitation set forth in Section 5.32.060, upon change of occupancy of mobilehome, the rent increase upon sale shall be limited to: For affected tenants who are permanent residents. ten percent of the current existing space rent or the aver- age of the lowest and highest space rent for all the affected tenants of that particular park, whichever is greater. For affected tenants who are nonpermanent residents, fifteen percent of the current existing space rent or the average of the lowest and highest space rent for all the affected tenants of that particular park, whichever is greater. Resident status pertains to the selling tenant, not the tenant -to -be. The limitations of this increase sliail not apply if change in occupancy is due to the involuntary eviction of a tenant. No rent increase under this section shall be allowed due to the death of the tenant wherein the deceased tenant's spouse. parents or children take over the occupancy. (Ord. 499 (part), 2004) 5.32.080 Information to be supplied to tenants. A. Within thirty days after the effective date of the ordinance codified in this chapter and prior to the re - renting of each mobi lehome space thereafter, the owner shall supply each affected tenant with a current copy of this chapter. B. Whenever the owner serves a notice of rent increase, except a notice of rent increase provided pursu- ant to Sections 5.32.060(A), (C), or (D) or 5.32.070. the owner shall at the same time and in the same manner serve the affected tenant with a notice that sets forth all of the following information: 1. The amount of the rent increase both in dollars and as a percentage of existing rent and documenta- tion supporting the level of increase desired; 2. The identity of all other affected tenants and the spaces that they rent: 3. The park owner shall place on file with the city manager two copies of documentation supportingthe level of increase desired. C. An owner failing to provide an affected tenant and the city manager with the notices required by this section shall not be entitled to collect any rent increase otherwise authorized by this chapter from that tenant. (Ord. 499 (part), 2004) 5.32.090 The rent dispute resolution process. A. Mandatory Meet -and -Confer Meeting. Except when a park ownerelects rent increases permitted un- der Section 5.32.060(A) or is able to obtain written consent of sixty-six percent of the tenants as set forth in Sec- tion 5.32.060(C), the tenants and park owners must, within thirty working days of the notice of rent increase, meet and confer with each other's representatives. Written notice of the time, place and date of the meeting should be arranged within fourteen days of the notice of rent increase. If the park owners ortenants fail to agree on the time, place and date of the hearing and to provide due notice to the city manager, the meeting shall be set at the convenience ofthe city manager. At the meeting, representatives of the parties should exchange documen- tary evidence that tate parties in good faith then know will be used to support their respective positions in any rent review board hearing ail discuss the issues in dispute. In the case ofa park owner, ail financial data upon which any proposed increase is claimed shall be supplied to tenant representatives at the time of the meet-anld- confer meeting. I . Meet -and -Confer Information. The pari: owner has a duty and burden to provide adequate informa- tion iit regard to the rental increase to allow the tenants to make a reasonably sopli ist icated inquiry into the re- quested rental increase. B. Petition. If discussions between ownerand tenants do not resolve the dispute between them. the ten- ants or their representative shall file with the city manager a petition for space rent review and a co}py of the no- tice of rent increase within thirty days ofthe meet -and -confer meeting. The city manager shall not accept a peti- tion for filing unless A has been signed by at least fifty-one percent of the affected tenants who are subject to the rent increase. Upon the filing of a petition. the rent increase is not effective and may not he collected until and to the extent it is awarded by the board or until the petition is abandoned. As used in this chapter. tate term "aban- doned" refers to lack of prosecution of the arbitration by the mohilehome tenants' representative(s). The ternn "prosecution" reFers to actively pursuing necessary steps toward preparing the tenants' case for the arbitration hearing,. C. Contents of Petition. I. The petition for space rent review shall set forth the total number of affected rented spaces in the mob ilehome park, shall identify the space occupied by each tenant and shall state the date upon which the notice of the rent increase was received by the tenant(s). 2. After obtaining the required signatures, the tenant(s) shall deliverthe petition or mail it by registered or certified mail to the city manager at the following address: 595 Harbor Street, Marro Bay, California 93442 (or other address as determined by the city manager). No petition shall be accepted unless it is accompanied by the requisite number of signatures and is received in the office of the city manager within the thirty -day period set forth in subsection B of this section. The city manager shall provide a copy of the completed petition form to both parties forthwith or within hive working days of the petition's receipt. D. Assignment to Board and Hearing Date. Upon receipt of the petition, or upon noticeof any otherdis- pute that requires hoard resolution, the city manager shall, within thirty working days, commission a mobile - home rent review board as established by Section 5.32.040. The owner and affected tenant(s) shall be notified immediately in writing by the city manager of the date, time, and place of the hearing and this notice shall be served either in person or by ordinary mail. E. Rent Review Board Hearing. 1. The owner and tenant(s) may appear at the hearing and offer oral and documentary evidence. Both the owner and tenant(s) may designate up to three representatives to appear for them at the hearing. The board may grant or order one continuance not to exceed five days to each party from the date of the hearing. The bur- den of proving that the amount of rent increase is reasonable shall be an the owner by a preponderance of the evidence. The hearing need not be conducted accordingto technical rules relatingto evidence and witnesses. The rules of evidence and manner of producing evidence shall be those rules set forth in Section 1 1513 of the Cali- fornia Government Code for the conduct of hearings under the Administrative Procedure Act. These rules may be relaxed at the discretion of the board in the interests of justice. The board shall have the ability to close the hearing to the general public if confidential financial information may be disclosed during the hearing. ?. The board shall. within fourteen days of the hearing, submit by mail a written statement of decision and the reasons for the decision to the city manager who shall forthwith distribute by mail copies of the decision to the owner and tenant(s). The board shall determine the amount of rent increase, if any, which is reasonable based upon all the provisions of this chapter. 3. Excluding rent increases permitted under Sections 5.32.060(A) and 5.32.074, the board shall not a[ - low more than one rent increase per park per twelve-month period. 4. The decision of the board, rendered in accordance with this section, shal[ be final and binding upon the owner and all affected tenants. The decision of the board will be subject to the provision of Code of Civi[ Procedure Section 1094,5. 5. Any party may have electronic recording equipment or a court reporter present to record and prepare a transcript of the hearing, before the board: however, such equipment or reporter shall be provided at that party's own expense. 6. The board is authorized to modify the basic time periods set forth in this chapter at its discretion to promote the purposes of this program provided a final decision is rendered within ninety days of the notice of rent increase. 7. Any procedural or jurisdictional dispute regarding the processes set forth in this chapter may be de- cided by the hoard. (Ord. 499 (part), 2004) 5.32.180 Standards of reasonableness to be applied to rent increases. A. The board shall determine whether rent increases that exceed Section 5.32.468(A) are reasonable un- der the circumstances, taking into consideration that the purpose of Ili is chapter is to protect home owners from arbitrary, capricious, or unreasonable rent increases, and at the same time permit park owners to receive a just and reasonable return on their investment. The board, in making the determination. may, but is not required to. look at the following standards: 1. Beneficial increases in maintenance and operating, expenses, including but not limited to the reason- able value of the owner's labor and any increased costs for services provided by a public agency, public utility, or quasi -public agency or utility; 2. The substantial rehabilitation or the addition of capital improvements, including, the reasonable value of the owner's labor, as long as such rehabilitation or improvement has been completed and is: a. D istingu islied from ordinary repair or maintenance, b. For the primary benefit, use, and enjoyment of the tenants, C. Permanently fixed in place or relatively immobile and dedicated to the use of the property. d. Not coin-operated nor one for which a "use fee" or other charge is imposed on tenants for its use, e. Cost -factored and amortized over the good faith estimate of the remaining useful life of the rehabili- tation or improvement. and f. Does not constitute maintenance of the infrastructure of gas orelectrical lines within the mobilehome park for which the public utility has permitted the park owner a special premium with the intent that it be used to replace or otherwise maintain the system within the mobilehome park; 3. The rental history of tate mobilehome park; 4. The occupancy rate ofthe mobilehome park in comparison to comparable parks in the same genera] area; 5. Existing rents for spaces in other Morro Bay mobilehome parks: b. The physical condition of the mobilehome park, including the quantity and quality of maintenance and repairs performed during, the last twelve months, provided, however, that if the home owners raise a lack of maintenance or physical deterioration as an issue, the board slialI also consider to what extent the home owners notified the park owner of the physical condition. and to what extent the home owners gave the park owner a reasonable opportunity to cure the physical condition; 7. Any increases or reduction in housing, services during the twelve months prior to the effective date of the proposed rent increase: 8. Debt service costs used for the servicing of existing debt: 9. Debt Service Costs Due to Refinancing. If the refinancing is used forextracting equity from the park, the rent increase shall be deemed unreasonable, and the rent increase shall not be allowed. The board may also require that the debt service casts be amortized over a period of years whicli is determined by the board to be reasonable: 10. A decrease in "net operating income" as defined in Section 5.32.020(p), 11. A decrease in the owner's "just and reasonable return on (lie property" as defined in Section 5.32.020(H): 12. Other financial inlvrntation that the Owner is willing to provide, 13. Any costs incurred as a result Of a natural disaster and only to the extent such costs have not been reimbursed to the owner by insurance or other sources and where such costs could not have been prevented by normal maintenance and repair. B. In any determination of what constitutes a reasonable rent increase under the circumstances, the board shall consider and weigh evidence establishing the nature and extent of any existing and/or outstanding violations by either the park owners or home owners. Any rent increase or decrease maybe disallowed, reduced, or made subject to reasonable conditions, depending on the severity of such violations. C. Changes in ownership of the park after the effective date of this chapter shall not entitle any succeed- ing park owner to higher rents than would have been paid if the original owner had remained the park owner without board approval. (Ord. 499 (part), 2044) 5.32.110 Obligations of the parties. A. if a final decision by the board finds that a proposed increase or any portion thereof that was previ- ously inoperative is justified, the tenant shall pay the amount found justified to the owner within thirty days after the decision is made or as otherwise ordered by the board. B. if a final decision by the board finds that an increase or any portion thereof is not justified, the owner shall refund any amount found to be unjustified, but that had been paid, to the tenant within thirty days after the decision is made or as otherwise ordered by the board. if such refund is not made within the applicable time pe- riod, the tenant may withhold the amount from the next space rent(s) due until the full amount of the refund has been made. Notwithstanding the foregoing, in the event that the tenancy of tenant is terminated for any reason prior to full credit against rent, the balance of the credit due the tenant shall be paid by tate owner within thirty days from the date of the termination of the tenancy. C. Any sum of money that under the provisions of this section is the obligation of the owner or tenant, as the case may be, shall constitute a debt and, subject to the foregoing provisions of this section, may be col- lected in any manner provided by law for the collection of debts. (Ord. 499 (part), 2044) 5.32.120 Rights of "tenant -to -be." Any person who is a "tenant -to -be" as defined in Section 5.32.020(X) must be offered the option of renting a mob ilehome space in a manner which will permit the tenant -to -be to receive the benefits of the mobilehome space rent stabilization program described in this chapter, which includes, but is not limited to, rental of a mo- bilehome space on a month-to-month basis, and a new base rent. Such a person cannot be denied the option of tenancy twelve months or less in duration. The park owner shall provide each "tenant -to -be" with a written noti- fication of the option which shall make the following recitation: UNDER MORRO SAY MUNICIPAL CODE SECTION 5.32 YOU ARE LEGALLY ENTITLED TO ELECT A MONTI-I-TO-MONTH TENANCY OVER ANY OTHER LONGER PERIODIC TENANCY. YOU ARE ADVISED THAT YOU MAY NOT BE ENTITLED TO RENT STABILI- ZATION (RENT CONTROL) PROGRAM BENEFITS 1F YOU ELECT A LEASE OF MORE THAN TWELVE MONTHS IN DURATION IF THAT LEASE MEETS THE REQUIREMENTS OF CIVIL CODE SECTION 798.17 WHICH HAS BEEN ATTACHED HERETO. Any effort to circumvent the requirements of this section is unlawful. as well as an unfair business practice subject to enforcement under Business and Professions Code Section 17200 et seq. The rights set forth in this section have no application to mob ilehome spaces subject to a more -titan -twelve-month lease. By definition, ten- ants -to -be are prospective "mobilehome tenants," and such "affected tenants" are defined by Section 5.32.020. Providing a copy of this chapter to tenants shall be deemed compliance with this section. (Ord. 499 (part). 2404) 5.32.134 Tenants' right of refusal. A tenant may refuse to pay any increase in rent which is in violation of this chapter, provided a petition has been filed and cithcr no final decision has been reached by tate board or the increase has been determined to vio- late the provisions ofthis chapter. Such refusal to pay shall he a defense in any action brought to recover posses- sion of a niobilehorne space or to collect the rent increase. {Ord. 499 (part), 2004) 5.32.140 Retaliatory acts—Tenants' right to organize. No owner may retaliate against a tenant or tenant -to -be for the tenant's or tenant -to -be ' s assertion or exer- cise of rights under this chapter in any manner. including but not limited to, threatening to bring or bringing an action to recover possession of a mobilehome space: engaging in any form of harassment that causes a tenant to quit the premises, dissuading a tenant -to -be from freely exercising his or her legal options to chose a month-to- month rental: decreasing housing services: increasing the space rent: or imposingor increasing a security deposit or any other charge payable by a tenant. The tenants have a right to organize a tenants' association without hin- drance from the park owner to exercise the rights provided under the provisions of the Morro Bay Municipal Code. This association may he referred to as "The Park Tenants' Association at (Park Mame)." (Ord. 499 (part), 2004) 5.32.150 Solicitation of any petition by the park owner is without force or legal effect within city's program. The distribution of a petition or other documents seeking to have mobi lehome tenants waive rights. aban- don a filed petition or in any way affect tate entitlement of'the tenants to participate in the rent stabilization proc- ess authorized under this chapter shall be without force or legal effect within the city's rent stabilization pro- gram. Such documents shall not affect the right of any tenant to participate in the rights. remedies, procedures and processes set forth in this chapter. Efforts to utilize such documents to discourage participation in (lie city's rent stabilization program may be deemed retaliatory. (Ord. 499 (part), 2004) 5.32.160 Nonwaiverability. Any provision, whether oral or written. in or pertaining, to a rental agreement whereby any provision of this chapter is waived or modified, is against public policy and void, except with respect to any rental agreement complying with all of the terms and conditions set forth in Section 798.17 of the California C iviI Code. (Ord. 499 (part). 004) 5.32.170 Penalties and remedies. Any owner who demands, accepts. receives_ or retains any money as rent f porn a tenant to which the owner is not entitled under (lie provisions of'ih1s chapter shall be liable to the tenant for any actual damages. attorney's fees, and costs incurred by the tenant as a consequence and the tenant may seek relief in a court of appropriate jurisdiction for injunctive relief and damages. (Ord. 199 (part). 2004) 5.32.180 Rights of affected tenants reserved. This chapter shall not be construed to limit orcurtail any other action or proceeding which may be pursued by an affected tenant against an o%%ner before any- court or other hotly having_jurisdlet ion thereof. (Ord. 499 (part). 2004) 5.32.190 Tenant complaints. Any affected tenant may file a complaint with the city manager for the purpose of contesting any rent in- crease and/or to enforce any provision of this chapter. Prior to and as a condition to such filing, the tenant must meet and confer with the owner to attempt to informally resolve thei r d i fferen ces. The owner shall make himself or herself available for the meeting and conferring within a reasonable time after being, requested to do so by the tenant, but no later than thirty days thereafter. If applicable, the owner shall comply with Section 5.32.080. If such informal resolution cannot be had, then the tenant (hereinafter referred to as "complainant") may file with the city manager (and contemporaneously deliver a copy to the owner) his or her complaint. All such complaints shall describe in detail the basis therefor and shall attach, where available and necessary to a full understanding of the complaint, documents and writings which support the complaint. Upon receiving such a complaint, the city manager shall assign the matter to the board in accordance with Section 5.32.090(D) and the matter shall be arbitrated in conformance with Section 5.32.090(E). (Ord. 499 (part). 2004) 5.32,200 Severability. The ordinance enacting this chapter shall be liberally construed to achieve its purposes and preserve its va- lidity. If any provision or clause ofthis chapter or application thereof to any person or circumstances is held in- valid, such invalidity shall not affect other provisions or applications of this chapter which can be given effect without the invalid provision or application, and to this end the provisions of this chapter are declared to be sev- erable and are intended to have independent validity. (Ord. 499 (part), 2004) INTI;ODUCI:1) at til regulnr meetinu of the ['its• Collis 11c1d on the. 8`1k day apt December 2003. by magiom of'Capuncilmemher Peters ,33rd sccomded by COU116lalleMber Winhol[r. PASSFD, APPROVTI) AND ADOPTED bV the Cite i'uuncil O rile 01V ol'Morro Bay on the 12th dray oChuman- 2004. h}• ll3e f'01lnti4'i11s, Grote (a) nit; AYES: NOES: ABSENT I'lliod. Peirce. Peters. Willholtx. Yates None None 1 'illi -am Yates. N9. (Ir 1 Bridgett E3.3t r, ON Clerk R. ORDINANCE NO. 0-97-05 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PISMO BEACH, CALIFORNIA, AMENDING TITLE 5 OF THE PISMO BEACH MUNICIPAL CODE WHEREAS, the City Council of the City of Pismo Beach has found that certain inequitable mobilehome space rental rates may exist in the mobilehome parks of the City of Pismo Beach, and that such rental rates may have been imposed in response to or in anticipation of the City's mobilehome rent control regulation (Pismo Beach Municipal Code section 5.20 et seq.) and overall rent control scheme; and WHEREAS,, the City Council of the City of Pismo Beach recognizes the need to protect owners and occupiers of mobilehomes from unreasonable and inequitable space rents, while at the same time recognizing the need of the mobilehome park owners to make a "just and reasonable" rate of return; and WHEREAS, the City Council makes the findings below which indicate that space rents in mobilehome parks in the City may be arbitrary and excessive as a result of responses to the City's rent control regulations; and WHEREAS, eliminating these inequitable rental rates is in the public interest in that it will assure fair and proper implementation of the rent control ordinance, and will not result in preventing a mobilehome park owner from receiving a "just and reasonable" rate of return; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PISMO BEACH DOES ORDAIN AS FOLLOWS: Section 1. The City Council of the City of Pismo Beach hereby makes the following findings. a. It has been brought to the City Council's attention that certain mobilehome spaces within the City are potentially being charged an arbitrary and excessive rent in light of the City's rent control scheme. b. The City Council desires to assure all mobilehome space tenants are treated equitably, especially in fight of the fact that it is impractical for mobilehome tenants to move their mobilehomes when inequity occurs; and, the City Council understands the need to balance, protection of the mobilehome tenant's substantial investment interest while at the same time assuring that the mobilehome park owners receive a just and reasonable rate of return. c. In November 1982, the City Council adopted Ordinance No. 305, a "mobilehome rent stabilization ordinance... providing a formula for maximum annual rent increases." d. On August 27, 1990, the City Council passed and adopted rent control ordinance (0-90-15) that allowed the establishment of use of the current fair market rent upon the change of ownership of a mobilehome, i.e., vacancy decontrol. The vacancy decontrol ordinance was adopted very reluctantly by the City Council, but the City Council passed the ordinance WAGE I OF 4 due to pressures -of threatened litigation as a. result of the decision in. the case of Hall v. City of Santa Barbara, 833 F. 2d 1270.1 e. Except for this interim period when vacancy decontrol was in effect, the City's overall rent control scheme had formal provisions to prevent excessive rent hikes upon vacancies. Allowing arbitrary rent hikes can seriously diminish a tenants investment and ability to sell a mobilehome, resulting in substantial losses to a tenant. f. On October 8, 1991, the City Council held a rent control hearing on the application of Hacienda Del Pismo Mobilehome Park for a $50 per space per month increase. Evidence -and arguments were received by the City Council. The City Council made findings with respect to the proper "fair return" basis for the park within the rent control scheme. g. Regardless of whether vacancy decontrol is in effect, by increasing rents to a levels outside of the envisioned rent control scheme, a mobilehome park owner could effectively usurp a city's rent control authority with respect to determinations of proper rent levels and fair profit. h. Mobilehome tenants purchasing zriobilehomes during this interim period when vacancy decontro12 was in effect may have been required to pay an arbitrary and excessive rent in. light. of the rent. control scheme.. There are also indications that some of these tenants were given assurances from the mobilehome park owner that their rents would be reduced to levels within the rent control scheme after formal repeal of vacancy decontrol by the City. i. A city can impose a rollback of rents in order to counteract a mobilehome park owner's charging of arbitrary and excessive rent in light of the current rent control scheme, and in anticipation of rent control. (Adamson Companies 7. City ofMalibu (1994) 854 F.Supp. 1476, 1491.) A rollback provision aimed at relieving arbitrary levels of rent has a rational relationship to a legitimate governmental purpose. And, roll back provisions that do not remove all economically viable use of a property do not result in a taking: j. Adequate due process provisions exist within the current rent control ordinance (City of Pismo Beach Municipal Code, Chapter 5.20, which allow the mobilehome park owner to present evidence that a just and reasonable rate of return can or cannot be obtained, and adjusted accordingly. (Pismo Beach Municipal Code, §5.20.031.) k. The information necessary for an adequate determination of a just and reasonable rate of return is solely in the hands of the mobilehome park owner. Thus it would be appropriate to place the burden on an owner to show that a just and reasonable gate of return is not being received. I Vacancy decontrol gives complete freedom to a mobilehome park owner to charge rent to a new tenant based on whatever he thinks the market will bear. The Halldecision effectively made vacancy control unconstitutional .when .embodied in a rent control ordinance. However, the. subsequent decision. in Yee v. City ofLswndido 0982) 112 S.Ct. 1522 has been interpreted to overrule Nall, reinstating vacancy control as an appropriate provision for controlling mobilehome rents. 2 It has now been established that vacancy control with respect to mobilehomes does not constitute a physical or regulatory taking. Mee t< City of Escondido, 112 S.Ct. 1522 (1992). PAGE 2 OF 4 Section 2. Chapter -5.20 of Title 5 of -the Pismo Beach Municipal Code shall be amended to add the following section 5.20. L00 to read as follows: 5.20.100 lent Rollback. A. The City Council has made findings that certain mobilehome spaces in mobilehome parks within the City of Pismo Beach are possibly being charged an inequitable rental- rate for mobilehome spaces, and that inequitable rates may have been imposed on spaces transferred just prior to and in anticipation of enactment of these rent control regulations, and in derogation to the City's overall rent control scheme. B. A mobilehome owner within the City of Pismo Beach may petition for a gall back of rent pursuant to the standards and procedure as set forth in this section. In order to be considered for a rent rollback, a petitioner for a rent roll back must submit a formal written petition to the City Manager for designee) requesting consideration of a roll back of mnt.- The City. Council may set. by resolution a fee to be paid by the petitioner. In order to be considered by the City Council, the petition must provide evidence that, 1) the rate was imposed in response to or in anticipation of the City's regulation of mobilehome rent, and 2) the rate is arbitrary and excessive in light of the rent control scheme.3 C. if the petition meets the criteria established above, pursuant to review by the- City Manager, the City Clerk shall set the matter for hearing before the City Council within 45 days of receiving the petition. The affected mobilehome park owner shall be provided notice of the public hearing at least 30 days prior to the public hearing. The mobilehome park owner can submit a formal written protest against a roll back of rent. The protest and supporting documents must be submitted to the City Manager no later than 10 days prior to the scheduled hearing date. The City Council shall make written findings and determinations supporting its decision based upon the testimony and documents presented to it at the hearing, and shall adopt its written findings and determinations within 14 days of the close of the hearing on the matter. D. A rolled back equitable space rental rate will be determined by adding 10 percent to the rent as paid by the prior tenant, or in excess of 10 percent as determined to be equitable by the City Council. The rent will then be adjusted to account for increases up to the current year. Unless otherwise determined, tenants shall not be reimbursed for rents paid to date as an allowance for any possible transfer of value for a mobilehome at the time of purchase. E. All decisions of the City Council shall be conclusive and final. Enforcement actions can be instituted by the City, or. any affected mobilehome tenant, or the mobilehome park owner. A tenant may refuse to pay any rent in 3 Under the City's rent control scheme with vacancy control, a mobilehome park owner can only increase the rent to a new tenant by 10% over the prior tenant's rent. FACE 3 OF 4- excess of the determinations of the City Council, and this shall be a defense in any action brought to recover possession of a space or to collect the unlawful rent. F. A homeowner must petition the City Council for a rent roll back by January 1, 1998, or within three (3) years from the date of the initially imposed arbitrary and excessive rent. Section 3. This ordinance shall go into effect and be in full force and operation 30 days after its final passage and adoption. Section 4. The. City Clerk shall certify to the passage and adoption of this ordinance, shall enter the same in the book of original ordinances of the City; and shall make a minute of the passage and adoption thereof in the records of the meeting at which the same is passed and adopted, Before the expiration of 15 days after the passage of this Ordinance, it shall be posted with the names of members voting for or against the same in three public places within the City of Pismo Beach, to wit, 1) City Hall, 760 Mattie Road, Pismo Beach, 2) U.S. Post Office substation Price Street, Pismo Beach, 3) U.S. Post Office, Crest Drive, Pismo Beach. INTRODUCED at a regular meeting of the City Council _held this. 19tbday of Augur, 1997 on motion of Councilmember Halldin , seconded by Councilmember Reiss , and on the following roll call vote, to wit: AYES: Councilmembers Halldin, Reiss, Rabenaldt NOES: Mayor Brown ABSENT: Councilmember Mellow ABSTAIN; none PASSED AND ADOPTED at a regular meeting of the City Council held this 2nd day of September , 1997 on motion of CouncllmemberRabenaldt , seconded by Councilmember Halidin. , and on the following roll tali vote, to wit: AYES: Councilmembers Rabenaldt, Halldin, Mellow, Reiss and Mayor Brown NOES: none ABSENT: none ABSTAIN: none di h/phetfMa/raMb=k.ont PACE 4 or 4 or john Brown APPROVED AS TO FORIM.- City Attorney David R. Hunt r� Chapter 5.44 MOBILE HOME PARK RENT STABILIZATION'S Sections: 5.44.014 Purpose and intent. 5.44.020 Definitions. 5.44.030 Exemptions, 5.44.040 Mobile home park owner exemptions under Section 5.44.030(F). 5.44.050 City council ---Powers and duties. 5.44.060 Bases ace rent—Determination—Allowable increases without hearing. 5.44.070 _Application for rent adjustment---Fee—Contents—Notice of request— Hearing. 5.44.480 Application for rent adjustment—Conduct of hearing. 5.44.090 Application for rent adjustment—Evaluation--Relevant factors. 5.44.100 Application for rent adjustment—Hearin —Determination. 5.44.110 Application for rent adjustment—Hearing—Appeal. 5.44.120 Rent increases not made in conformtt withprovisions—Tenant's right to refuse to pay. 5.44.130 Actions brought to recover possession of mobile homes ace—Retaliator eviction grounds for denial. 5.44.140 Owner to provide tenants with copy of this chapter. 5.44.141 Amendment. 5.44.142 Severability. Prior history: Ords. 923, 1020, 1077, 1079 and 1091; prior code §§ 4800 through 4842, 4804 through 4809 and 4811 through 4813. 5.44.010 Purpose and intent. A. There is presently within the city and the surrounding areas a shortage of spaces for the location of mobile homes. Because of this shortage, there is a very low vacancy rate, and rents have been for several years, and are presently, rising rapidly and causing concern among a substantial number of San Luis Obispo residents. B. Mobile home tenants, forced by the lack of suitable alternative housing, have had to pay the rent increases and thereby suffer a further reduction in their standard of living. C. Because of the high cost and impracticability of moving mobile homes, the potential for damage resulting therefrom, the requirements relating to the installation of mobile homes, including permits, landscaping and site preparation, the lack of alternative homesites for mobile home residents, and the substantial investment of mobile home owners in such homes, this council finds and declares it necessary to protect the owners and occupiers of mobile homes from unreasonable rent increases, while at the same time recognizing the need of park owners to receive a suitable profit on their property with rental income sufficient to cover increases in costs of repair, maintenance, insurance, utilities, employee services, additional amenities, and other costs of operation, and to receive a fair return on their property. D. This council finds that the present low vacancy rate and frequent increases are particularly hard upon and unfair to residents of mobile home parks within the city. Large numbers of these residents are senior citizens and others on fixed incomes who installed their mobile homes in the city when the present inflationary rent increases could not reasonably have been foreseen. E. Tenants in mobile home parks desiring to sell their mobile homes may have difficulty finding buyers because, upon a change of ownership, the park owner is able to raise the rent without regard to the city's mobile home rent stabilization ordinance. F. This council finds that it is in the best interests of the citizens of the City of San Luis Obispo to assist those who are seeking to sell their mobile homes and those who are seeming to buy such homes to have the same fair rental protection as is afforded to those who remain in their mobile homes without sale. This council finds that the vacancy control provisions originally included in the mobile home rent stabilization ordinance when it was approved by the voters was an effective and beneficial provision for the people of San Luis Obispo living in mobile home parks, and should be reinstated. This council further finds that provisions allowing annual rent increases together with provisions allowing rent increases upon a showing of necessity protect the park owner's right to a fair return on investment, thus eliminating the need for rent increases above ten percent upon change of ownership. G. However, this council recognizes that a rent stabilization ordinance must be fair and equitable for all parties and must provide appropriate incentives for mobile home park operators to continue their parks profitably, as well as to attract additional investors for new parks. (Ord. 1226 § 1, 1992: Ord. 1117 (part), 1988) 5.44.020 Definitions. For the purpose of this chapter, certain words and phrases used herein are defined as follows: A. "Capital improvements" means those improvements, not previously located in the mobile home park, that materially add to the value of the property and appreciably prolong its useful life or adapt it to new uses, and which may be amortized over the useful life of the improvement in accordance with the Internal Revenue Code and regulations issued pursuant thereto; provided, that this definition shall be limited to capital improvements approved by more than fifty percent of the tenants in the affected park. B. "Mobile home park" means an area of land which rents spaces for mobile home dwelling units. C. "Mobile home park owner" or "owner" means the owner, lessor, operator or manager of a mobile home park. D. "Mobile home tenant" or "tenant" means any person entitled to occupy a mobile home within a mobile home park pursuant to ownership of the mobile home or under a rental or lease agreement with the owner of the mobile home, E. "Rehabilitation work" means any renovation or repair work completed on or in a mobile home park performed in order to comply with the direction or order of a public agency or public utility, or to maintain existing improvements in a safe and usable condition, or to repair damage resulting from fire, earthquake or other casualty. F. "Space rent" means the consideration, including any security deposits, bonuses, benefits or gratuities, demanded or received in connection with the use and occupancy of a mobile home space in a mobile home park, or for housing services provided, but exclusive of any amount paid for the use of a mobile home dwelling unit. G. "Change of ownership" means the sale, rental transfer, or exchange of a mobile home subject to the provisions of this chapter, excepting the transfer to tenant's spouse by gift, bequest or devise. H. "Hearing officer" means the duly appointed hearing officer selected from a panel of qualified hearing officers. A hearing officer shall have no financial interest in either a mobile home park or a mobile home nor have been a resident of nor reside in a mobile home park. I. "Appellate panel" means a panel of three qualified hearing officers. A panelist shall have no financial interest in either a mobile home park or a mobile home nor have been a resident of nor reside in a mobile home park. J. "CPI" means the Consumer Price Index (1967 = 100) All Items, All Urban Consumers, for the Los Angeles/Long Beach/Riverside standard metropolitan statistical area published by the Bureau of Labor Statistics, United States Department of Labor. If the CPI is not hereafter published, then any substitute index, or, if none, then the index most closely resembling the CPI shall become the new CPI. K. "Qualified Hearing Officer." The city administrative officer shall maintain a list of available qualified hearing officers. Qualified hearing officers shall be persons experienced in financial and accounting methods with knowledge of mediation process and rules of evidence. (Ord. 1117 (part), 1988) 5.44.030 Exemptions. The provisions of this chapter shall not apply to the following tenancies in mobile home parks: A. Mobile home park spaces rented for nonresidential uses; B. Mobile home parks managed or operated by the United States Government, the state of California, or the county of San Luis Obispo; C. Tenancies which do not exceed an occupancy of twenty days and which do not contemplate an occupancy of more than twenty days; D. Tenancies for which any federal or state law or regulation specifically prohibits rent regulation; E. Tenancies covered by leases or contracts which provide for a tenancy of more than a year, but only for the duration of such lease or contract. Upon the expiration of or other termination of any such lease or contract, this chapter shall immediately be applicable to the tenancy. No rent increases other than that allowed under the provisions of the lease shall be allowed during the duration of such a lease or contract. F. Spaces in a mobile home park which sells lots for factory -built or manufactured housing, or which provides condominium ownership of such lots, but only when the dwelling unit and the underlying interest in the space it is located upon are in the same ownership. (Ord. 1228 § 1, 1992: Ord. 1117 (part), 1988) 5.44.840 Mobile home park owner exemptions under Section 5.44.030(F). A. Any mobile home park owner claiming an exemption under Section 5.44.030(F) shall comply with the following requirements and procedures: 1. Such mobile home park owner shall file with the city clerk a statement setting forth the basic facts upon which the claim for exemption rests, such as total number of spaces, number on long-term leases, identity of spaces on long term leases, expiration date for each long-term lease and any other information determined necessary by the city administrative officer to evaluate the claim. 2. The statement shall include a listing, by space number and name, of each tenant not on a long-term lease and who would be affected by the claim of exemption. In addition, the owner shall provide proof of service that all tenants have been notified of the claim of exemption and of the fact that a tenant may file an objection within thirty days. 3. The statements required to be filed above shall be confidential and not public records unless and Cantil a hearing officer determines otherwise as necessary to conduct a hearing as set forth in subsections (D) or {F} of this section. B. An objection to the claim of exemption may be filed with the city clerk within thirty days after the notice of claim has been served. The objection shall state the grounds of the objection. The only acceptable grounds for objection is that the owner in fact does not have two-thirds of the spaces in the park on long-term leases. C. If an acceptable and timely objection is received the owner and the tenant(s) filing the objection small meet and confer to negotiate in good faith and attempt to reach an agreement, If no agreement is reached within thirty days of the date of fifing of the objection, the owner shall within ten days notify the city administrative officer that an agreement or resolution to the objection has not been reached. The city administrative officer shall proceed to select a hearing officer as set forth in Section _(E). D. The hearing officer shall set and conduct a hearing as set forth in subsections (E) and (G) of Section 5.44.070. The hearing officer shall determine whether the claim of exemption is valid, taking into account all relevant evidence, facts and circumstances necessary to come to a decision. E. The hearing officer's charges shall be paid by the city. F. An appeal may be taken from a decision of the hearing officer as set forth in Section 5.44.110, including the obligation for the costs of the appellate panel as set forth in subsection (D) thereof. (Ord. 1146 § 1, 1989) 5.44.050 City council—Powers and duties. Within the limitations provided by law and in addition to any other powers and duties the council has, the city council shall have the following powers and duties: A. To meet from time to time as required to receive, investigate, hold hearings on, and pass upon the issues relating to mobile home park rent stabilization as set forth in this chapter; B. To direct staff to make or conduct such independent hearings or investigations as may be appropriate to obtain such information as is necessary for the council to carry out its d uties; C. To adopt, promulgate, amend and rescind administrative rules, as it deems appropriate to effectuate the purposes and policies of this chapter. (Ord. 1117 (part), 1988) 5.44.060 Base space rent—Determination----Allowable increases without hearing. A. The "base space rent" for purposes of this chapter shall be the monthly space rent charged as of March 15, 1982 plus any increases otherwise allowed, pursuant to this chapter. The maximum monthly space rent for any space under a lease, upon expiration of the lease, shall be no more than the rent charged in the last month of said lease. In parks where there is an exemption because 66.67 percent of the spaces are governed by a lease with an initial term of no less than one year, then the maximum monthly space rent shall be the space rent designated in leases for comparable spaces. A schedule of current rents in the park shall be posted in a conspicuous place in the park. B. Except as otherwise provided in this chapter, the maximum monthly space rent may be increased no more than once a year based on the percentage change in the CP1, or nine percent, whichever is less, calculated as follows: 1. The maximum monthly space rent may be increased at a rate equal to one hundred percent of the CPI up to five percent and seventy-five percent of the CPl in excess of five percent calculated as follows - a. The change in space rent shall be calculated by dividing the ending CPI index by the beginning CPI index. b. If the resulting quotient is less than 1.05, then it shall be multiplied by the space rent. The resulting product shall be the new space rent. c. If the resulting quotient is greater than 1.05, then the difference between the resulting product and 1.05 shall be multiplied by seventy-five percent. The resulting product shall be multiplied by the space rent and that product small be added to the sum derived from Section 5.44.060(B)(1 )(b) above. The sum shall be the new space rent. d. The beginning CPI index shall be the index for the month used as the ending index for the last CPl adjustment. e. The ending CPI index shall be the index for the month twelve months after the beginning index. 2. At least every two months the city administrative officer shall publish, by means of an advertisement or similar notice in the newspaper, the percentage change of the CPI allowed under this subsection B for the twelve-month period immediately preceding the month for which CPI information has been most recently published by the appropriate federal agency. 1 It is the intention of this subsection B to allow for automatic increases in space rent based on changes in the cost of living as measured by the CPI. The limitations on such increases are intended to minimize the immediate impact drastic changes in the CPI might have on residents. The limitations are not intended to prevent ultimate adjustments to allow owners to receive a fair return on their property. C. The maximum monthly space rent of a tenant may be increased by the owner when there is a change of ownership affecting a mobile home. However, such increase shall not exceed ten percent of the then existing space rent and may not be relied upon any more often than once in any thirty -six-month period as the basis to increase rent. In the event of change of ownership resulting from subletting of the mobile home space as may be allowed by state law, should such become state law, then upon any such subletting the space rent may be increased up to ten percent of the then existing space rent. In the event of change of ownership resulting from vacation of the space, then the space rent may be adjusted to fair market rent in the community. Nothing in this paragraph shall preclude an adjustment as may otherwise be provided for in this chapter. D. No owner shall either (1) demand, accept or retain a rent of or from a tenant in excess of the maximum rent permitted by this chapter, or {2} effect a prohibited rent increase by a reduction of general park facilities and services. However, an owner may modify the nature of park services if reasonable allowance is provided to the tenant. For example, if the owner elects to submeter water so that tenants pay for water consumed by them, then tenants shall receive a reasonable reduction from their base space rent. E. Space rent may be automatically adjusted based on increases or decreases in expenses for common area utilities, new government -mandated services, garbage service and cable television, where applicable, excluding capital improvements or ongoing maintenance costs. The space rent may be adjusted by dividing the total increase or decrease in any such expenses incurred during a twelve-month period by twelve, fess the percentage in the CPI index for the twelve-month period. The quotient shall be allocated to the space rent for each space in the park based on the amount the space rent relates to total space rent for the park. Automatic adjustments to rent authorized by this paragraph E shall not be included in "base space rent" for the purpose of determining CPI increases pursuant to Section 5.44.060.13, but shall be considered as additional rent. Notice of the increase, or decrease, shall be in writing and shall be given as required by law no less than ninety days prior to any such increase or decrease being effective. The notice shall state the amount of the rent increase or decrease, the new space rent, the amount of the total increase or decrease in expenses and the nature of the expense. A copy of the notice shall be given to the city administrative officer. The city administrative officer shall have the authority to resolve questions regarding computation of the space rent increase or decrease based on this section. There shall only be one such increase or decrease in any twelve-month period. (Ord. 1279 § 1, 1995; Ord. 1268 § 1, 1994; Ord. 1226 § 2, 1992; Ord. 1173 § 1, 1990; Ord. 1167 § 1, 1990; Ord. 1146 § 2, 1989: Ord. 1117 (part), 1988) 5.44.070 Application for rent adjustment—Fee—Contents—Notice of request— Hearing. A. Except for automatic increases in base rent allowed under Section 5.44.060, an owner or tenant may file with the city clerk an application for a rent adjustment ("application"). The application shall state the amount of the adjustment for each space affected and the reasons for the adjustment. 1. An application shall be accompanied by the payment of a fee as may be established from time to time by the council. 2. An application filed by an owner shall be accompanied by a statement that the tenant for each space affected has been served either personally or by mail with a notice describing the application and the change in rent or services. 3. An application filed by a tenant small be accompanied with a statement stating that the owner has been either personally or by mail served with the application and with a statement designating not more than three persons to act as representatives for the spaces affected and containing the names and addresses of tenants representing no less than fifty-one percent of the spaces affected by the application and supporting the application and established by a secret election. 4. A statement shall accompany the application and shall notify the receiving party that he/she has thirty days to file an objection and if one is not filed within the time allowed, then the application will be automatically granted. B. An objection to the application may be filed with the city clerk within thirty days after the notice of application has been served. The objection shall identify the portions of the application objected to and shall state the grounds of the objection. 1. A copy of an objection filed by an owner shall be mailed to each of the designated tenant representatives. 2. A copy of an objection filed by a tenant shall be mailed to the owner. The tenant's objection shall designate not more than three persons to act as representatives for the objecting tenants. The objection must be accompanied by a statement containing the names and addresses of tenants representing no less than fifty-one percent of the spaces affected by the owner's application and verifying that they object to the application, established by secret ballot election. C. If no objection is filed to an application within the time allowed, or if less than fifty-one percent of the tenants support an objection to an application, then the application will be automatically granted. D. if an objection is filed within the time provided, then the owner and the tenant representatives shall meet and confer to negotiate in good faith an agreement regarding the application. Either party may request a mediator of their choice to assist in the negotiations, but this is not required. if an agreement is reached within sixty days, then the tenant representatives shall notify all tenants affected by the agreement. The tenants small have ten days to approve or disapprove of the agreement. If tenants representing a majority of the spaces affected fail to disapprove of the agreement then the agreement shall be binding on the owner and all tenants affected. The city clerk shall be notified that an agreement has been reached. The statements made in negotiations and any agreements reached but not approved shall not be admissible in any subsequent hearings regarding the application. E. if the owner and the tenant representatives fail to reach an agreement within the time provided or if a majority of the tenants disapprove of an agreement reached, then the applicant shall within ten days notify the city administrative officer that an agreement has not been reached. The city administrative officer shall obtain a list of no less than five qualified hearing officers. Owners and tenants may each delete one person from the list of qualified hearing officers seven days and one of the remaining persons shall be selected by the city administrative officer as the hearing officer. Appointment of the hearing officer shall be completed no later than twenty-one days after filing of the notice that an agreement has not been reached. F. The hearing officer shall set a hearing on the application complying with the requirements of this section no less than ten days and no more than thirty days after his or her appointment. The hearing officer shall notify the owner and tenants, in writing, of the time, place and date set for the hearing. No hearing or any part thereof may be continued beyond thirty days after the initial hearing date, without the applicant's consent. If the hearing officer approves an application as requested or as modified, the same shall take effect as noticed by the owner or as the hearing officer may otherwise direct. (Ord. 1117 (part), 1988) 5.44.480 Application for rent adjustment—Conduct of hearing. A. All review hearings conducted by the hearing officer shall be conducted in accordance with the Ralph M. Brown Act, at Section et seq. of the California Government Code and according to the rules of the American Arbitration Association, B. All interested parties to a hearing may have assistance from an attorney or such other person as may be designated by the parties in presenting evidence or in setting forth by argument their position. All witnesses shall be sworn in and all testimony shall be under penalty of perjury. C. In the event that either the owner or the tenant(s) should fail to appear at the hearing at the specified time and place, the hearing officer may hear and review such evidence as may be presented and make such decisions as if all parties had been present - D. Owner and affected tenants may offer any testimony, documents, written declarations or other relevant evidence. E. Formal rules of evidence shall not apply. F. Minutes shall be taken at all review hearings. (Ord. 1117 (part), 1988) 5.44.098 Application for rent adjustment—valuation—Relevant factors. In evaluating the application the council may consider, along with all other factors it considers relevant, changes in costs to the owner attributable to increases or decreases in master land and/ or facilities lease rent, utility rates, property taxes, insurance, advertising, variable mortgage interest rates, employee costs, normal repair and maintenance, and other considerations, including but not limited to, rehabilitation work, capital improvements, upgrading and addition of amenities or services, net operating income, and the level of rent necessary to permit a just and reasonable return on the owner's property. A. In applying the foregoing factors, the hearing officer shall utilize the maintenance of net operating income (MNOI) formula. Under the MNOI allowable gross rents are calculated as follows: all operating expenses for the twelve-month period ending December 31, 1981 are subtracted from all operating expenses for the twelve-month period immediately preceding the date of the application for which expense data is available. In the event operating expenses are not available for the period ending December 31, 1981, then expenses for a twelve-month period reasonably close to December 31, 1981 may be substituted. The difference shall be added to gross annual rent based on rental rates in effect on March 15, 1982. The sum shall be the allowable gross annual space rent. The allowable gross space rent shall be fairly apportioned between all spaces in the park. The space rent determined under the MNOI formula shall be adjusted as follows: 1. There shall be an adjustment to allow for inflation calculated as follows: the net operating income (NOI) for the base period shall be calculated by subtracting the park's operating expenses for the twelve-month period ending December 31, 1982, from the park's annual gross space rent based on the space rent in effect on March 15, 1982. The CPI index for the month most recently available prior to filing the application shall be divided by the CPl index for March, 1982. The resulting quotient shall be multiplied by the base period NOI. This shall be the adjusted NOI. The operating expenses for the twelve-month period immediately preceding the date of the application for which information is available shall be added to the adjusted NOI. The sum shall be the inflation-adjusted gross space rent. The allowable space rent shall be the greater of the space rent calculated using the MNOI formula and the space rent adjusted for inflation. 2. In calculating MNOI there shall be an adjustment to the gross space rent in effect on March 15, 1982, if the hearing officer determines that the gross space rent in effect on that date did not allow the owner to receive a just and reasonable return on his or her property. 3. If the hearing officer concludes that the MNOI formula, and the adjustments thereto, does not provide a just and reasonable return to the owner, then the hearing officer may apply any reasonable formula, including a return on investment, a return on fair market value, or return on equity, to determine a space rent which will allow the owner to receive a fair and reasonable return on his or her property. B. The hearing officer shall not consider income arising from spaces leased in the park pursuant to Section 5.44.030E of this chapter. Likewise, the hearing officer shall not consider a pro rata portion of the expenses of park operation attributable to the leased spaces. (Ord. 1117 (part), 1988) 5.44.100 Application for rent adjustment—Hearing—Determination. A. The hearing officer small make a final decision no later than twenty days after the conclusion of the hearing. The hearing officer's decision shall be based on the preponderance of the evidence submitted at the hearing. The decision shall be based on findings. All parties to the hearing shall be advised by mail of the hearing officer's decision and findings_ B. Pursuant to his or her findings, the hearing officer may - 1. Permit the requested adjustment to become effective, in whole or in part; or 2. Deny the requested adjustment; or 3. Permit or deny, in whole or in part, requested reductions of, or charges for, facilities or services. C. Any decision of the hearing officer shall be final unless, within fifteen days after mailing of the decision and findings, the owner or any affected tenant appeals the decision. D. The hearing officer's charges shall be paid by the city. (Ord. 1'I 17(part), 1988) 5.44.110 Application for rent adjustment Hearing—Appeal. A. Any appeal from a decision of the hearing officer shall be filed with the city clerk. The appellant shall also mail a copy of the appeal to the responding party. The appeal shall state the grounds on which it is based. An appeal filed by a tenant shall be accompanied by a statement continuing the names and addresses of the tenants supporting the appeal. The appeal must be supported by at least fifty-one percent of the tenants affected by the appeal. B. Upon filing of a valid appeal, the city administrative officer shall obtain a list of no less than seven qualified hearing officers. The hearing officer who previously acted shall not qualify. Owners and tenant representatives may each delete one person from the list of qualified hearing officers within seven days, and three of the remaining persons shall be selected by the city administrative officer as the appellate panel. Appointment of the appellate panel shall be completed no later than twenty-one days after filing the appeal. C. At the time set for consideration of the appeal, the appellate panel shall review and consider the record of the hearing officer's hearing as well as the decision and finding of the hearing Officer_ After review and consideration, the appellate panel may either (1 ) determine that a further hearing shall be held, or (2) ratify and adopt the decision and findings of the hearing officer. if a further hearing is conducted, the appellate panel may, upon conclusion of that hearing and in no event more than thirty days thereafter, modify or reverse the decision of the hearing officer, only if the appellate panel finds that there has been an abuse of discretion or that there is no substantial evidence to support the hearing officer's decision. The appellate panel's decision shall be final and no appeal may be taken to the council. D. If the party filing the appeal is unsuccessful, then that party shall pay the appellate panel's charges. If the responding party is unsuccessful, then both parties and the city shall share equally in payment of the appellate panel's charges. (Ord. 1117 (part), 1988) 5.44.120 Rent increases not made in conformity with provisions—Tenant's right to refuse to pay. A tenant may refuse to pay any increase in rent not made in conformity with this chapter. Such refusal to pay shall be a defense in any action brought to recover possession of a mobile home space or to collect the rent increase. (Ord. 1117 (part), 1988) 5.44.130 Actions brought to recover possession of mobile home space ---Retaliatory eviction grounds for denial. Notwithstanding Section 5-.44.120, in any action brought to recover possession of a mobile home space, the court may consider as grounds for denial any violation of any provision of this chapter. Further, the determination that the action was brought in retaliation for the exercise of any rights conferred by this chapter shall be grounds for denial. (Ord. 1117 (part), 1988) 5.44.140 Owner to provide tenants with copy of this chapter. Any tenant offered a lease or contract which if accepted and fully executed would be exempt from the provisions of this chapter (Section 5.44.030(F)} shall at the time of the offer also be provided with a copy of this chapter. (Ord. 1117 (part), 1988) 5.44.141 Amendment. The provisions of this chapter may be amended by a majority vote of the city council. (Ord. 1117 (part), 1988) 5.44.142 Severability. If any portion of this chapter is found to be invalid, then that shall in no way affect the validity of the remaining portions of this chapter. (Ord- 1117 (part), 1988) I APPENDIX C D• i:: , Iarly)a i-�bV1 t KennethK. baar, MD., Dorina'PojOrOL ar i, MCP , ' Mobilehome Parks.andMob'ilehome Space Tenancies in Marina, This report was commissioned by the City of Marina. The opinions and conclusions herein are those of the authors and do not necessarily represent the views of the City. SUMMARY The City has five mobilehome parks with a total of 399 mobilehomes. These homes are nearly evenly divided between singlewides and doublewides. The "sizes .of parks 'are similar, ranging from 61 to 99 spaces. Average space rents in the parks range from $349 to $608 per month. Apart from space rents, mobilehome owners pay for utility costs, which in most parks include water, sewer, and trash costs, as well as gas and electricity. These costs are_typically in the,range of $100 per month. Also, mobilehome owners pay property taxes and -have insurance.costs. , Long term residents typically paid prices in the range of $20,000 to $40,000 for their homes. Residents who have moved in since 2000 have paid an average of $95,000 for their mobilehomes. The majority of mobilehomes were manufactured before 1980. However, 27% were manufactured since 2000. The mobilehome park owner-mobilehome owner landlord -tenant relationship is not a market relationship in the conventional sense. Mobilehome owners have homes which as a practical matter are `immobile", and therefore, they have no bargaining power as long as they desire to retain their mobilehomes or recover their investments in their mobilehomes. Current rent levels vary among the parks . and may, be considered reasonable or unreasimabli depending on' what`standard' f<reasonaWneW is used' However; in any, case, mobilehome owners have no security against exceptional rent increases in the future. Since mobilehomes are "immobile", conventional market deterrents to exceptional increases in space rents are undercut by the fact a substantial portion or virtually all of the value of a mobilehome may be capitalized into the rents for the underlying land. Exceptional rent increases can lead to a situation in which mobilehome owners cannot afford to remain in their mobilehomes and/or lose most of the value of their mobilehomes. A substantial portion of the mobilehome owner households are low income. 33% of the households have an annual income of less than $20,000. 28% have an annual income between $20,000 and $29,999. A substantial portion (60%) of the mobilehome occupants are senior citizens. A substantial portion of the mobilehome owner households have housing cost burdens in excess of federal affordability standards (30% of income). This phenomenon is standard among low-income households in all types of housing. Consistent with trends in house prices (but not consistent with trends in apartment rents), since 2002 rent increases in the mobilehome parks have substantially exceeded the percentage increase in the CPI. In four of the five parks, rent increases have exceeded 40% compared to a 16%a increase in the CPI. In one park, rents have increased by 64% during this period. The Authors ' Kenneth Baar has a Ph.D in urban planning and is an attorney. Donna Pcjani has a.Master's. degree in urban planning. Baar has researched and published extensively on housing policy and other public policy issues. His publications have been cited frequently by. California, Courts, of, Appeal-, and: the State Supreme Court. He has served as a consultant to the following cities on issues related to mobilehome park space rents: Azusa, Capitola, Carpenteria, Carson, Ceres; Citrus Heights, Clovis; Cotati,; Escondido,' Fremont, Fresno, Healdsburg, Milpitas, Modesto, Montclair, Oceanside, Palmdale, Palm Desert, Riverbank, Rohnert Park,. Salinas„San;Marcos, .Santa Rosa, Santa, Cruz County,, Santee, Simi Valley, Sonoma, Vallejo, Ventura, Watsonville, and Yucaipa. His curriculum vitae is attached as an Appendix to this report. ,,y1..,,,s. ui TABLE OF CONTENTS I. Introduction 1 •... II. The Special Nature of the Park-Owner-Mobilehome Relationship 1 III. The Supply of Mobilehome Park Spaces " 4 i IV. Resident Survey 5 V. Mobilehome Purchases Prices and Terms o, '41 VI. Current Rent Levels,' Increases inBents,`and'Terms of Rental Agreements 16 VII. The Investments in Constructing Mobilehome Parks and Trends in the Value of Mobilehome Parks 1 21 VIII. The Affordability of Mobilehome Park Space Rents in Marina 22 IX. Affordability of Housing Alternatives 24 X. Rationale For and Against Regulation of Mobilehome Park Spaces 24 XI. Rent Regulations in Neighboring Jurisdictions 29 XII. Comments on Cost -Benefit Issues 30 XIII. Recommendations Regarding Rent Regulations 33 Appendix A - Author's Curriculum Vitae Appendix 1 Appendix B — Resident Survey Form Appendix 8 Appendix C — Park Owner/Manager Survey Form Appendix 10 iv, I. Introduction Within the City of Marina, there are five mobilehome parks with 399 mobilehome spaces. The parks range in size from 61 to 99 spaces. The purpose of this study is to provide information and analysis about mobilehome park residents and mobilehome park space rentals in the City of Marina in order to assist the City in considering policies in regards to mobilehome parks and mobilehome park tenancies. This report provides information about the mobilehome owners and trends in rents, mobilehome prices in the parks which are privately owned. The study is largely based on: 1. Information contained in responses from 276 households and five park managers to a mail survey. 2. Mobilehome sales data from 1997 through 2008 obtained from a private service which compiles sales data from sales reports supplied to the California Dept, of Housing and Community Development. H. The Special Nature of the Parkowner-Mobilehome Owner Relationship At the expense of reciting information that is commonly but far from universally known, an introductory explanation of the nature of the parkowner-mobilehome owner relationship is essential in order to provide a perspective on the information and analysis provided in this report. As a practical reality, mobilehomes that are placed in mobilehome parks are actually "immobilehomes". They are prefabricated homes, that generally are comparable in size to apartments or small houses. A substantial portion of all mobilehomes are "doublewide" structures that consist of two 10 or 12 foot wide sections that are joined together when they are installed on a lot on top of a simple foundation. Mobilehomes are rarely moved after they are placed in mobilehome parks. When mobilehome park residents move they sell their mobilehomes in place.[ Special characteristics of mobilehome park tenancies in urban areas generally include the following: 1. The "historical" investments of the mobilehome owner (tenants) in mobilehomes in mobilehome parks generally exceed those of the landlord parkowners. 1 For background see Hirsch, "Legal - Economic Analysis of Rent Controls in a Mobile Home Context: Placement Values and Vacancy Decontrol", 35 UCLA Law Review 399-466 (1988); and Baar, "The Right to Sell the 'Im'mobile Manufactured Home in Its Rent Controlled Space in the 'Im'mobile Home Park Valid Regulation or Unconstitutional Taking?', Urban Lawyer Vol. 24, 107-171 (Winter 1992, American Bar Ass'n) 1 2. The physical relocation of mobilehomes is costly, 3. Relocation within metropolitan,areas is practically impossible because there, are virtually no vacant.spaces to mobilehome parks 2 4. Parkowners generally will not ,permit.,older mobilehomes to; be moved into their parks when they do have vacant spaces-for-rent.,, 5. The, supply.of. mobilehome -park, spaces in urban areas, in California is eitherfrozen or declining.- Mobilehome park construction in urbanized areas-of Califomia`virtually ceased by the early 1980's as alternative land uses became more profitable and 'land`=use policies continually tightened restrictions od'the construction of new mobilehome parks. The mvestments'of mobilehome',park residents in their moliilehomes'are "sunk"costs. The benefits of.th6se investments can only be realized by continuing occupancy m,the.rnobilehome or by an "in-place"- sale of the mobilehome In 2001, the California Supreme Court explained:, , 2 Exceptions to this pattern occur when there are exceptional increases in space rents, and mobilehome owners, unable to afford the increases, abandon their mobnehomes creating vacancies in parks. - i Z BACKGROUND: THE MOBILEHOME OWNERlMOBILEHOME'PARk OWNER RELATIONSHIP " This case'coriceffi the application of a mobilehome rent control ordinance, and some background on the unique situation of the mobilehome' owner' in; hi''s br"fier " relationship to the mobilehome park owner may be useful. "The term 'mobile home' isisomewhat•misleading. Mobile homes,aee'largely immobile a"s a"practical matter, because the cost of moving one is often a significant -fraction of the value, of the mobile home itself. They are generally placed permanently in parks; once u, iniplace, only. about 1 in every 100;,mobile homes is evermoved.s[Citation.] A_ mobile home owner,typically_rents a plot of land, called a'pad,' from the, owner of; a mobile, home park.- The park owner provides private, roads within the park, common facilities such. as washing machines or a swimming :pool, and often utilities. The mobile home owner often invests in site-specific improvements such as a driveway, steps,,walkways, porches, or landscaping. When the mobile home owner' wishes' to move, the mobile home. is usually' sold in place;. and; the purchaser continues to rent the pad on which the mobile home is located." (Yee v. Escondido (1992) 503 U.S. 519, 523, 112 S.Ct: 1522r 118L.Ed.2d 153.)'Thus;' unlike the usual tenant, the mobilehome owner generally makes a substantial investment in the home and its appurtenances -typically a greater investment in his or her space than the mobilehome park owner. [cite omitted] The immobility of the mobilehome, the investment of the mobilehome owner, and restriction on mobilehome spaces, has sometimes led to what has been perceived as an economic imbalance of power in favor of mobilehome park owners. 3 Court opinions and academic reviews have repeatedly noted the captive nature of mobilehome park tenancies. For example, in one case the Florida Supreme Court concluded that mobilehome owners face an "absence of meaningful choice" when their space rents are increased: Where a rent increase by a park owner is a unilateral act, imposed across the board on all tenants and imposed after the initial rental agreement has been entered into, park residents have little choice but to accept the increase. They must accept it or, in many cases, sell their homes or undertake the considerable expense and burden of uprooting and moving. The "absence of meaningful choice" for these residents, who find the rent increased after their mobile homes have become affixed to the land, serves to meet the class action requirement of procedural unconscionability.' In 1994, a federal district court in California stated: 3 Galland v. Clovis, 24 CalAth. 1003, 1009-1010 (2001) 4 Lana Homeowners, Inc. v. Lantana Cascade of Palm Beach, Ltd., 541,5.0. 2014 121, 11.2 .4 (Fla.), cert. denied; 49.3 U.S. 964 (1999) Mobile homes, despite their name, are not really mobile. Once placed in a park few are moved. This,is principally due to the cost of moving a coach which is often equal to or greater than the value'ofthe`coach itself; Also, many mobile pa home rks..will not accept older coaches so that after a time, the coach -may be = rendered effectively immobile... the park owner; .absent regulation, theoretically has -the power to exact a premium from the' tenant who, as a -practical matter; cannot move the coach.s In response to the special situation of mobilehome park residents, California has adopted a set oFlandlord-tenant laws which provide specialprotections for mobilehome park -tenants. -In addition, approximately one hundred jurisdictions. in California have adopted some; type of rent control of mobilehome park spaces. Typically the rent control ordinances fie annual allowable rent increases to the percentage increase in the Consumer Price Index (CPn-all items. Most of, the ordinances do not permit additional rent increases (vacancy decontrol) wben a mobilehome is sold in place. Under all ordinances, park owners are entitled to petition for additional rent increases in order to obtain a fair return. III. The Supply of Mobilehome Park Spaees In'Califoruia, currently, there are approximately%374,000 spaces in about 5,700 mobilehome parks. 6 Monterey County has 45 mobilehome parks with 20 or more spaces. These paiks'contain' a -total of 3640 mobilehome spaces.'Santa Cruz County has 100 parks with 20 or more spaces. They contain 11,990`mobileh6me'spaces--m6bilehome'parks Santa! Clara County has for mobilehome parks with 20 or more spaces; they contain' 181,140 spaces. Mobilehome park constructionvirtualfy ceased in urban areas ,in California by 1980: In Marina all of the mobilehome parks were'constructed between 1958 and 1965.' 5 Adamson Companies v. City of Malibur854 F.Supp. 1476, 1481 (1994, U.S.D:C. Central Dist. Cal.) 6 Source for data in this section: Disc produced by the State Department of Housing and Community Development. 4 Mobilehome Parks within the City of Marina Type of mobilehome source; Survey qt parK managers. IV. Resident Survey A. The Number and Distribution of Survey Responses As apart of this study„ a mail survey of. mobilehome owners ;was conducted. This survey included,questions about:when mobilehome owners.moved into their,mobilehomes;,the size of, their mobilehome, the , rent at r the time . ,of moving in,, and., the current. rent, the ages and employment, or retirement status, of household,,members; the income of;the household •and the cost and financing of the purchase:of the mobilehome. ,, Responses were•received from the residents of 276: mobilehome.spaces, .73% of the,spaces in the City. The response rates,from all of the parks exceeded 60%. B. Household Size About half of the households are single person households and another 31% are two person households. 18% of the households have three or more persons. Household Size Household Size Year " >' --': 2 31% 3 Park Name:. Opened Address , Spaces w aB Double aee wmle Cypress Square'' '' 1961,- 347 Carmel Ave. 87 -""8' 76'', 3 EI Camino Early 60's 3320 Del Monte Blvd. 61...14 47.,,., 0 EI Rancho 1958 356 Reservation Rd 99 78 18 0 ,Lazy Wheel , ., 1965 ., 304 Carmel Ave.. 1:.69,, ,;r46� „ ,29 0. Marina del:Mar .1958:. 3128 Cresbent'Ave. '' 83 S8 24 1 ' Total 399 .204. 194, .. 4 source; Survey qt parK managers. IV. Resident Survey A. The Number and Distribution of Survey Responses As apart of this study„ a mail survey of. mobilehome owners ;was conducted. This survey included,questions about:when mobilehome owners.moved into their,mobilehomes;,the size of, their mobilehome, the , rent at r the time . ,of moving in,, and., the current. rent, the ages and employment, or retirement status, of household,,members; the income of;the household •and the cost and financing of the purchase:of the mobilehome. ,, Responses were•received from the residents of 276: mobilehome.spaces, .73% of the,spaces in the City. The response rates,from all of the parks exceeded 60%. B. Household Size About half of the households are single person households and another 31% are two person households. 18% of the households have three or more persons. Household Size Household Size Pct. of Households 1 51% 2 31% 3 7% 4 or more 11% 5 The average household size reported by survey respondents was 1.83 persons., Based bn this average, the total number of mobilehome park residents in the City is estimated to be about 730 peisons:' :.. C. Age More than half of the residents in the respondent households'are 60 years old or older. 12% are 18 years old or younger.sr. In terms of household composition, in 62% of the households, _all members were 60 years old or older. 15%a of the households include children (18 years old and younger). -- _ - - Age of Residents,.,,,,. _ Age Percentage of Residents 18 and under 12% 19-39 13% 40-59 21% 60-69. 23%, 70-96 31% This distribution coutrast§'with some'cities 'where inostof the parks'have'only seniors: . 2- 0, r; ._.. 7 The number of residents has been estimated by multiplying the approximate number of occupied mobilehome park spaces in the City by 1.83. 6 D. Length of Tenancy, in Mobilehome,Park , Approximately half of the households moved into their mobilehomes since 2000. 28% moved into their mobilehomes in the 1990's and 23% moved in before 1990. Year Household Moved into Mohilehome Park Year Household Moved into Park Percentage of= - Households Before1990 ,23'/R:��r,;; 37% 1990-1999' ` 26i)/6' 2000-2004 25% 2005-2008`:. 6% E. Prior Residence L Type of Dwelling 58% of the respondents were renters in houses- or apartments prior to moving into their current residences. 28% of the respondents had owned'their own houses or condominiums. 39% of the former homeowners(25 out of 65 respondents) were very low income (under $20,000/year). Approximately 6% of the respondents (15 respondents) had lived in other mobilehome parks. Two respondents indicated that, they, had been homeless prior1. to moving into their mobilehome. Ty De of Dwelling prior to moving into Mobilehome Park Prior Residence Type of Dwelling 'Includes two percent_ Percentage of Households rented apartment 37% rented house 21% owned home 280/6' mobilehome in other mobilehome park 6% Other (living with family, RV, military housing, room rental, live-in caregiver) 10% condominium. owners 7• 2. Location of Prior Residence 94% of the- respondents were already California'' residents'. prior `'to 'moving 'into the mobilehome park; only 15''respondent9•had"come from' ouf of state. 28% of 'the' respondents already were Marina residents prior to moving into the mobilehome park. 79% of the respondents were already residents of Monterey County. a. , .':,s10, F. Employment or Retired Status Two'thirds of th'e adults in'the re'spondent households'aze not working,' aiid less'than a quarter are working fulltime. . Employment' or Retirement Status of . Mi bil6F ohne ParkSRe'sideint`s__ Employment or'.j.,:P,.ercentage.of Retifement-Status Residents working full-time' - 23 working part-timeF 1Y 6/e not working iN,,; ; ' -26%i- ' Retired I_ :"; t'' 400W,,.t., Furthermore in one third of the households none of the members are employed. .. ,its . ' ,, _ Overall Musehold =' -Employment"or'Retirement'Status" 'Mobilehome,Faek'Households' -' Employment or Percentage of Retirement Status Households one or more persons working 23% Oulltime; no one' working fulltime, one or 44% more persons working art -time all persons retired 33'/0 or not working 8" G. Household Income Levels The survey included a question about .household income levels, including social security benefits of the households. 89,% of the survey responses included an answer.to this inquiry. Survey question: What was the total income of your household in 2007 before taxes? (please include income from all sources including social security, pension, interest, dividends, and any public assistance) 1. r .. One third .of all households. reported that their income was -under, $20,000. In 28,%o of, the households, the income level was between $20,000 and $29,999. •Mobilehome Owners . . ,Household Income Levels-, Income Category ; '° l6(14s, liouseliolds . under, $15,000 23%. . . $15,000$19,999 10%; $20,000 = $29,999 28% $30,000'- $39,999 1118% $40,000+ 21% In comparison, in 2008, the income ceilings for classified as "very low" income under federal HUD standards (50% of Area Median income or under) are $22,700 for one person households and $25,900 for two person households. The.income. ceilings. for households classified as "extremely low" income (30%,of,Area Median Income.or'under) are $13,600 for one person households and $15,500 for two person households.8 In half of the households where -all the members_.wereat�least 70 years old (38 households) the household income was under $20,000. Mobilehome owners who purchased their homes after 2000 (half, of the respondents) have higher incomes than the mobilehome owners who purchased their.homes before 2000. 8 See HUD 'TY 2008 Income Limits" published on HUD's web page 9 Household Income Pre'and_P8-st.2000 Purchasers Household= Income Category_' Purchased MH., '_before 2000, -,,Purchased MH in 2000 or after under $20,000 _ 43%° 24% $20,000-$39,999 45% 45% over $40,000 121%. 31% H. Characteristics 01 Mobltehomes 1. Size About half of the mobilehomes have one section (singlewide). and the other half have two sebtions (doublewide)." •:, Forty percent of the mobilehomes are over 900 square feet, the size of a two bedroom house. ' Square Foota e`o'f MobileHomes9 Size of. -, Prt of Mobilehome Mobilehomes (sq. feet) under 600 18%'' - - 600-899 _41% 900-1,199 ,;. ,18%-: : - 1,206-1,600'V ' 23% 2. Age of Mobilehomes As is typical in mobilehome parks most of the mobilehomes were manufactured about the time that the park opened and have been sold in place. A_pprozimatel.1half of the mobilehomes were manufactured before 1980, in the 1960'§ and 1970s. Less than a,quarter were manufactured in the 1980s and 1990s. About one quarter --were manufacturedsince 2000. Usually, these homes replaced other mobilehomes on the same spaces. 9 Square footage calculations were made by multiplying the information on the'dimensions of mobilehomes that was provided by residents in their responses to the survey questionnaire. 1d' Aae.of.Mobilehomes Year Mfd. (. " ;,, - ,Pct. of Mobilehomes before 1970. 22% -- 1970-1979 29% 1980-1989 9% 1990-1999 13% 2000 and after 27% V. Mobilehome Purchases Prices and Terms As indicated, data on mobilehome purchases prices was obtained from the resident surrey and from Santiago financial. Typically long term owners paid from $20,000 to $40,000 for their mobilehomes, while recent purchasers have typically paid $80,000 or more for their homes. About half the respondents purchased their mobilehomes before ..2000,. and. the., other half purchased their mobilehomes in 2000 or after. The mobilehomes purchased before 2000 cost $28,514 in average while the mobilehomes purchased in,2000 or after cost $95;063 in average. A. Data Obtained from Resident Survey All of the respondents, exceptone, indicated that they own their mobilehomes. 23% invested more than $100,000. The investments'of mobilehome owners substantially depending on -W is park where the mobilehome s located, when the home was purchased, when the mobilehome was manufactured, and the size of the-mobilehome, -- Mobilehome Purchase Prices (Resident Survev) Price' ,Pct: of Total iinaer$20,000 21% $20,000$39,999 25% . . $40,000-$59,999 17% $80,000$99,999 14% $100,000-$230,000 23% `Iwo respondents indicated that they had obtained their mobilehome. for. free. 11 j,,U It Mobilehome Purchase-Pric6sty Mobilehdrne Type 41`1'eslclents'urveVV" Type - - ',,,",-,:,Pct. Of Average-PLie6hase -1 Manufacture Mo bileho-m-ids Pride before 167-0" 22% $27," Single -wide 50% !94,213; Double -wide,,-; m% $87,343'11 ' MobilehomePurchase Pildeg?by,.',Year otManufacture (Resident Survey) Year 6f- ti'' Pct. of 4veragejPurchase, Manufacture Mobile r T Price before 167-0" 22% $27," 1990-1999; n _128% 1.1553 1970-1979 1 29°(0 i$29,326 2005=0ies"'e"hf,' '-1 ri 240/6 L q $51 ,700 1990-1999 $62,966-'_ 2000 -present $i Mqbilehome Purchase Prices by Year, of PLirchise ,^Resldent Survev Ye ar of -Purchase Pct. ofAverage,, :Respondents Price Purchase before 1990 23% ,,$26,114 1990-1999; n _128% $30,322 2000=2004; 25% $86,639 C 2005=0ies"'e"hf,' '-1 ri 240/6 L q $1 92,70 h Mobilehome Purchase Prices by Park Resident Survev Park Average Purchase -`" Price Cypress Square,,', : ,i $90,673 ear `$77,541 .E[Rancho...-. $38,618 l.azy_wtieel_ " = $61,7113_'`_' Marina del Mar $37,166.' Purchase Prices for Mobilehomes Manufactured before 1990 (Resident-SurvaW - Move in. :. -`" ear. all ear 2005- before .,1990- 2000-.... 2005- 1990.... 1999 20041, present Type "$751760' Single-wiae_. _.'[31]•••``._ [9] $25;027..._ $21,124 --''$16,215' $147;776 -'$27,875 -$46,249 Single -wide [281' '; 1291 [281 [t.11. .,; ' [14] $43;305 $30,375 •$38,707 $62,313;- . $67,000 Double -wide. _ _ _. _.___ [191 [231 181 _' [61 The number of responses is indicated in parenthesis. ** No responses were received for triple -wide mabilehomes: Purchase Prices for Mobilehomes Manufactured after 2000 (Resident Survey" Move-in,c :. ear. all 2000-2004_ 2005- present- - - °`$58,453 $63;538 "$751760' Single-wiae_. _.'[31]•••``._ [9] $129,687 ` $126,935 $147;776 Double -Wide bl d [ss] [251' [281' '; ' * _The number of responses is indicated in paregthesis.- i ** Only onetespon$C was received for triple -wide �_ - _- mabilehomes, reporting a purchase price of $225,000. ***Some residents reported the purchase price but not the move -in date. 13 More than half of the respondents reported that they had paid all cash for their mobilehomes. 40% of the mobilehome owners have mortgages at this time, including two owners who had paid all cash initially. The median monthly mortgage payments are $756/month, ranging from $228 to $1,728. Out of the 135 respondents who purchased their homes after 2000, 70% have mortgages at this time; their median monthly mortgage payments are about $792/month, in a similar range to the overall responses. B. Mobilehome PurchaseiPrices;,Sales:Data 1Reported by,Manufactured Housing Sales Reporting Service Data on original and current mobilehome purchase prices from 1997 to the present was obtained from a private service (Santiago Financial Inc., Tustin, CA) that provides mobilehome sales price data (primarily to appraisers). This data is based on information contained in sales registration reports which must be filed with the State Department of Housing and Community Development when mobilehomes are purchased. (Cases in which the sale price was reported as $0 were removed from the calculation -of price averages.), From 2000 to 2007, the average price of mobilehomes in Marina increased from $72,477 to $97,171. Since 2007, the average price and the number of sales have decreased. Through August 2008, the average sale price for a smaller number of -'sales was $59,394. (The small number of sales each year does not allow for tabulations_ by park or for analysis of ,sales of older mobilehomes.) 14- Average Purchase Prices for Mobilehomes in Marina* - Qantiann Finnnriol lnr , -Vnor 9nnn--mm r. . ill 7 nesioents- Responses, Year iubu-zuuu O \ \fj/ N 1OA N C �.N O {mp I 00 ` N1\ O n C \ Ln U) CO 4tO N N CO N. n\N�%D N N N O v Ia m m"' ry N m S .N I N i— �: COm .COQ L �� N O1 O I N N N w M OyNj n m W N O1 N N m n Ln te N N N N N "A— O 'N-1 m 00 00 oi0 00 OOff' OOff' Oh 06 01 O, of 1�$Oyoi y00�,y�i .t0 ,10 ,y0 .t0 ,10 ,y0 ,y0 ,y0 -$3 —A Average Purchase Price (Reported by Residents) —m—Average Purchase Price (Reported by'Santiago Financial') ales is indicated in lighter typeface next to the average purchase urice. 15 Similarly, in Monterey County, the average price of mobilehomes increased from $48,220 in 2000 to $79,257 in 2006. This trend fs'in accord with the surge in house prices -and rents from 2000 to 2006. Subsequently, .mobilehome-prices began to fall, reflecting general real estate trends. From 2007 through Augu t 2008, the average,price of mobilehomes was $62,140. Average Purchase Prices for Mobilehomes in Monterey county* 21100-21108 N N ■ m n N ,-I n to ■ N r - - n ■■ ■ n y '� 00 o 00 .i r 00 Ln N NLn N N a * The number of sales is indicated above the chart line Since 2000, Marina has averaged higher prices for doublewide mobilehome sales than the Countywide averages. VI. Current Rent Levels, Increases in Rents, Vacancy Rates, and Terms of Rental Agreements 0 A. Current Rent Levels The City sent a questionnaire to park managers about average rents, the range of rents, the portion of residents who have entered into lease agreements, and rental practices. The managers of five parks responded to this questionnaire. Each park manager provided information on the range of rents in the park, but did not indicate the average rent. 16' Current. Rents Survev of Park Managers Park Tenant survey responses were used to calculate the average rent,in each park. The information that the residents and park managers provided on rent levels was consistent. ' Current Rents Resident Survev Park -Range Initial Rent $463 Current Rents " New Tenants Cypress Square $440$500 $475 _ELCamino._ '_' ..$40,$500 $'475'' EI Rancho 10- $3$405 $380 to $420 Lazy Wheel $450-$675 $650 Marina del Mar $486 doublewide $299-$468 $436 singlewide Tenant survey responses were used to calculate the average rent,in each park. The information that the residents and park managers provided on rent levels was consistent. ' Current Rents Resident Survev Park Current Rents Average Cypress Square $463 EI Camino $445 EI Rancho $349 Lazy Wheel $608 Marina del Mar $3 53 B. Average Current Rents and Household Income Avera a Current Rents by Income Cate ory Household Income Category Average Current Rent under $20,000 $418 ;$20,000$39,999 $437 over $40,000 $466 17 C. Rent Trends In each decade space rents have m6fease&by about $100 on average. Rent Trends — All Parks (Resident Survev) . ,,_ 1 1 .. Yeae'MovedAverage' into MH Park 'Move-in'Rent -Average Currerit Rent' Pct. increase before.1990 $178 $419 135% 1990-1999 $277 $400 44% 2000-2004 $371 $460 24% 2005 -present $438 $473 8% From 2002 to 2008, increases in space rents exceeded 40% in four of the five parks in the City in contrast to a 16% increase in the CPI -all items during this period"and'to 10% increase in the Consumer Price Index rent index; The following table compares park rent levels in each park in 2002 and 2008. Comparison of Rent Levels in 2002 and 2008 Sources: 2002 survey— City of Marina Task Force; Resp6nses from 2008 survey of park residents - * $370 used as average . *. CPI -All Urban Consumers All -Items (San Francisco -Oakland -San Jose) :1 c, .. D. Mobilehome Owner Expenses in Addition to Space Rent In addition to space rent, residents have other costs associated with the ownership of their mobilehome. 18 Pctincrease Park October,. August in Rent. 2002 2008-1- Oct 2002 -August 2008. (Increase in CPI 160/.") Cypress Square 340=400• 463, 25.1% EI Camino 295 445 50.8% EI Rancho 247 349 41.3% Lazy Wheel 370 608 64.3% Marina del Mar 247 353 42.9% Sources: 2002 survey— City of Marina Task Force; Resp6nses from 2008 survey of park residents - * $370 used as average . *. CPI -All Urban Consumers All -Items (San Francisco -Oakland -San Jose) :1 c, .. D. Mobilehome Owner Expenses in Addition to Space Rent In addition to space rent, residents have other costs associated with the ownership of their mobilehome. 18 1. Utilities (Gas, Electricity, Water, Sewer, Refuse Collection) In all of the parks residents pay for their gas,apd;electricity.expenses. In addition, residents pay for water and refuse expenses. In four of the five parks residents also pay for their sewer expenses. The expenses of individual mobilehome owners vary depending on their usage levels. The standard fee for refuse collection for, one 35rgallon can is $13.00 per month. Residents reported that monthlysewer, charges in:their parks were fixed in the range of $16.00. Water usage is generally metered by'parks, with monthly costs typically in,the range of $20 to $25. The County Housing Authority authorizes a $93 utility allowance for Section 8 tenants 2.Insurance 84% of the residents have some form of insurance for their property. City-wide the average annual cost for mobilehome owners is $446. Insurance costs rise in direct proportion to: • The purchase price of the mobilehome, ranging from an average of. $313/year for mobilehomes purchased for less than $20,000 to $675/year for mobilehomes purchased for more than $100,000; • The mobilehome owner's income level, ranging from an average of $378/year for households witli'an income under $15,000/year to $559/year for households with an income of $50,000/year or more (four households that earned incomes over $75,000 paid in average more than $1,000/year in insurance); and • The year of purchase, ranging„from $348/year ,for owners who purchased their mobilehome before -1990 to $553/year for owners who purchased their mobilehome since 2005. 3. Taxes Almost all the respondents reported that they pay taxes on their.property, averaging from $320/year to $375/year. Taxes are almost twice as high for owners who bought in the last 2-3 years (about one fourth of•the sample); averaging $471/year, compared to residents that have lived in the parks for 20 years or more (another fourth of the sample), averaging $257/year. 19 E: •Rental Terms arid'Exempt Leases ' ' _ • .: .:: �a In four out of the five parks in the City none of the space rentals are covered by leases of more than'one year' In Mariva,'de]' Mar mostof the'' spacerentals are-subject to leases of one to five years. Under state law, mobilehome park spaces which are subject to leases that meet specified, terms are exempt from rent regulation as long as the lease is in effect.10 When the lease terminates, the space may be subject to rent regulation. A substantial portion of mobilehoine park space.rent control ordinances prohibit a;park owner from requiring that incoming tenants execute leases' that would be exempt from the rent regulation: 10. Civil Code Section 798.17. 20- VII. The Investments in Constructing Mobilehome Parks,,and Trends in the Value of. Mobilehome Parks While extensive information has been compiled on trends,in mobilehome values, information. on trends in mobilehome park values has not been systematically collected and reported. However, there is information available which provides evidence of the scale of appreciation in mobilehome parks. . When,mobilehome parks were constructed, there was an ample supply of vacant land which could be purchased at a low, cost.,Reports and surveys,indicate that the average costs, for the land acquisition and construction costs of mobilehome parks.,were about $6,000,per,space.in the 1970s. A 1974 report by the Western Mobilehome Association projected that the total cost of onsite improvements averages $2,600 to $4,000 per lot, exclusive of land. "This includes installation of all underground utilities, utility services, sewers and sewer connections, landscaping, paving of parking areas and streets, and construction of services, swimming pools, and recreation buildings." II The report projected land costs in the range of $5,000 to $25,000 per acre, with permitted densities of 81/2 spaces per acre. This translates into land costs of $600 to $3,000 per space. The Small Business Reporter of the Bank of America estimated development costs of mobilehome parks averaged about $2,625 per space in 1970 and estimated that development costs ranged from $3,500 to $6,500 per space in 1976.12 In Marina, two parks, Cypress Square and El Rancho have been in the same ownership since the 1960's. Three of the parks were purchased since 2002; El Camino — 2002, Marina de Mar — 2005, and Lazy Wheel — 2007. Appraisals would be required to make precise estimates of the current value of the mobilehome parks in Marina. However, some estimate of the range of park values may be made. In the current market, capitalization rates for mobilehome park purchases are in the 6 to 7% range. (In other words, the value of each $1,000 in annual net operating income is in the range of $14,285 or $16,666 ($1,000/.07 or $1,000/.06)) If it assumed that park operating expenses ratios are 40% of gross income and that net operating income is 60% of gross income, a typical annual net operating income per mobilehome space of a park with rents at $450 per month ($5,400 per year) would be approximately $270/month (60% of $450) or $3,200/year. Under these circumstances the current values of mobilehome parks would be in the range of $53,333 per space ($3,200/.06). Changes in capitalization rates, which largely reflect changes in mortgage interest rates have had a dramatic impact on the values of rental property. In the past five years park values have increased substantially as a consequence of declines in capitalization rates, from a typical rate of 11 Western Mobilehome Association, Mobilehome Park Development, p.4 (1973-74 edition). 12 Bank of America, "Mobile Home Parks", Vol. 9, No. 7, p.7; Bank of America, "Mobile Home Parks", Small Business Reporter, Vol. 13, No. 6, p.10. - 21 8% io 9% to 5 to -70/o. -'If the capitalization rate'had -rema cd at the former levels of 8% or 9%,'a park with an annual net operating income per space of $3,200 would have a value $35,555 ($3,200/.09) per space or $40,000 ($3,200/.08) per space. Instead, the value of the same income level is substantially higher. " -, o-.,� - r Limited data on sales and financing of mobilehome park purchases was obtained from one real estate service. It indicates thatLazy Wheel was, purchased for $5.7 million in 2007 ($72,463 per space), with financing of $4 million:' - '` Manna del Mar was assessed at $3.5 million in 2008 ($42,168 per space) following a sale in MO. This would indicate that the sale price in 2006 would have been for approximately this., amount (since assessment increases are limited to 2% per year). In 1986, the park was purchased for $l million. El Camino was purchased for $2,500,000 in 2002 ($40,983,per space.) As indicated, Cypress Square .and El Rancho have been field by the same owners for over four decades. VIII. The Affordability of,Mobilehome Park Space Rents in Marina _ -- As -indicated; one third of the households: surveyed -indicated that their annual -,household income was under $20,000 and another 28% indicated that their household income was between $20,000 and $29,999;, If housing expenditures for •households .with amannuid dricome of $20,000 were limited to . -30%of income (the federal standard for housing affoidability);.the monthly -housing expenditure would.be $500/month ($6,000/year). In order to place the,foreg"oing $500/month amount in perspective it is critical toremember that this is the affordability level for households'at the;top point of this income group. _ _ ;e =In the -following table, for the:purpose-of.-estimating overall mobilehome'owners housing:; costs (excluding mortgage payments), it assumed that utility -costs, average $93/month and that maintenance,' insurance, -and tax costs -average. $100/month. The table sets forth thea"gaps" between housing costs'for-i"ilehome' ownei households based on alternate assumptions about: 1) rent levels which reflect the three common rent levelsinthe parks ($350, $450, -and $600); - 2) household income ($15,000, $20,000, and $30,000/year), and 3) alternate affordability standards (30%6 and 40%d'6f income). The data indicates'ihat Households with"an Income of $15,000 face an affordability gap at all three common'rent levels - $350, $45W'dnd $'600. Households witti'an income of $26000 face an 22 affordability gap at all levels if a 30% of income standard is,used. If a 40% standard is used, they still face a $126 affordability gap at the $600 rent level. The data is subject to the major qualification that it does not take into account the.costs of acquiring a mobilehome. Housing Affordabilitv for Mobilehome it Households Affordable Costs $350 — $93' 40% of Income Level .30%of, Monthly. Monthly Housing Costs Gap Income Income 40% (a) (b) (c) it Households I Lu -quays] I r $350 — $93' Space Affordability Affordability Overall ;Gap Gap Rent I 30% 40% Housing Standard :: Standard Ig•bl ''' 19-cl ` "Zi I Lu -quays] I r $350 — $93' Space Utility Cost of Overall $100 $643 Rent I Cost Insurance Housing Prop' Cost (d) (e) Taxes & Maim. (excluding (� mortgage) $15,000 $375 $500 $350 — $93' $100 $543 $450 $93 $100 $643 $600, oz $93 $100 $793 $350 $93 $100 $543 $20,000 $500 $667 $450 $93 $100 $643 $600 $93 $100 $793 $301000=' $750 $11000 $350 $93 .$100_ .. $543 $450' $93 1$100 $643 $600 $93 $100 $793 $168 $43 $268 $143 $418 $293 $43 None $143 None $293 $126 None None None None $43 None If the households with an income of $20,000/year ($1,667/month) spend $350/month for space rents, $93/month in utility costs, and $100/month for.. maintenance and insurance, the total of $543/month in housing cost would amount to 32% of their income. This total does not include any allowance for costs associated with purchasing the mobilehome. A monthly, expenditure of $500 for housing costs„would leave approximately $1,167/month for other living costs. 23 If'the households with -an income of $20;000/t'e'ar ($11667/month) spend $543/month for space rents $50/month in utility costs,' and' $100/month foi mahntenance and insurance; the total of'$667/month in -,housing cost would amount to 40% of their' indite. This would leave approximately $1,000/month for other living costs. IX. Affordability of Housing Alternatives Apartment=rents sulisfantiaby" exceed-mobilehome space rental- costs' (taking into account maintenance, fire insurance, water, and, trash collection'costs which are not usually incurred by apartment tenants). The August 2008 Housing Element indicates that average rents for studios, one bedroom; and two bedroom (one bath units) were in the range of $83kd $942: Monthly condominium ownership cost's (including mortgage costs)'would exceed $1,800 for' very low cost condominiums (e.g. $150,000) would far exceed park space rental costs. X. Rationale For andAgainst tiie Regulation'of MV bilehome ParkSpace. Rent§. A. Rationale,for Regulation „ 1. The Need to Regulate a Monopoly Type of Relationship and Prevent Excessive Rent Increases The rationale for the regulation of Mobilehome park space rents primarily rests on the special nature of the landlord -tenant relationship in such transactions. :;In a market economy supply and demand; mechanisms, are relied, on in order, to reach results that are in the public interest. When prices increase" incentives. -are created for additional production and consumers have the option of reducing their consumption. At the same time, in monopoly situations (such as in the provision of utilities) price regulations are standardly implemented. ht the case of apartment rentals, tenants have the option of moving to other apartments. The costs associated with such moves are likely to be in the range of one or two month's rent, taking into account moving costs and the possibility of additional rent during a moving period. In contrast, a household with a mobilehome has an immovable investment which can only be sold in place. While mobilehome park owner's do not have monopoly rights as a matter of law, as a practical matter they have monopoly -like control over space rents. Mobilehomes are rarely moved after their original installation on a mobilehome park space. 13 In urban areas, vacancy rates in mobilehome parks are 'exc'eptionally low. Furthermore; standard park owner practices (as' 13 A 1988 study concluded that only about one percent of all mobilehomes are ever moved during the lifetime "of the' mobilehome. Werner Z. Hirsch & Joel G. Hirsch, `Legal -Economic Analysis of Rent Controls.in a Mobile Home Context: Placement Values and Vacancy Decontrols", 35 UCLA Law. Review 399,405 (1988) ' 2d' well as land use restrictions) assure the immobility of mobilehomes. Most mobilehome parks Will not accept mobilehomes that, are, more than a few years .old .thereby precluding any, movement of mobilehomes between parks within urban areas. 14 Furthermore, as. noted, ,the combination of land use regulations and changed economic conditions -preclude the construction of new parks in urban areas. As a result, the relationship between park owners and their tenants is virtually a monopoly relationship in the sense that a mobilehome can only be used on the space on which it is currently located. In other words, the supply of available mobilehome,spaces for a mobilehome that has been installed on a mobilehome park space becomes only one, the space where the mobilehome was initially, placed. Under.these.circumstances,•the; rationale for mobilehome space rent regulations is,parti Iularly compelling. This special ,situation and the, captive nature of mobilehome, park tenancies has been repeatedly recognized in state and local legislation and by the courts. The California legislature has declared that it is necessary to provide mobilehome owners with "unique protection,,' from evictions. The Legislature finds and declares that, because of the high cost of moving mobilehomes, the potential _for damage resulting therefrom, the requirements relating to"the installation of mobilehomes,'and the cos,t of landscaping or lot preparation, it is necessary that the owners of mobilehomes occupied within mobilehome parks be provided with the unique protection from actual or constructive eviction afforded by the provisions of this chapter.15 - � • Local mobilehome park space rent stabilization ordinances commonly note the "captive" nature of mobilehome park tenancies.:. As early as 1966, an "Appraisal Guide for Mobilehome Parks" published by the Finance Division of the'Mobile Homes Manufacturers Associatioir described how land nse"restrictions provide park owners with "monopolistic" value. The guide stated: 14 This conclusion is confirmed by surveys conducted for this author overthe past five years. Park managers often viewed the question as largely hypothetical because mobilehomes had only rarely or never had been moved from another park into their park. 15 Civil"Code Sec.798.§5a 25 Monopolistic Value` ` Generally, the cost approach of a proposed park represents the upper limit - of value.' This isnot'always true,' for this'approach".frequently cannot" include the monopolistic value of a' limited"Or restricted area use: Nor is'it' true in the case of older" parks, in areas which no longer permit they construction of parks and which_ frequently have this monopolistic value:, Under"itiese circumstances;" when 'competition is strictly .curtailed, the" value of this interest, plus the,value of improvements, and the "normal value of the land, may exceed-the'accepted application of the cost approach: the land with this lega6use should be credited with the, premium, value of the monopoly interest In 1988, a nationally prominent real estate newsletter explained that: With today's parks having virtually no vacancies,and,tenants with ;limited ". options�rou get a base cash flow that is as predictable as the first of the . month' Monopoly Rents . The' -immobility of'-a-mobilehome creates a,situation in°which a pack owner can actually, charge an even higher rent than "market"ient `(the' "amount of rent' that could be obtained, for a' vacant mobilehome space), , because .the park owner can charge i an additional amount that a mobilehome. owner will'pa`' lust to 1{eep from:.losmg an investment m a mobilehome: In one widely -cited publication, on mobilehome issues, the authors, who, are economists commented:r `.Me fact that it is quite costly for a tenant to,move after having, ocated"in; die park gives, landlords the'opportunity to seek larger rent increases than they otherwise wouldrbe able to obtain."18 The authors describe this charge as "quasi -rent "19 A more realistic characterization is that it is impossible for a tenant to move with his/her mobilehome within an urban area, rather than only being "quite costly.' 'L -T _ ` } ... . - =1;' - i Under these circumstances •the rent setting' process of mobilehome'park spaces' largely. refl'e'cts the will'of'a park owner rather than any'type of market mechanism Rent levels 'and rent increase patterns within "market" areas vary" from cases m which rents have'.' ave barely been increased, to adjustments which track increases in the CPI, to adjustments which substantially exceed increases in the CPl,lbutlare comparable of those of other -park. wners; in, the area, to increases which far exceed the rent increases in other mobilehome parks in the area. 16 Randall;!ApnraisaliGuide for MobilehomeParks'31 (1966, Mobilehome Manufacturer.'s Ass'n)s::'., 17 "Mobile Home Parks: A Profitable Niche for Partnerships", 11 Real Estate Outlook (No. 3),(1988, -Warren, Gorham, and Lamont). 18 h1. at,420 (emphasis added), 19 See'Hirsch and'Hiisch, `Legal Economic Analysis'of Rent Controls m a Mobile Home Context ..Placement Values'aud Vacancy Decontrol", 35�UCLA Law Review 399, 419=423.' " 2. Preservation of the Viability of Mobilehome Ownership and the Investments of Mobilehome Owners --- --.. I- - related rationale for -controls of space,rents is the preservation of.mobilehome-values and consequently the investments of Mobilehome. owners. Traditionallyeconomists and appraisers projected that each $100 increase in space rents would lead to a $10;000re'duction,in the value of a mobilehome. These projections were based on a capitalizauon'analysis, m'which a $100 iitcrease,,m rents would_, lie offset by $100 in the monthly purchase costs of a"mobilehome (ari"amount that would'cover x'$10,000 purchase loan.) :. Empirical studies°Have not confirmed the validity of such -projections. However, it is clear that steep increases in rents have led to situations in which mobilehomes are`sold at nominal prices or become unmarketable. 3. Preservation of Affordable'Housinj;- Presently, longer term mobilehome owners have a form of housing which is more affordable than other forms of housing because they own their dwellings free and clear and have remaining housing costs that are a few hundred dollars per month below apartment rents. At the same time, they have some equity in their mobilehomes that can be realized if they elect to or have to move at some,point. In the case of the low income mobilehome owners,an;increase in housing costs of a, hundred dollars or a few hundred dollars can be unbearable.. While recent purchasers have made substantial investments in nioliilehomes.(especially doublewide mobilehomes), thets se in are 'bcell below the mvestments'that would have been required to obtain single family dwellings and "moderate size'condominiums. It is safe to assume that these purchasers chose mobilehome ownership because other ownership'alternativ'es were unaffordable. 't - B. Rationale against Mobilehome Park Space Rent Regulation The principle arguments_ against regulation of mobilehome park space rents.haye been that they do not make Mobilehome ownership more affordable for future owners and that,they lead to an unjust transfer of land "values'from park owners to park residents. 1. Impact of Rent Regulations on the Affordability of Mobilehome'Ownership Some economists have concluded that mobilehome park space rent controls do not advance housing affordability .because prospective in a jurisdiction with rent regulations :mobilehome owners are forced to pay a higher price for mobilehomes which incorporates the benefit of the rentregulation. : � ` >-. However, a principal facet of affordability is the security of an investment. Commonly, mobilehome owners are retirees who must rely on their assets, as well as their income for security.. If there is no limit on how . much the rent may be increased upon a change in mobilehome ownership, the mobileh'onie owner faces the possibility'that.his/her investment may 27 be substantially br nearly totally extinguished. As previously -indicated this'has occurred when park owners'have imposed exceptional rent increases. 2. Equity Arguments = Claims of Unjust Transfer of Land Value's Much of the criticism of mobilehome park space rent controls has been based on the view that such regulations result in an unjust transfer "of the land* value from park owners to mobilehome owners. This criticism has been set forth "in court opinions. While the Supreme Court has rejected the view that this outcome renders such legislation unconstitutional, the criticism still plays a role in debates about the equities and inequities of mobilehome park space. rent controls.. , In Hall v. Santa Barbara, a U.S. Court of Appeal. concluded that the combination of the mobilehome space rent control and the state-createdright to'sella mobilehonte'in place created a transferable possessory interest which had a "market value".' This' distinguished 'iC from conventional apartment rent controls, which had been consistently upheld by the courts; The apartment rent controls did, not grant' occupancy rights which were transferable. In contrast, under the-mobilehome regulations "tenants were reaping a monetary windfall'."' The Court concluded that the tenants' ability -to -realize a "windfall" premium "shades" into "permanent occupation of the property". - . In none of the cited cases, has the landlord claimed that the tenant's right to possess the property at reduced rental rates was transferable fo_ others, that it had a market value, that it was in fact traded on the open market and that tenants Were reaping a monetary windfall by selling this right. to others. This is not a minor difference; itis crucial. I'. That tenants normally cannot sell their,rights in.rent controlled property provides important safeguards for landlords'.'.. [Under conventional rent controls] [w]hen the premises become vacant,- the landlord is able .to reassert a measure of -- control over the property... [A]s the Santa Barbara ordinance is alleged to operate, landlords are left with the right to collect 'reduced rents while tenants have practically all other rights in the ' property they occupy. As we read the -Supreme Court's pronouncements; this oversteps the boundaries of .mere regulation. and 'shades. into- permanent " occupation of the property for which compensation is due .20,, Another federal trial court opinion sets'forth a counter to this windfall theory. The court stated. that it was clear that investments by mobilehome owners which -would substantially exceed the investments of the park owners would be an essential ingredient for the success! -Of the park enterprises and that park owners fully understood and encouraged mobilehome owners to make substantial investments m their mobilehomes: 20 833 F.2nd. 1270, 1278-80 (9th cir. 1986) 28 It is clear that most, or even all, of the tenants have invested more than the value of the coach itself to move into the park. New tenants have paid for placement value held by previous tenants. Therefore, tenants have an expectation that they will be able to substantially recoup that investment upon sale of the coach. While that expectation many not be altogether wise, it is not unreasonable..The ,park owners are business people who understand that the operation of a mobilehome ,park involves an economic relationship in which both park owner and the tenant must make asubstantial,investment. Indeed, they. have encouraged the.tenants to make the investment and to expect a return on it.21 XL Rent Regulations in Neighboring Jurisdictions and MOUS (Memorandums of Understanding) as an Alternative Rent Stabilization As indicated, approximately one hundred jurisdictions (cities and counties) in California have. adopted mobilehome park space rent regulations. 1n, Monterey County, Santa Cruz,County, and Santa Clara County mobilehome park.space rent, regulations_ are, ineffect in Capitola, Gilroy, Milpitas, Morgan,Hi11, Salinas, Santa Cruz County, and Watsonville. These ordinances have been in effect since the 198W s. The following chart summarizes the provisions of these ordinances. _. Mobile Home Park Space -Rent Ordinances , in. Monterev. Santa Clara. and Santa Cruz Counties 21 Adamson Companies v. City of Malibu, 854 F.Supp. 1476,1489 (1994, U.S.Dist.Ct., Central Dist. California) 29 " Annual IncreasesProspective Increases # of Pass- on In -Place Purchaser Jurisdiction Space Can Refuse s Amount'' Floor Ceiling Throughs Mobile home Exempt Sales, <Lease Ca itola 677 60%ofCPl 5% ' `.none' Gilroy ' ' -" 349 60% of CPI ` 5% .unlimited ' Milpitas ... �� , 5(38 , '50% of CPI 5% none Morgan Hill,,-_, 816 .75% of CPI Salinas 1,467 75% of CPI 8% unlimited. San Jose 10,756 75% of CPI 3% 7% 8% Santa Cruz prop. tax inc, County, 5;797 60% of CPI1/2 cap' ' none- X . Unincorporated replacement' cost ' the ,greater of Scotts Valley 529 100% of 3 5 7% prop tax ind; 1 A' or $30, ` CPI 1/2 cap. rep one time in 36 months gov't Watsonville 1,254 70%ofCP1 5% mandated x fees 21 Adamson Companies v. City of Malibu, 854 F.Supp. 1476,1489 (1994, U.S.Dist.Ct., Central Dist. California) 29 An MOU (Memorandum of -Understanding) as an Alternative`13entStabilizi tioii ' Ink few jurisdictions; park owner's and residents have, entered into an MOU approved by the locality•(city=or county) and the locality has,reframed from adopting rent 'regulafions'as'a result:' In i a few other cases! park owner's have had the alternative of entering into' an MOU' or being' subject to the rent control ordinance. " ' ' ' ' "The MOU's aie`renial` agreements which generally'piovide for:more liberal 'rent increase terms thanan ordinance but still contain ceilings 'on rent' increases. (Eig. the' MOU's provide for greater' annual rentincreases of"permit limited rent'increases"_upon vacancies 'wliich' 'are' not' usually permitted under -rent controls.) Tliisalterni five has been attractive to park owne'r's when'it' is4 clear that a rent stabilization ordinance will be adopfed' if'tfiey do not'enter'an�,&100 `or alternatively they will be subject to the ordinance which has been adopted, if they do'iiot enter' into the MOU. The advantage of the MOU for a locality is that it cannot be challenged because it is "voluntarily" entered into. Also, if the MOU is well drafted the administrative participation of the -City canbe minimized (e.g.' If "the' MOU' does`not'provide for capital improvement pass- throughs which have to be reviewed by the City.) " - ' ` . „ A:1; If a rent stabilization' ordinance includes`• `am MOU'altemative, then the- rent stabilization protections are in place in the event that some owners choose not to enter into the MOU or do not comply with the MOU. XII. Comments on Cost -Benefit Analysis, In considering'cost add benefits of municipal policies :in regards to niobilehome parks' and mobilehome park residents', an infinite number of scenariosare possible; which consider varying' factors. Such^factors may'iaclu& the -benefits to the'communify of'preserving"affordable housing, the cost of creating replacement housing 'of equal affordability, and/or, potential increases in revenue associated with higher value forms of development._ Caution is in order in undertaking such analysis -because their outcomes'are'largely determined by the values'fhat,are used'or'oinitted in undertakingsuch'an analysis." A. Creating' Affordable Units Over the past decades, "affordable" housing is a_`diniinishing commodity` iir'th& coastal regions of California The cost of creating housing units that• are affordable' to low income -households is' `very substantial.. Cities commonly'-have"to' provide'subsidies `of'$25,000'to $50;000 in' order to assist the development of affordable units in non-profit housing. 11 ' The costof not adopting some type of rent regblation'niay be the'loss'of affordable units in future years and the loss by low and, moderate'income household§' of 'theft investments' in: their' homes. This cost is'nof a certainty, -because rent increases may or,may not be "reasonable' m fiiture'years:''' 30 B. Legal Challenges,to Mobilehome,Park.SpaceRent,Regulations• The principal cost, argument that. has been used against, the adoption, of; mobilehome park space'rent regulations has ,been that their, ado may lead to substantial,]egal expenses. When, the introduction of. such regulations is discussed,,cities are told that their adoption may result,in, as much as millions of dollars in legal expenses. In fact, for two lengthy pen ds,du;ing the past twenty years, ,after federal courts struck.down ordinances; which controlled 1and-lea5 e ;or,mobilehome„park, space rents, clouds„of legal uncertainty about their constitutionality remained in;effect,for.:yeazs until these.precedents were reversed by the U.S. Supreme Court,Duringahs period,.mobilehome,space rent controls were faced ,with numerous,facial,challenges,. constants,, threats . of .further, litigation„ and„ continual uncertamfies. C. Facial Challenges At this, point none-of.California's one, hundred mobilehome space ,rent control„ordinances have beenstruck'down as facially invalid, although,a few, sections of some ordinances may. have; been invalidated. (In a recent decision, which does not have precedential weight, a federal trial court struck down the San Rafael ordinance;;however, that decision ison;appeal.),., The general judicial doctrine in regard to price controls and apartment.rent controls has been that such regulations are constitutional as long as they permit a fair return. However, on two occasions, in 1986 and 1996, the federal Ninth Circuit Court of Appeals concluded that mobilehome park space or land lease rent regulations .constitute, a ,taking,of, a landowner's: property because the regulations provide tenants with "premiums” in the value of their homes. The bases for these, conclusions departed.,fiom traditional takings analysis, because they, were dependent on conclusions ,about the benefits . of the space,;rent .regulation for the tenants, (mobilehome owners or owners of homes on leased land), rather, than .on .an, analysis of the burdens ihat the regulations placed on the landowners. rill I In 1992, the U.S._ Supreme Court, rejected the, theory that provided the:basis for, the .1986 decision of the Ninth Circuit and in 2005, the Court rejected the theory, that -provided the basis for the 1997 decision of the Ninth Circuit. The Ninth Circuit rulings were based on its views about the constitutional significance of the economic principle that the combination of local space rent controls and the state -created right to sell,mobilehomes .in-place .create `,ipremiums", in,the va_lue,of.m_ obilehomes.. The "premium" theory rests on the economic principle that mobilehome owners are willing to pay more:for a mobilehome if the associated land rent cost is regulated. Traditionally such issues would be of concern to legislative bodies, but would,pot;be legal, issues.; However, in the.course of judicial consideration. of the constitutionality of mobilehome.space, rent,regulations, these issues became, central legal issues. In ,1986,.in Hallv. City, of Santa Barbara, the Ninth Circuit held that vacancy controls constituted a "physical".taking of a, park,,owners property, because such controls allowed mobilehome owners to, capture, a part of the, value of the park owner's. land when selling thea, homes.2I In 1992, in Yee v. City of Escondido, the U.S. Supreme Court rejected the view that. 22 833 F.2d. 1270 (9th dr., 1986) 31 vacancy.controls constituted a"'physical" faking `of'a park�'owners' property:23''The Court rejected the concept that any transfer-of'wealth arising out'of-a rent' -regulation constitutes -'a` "physicaf`takiug and noted that'transfersaf wealth commonly occur as -a result of rent and land` use regulations: Petitioners emphasize that the ordinance transfers wealth from park owners to incumbent mobile home owners. Other forms of land use regulation, however; can also be said to transfer wealth from the one who is regulated to another. Ordinary rent control often transfers wealth from landlords to tenants by reducing the landlords' income and the tenants' monthly payments, although it does: not cause a one-time transfer of value, as occurs with mobile homes. Traditional zoning regulations, can.transfer,wealth from -those; whose activities are prohibited, to their neighbors;,when a',propertq owner is.barreil yfrom. mining coal on his land, . for example thefValue of his'property may,decline, bufttie value of firs neighbor's property may rise. The"mobile home owner's ability to'sell'the mobile home at a premium maymake`this we alth'tr`ansfer more visible than` in the ordinary case; .:. ' but the existence of the transfer in itself does not convert regulation into physical invasion.24 In 1997, in Richardson v. City of Honolulu, the Ninth Circuit held that rent controls on land leases were an unconsfitutional taking ,because they, did not."substantially advance` a legitimate state interest "�5 ,The Court concluded that the -Honolulu law did not advance a legitimate state' interest because homeowners could obtain capitalize the value of the rent regulations into ithe value of their mobilehomes; therefore, the housing would not be more affordable as a result of the rent regulations: Sn-2004,Vdri the basis of the Richardson opinion, in Cashman-v.'Cotati,� the Ninth °Circuieruled! that Cotati's mobilehome space rent -control ordinance was unconstitutional because it a "premium in imobilehome values. ' hi May 2005, in Lingle v. Chevron, the U.S. Supreme Court`niled that the "substantially, advances" formula is not an appropriate test for determining whether a regulation constitutes a taking. In a opinion-roundlycridcizing the reasoning -of the U.S. Court of Appeal, the Supreme Court explained'that,there was'no connection between'the,test and the`questions that determine' whether- a -regulation- constitutes I a., -taking; `which" involve -the-' character 'of the i urden`that is imposed -on private property -rights. ... the "substantially advances" inquiry reveals nothing about the magnitude or character of the burden a particularregulation imposes on priVate.property rights. „Nordoes Jttprovide, any.'"information, aboutr,how,tany.,.regulated t burden is , distributed among property owners. In consequence, this test does not help to identify those regulations whose effects are, functionally._.comparable. to government appropriation or invasion of private property; `it is tethered neither to the text of the Takings Clause nor to the basic justification for allowing regulatory actions to be challenged under, the Clause 26 23'503 U.S. 519'(1992) Ti 24503 U.S. 519, 529-530 . 25 124 Fad. 1156 (9d'i cic 1997) 26 Lingle v. Chevron 544 U.S. 528 (2005) ' 32 Furthermore, the Court stated that: "The, notion that ..,.a regulation-,.. ,`takes', private property, for public use by virtue of its ineffectiveness or foolishness.is untenable:" In addition, the Court noted that the application of. the "substantially advances" test would' present'"serious practical difficulties..." and "... would require courts to scrutinize the efficacy of a vast affray, of state and federal regulations - a task for which courts are not well suited." In turn, the Ninth Circuit withdrew, ,j its opinion and affirmed the. District Court's opinion upholding the Cotati ordinance:27 D. As Applied Challenges On the other hand,�there have beensuccessful challenges to administrative decisions in the review of fair return petitions. Commonly; these challeriges`have e'inerged• in situation's in which an ordinance has'not provided for annual'increases and cities have'only permitted small rent increases for park owners who.havenot obtained any rent increases for years. E. Potential Challenges ,,.There is no,;bar to bringing a legal challenge against any ordinance that Manna may adopt. However, at:t_his time there is no precedent to, support a holding that a typical ordinance would be invalid., If .a fair return peCrfion;is.filed,-a challenge to the administrative ;decision.could be filed. Howeygr,.Marina does not face the types:of situations which are inductive to -,difficulties with fair return issues, such as cases in which park,owners:have not raised rents for years prior to the adoption of an ordinance (historically low rents) or a recent park purchaser is locked into rents set prior to, the purchase of, the park: , - Nevertheless, any discussion of,legal•issues related.to mobilehome,spacerent controls -must be subject to the caveat that judicial outcomes in-this,area has .brought surprises and numerous' instances Jn trial ,court and appellate courts, have differed in their conclusions, about the, -law. Furthermore, challenges are repeatedly brought even though the, success rate.for such challenges. has been very low. XIII. Recommendations Regarding Rent Regulation In the Event that the.City Elects to Adopt Rent Regulations—'Drafting-Guidelines A. The Need for Objective Standards ' Mobilehome space rent control ordinances and/or implementing regulations should, to the degree feasible, contain objective standards, as opposed to subjective and/or open ended. standards. Discretion provides fuel for complicated, costly, and lengthy,,disputes: The differences between ordinances in terms of objectivity are drastic. A substantial portion of ordinances do not state how fair return shall be determined or use standards that are unworkable and/or circular in the context of a price regulation; thereby virtually assuring, that, fair return 27 Cushman v. Cotati 415 F.3d.1027 (2005) 33 hearings will turn into, lengthy; debates about what standard's) oul'd be used, and" conrmodly leading to'litigation.' A less complex example is the difference between an ordinance (and/or implementing'regulations) governing'the treatment of capital iWprovemen'ts which sets forth the allowable interest rate and the' amortization `periods 'for` various `types of improvements' and an -J" , ., . ordinance which simply'states tjiatcost all owarices or rent increases are authorized for capital improvements: n B. Copy Machines.Are Poor Tools for Drafting Legislation Cities should not simply copy ordinances of other jurisdictions. Often provisions from other - ordinances are copied verbatim without any understanding of their meaning or implications or how they operate in practice. C. Automatic Annual Rent Adjustments Ordinances should provide for automatic annual increases tied to ,the Consumer, Price Index - (CPI). The,purpose of m - in space rent regulations is, to prevent excessive rent -increases, rather than to stop all rent increases. In the,absence of annual, rent increase provisions a petition, is required for each rent increase. Due to the burdens associated with filing an individual rent adjustment petition the time periods between rent increase petitions, are usually substantial. As a result, large rent increases are commonly required to cover cost increases and provide growth in net operating income since the last rent -increase. At the same time, such increases commonly are shocking to lower income households that have difficulty making ends meet,' especially if their incomes -are shrinldng in real terms. Sometimes rent commissions, find that no rent'increase or only a small increase is warranted.until a park owner moves for judicial intervention and•a court finally finds that a large rent increase is required in order to permit a fair return. There is no single correct answer as to what "automatic" annual increase is the best or fairest policy. There are rationales for no annual general adjustment and for increases ranging up to 100% of the rate of increase in the CPI. To the extent that annual across-the-board increases are below the increases authorized under the fair return standard, the system may become increasingly dependent on rent adjustments through fair return individual hearings. A significant portion of California's mobilehome space rent ordinances do not include any provisions for annual across-the-board rent increases. In Carson Mobilehome Park Owners Ass'n v. City of Carson, the State Supreme Court ruled that annual across-the-board increases are not constitutionally required. The Court set forth possible rationale for a system of rent increases solely through individual park hearings that allows a rent board to tailor rent increases to the actual operating cost circumstances of a park." " At the •same time, there is strong rationale for annual "automatic" increases tied to the CPI,, 28 35 CaDd. at 195 (1983)." 34 which are, adequate to allow most owners to realize growth in,net,operating income without, having to make individual rent adjustment applications. Although'the CPI might not be a precise measure of operating cost increases, it is seen as an impartial measure which reflects average; cost increases and inflation in the overall economy that is not subject to manipulation; Therefore, its results are generally accepted as reasonable. Also, in fimes,of moderate reflation annual increases tied to the CPI are consistent with the objecfive of preventing'ezcessive increases. In contrast, public commissions commonly face strong pressures to not grant annual increases. Under ordinances that tie allowable annual increases to increases in: the CPI, ceilings and/or floors for those increases are common. Typically the ceiling is 6%.29 Floors are typically set at 2% or 3%.'0,. D. Vacancy Decontrols, Vacancy Controls and Limited Increases upon Vacancies Most mobilehome rent ordinances contain vacancy control provisions. Some ordinances allow unlimited rent increases when a mobilehome is sold in-place. After the new mobilehome owner assumes ownership future rent increases are subject to regulation; however, the initial rent is set Ey the park owner. Under vacancy'decontrols, current owners are protected•, however, they may,lose their'equity in their mobilehomes if excessive rent increases are imposed at the time'of a'sale. ,Some, ordinancesauthorize limited increases upon vacancies -.typically.) about 10%. -Often the provisions authorizing .limited;increases upon vacancy,;place a limit on the frequency.of vacancy increases,(e.g. not more than one vacancy increase in a 36 month period); others -place a dollar ceiling and/or provide a floor on the amount of the -vacancy increases. 29 E.g. Fairfield Municipal Code, Sec. 29.4(d)(v); Petaluma Municipal Code, Sec. 6.50.040.A.2; Sonoma County Code, Sec. 2-193(a)ii.''' 30 E.g. Contra Costa County has a floor of 2%. (Contra Costa County Code Sec. 540-2.404(a)(1). 35 r.i Examples of Limited Vacancy Increase Provisions ' Moolicable to In Place Sales of Mobilehomes) City or County, _ _ Type. of Vacancy Increase Provision .� American Canyon $25 if ren below mediani limit,to one increase -.Per five year Oeriod • i:,.;.�' Moorpark the lesser of 5% or CPI increase Oxnard the lesser of 15% or $80 -.Santa Clarita & Vacaville. 10%0 ., ..` Sonoma " ` '" '' $50if,rent -5:$350, 10% if rent.> $350 Laverne & Upland the Oreatei of $34or 70/.' Ventura County lesser of 7% or $50, M Appendix A Curriculum .Vitae Kenneth Kalvin;Baar, Urban Planner-& Attorney Address: 2151 Stuart St. Berkeley, Ca. 94705; Tel.: (510) 525-7437 Education Ph.D. 1989 Urban Planning, University of California at Los Angeles (Dissertation topic: "Explaining Crises in Rental -Housing Construction: _Myth and Schizophrenia in'Policy Analysis") M.A. 1982 Urban Planning, University of California at Los Angeles J.D. 1973 Hastings College of Law,'Univ. of California, San Francisco, CA: B.A. 1969 Wesleyan University, Middletown, CONN. Major: Government Foreign Languages: French and Italian Teaching Visiting Professor, Fulbright Scholar, Polytechnic University, Tirana, Albania (Introduction to urban planning) (2002 and 2003) Visiting Assistant Professor, Urban Planning Department, School of Architecture, Planning, and Preservation, Columbia University, New York (1994-1995) (courses: planning law, introduction to housing, comparative housing) Visiting Professor, Fulbright Scholar, Budapest University of Economic Sciences (Sept. 1991- June 1993) Instructor, San Francisco State University, Urban Studies Program (1983-1984) Short courses, Series of lectures Technical University of Budapest, Planning Department Series of lectures Professional Extension Courses and Undergraduate Courses (19914992) Kiev University Law School, real estate law (1992, one week course) Warsaw Technical University, Planning Department, urban planning (1992) Netherlands Ministry of Housing (1997) Appendix I Projectsr1980-2008 Consultant to California cities (Azusa, Capitola, Carpenteria, Carson, Ceres, Citrus Heights, Clovis; Cotati, Escondido, Fremont;" Fies'no, Healdsburg, Milpitas, Modesto, Montclair, Oceanside, Palmdale, Palm -•Desert,` Riverbank,' Rohnert Park, Salinas, San Marcos, Santa Rosa, Santa Cruz County, Santee, Simi Valley, Sonoma, Vallejo, Ventura, Watsonville, Yucatpa).on mobilehome parlcpolicies: (1980 -present) Co-author and Co-editor of Book "Urban Planning in a Market Economy" for Publication in Albania (2003-4) Institute of Transportation and Development Policy (New York City), Preparation of study on European policies governing location of shopping malls (2002)' Open Society Budapest (Soros Foundation), Preparation of study on contracting out of public services and 'freedom 'of infoririation in Czech Republic, Romania, and Slovakia (2000-2001) Consultant to World Bank (Budapest office), Preparation of studies on municipal contracting out of public' services' in Hungary and" on policies for the provision for the provision of district heating (1998-2000) Urban Institute; U.S. Aid for International Development (A.I.D.) funded technical assistance, Hungarian Subnational Development Project (1998 & 1999) Consultant Institute for Transportation 'and Development 'Policy; to East European Organizations on Transportation Policies (1997-98) Studies for the Golden State Mobilehome Owners League on Issues Related to-Mobilehome Ownership and Statewide Referendum on Mobilehome Owners Rights (1995-96) U.S.A.I.D. funded technical assistance to AlbanianMinistry of Construction (Sept. 1993 - March 1994) Consultant, East European Real Property Foundation, (U.S. A.I.D. funded), development of education and training in Hungary (July' 1993).. Study of HungarianLand Use Regulations'(1992, publication and technical assistance sponsored -by Urban Institute, Wash.'D.C.) ' Report for Hungarian Ministry of Justice, Comparison of•Landlord-Tenant Law in France, United States,' and Hungary (1992, funded by Urban Ins6tute,'Wash. D.C.) Consultant, City of Santa Monica, Cal., Incentive Housing Program Consultant, State of New Jersey Attorney General and Public Advocate, on fair return standards under state statute regulating evictions of senior citizens from condominiums Appendix 2 Studies of Impacts of Local Regulations on Housing Supply, Cities of Santa Monica and-. Fremont, Cal. Preparation of a Guide for New Jersey Rent.Control Boards on Fair Return Standards and Landlord Hardship,Applications (National Housing Law Project) Research and Writing Articles on Inequalities.in Property Tax Assessments ,(Legal Services Corporation, Washington, D.C.) Consultant, Peter L. Bass & Associates, Development of Contracts with Developers under the California Coastal Conservancy Lot Consolidation Program Expert Witness, City of San Francisco, on the impacts of. city policies on apartment construction in litigation involving applicability of antitrust regulations Project Director, survey of mercbants.and commercial property. owners for City of Berkeley, Cal., Planning Dept. Preparation of apartment.operating cost,studies,for the cities of Berkeley,.Santa Monica, and Cotati, California) . Consultant, Real Property Division„ First Nationwide.. Bank on disposition of assets. in operations inventory Assistant"(on contract) to Deputy,City Attorney of San Jose, California on drafting of environmental and subdivision regulations Publications,..• . Articles Baar, "Fair Return Standards Under Mobile home Park Space Rent Controls: Conceptual and Practical Approaches", Real Property Law Reporter, Vol. 29, No. 5, pp. 333-342 (2006) Baar, "Legislative Tools for Preserving Town,.Centres and Halting the Spread of Hypermarkets and Malls Outside of Cities"" published in Etudes Foncieres (Land Studies) No. 102,, pp. 28-34 (March -April 2003, Paris,, translated into French); and Falu, Varos, es Reeio (Village,Town, and Region), 2003, issue no., 2, pp. 11-22 (Budapest, translated into Hungarian) Baar, "Contracting Out Local Public,Services in a Transition Economy", Review of Central and Eastern European Law, Vol. 25, No. 4, 493-512, September 2000, (Leiden, Netherlands) Appendix 3:. -Baar; "Contracting OutMunicipal Services: Transparency; Procurement, and Price Setting Issues", Hungarian Public Administration; Vol. 49, No: 3, May 1999'(translated into Hungarian) 'Baar, "Laws Protecting Mobilehom' a Park Resident's", Land Use and Zoning Digest Vol. 49, 3-7 (Nov. 1997, American Planning Association) Baar, "The Anti -Apartment Movement in the U:S. and the Role of Land Use Regulations in Creating Housing Segregation", Netherlands`- Journal 'of Housing and 'the Built Environment, Vol. 11, no.4, 359-380,(1996) Baar, "La resistance an logement collectiF','Etudes Foncieres, Vol. 67;44-48, (June 1995, Paris, Association des Etudes Foncieres) and, 11 Movimento Contro Gli Edifici Multifamiliari Negli Stati Uniti", Storia Urbana Vol 66, 189-212 (1994, Milan, Italy) (translated versions of "The National Movement to Halt the Spread of Multi -family Housing (1890-1926)'; Journal of the American Planning Association,' Vol. 58, no. 1, 39-48 (Dec. 1991)) Baar, "Impacto del precio 'del`suelo Y' de- las normas sobre so use en el precio y la distribucion de las viviendas en. USA", La Vivienda,. no. 23, 43-51 (1993, National Mortgage Bank of Spain)'[°The'Impactof Land Costs and Laud'Regolations on'the Cost and Distribution of Housing in the United States"] Baar, "A' Teruletrendezes -Dilemmai- a Demokratikus - Piacgazdasagokban", Ter es Tarsadalom, Vol.6, no. 1-2, 89-99 (1992, Budapest) ["Dilemmas of land Use Planning in a Democracy with a Market Economy", Space and Societvl Baar, "The -Right to Sell the 'Im'mobile Manufactured Home in Its Rent Controlled Space in 'the "Im'mobile' Home Park: Valid Regulation or ,Unconstitutional Taking?", Urban Lawyer Vol. 24; 107-171 Winter 1992; American Bar-',Q'n) Baar, "The National Movement to Halt the Spread of Multi -family Housing (1890-1926)", Journal of the American Planning Association, Vol. 58, no. 1, 39-48 (Dec. 1991) Baar, "El Control de Alquileres en Estados Urudos" Estudios Territoriales , Vol. 35, 183-199 (1991; 'Madrid) ["RentControl in the United -States"] Baar, "Would the Abolitionof Rent Controls Restore a Free Market?", Brooklyn Law Review; Vol. 54, 1231.8 (1989) " Baar, "A -Choice of Issues" (Introduction to articles on ihe'impact-of rent controls on the property tax base), Property Tax Journal Vol. 6, no. 1, 1-6 (March 1987, International Ass'n of Assessing Officers). Appendix 4 Baar, "Facts and Fallacies in the Rental Housing Market' Western City, Vol. 62, no. 9,:47 (Sept. 1986,.Califomia.League of Cities) Baar, "California Rent Controls: Rent Increase Standards and Fair Return", Real Property Law Reporter, Vol. 8, no. 5, 97-104 (July 1985, California Continuing Education of the Bar) _ Baar, "Rent Control: ,An Issue Marked by, Heated Politics, Complex Choices and a Contradictory Legal History", Western City, Vol., 60 (June 1984) Baar, "Rent Controls and the Property Tax Base: The Political -Economic Relationship", Property,Tax Journal, Vol. 3, no. 1,,1-20 (March 1984) Baar, "Guidelines for Drafting Rent Control Laws: Lessons of a Decade", Rutgers Law Review, Vol. 35,72.3;r885 (1983) Baar, "Property Tax Assessment Discrimination against Low -Income Neighborhoods", Urban Lawyer, Vol. 13, 333-405 (1981, American Bar-Ass'n), , abridged versions: Clearinghouse Review, Vol. 15, 467-486 (1981), Property Tax Journal, Vol. 1, (no. I) 1, 50,(Mareh 1982) Baar, "Land Banking and Farm Security Loans", Economic Development Law Project Report, Vol. 8, no. 4, 1978) Pearlman and Baar, "Beyond the Uniform .Relocation Act: Displacement ,by State and Local Government", Clearin¢house Review, Vol. 10, 329-345 (1976) Chapters in Books Baar, ."Land Use 'Regulation", "Contracting Out 1 Municipal Services: Transparency, Procurement and Price Setting Issues", and "Financing, and Regulating District Heating", Intergovernmental Regulation in Huh6TV - A Decade of Experience (World Bank Institute, 2005) Baas, "Open Competition, Transparency, and Impartiality in Local'Government Contracting Out of Services" (Chapter 2), Navigation to the Market: Regulation and Competition in Local Utilities in Central "and Eastern Europe, ed. Peteri and Horvath ,(2001, Local Government and Public Service Reform Intifiafive, Open Society Institute, Budapest) Baar, "New Jersey's Rent Control Movement" (Chapter 10) and "Controlling "Im"Mobile Home Space Rents", (Chapter 13), ed. Keating, Tietz, & Skaburskis, Rent Control: Regulation and the Rental Housing Market (1998, Center for Urban Policy Research, Rutgers University.'., ' Appendix 5 Baar, "Hungarian Land Use Policy in the Transition to a Market Controls Land' Tenure 'and Property-'Development='i Association des Etudes Foncieres, Paris) Book (editor and coauthor)' ' with Democratic "lsurope ('i993; Eds. Baar and Pojani, Urban Planning in a Market Economy, (Tirana, Albania 2004) author of -' chapte'r's: "Deceutralization in Servie' Provision and , Urban' -'Planning - Aii.2 International Perspective, Private' , "Property Rights; Public Expropriations, and Public Rights to Undertake Urban Planning", "Contracting out Public Services in Hungary - Regulatory, Contracting' and Transparency'Issiies".- Coauthor =of chapters: "Urban Planning in` a Democracy with d''Market Economy "Local Service Provision in Albania". Expert Witness (on behalf of cities) Baker v. City of Santa Monica (1982;'Los Angeles 'County Superior Court) Segundo v. City of Rancho Mirage and Kapp v. City of Cathedral Ci tv (1985, U.S. Federal Distrir Comt, Los Angeles) Hozz v. City and County of San Francisco, (1984, Superior Court, San Francisco County) Kirkpatrick v. City of Oceanside, (1993, Superior Court, San Diego County) 440 Company v. Boroueh,of Fort Lee,'New Jersey (1996, U.S. Federal District Court;: New Jersey) Cashman v. City of Cotati, (2002, U.S. Federal District Court, Northern District California) Court Opinions Citing Articles by Baar on mobilehome park space and apartment rent regulation issues Westchester West No.2 Limited Partnership v. Montgomery County, 348 A.2d. 856 (1975) Maryland Court of Appeals [highest Civil Court in the state] Helmsley v. Borough of Fort Lee, 78 N.J. 200; 394 A.2d. 65 (1978) New Jersey Supreme Court Fisher v. City of Berkeley, 37 Cal.3d. 644; 209 Cal.Rptr. 682 (1984) California Supreme Court; affirmed, 475 U.S. 260, 106 S.Ct. 1045, 89 L.Ed.2d. 206 (1986) Oceanside Mobile Home Park Owners Association v. City of Oceanside, 157 Ca1.App.3d. 887; 204 Ca1.Rptr. 239 (1984) California Court of Appeals Mayes v. Jackson Township, 103 N.J. 362; 511 A.2d. 589 (1986) New Jersey Supreme Court; cert. denied, 479 U.S. 1090, 107 S.Ct. 1300, 94 L.Ed. 2d. 155 (1987). Appendix 6'- Yee v. Mobilehome Park Rental Review Board, 17 Cal. App., 4th 1097; 23.Cal.Rptr.2nd. 1 (1993) California Court of Appeals Palomar Mobilehome Park v. City of San Marcos, 16 Cal.AppAth 481, 20.CaLRptr.2d., 371 (1993) California Court of Appeals Guimont v. Clarke, 121• Wash. 2d. `.586; 854..P.2d.1. (1993) Washington Sup;erne Court; cert. denied, 510 U.S. 1176,.1.14 S.Ct. 12169 127 L.Ed.2d: 563 (1994) Kavanau v. Santa Monica Rent Control Board,,.16"CalAth. 761; 66 Cal.Rptr. 2d. 672 (1997) California Supreme Court); cert. denied, 522 U.S.,1077,.08 S.Ct. 856,139 L.Ed. 2d. 755 (1998) Quinn v. Rent Control Board of Peabody, 45 Mass. App.Ct. 357, 698 N.E.2d.911 (1998, Massachusetts Court of Appeal) Galland v. City of Clovis, 24 Cal.4th 1003 (2001) California Supreme Court_; cert. denied, , 534 U.S. 826, 122 S.Ct. 65 (200 1) MHC Operating Limited Partnership v. City of San Jose, 106 Cal. AppAth; 130 Ca1.Rptr. 2d 564 (2003) California Court of Appeal . , Berger Foundation v. Escondido, 127 Cal.AppAth 1, 25 Cal. Rptr. 3d. 19 (2005) California Court of Appeal TG Oceanside. L.P. v. City of Oceanside „156 Cal. AppAth 1355 (2007),Califomia Court of Appeal Appendix B Resident Survey Form o NOT But your name or address on this survey for (if a quesrion is not applicable - write N/A-") SURVEY OF MARINA MOBILEHOME PARK RESIDENTS , .. 1. In what year was your mobilehome manufactured? 2. What type of mobllebome do you live in? (check one) Singlewlde 1 Doublewide _ Trlplewlde 3. What am the dimensions of your mobilehome? - - . • Length_ Width_ A. In what year did your household move Into the mobllehome? '' - I, ..- _ _ _ & Before you moved Into the mobilehome park where did you live? : ' - City State 6. Before you moved Into the mobilehome park where did.you reside? (check one) apartment rental unit :. .. _ .._ house you rented. - --- - - - - house you. owned _ condominium you owned _ anothee moblle66tne park_,, _ _ . .. .. _- _ - • other(please describe) - - - 7. What was the monthly space rent when your household motied Into this mobilehome? K What Is your current monthly space rent? .. -- $ 9. In addltlon to the monthly spacerent, what other monthly payments do you make, to the PARK OWNER? (check thwe that apply) Gas_ Electrlclty _ {Yater_ Sewer_ Garbage_ Other (list)'_ 10. What utilities do you pay for dlrectiv to the UTILITYCOMPANY? (check those thatapply) Gas— Electricity_ Water_ Setter_ Garbage_ Other (list) 11. Do you have Insurance on your mobllehome', Yes _ No 12. If you have Insurance, what Is the cost per vear for the INSURANCE? $ Appendix 8 13. How much do you payen l year In PROPERTY -TAXES? - - - $ - - 14. Does your household own or rent the mobllehome? ". • Own, (the home, not the apace) Rent 15. What wps'the"pur'chase price of your mobllehome? - l:: -. _._ $- 16. Did you pay In full (all cash) for your mobllehome?' Yes _ No_ 17. If you did not pay all cash, how much was your dow•npayment? $ 18, What Is the total mortgage due NOW on your mob0ehome, If any? $ 19. What are your monthly mortgage payments NOW, If any? , $ 20. including vourself- how many persons live In your mo611ehome?.,, _ 21. Please 011 In the following Information about the adults (persons 18 or olden In vour household, ❑ 22. What are the ages of any children In your household? Child#1 Child42 .,,Child#3 -Child #4 23. What was the total Income of your household in 2007 before -taxes? (please. include income from all sources including social securitv,,pensioa, interest, dividends, and my public assistance) under $15,000 $15,000-$19,999 _. . $20,000. $29,999 $30,000. $39,999 ' $40,000-$49,999 _ $50,000 - $7099 $75,OOOormore . Appendix 9. Ake Employed pull -time Employed Part-time NotworkluR Retired Household Member'#1 ❑ ❑ ❑ ❑ Householdj%1emher,,#2'.;,, . _ ❑ ❑ ❑ ❑ Household Mimber 43 ❑ ❑ ❑ ❑ Household Member #4 ❑ ❑ ❑ ❑ 22. What are the ages of any children In your household? Child#1 Child42 .,,Child#3 -Child #4 23. What was the total Income of your household in 2007 before -taxes? (please. include income from all sources including social securitv,,pensioa, interest, dividends, and my public assistance) under $15,000 $15,000-$19,999 _. . $20,000. $29,999 $30,000. $39,999 ' $40,000-$49,999 _ $50,000 - $7099 $75,OOOormore . Appendix 9. Appendix C Park Owner/Manager Survey Form MOBILE HOME PARK SURVEY 1. Park Name 2. Name of Contact 3. Phone Number 4. In what year was the park built? 5. How many mobilehome spaces are in the park? 6. How many spaces are occupied by: Singlewide mobilehomes Doublewide mobilehomes Triplewide mobilehomes 7. What is the average rent for occupied spaces ? and/or describe the ranges of rents 8. What is the rent for incoming purchasers of mobilehomes? 9. Does the park offer lower rents for low income tenants? If yes, please describe the park policy Appendix 10 0. How many residents have entered into leases of one year or more? 1. Are incoming residents required to enter into a lease? a. If yes, what is the length of that lease? 2. What are the requirements for mobilehomes that are moved into the park - size, age,condition etc. 3. Does the park own any mobilehomes?.. �, .. �. a. If yes, how many? b. Is the park selling or renting those homes c. If the,spaces are rerited,iwhat is the rent Including the space and mobilehome rent? 4. When did the current owner purchase the park? 5. How many spaces are covered by leases of more than one year. f the park has a standard lease please provide a copy Appendix 11 A Report Commissioned by the City of Marina- .. [The information and opinions presented are the views of the author, not the City of Marina, informants, or any of the stakeholders.] EXECUTIVE SUMMARY 3 This report describes economist Michael St. John's findings about mobilehomes, ., . mobilehome park residents, space rents, and mobilehome values W' Marina, California. The Findings are based on survey responses by residents and park owners; interviews with stakeholders and others involved in the mobilehome market, and mobilehome, sales data. A_. .111 -.,.. . . 1111... 11. 1 11. 1 he report is responsive to the Marina City Council's search for information and . : . perspective on mobilelionie space rents. If'addresses the insecurity some.mobilehome., residents feel about spac--- ent increases insecurity tri ggered.by-fanly major space rent; , increases at one Mirindinobilehome' parkin 200711 rhe report finds that space rents in Marina are moderate. Space rents in -Marina are low1 -1er than space rents elsewhere in Monterey County Spacerents in four out of five parks have - T... increased by le`s's than'the- consumer price index for apartment -rents (CPI -Rent) over the - pas ftwen tyyears: Even the relatively high space rents at the highest rentpark are not r higher than space rents in some parks m Salinas and elsewhere in Monterey County , as. e . .r The report finds that mobilehome values,'on the other hand, have.increased in the past twenty year`s'by more than the both the' CPI and the CPI Rent index, such that sales prices in some cases exceed the intrinsic value of;the-mobilehomes: , + Mobiehom.-. e valiies and spac.e . rents are inverse,ly reF la'.cd Leaving market fluctuations aside, high space lents tend to decrease mobilehome values and low space rents tend to: - increase mobilehome values. To assure market stability, mobilehome values and space rents should be in balance. The report finds that the mobilehome I space;rent market in Marina may be out of balance in the sense that increases in mobilehome values have, over_ khe past 20 years, exceeded increases m space rents s1111 .. 1111 'report concludes with the following recommendations ,.. 1111. ... ...0 ... 1 Ttiat the City sponsor a transparent, inclusive process involvmg,all stakeholders.in order to work out a cooperative solution to residents' insecurity regarding mobilehome space rents and mobilehome values. '� 1. That the City,, mobilehome park,residents; and mobilehome park,owners;explore the possibility that a renegotiated memorandum of understanding (MOU and model lease. would bring stabilityand balance to the mobilehome. market . ........ .._ .. s 1111 3 That the City abandon the proposal to re -zone mobilehome parks and continue to.seek locations for additional' mobilehome' park space outside the downtown revitalization,, project area. 4. That the City cover the administrative costs and,consider making'a,matching p contribution to a rent subsidy program funded by parklowner contributions of 30 of gross'. 1111 . space rentals, m order to address the income needs of the lowest income mobilehome Park ................. .. ... . . residents. ' " EXECUTIVE SUMMARY r' TABLE OF CONTENTS SECTION 1- INTRODUCTION 1.1 Background .... 1.2 Key Questions.............................................................................. 1 ............. 1.3 Stakeholder'Concerns...::.:.:.._. " `'' 2 1.4 Marina, California:. irr.r ........... .....:............. :...... ._.............. ........................ 1.5 The'Mobilehome'Parks'in Marma:...:.. . ................ .. .......................... ......................... 1.6 Organization of this Report ................:..::. SECTION 2 = THE`1VIOBILEHOMt / MOBILEHOME PARK ARRANGEMENT ' ...- . 2.1 `Mobilehome Parks'- Historical Overview;...........:. 2.2 Space Rents - What's AtIssue.::::.......:::... " ....:::.»............." 6 ............................................. . 2.3 Examples of Sudden; Excessive Rent Increases .' ..::.:...................................: . ........ 9. ............. 2.4 Examples of Rent Control Programs That Go Too Far.....................................................10 2.5 Balanced Space Rent Increases.................................................................: ................. ..11 2.6 Balanced Mobilehome-Values.'..:.:...... ......::.::. :11' ...... ...... SECTION 3 - MOBILEHOME RENT CONTROL 3.1 Mobilehome Rent Control in California............................................................................13 3.2 Mobilehome Rent Control and Affordable Rousing:».::...........:..........................::........15 3.3 The Abandonment of Renf Cbntrol..::......::::...................::..............................:..:...............16 SECTION 4-= ALTERNATIVE PROGRAMS' 4.1 Model Leases ....... ............................................ ....................... .................................................. 18 4.2 Draft Memorandum of Understanding' 4.3 Draft Provisions that Might Be Included in a Model Lease ............................................ 20 4.4 Resident Assistance (Subsidy) Progr`ams:......:.....:..::..:.:.......::..............:.................:...:...... 21 4.5 Resident Purchase of Parks................................................................................................ 22 4.6 Purchase by aNan-Profit'Housing°Developer:S:::.:.:::...:».::. ' " ` ............. 22 ............................... 4.7 Condominium Con'version'(Sulidivision)................... ........ ........................ .............. 22 4.8 Case Stud Stanislaus County" '23 ..................... , • ... SECTION 5 = SPACE RENTS, HOME 'VALUES ,' & AFFORDABILITY IN MARINA, 5.1 Mobilehome Characteristics..........:...::..:...:......:.:.......:.::..................................... .. 26 5.2 Mobilehome Space Rents in Marina'::::.::.:::.:::..:..................::.....::..................:.::...........'27 5.3 Mobilehome Values in Marina........................................................................................... 30 5.4' Mobilehome Residents iu Marina:::.::...::: 35 5.5 The Affordability 6f Space Rents`:::.............::.....:::..:::...::....................................:..':......38 5.6 The Availability of Affordable Housing in Marina....................................................::.... 40 SECTION 6 - CONCLUSIONS AND RECOMMENDATIONS 6.1 Answers to Questions Posed of ttie`Begiuniug of this Report............................................... 42 6.2Recommendations :........:....::. :' ..,' . iii APPENDIX 1- RESIDENTS SURVEY FORM...................................................................... 46 APPENDIX 2 - PARK OWNERS SURVEY FORM............................................................... 48 APPENDIX 3 - MONTEREY COUNTY RENT SURVEY........................................................ ; 50 BIBLIOGRAPHY......................................................... :............... :......................... :.................... 5.1: ................. KEY INFORMANTS ...............:............................ .................................... ............. . 51 ABOUTTHE AUTHOR..................................................................................... ................ ........ 52 h, SECTION 1— INTRODUCTION 1.1 Background In response to residents' concerns about major rent increases in one mobilehome park, the Marina City Council decided in the Fall of -2001 that it would look into the status of mobilehome residency in the City. Some residents felt at the time that the "Memoranda of Understanding" (MOUS) that had been in place for several years were no longer working, and that Marina should adopt rent control. It was determined that the City would conduct surveys of residents and park owners. Kenneth Baar and Michael St. John were hired as consultants to review the survey results, collect other relevant information, and write independent reports. Baar and St. John would then comment on each other's report and all of this material would be transmitted to the - City Council. This is the initial St. John report. 1.2 Key Questions It may be useful, at the outset, to articulate the questions that the City Council might want to consider in this context. I will address the following questions in the body of the report and summarize the answers in the final section. 1. Are the mobilehome space rents in Marina too high, too low, or about average? 2. Is there a problem about space rents that the City of Marina should address? 3. Are the prices at which mobilehomes are selling reasonable, considering the overall market? 4. Is there an actual or perceived problem that rent control might address? 5. Has something changed from the situation that has prevailed, without rent control, for many years? 6. Are park owners in any way exploiting the "captive" nature of the mobilehome / mobilehome park relationship? 7. Are mobilehome residents more financially challenged than homeowners or apartment dwellers in Marina? 8. Is it possible or likely that space rents in Marina would increase significantly in the foreseeable future as they have in some surrounding communities? 9. How do mobilehome parks fit into Marina's plans for future development, including plans for creating and preserving affordable housing? 10. What might be the effects of rent control on residents, park owners, taxpayers, and the City of Marina? 11. How do the costs of mobilehome residency compare to the costs of living in a single- family home or an apaitment in Marina? 12. Are there alternative programs that might balance the market and address financial insecurity more effectively than rent control? 13. Are there mobilehome residents for whom paying space rent is a financial burden? 1:0 _Lt 1.3 Stakluildier'Concerns The spicereni ic causes stak6liOlders t.bat'afeunderstandable. • Residents are fearful that space rents will increase so much that they will' be fiiiccdiio leave their homes. Residents are also fearful that, with higher rents, their, homes will lose value or that they ivilllieforced to abandon them or sell for'salvage value. These fears are understandable, given that this has happened iei'elhtly W inobilkho, in"e" parks 'in other communities inNoithernCaliforWi.L'4�"'�; • Park Owners are fearful that rent control may co:'me`t6`MarW-'a;' Park6"crs know that rent control routinely "goes too far" by regulating rents so strictly that rents cannot keep'up With inflatidii'andlb* n ok2illowifig the #aisi i1iiiiiiih of property taiincreases and major improvements. Park owners believe that, under rent control, the values d" mobilehomes will increase and the values of parks will fall. Park owners also observe "thatrehUc(Oitfol is':a*&ati'vely-bur'de'n�s"oyme','t�'b�iias to"ilivie "communities Id `Wfo_ warring factions;-and'is pronto costly litigiiiiiiii. City (ifficialsare 'concerned 'that the a"din"Ar'Ation of 'rent control would be costly and would take City resources -from, oth`er,h- & & d ' projects A- he Ci,tj'_is'bnjag'ed hi s"ev, e,ra, l devel6pmeitprGiec6,thaihiiitluepotentialLlifi,thiW&is'of'th6'Ci"y9s vision', Z , statement —to allow Marina to "grow and mature from a small town bedroom, I I ., 0 , '. ,,, 1 3 1 1-111 commlinitytoasmaHdty�"W'hi6h'i�div46rsffi�d,,vibi-aiit�-and.'.'.s�lf-;sufticiinLl'ACity"', divided by rent control arguments and burdened by rent control litigation doesn't fit this ,wiis'i ionPWell I L 1:4, Marina; Californiw-i A study of housing in Marina should take into account Marina's history and, looking forward, its development plans. Marina was atone EC156droorri,and'scrvice ccirnhihnity lihke&WFdrt' Ord'. The closure'of Fort, Ord in, 1994 caused major economicdisl6cAtio a4siMarina's population" declined at that time by,27%-.: Now.the City is redefining itself, and,has major deVelopment plan's underway. The, City S vision and mission statements say that "Marina wMgrowaod mature from a small bedroont CommUffftVtoaSmaY`cjJ.V which is diversified, vibrant, and through positive relationships with regional agencies, sear -sufficient: Ybe CIIv WY develop At a way thatjasulates itfronz,the negative Awels of urban sprawl to -become a,desirable residemialandbusiness, 2 commundy Ala natural setting, "I " 7be City Council will provide leaderslnp in protecting Marina 'snatural setting while developing the Cityin away thatprovides a balance ofhousing, jobs and, business opportunities that will resuitin a community characterized bya desirable quality oflife, mcluding,recreanon and cultural opportunities, a safe environment and an economic viability that supports a higb level ofmunicipal services and infrastructure. "� .- Among the ambitious projects now under consideration or in development are: a downtown revitalization project • several major development projects including housing, -retail space, office space, civic facilities, parks, and open space • ,further expansion of CSU Monterey Bay. It is anticipated that the population of Marina (25,101 in.2000) may double in the coming -25" years. ..d The Housing Element of the Marina General Plan puts significant emphasis on the development and preservation of affordable housing. The City has enacted or is in the process of enacting - "inclusionary zoning" — a requirement that 20% of new housing be affordable to low and moderate income residents. The City is also enstuing.afford1.ability by planning for smaller homes. on smaller lots, townhouse residences,, and apartments,, all.of which would be "affordable.by. , . design" and therefore more affordable than large single family homes on standard size lots. Marina's Housing Element, addresses mobilehomes in two sections: • Policy 2, Program E proposes that additional land will be zoned for a new mobilehome park. • Policy 6, Program A proposes that the land under existing mobilehome parks be re -zoned so that mobilehome park is the only allowed use. The City hasn't, taken;steps to reserve vacant land, for mobilehome park development, but the City seems to be moving forward on the plan to freeze existing mobilehome space in perpetuity. It would appear, however, that this intention conflicts with some of the goals of the downtown revitalization project. Two parks, El Rancho and Marina Del Mar, are within the Downtown Specific Plan area. Both are within a few: hundred feet of Reservation Road and therefore might someday be better used for more intensive development. Leaving the zoning.as it is wouldn't by itself cause more intensive development of this prime downtown land, but it would leave open that possibility. Nothing is forever in this.world.3 - . . Vision Statement, Marina City Council Resolution 2006-112, May 2, 2006. - x Mission Statement, Marina City Council Resolution 2006-112, May 2, 2006. 3 Marina's General Plan, in an earlier version, mentioned the land under the downtown mobilehome parks as appropriate for commercial development, but that section was deleted in a later version of the General Plan. 3 1.5 The Mobilehome Parks in Marina There are five mobilehome parks in Marina. Three are senior parks. Two have no age restrictions. Four parks are clustered in the downtown area off Reservation Road. One is at the northwest end of town on Del Monte. All of Maiina's•parks were'built about fifty years ago, long before Marina saw itself as a future city or engaged in meaningful city and regional planning. Three have a clubhouse but no pool. Two have a pool but no club house.bne has'street parking; four have off-street parking. Marina's parks are moderate in size, ranging from 61 to 96 spaces. Marina's mobilehome parks have a total of 396 spaces that house approximately 721tpele. Information regarding Marina's mobilehome parks is summarized in the following table. MARINA'S MOBILEHOME PARKS ail single double 4lple year p,¢ritae cd mreet PARK OWNER age Maces wide wide wide built dam M sa pmt pool Cypress Square Albert Vieira rsenior 87. .,8 76 3:1961 1993 es no no' 347 Carmel Ave. EI Camino Albert VieiraX,, 61 . 14 - 47 .0 1962 2002.yes no : no;3320 Del Monte EIRancho Michael Tate 96 78 18 0 19581 1958 yes no no 356 Reservation Lazy Wheel Ken Waterhouse X 69 40 129 0 19651'2007 no yes` yes 304 Carmel Ave. Marina Del'Mar - Bill B Su"e Denho ''' `X-1 83 "58 "24 '-1 1958 2005 ' no no yes 3128 Crescent total: 396 Source: Marina Park Owners' Survey ° The information comes from responses to the Park Owners' Survey, Appendix 2. F! 1.6 Organization of this Report The report is organized into six sections: 1. Introduction, 2. The Mobilehome /, Mobilehome Park Arrangement ,3. Mobilehome Refit Control „ 4. Alternative, Solutions_„ _ •: „ 5. Space Rents, Home Values, and Mobilehome Affordability in Marina - 6. Conclusions and Recommendations - Section 2 explains the legal and economic arrangements governing mobilehome residency, and sets out the dynamics underlying the insecurity residents feel about space rent increases.' Section 3 discusses mobilehome rent control as a possible solution to residents' insecurity about space rents and home values. Section 4 lists alternatives to rent control that can address space rent insecurity. Section 5 describes findings regarding mobilehomes, mobilehome;residents„space,rents, and. mobilehome values in Manna. Section 6 sets out conclusions and recommendations followingfrom th6analysis. 5 SECTION2'= THE MOBILEHOME YMOBILEHOME PARK'APAUNGEMENT " 2.1 Mobilehoine`Parks=HistoricalOverview Sonic mobilehome parks in California' were built intentionally"a's mobilehome parks, but many are'parks by accident 's o 's to speak` These parkwere originally developed for mobilehomes as a transitional use, much as vacant land in' cities is often'used for'car and tmck`parking while - development plans are in process. It was assumed in these cases that the land would be used for, mobilehome housing fora tiine and then further developed at some point in the future. Many "} parks were built under this assumption with' conditional use perniits Utilities in these cases were•' installed by the parks'themselves, not by'PG&E; and not to PG&E'standards. Similarly, roads' within parks' were often built to lower staiidards'than other cite streets.' Cifies for many years` disfavored mobllehome parks because some parks tended to'be'ruri 'down and because mobilehome parks didn't add much to the tax base. But'cities then came to' understand that mobilehome parks serve usefully as'affoidable housing for low-income residents.' -For the last 20'yeais`6r so, cities have paid attention to affordabiliiy'of housing`; and in this'context mobilehome parks have come to have'a more aluedplace among cities' housing resources. Cities today' are`theiefor'e reluctantto'''see mobilehome parkland ` developed more intensively. Some cities even take the addifional''step of re -zoning inobileliome park land'froin general residential use'to mobilehome park'nse; making intensive development' more difficult or impossible.s I The problem'is that'mobilehonte p" ``arks, if they are to' provide'permanenfhousirig, need large investments in critical infrastructure: utilities, roads, sewer syste.ins,'and'so' forth'But the cost of these investments will have to be met somehow, and this requirement doesn't match the need for affordable housing. "Affordable" rents, valued'forlh'at reason, don't support the investments that will be needed to upgrade the crumbling infrastructures within many mobllehome parks. This is a problem'that'cities and counties need "to consider thoughtfully'as they craft workable'affordable housing policies. 2.2 Space Rents —What's At Issue? The economics of mobilehome residency rests critically onfthe interaction of rents and'' mobilehome values. The mobilehome park arrangement is unique among housing alternatives in that the resident owns the home but rents the land.' Owners'of single family homes own the land and the home. Apartment renters own neither. Condominium owners own their condominium and own the underlying land jointly with `other condominium owners. In a mobilehome park, in contrast; the resident home owner owns the' home but the park owne-r'`owns the"land. The split " ownership in the case'of'riiobilehoines'in mobilehome parks'raise's'some sticky issues. Economic theory explains that mobilehomes and the pads they sit on -are "complementary goods" 5 The City of Sana Cruz 'for ekample ,enacted restrictive mobilehome park zoning along with restrictive " mobilehome rent control. The rent control program`proved unworkable and was repealed.'The zoning restriction has' not prevented the largest park from gentrification and loss of affordability. that have to be used•togetherto be useful. Homes without a.pad ora pad without a home are basically useless. Itis the combination that is useful. The combination (a mobilehome on a pad) provides housing just as single-family homes, apartments,,and condominiums provide housing. The combination is provided jointly by home owners, who pay for the homes themselves, and by the park }owner, who pays for the land, streets, utility, systems, and other infrastructure elements. The total combined home owner investment in the homes in a park is typically, on the same order of magnitude as, the investment ofthe owner in thepark itself..., The 'total housing -payment that residents will be willing to make for an apartment is its rent. The amount that residents will -be willing.to pay fora single, family residence is the sum of the mortgage, the,propertyf.taxes and other costs of homeownership. The amount that residents will be willing to pay for a -condominium is the sumof the mortgage, the homeowner associa1.tion, . dues, property taxes, and other costs, of ownership. The amount that residents will be willing to pay to live in a mobilehome park is the sum of the mortgage, the,rent, and, other costs of ownership. In the.most basic terms,, living in a mobilehome., park involves payment of rent and. purchase of the mobilehome. It is logical that when,the.rent is low, more can be.patd,for. the mobilehome. Alternatively, as,the rent increases, less can be, paid for the mobilehome. A mortgage payment of $300 pm month plus a rent of $,400 per month, for example, sums to total monthly housing -payments (ignoring insum ce,.property taxes, utilities, and the,cost of maintenance) of $700 per month. If the home is,worth more, and therefore has a, higher mortgage, but the rent is lower, the combination could also be $700. Likewise, if the home is worth less, and has a lower mortgage, but the rent is higher, the combination could still be $700. A new resident wouldn't care,,presumably, about the,mix, only the total. This dynamic can become problematic in two ways. 1) If,the, park owner raises the rent, the values of mobilehomes in the park will fall. . 2) If rent,control lowers the, rent, the values of mobilehomes in the park ,will rise. . The rent—value tradeoff also impacts the park owner. The values of income-producing assets (like apartment buildings and mobilehome parks) are dependent on the rents. If rents increase, the value of the park increases. If rents decrease, the value of the park decreases. Therefore, 1) If the park owner can raise the rents, the value of the park.will rise. 2),If rent control lowers the rents, the value of the park,will fall. So we see that rent levels affect mobilehome owners and park owners in opposite ways. If rents„ rise, the value of the park rises and the values of mobilehomes fall.. If rents fall (because of rent . control, for example), the_value ofthe park falls and the values of mobilehomes.rise.b. T. . 6 Space rents don't often actually fall. In an inflating economy, rent increases less than inflation are equivalent to_ rent decreases. Rent control doesn't usually lower rents.. Rent control prevents rents from increasing overmuch. When rent controls are too restrictive, they force the real, intlauonadjusted value,of rents to decline.It is in this sense that rents can be said to "fall" under rent control.,. - 7 The relationship between rent and value is explained in economic theory" by the concept of „caprtal„izataon . Rents (adjusted by expenses) are the return tbafcan be achieved by -a productive asset: As'rents increase (or"deerease), the value of the asset increases (or falls). Changes in rent are said to be'"capitalized" into the value'of the'assetr'Asset value; in other''" words,'reflects changes in tlie'fe"nts (the return). '11i ratio between return and value'is'known-as the "capitalization rate", often called "cap rate" for short." Cap rates vary over time. If the cap rate is 8% aiid`the expense ratio 30%; forexaitple, a renf incre'as' cW $100per monthwould lead Eo an increase in value of $10,500.7 , � ' r , But rent adjustments have opposite effects on'mobilehomes `and mobilehome park's.' Leaving " other influences aside, rent increases will"tend to decrease the`value of mobilehomes but'increase the value of parks.'Converseiy, rent decreases" will tend to increase the value of mobilehomes`but decr'86,thevalueofparks: In *recent years the' capitalization rate has been unusually. low; suggesting that, today, a rent increase of $100 per month would"cause the value'of mobilehomes to fall and the value of the park to rise by something like $20,000 per space. Conversely; rents that are below market by $100 per month would cause the value of mobilehomes to rise and the value of mobilehome arks to fall'b" something like'$20 000 er spa;es P y g p. This being'so itis clear why_inobileliome owners and paik'oWners feel so strongly about what"', space rents'should beAt is also clear why mobilehome owners urge cities and counties'to adopt'' rent control and why park owners oppose the imposition of rent control. Since'ienf levels affect the values of the mobilehomes and of mobilehome parks, rent levels are especially meaningful in the mobilehome context. The rent -value dynamic doesn't exist in the case of apartments. The costs of moving from one apartment to another are relatively low.'If the propertyowner raises the rent above the rent' charged for "similar apartments, tenants will'move Out.' Tliii imposes market discipline on property owners. An owner who increases rents too much will end up with a vacant building. It is'true that apartment rent control,; by lowering the rents of apartments,' can lower the value of, apartment buildings, just as mobilehome rent control calf lower the`value of a mobilehome"park,' but California state Iawnow says that; even when there islocal rent' control, apartment' rents may rise to market "'on vacancy., The impact of rent control on'the value'of apartment buildings is muted by vacancy decontrol. Rents always retiirn'to market levels eventually.' ' ` In the"case of mobilehome parks,'in'contiast, the'cost'of moving is high:' It bas been-s'aiil that ttie''- cost of moving'And setting up atypical `mobilehome is`$10 000 or more: In addition; and more important, is the fact that there is nowhere to move a used'niobilehometo'in most c'a'ses. Most 9 Rent of $100per month implies net income of $70 per month, which "implies net income' of $840 per year. $840 P .08=$10.500.. ,. .. - ,l:. . . '.J, s The capitalization hypothesis has been addressed in several studies. See St. John (1989), Mason and Quigley (2007), Hirsch and Hirsch (1988), and Meng and Dale -Jorgenson (2007). 9 The Rental' Housing Act of 1995;' otherwise ]mown as "The'Cosia-Hawkins Act", mandates'vacancy decontrol for , all jurisdictions that control apartment rents. Costa -Hawkins doesn't apply, however, to mobileho'nte rent control. parks are full,sand when there is a vacant space, most park owners will only accept a new, . The option of moving the mobilehome when rents,are,raised too much is therefore mobilehome, not realistically available to mobilehome owners. And the. option.of moving. out, leaving the mobilehome behind, is constrained by the fact that higher rent lowers„the, value of the mobilehome, so that mobilehome owners face the prospect of losing a,portion of the value of their home if they move out and sell the home when the rent increases.. It can be said that mobilehome owners are "captive” in.this sense, or that the park owner, for these reasons, has a kind of "'mo monopoly power". Rent control also .works differently for mobilehomes..The state law,that says that.the rent on rent controlled apartments may go to market on vacancy doesn't apply to ;mobilehomes. Therefore cities and counties that impose mobilehome ren.t,control can, and usually do, include vacancy control. Under mobilehome rentcontrol, residents can lobby government for lower rents and.for vacancy controls. To the extent that they are successful, residents add to the value of their homes and, at the same time, limit the value of the park. This means that, in rent controlledjurisdictions, the park,owners are in this sense"captive" and.that the residents,twith the help.of the jurisdiction, have a kind of "monopply power". So here is the relevant question: Can we devise ways,to retain the freedom and protect; the investments of both parties, mobilehome owners and park owners? Can we arrange a system that prevents excessive rent increases, that remove the value of mobilehomes and at the, same time prevents the excesses of rentcontrol.that deprive park owners.ofa fair return on their investment or lower the value of.parks? 2.3 Examples Of Sudden, Excessive Rent Increases. Residents', concerns about rent increases that might make space rents unaffordable and decrease_ the value.of their homes are not altogether -irrational. There are striking examples not so far . distant from Marina. The Monte,del Lago mobilehome community.is about five miles north of Marina, in,Castroville. , The 310 -space park was purchased in 1997 by Eqmty Life, Style,Properties (ELS), a company, that owns many.parks and retirement communities nationwide.;ELS raised rents,significantly soon after purchase and has indicated that additional increases mill be announced,The residents asked the county to enact rent control, but the county. declined, citing likely, costs of, litigation_ _ The Monterey County Housing Authority explored the idea of buying the park, but it was determined that this was not feasible. It is said that rent increases at Monte,del Lago have caused many residents to leave the park. The increases are also said to have caused the values of mobilehomes at Monte del Lago to fall, significantly. to' Mobilehomes in De Anza Mobilehome Park in Santa Cruz, another park owned by ELS, have also been subjected,to large rent increases. Santa Cruz had rent control since 1992. Space rents; varied from $400 to $750 — a bargain considering the location and quality of the park. ELS 10 These effects are anecdotal. A detailed study of the effects of rent changes at Monte del Lago would add_ to our understandings aboutthe relationships between rents and value.: , PJ brought a lawsuit asserting that the prices at which'hcmes changed hands - $150,000'to $400,000' for older mobilehomes — included a huge "premium" based on rent control. Homeowners, in effect were selling the pazk`owneYs property according to ELS. The rent control ordinance ' included price controls_ on'the sale'priceof mobileliomes, but residents routinely bypassed the ' sale price restriction's; and the City"didn't enforce those restrictions effectively., When the legal ' costs'approached $1'million, the'City, negotiated 'an arrangement with ELS whereby cbrrent. residents would 'receive moderate (coritrolledj re'nt'incre'ases'T6r 34'years; but therewould be no control on the rents when current residents -left. Rents`on` vacancy'are said to be set now at ' $3,000 to $5,000 depending on location in'the park. Needle 4`to say;' with rents like that, mobilehomevaldes are probably uearzer&"' These examples — and there azeothers around tb'e'stai&' worry'inobilehome residents'' in Marina' and elsewhere. Residents' concern is understandable. But we need to bear in mind that De Anza and Monte del Lago are superlative, luxury parks in extraordinary locations. De Anza is located on a bluff above the ocean within walking distance of downtown Santa Cruz. Some homes there have oceadviews. Spaces are larger The "setting is peaceful.' S16ntedel Lago feels more like a gated community of single family homes`thin' a`mobilehomepark. These two' parks have more'' amenities and a far more exclusive ambiance than any of the mobilehome parks in Marina. Many homeowner's at Anza and M8nteD@--Lago live eisewhe`re; using their California mobilehome as a second`homei It seems unlikely, for these reasons; thavlmge rent increases' would ever be imposed af'Marina's mobilehome packs: The tnarket'wouldn't support excessive space rents in Marina. The fear that what happened at De Anza and Monte del Lago''will happen'at Marina's parks, although understandable, is without foundation. 2.4' Examples'Of Rent Control -Programs That'Go Too Far t One also doesn't.have to look far to find rent control programs that "go too far". 12 Almost all do. A few,miles' north of Marina, Santa'Cruz County has a particularly restrictive form of rent control. Rent increases in'Santa Cruz`Coumy mobilehome parks'arerestricted to 50°/d"of the CPI (Consumer Price` Index): That means that the income that park owners receive can't keep up with inflation. But the costs of streets, taxes; repairs and so'forth continue to grow at the full CPI. Santa Cruz County has 100% vacancy controls. No rent increase is allowed on vacancy. So park owners in Santa Cruz County watch helplessly while their net incomes decline, year by year. Space rents are in the $200 - $300 range, far below market for Santa'Cruz County and -the Values of mobilehome parks in the county arefrozen or declining. Meanwhile; as one would expect, mobilehome values in Santa Cruz County'are high'and'risimg, Protected by'rent' control, mobilehonteowners enjoy major increases in the value of their homes. Many homeowners in Santa Cruz County rent their mobilehomes to'others, making'a profit because although there is rent control mi -the space they'rent`from'the park owner,'there is no rent " The scope of this study didn't allow detailed investigations of communities outside of Marina. The outfall from the end of rent control at De Anza would be a fitting topic of further research. 12 The phrase "go to far," has special meaning in discussions about economic regulation. First used in a case known as Pennsylvania Coai'd . v. Mahon in 1922, the piirase'rite' that controls which are permissible if they are ' " reasonably limited may, if they "go too far", violate the Takings Clause of the US constitution. See Manheim, p.5. 10 control,on the rent they receive,from their tenants. This situation in Santa Cruz County,is clearly ,out of balance It is also unstable. Some park owners sue There has been lots of litigation involving mobilehome parks in Santa Cruz County._; Some park owners are, said to be planning to close their,park permanently„ Other park owners are simply buying up the mobilehoI.mes in.their own parks,, one,by,one,; and, then renting;them out. ,. Since there are no controls on the rental of mobilehomes, park owners; can buy their way out of , rent control in this way. Once they do,thatz the mobilehomes rent for market rents and, mobilehome residency loses,its affordability. Santa Cruz County, has,been,buying.parks itself, but it is not clear that this is'a workable solution long-term,,or that Monterey, County. or_the City of Marina can afford to do that. The mobilehome situation in Santa Cruz County is fundamentally unbalanced and therefore, in the long,run,•unsustainable.. 2.5 Balanced Space Rent,Inereases .If space rent increases,can sometimes be too high and sometimes too low, what,space rent increases would,be Balanced? What.space rent increases would be fau to residents and park owners simultaneously?., „• -, ■ . Space rents must increase at the,CPI (the consumer price index) or a. bit more than., the CPI to cove r,extraordinary cost increases. Space rent increases below; the CPI are really space rent decreases: Space, rent decreases lower the value of parks; which is (or should be) impermissible. • Space rents must also (in addition) cover increases in governmental fees and taxes, including property tax increases following the sale of a park. Traditionally, under free market conditions, space rents have been increased to cover these sorts of cost increases. ■ Space rents must also (in addition) cover major capital improvements There is no basis for, believing that major infrastructure improvements can be handled within ,, the existing rent structure. Traditionally,, under free market -conditions, space rents,,: have, been increased to, cover major capital,costs. 2.6 Balanced Mobilehome Values.,, The true values of mobilehomes are hard to identify and often disputed. Park owners intent - controlled jurisdictions, often claim that home values,are inflated -,that homeowners capture and sell part, of the,value of the park when.mobilehome values are high..This is possible,-park,owners say, because buyers are willing to pay more.for a home with low, controlled rents:. The• prices at which mobilehomes sell in some, communities far,exceed the intrinsic, value of the physical mobilehome. The extra value — value above the intrinsic value of the home alone plus the value of placement on the lot - is called "the rent control premium" or simply "the premium" in these discussions: Mobilehome owners "whose rents are'not restricted by rent control, on the other`hand; often claim 11 because rents are stabilizedduring their occupancy. Moliilehome'owners in a vacancy decontrol program would enjoy'the stability`of rent contzof for th'e duration of their tenancy. But' , homeowners under a decontrol program would not be'able to'sell'the'ir home for more than its intrinsic value wkien they leave. When residenis leave, the home'would sell for its actual; un- inflated 'value or; if it is'old and in poor 6oridition, for its"salvage value. The second -generation mobilehome owners would therefore be able to buy the old mobilehome at an affordable price (or purchase and install a new mobilehome at its fair value) and enjoy the advantages of stabilized rent front the purchase date forward. Mobilehome renecontrol with vacancy'control,'oii the'other band, cannot be expected to 'serve as affordable housing. The first generation homeowner will`enjoy the advantage of stabilized rent ` during his or her occupancy and, in addition, will be able to sell the mobilehome with the rent control premium attached'wb'en he'lea'6s Tliis means` that the second -generation mobilehome owner (the buyer) will pay a premium for the home, such that the home is not "affordable" in any meaningful sense to the second -generation buyers. The affordability advantage of controlled rents is offset completely by the increased cost of purchase. is Indeed, affordability is decreased by rent control because buyers need to come up'with larger down payments for the more expensive homes. Larger down payments may make ownership' difficult or impossible for low income households. . - - , . Municipalities that adopt rent control, thinking that they arepreserving affordable housing, should consider that they may be protecting one generation of homeowners but burdening the next generation of homeowners. If the intent is permanently affordable housing, rent controls should not survive vacancy. Rent control with vacancy control -will assist the homeowners in residence at the time the regulations are imposed, but will not assist future generations of homeowners. Indeed, rent control with vacancy control will reduce the. affordability of ; mobilehome housing. , 3.3 The Abandonment Of Rent Control For both political and practical reasons, abandoning rent control, once it is initiated, is extremely difficult. Year by year, as space rents are constrained below market by rent control, the values of mobilehomes in the park increase. Over time, residents become used to this and consider the value to be theirs by right. Some new residents, relying on rent control to keep rents low, buy older homes at prices far above their intrinsic value. Those mobilehome owners have invested hard cash in reliance on rent control. If rent control were to be abandoned, they would lose their investments because the value of their homes would fall as the "premium" was returned to the park owner. No wonder mobilehome owners resist the abandonment of rent control. No wonder rent control becomes a part of the political culture in jurisdictions that adopt it. Nevertheless, pressures rise, and there are communities that have found a way to abandon rent '8 That the rent discount is completely capitalized into increased mobilehome value has been established by several economic studies. See Hirsch & Hirsch (1988), St. John (1989), Mason & Quigley (2007), and Zheng and Dale - Jorgenson (2007) in the bibliography. For example, "The effect of lower mandated rents to consumers is offset by the higher purchase prices of mobilehomes". Mason & Quigley, page 205. 16' control. Most often, abandonment is gradual„allowing space rents to go to market upon turnover, ; but allowing current residents to remain in their homes.paying controlled space rents for their lifetime.. This 'is what happened in Santa Cruz when the costs of litigation became too much for the City. A deal was ,struck with the owner of De.Anza Mobilehome Park whereby rent control was phased out. Current residents could stay for up to 34 years with controlled rents. But upon their departure, the rents could go to, market. This is called "sunset", or "phase-out'. Alternatively, communities sometimes replace rent control with a model lease backed by a memorandum of understanding. Such arrangements ensure that rents won't increase dramatically, but that park owners will be.able to increase rents to cover cost increases over time., This happened in Hollister and Ontario, for. example. California communities that have repealed rent control include the following:, J' „ J, , • Napa (1985) • Westminster.(1985).. • . Los Angeles County (1994) • Delano.(1994) , , • Cotati (as to apartments, 1996) • Hayward (as to apartments, 1990) • Hollister (1994) - r. , . .,;. • :Arroyo Grande (1998) • Ontario (1999) • Santa Cniz City 1(2003) It is likely that the list will grow'as communities come to understandthat rent control is not as simple as it seems, that it is an inherently imbalanced arrangement, and that it causes problems that grow over time, threatening the stability of the mobilehome / mobilehome park arrangement. 17 that a part of the value of their home is confiscated when rents are increased"It is true that mobilehome values will tend to fall when rents are increased significantly. There are examples (Santa Cruz, Castroville) where this has happened dramatically'.` The controversy about values is- made more complex because mobilehome values respond to the market as well as to intrinsic Value, condition of ,the home, and rent levels. In-place mobilehome values inc're'ased 20 ased between 1998 and 06'pardy because the housing market generally was experiencing high mflation'at that time. Similarly'', in-place mobilehome values are decreasing today along with the entire housing market. The values of single-family homes in Manna have fallen by 30 or 40% in the past two years. It is possible that mobilehome values are not as ' ' volatile as the values of single family homes, but the current downturn seems to have affected the values of mobilehomes' as well. ' �,. Over long periods, the value of mobilehomes'should increase by no more than the inflation rate. If space rents increase and' home valuesboth'increase at the inflation rate, tie balance between the investments of residents and park owners is maintained. If space rents increase'by less than inflation; it is likely that home values will increase by more'than inflation and that the value of the park will increase by less than inflation. Conversely, if space rents increase by -significantly more than inflation, it is likely -that home values will decrease or will'increase by'less than ' inflation, while the park value will increase by more than inflation. Either outcome is unbalanced and in the long ran unstable. 13 ." Since the sum of homeowners' investments in`their homes is in many parks roughly equal to the investment of the park owner in the park itself, it makes sense that homeowners and the park owner should share in any appreciation thaGthe'housing market allows. Over"dine; on'averag e, with fluctuations, the housing market`has'appreciated' over recent decades -d slightly'more than the inflation rate. Balance will be'preserved if'space`rents increase dt `slightly above the inflation rate. Space rents increasing in this way will'probably'allow both mobilehotues and mobilehome parks, assuming that they are well-maintained, to appreciate slightly above the inflation rate. 14 13 Some believe that mobilehomes invariably depreciate and that all increases in value should accrue to the land. Bu[ it is appareni in rent controlled and non -rent controlled situations that mobilehomes "that are well-maintained _' cwmmonly'do appreciate. Historically categorized'as vehicles, mobilehomes today are more like real estate. It seems appropriate;.therefore, that mobilehome owners have access to inflatiodadjustments in the value of their homes. 1a The prescription "slightly above the inflation rate" reflects the fact that urban and coastal land is a scarce resource that becomes more valuable over time. It also reflects the fact that space rents in many parks reflect the temporary nature of theoriginal infrastructure installations in many mobilehome parks. Space rents may have to increase at somewhat more than the inflation rate in order to make possible important infrastructure improvements if these temporary installations are to be considered permanent. 12 SECTION 3—, MOBILEHOME RENT CONTROL 3.1 Mobilehome Rent Control In California There are about 105 cities and counties that. control mobilehome space. rents in California. There are more than 400 cities and counties with mobilehome parks that don't control space.rents. Most jurisdictions in California have no rent'control. Of the 5,733 mobilehome.parks in California 1,561, or 27%, are rent -controlled.., The rest are, free market Of the 379,815 mobIlehome park spaces in California 149,791, or. 39.4% are rent -controlled. Most: mobilehome spaces in California are free market. 15 Rent control, in most locations, is not necessary. Mobilehome residency works perfectly well in the hundreds of jurisdictions, thousands of parks, and tens of thousands of mobilehome spaces that have no rent control., There was a rush to institute rent control programs in the late 1970s through the early 4990s. Rent.control - a new program that promised something for nothing - was popular at that time. Thereafter, .-there have been a few jurisdictions that added rent control and several that abandoned it.,It is now better understood,that rent control is not a balanced solution because it addresses the concerns of residents without addressing the,concerns of park owners. More and more frequently,, cities and counties that consider these questions are looking for solutions that meet the needs of all.stakeholders. More. and more often, rent control,is , understood to be a heavy-handed, one-sided, divisive approach that causes civic conflict, is expensive, and doesn't always keep space rents down. The space rents in rent -controlled Salinas, for example, are higher thanmost space rents in Marina. A key probl1.e1.m, with rent,control is that it is subject to political pressure. In theory, it:would be possible to structure rent control programs that would meet,the needs of park owners and.., mobilehome'owners simultaneously. But with remarkable consistency, rent control programs tend to "go too far". Most rent control programs are, written from a pro -tenant viewpoint.. Programs that are balanced.on inception tend to be revised over time in an unbalanced direction. When economic rights become a political matter, it is just too easy for things to slip out of balance. There are, after all, many more mobilehome owners than there are park owners. So local political pressure tends to lean toward residents. Park owners are few in number, sometimes don't live in the same community, and therefore often have no effective voice. It is not surprising that rent control programs too often address the needs of mobilehome owners but neglect the legitimate needs of park owners, and thus, in the end, imbalance the market. An example (among many) of the pro -tenant drift of rent control is the Santa Cruz County rent control ordinance. Passed in 1982, the ordinance was moderate, providing for 100% of CPI and allowing reasonable increases to cover unusual cost increases. The ordinance was amended 19 times over the next twenty-five years — almost always to make it more restrictive. The ordinance now allows space rent increases covering only -50% of CPI, allows almostno pass-throughs (extra increases. to cover unusual cost increases), and controls rents strictly on vacancy. As a result, space rents in Santa Cruz County are in the $200-$300 range, far below market,renis for ,r These figures are based on 1990 Census data and a Housing and Community Development Department (HCD) report dated 1026/93 and are therefore a bit out of date. The number of mobilehome parks has not changed much since the 1990s, hoviever, `so the numbers todsy'are likely not far different from these numbers: Some communities have added rent control since 1990. Other communities have abandoned rent control since 1990. The percentages haven't changed much. r, , , 13 Northern California.,;-= z, Another problem'with�mobilehome rent control that will eventu'ally.become critical is that'the'1" mobilehome park infrastructuie'd6i6horates ove"i tiirie Park'o'wners are require&to maintain services, buipark owners' under rent control don't have the ability or incentive tdreplace, ageing infrastructure. Septic systems;'road`s; and,utilifies get old and are subject to failure.' Park residents typically argue against the pass-through of the costs of capital improvements. Park owners therefore' patcli and repair instead -of replacing `or upgrading.Many parks, for example, werebuilt with;30=amp electrical systems. We all use"far'more e'nergy'than"ihattoday 'But park' owners under rent control can't afford to upgrade'to 100 amp' 'ervice'Similarly, many parks are served by fading'septic systems' but park owners can f afford to upgrade or to connect to'pubhc sewer systems.., Santa'Cruz County bumped into the infrastru6mre problemrecently. Having acquired Pleasant Acres Mobilehome Park for $7 million in 2003, the county then found that it cost an additional ' $4 million to make needed infrastructure repairs. What seemed like a good opportunity to secure, 65 units of affordable housing at a reasonable pnce turncos ed out to t far more ihan'the County ' anticipated: $108,000 per space initially and then $62,000 per space m infrastructure upgrades, ±. bringing the cost of each space'to $175;000: If this were to be iealisticallycovered by space rent," the rent would have to be something like $1 500 per month completely incompatible witfi the affordability goal Itis clear that iheiaxpayers will be subsidizing the rentsof Pleasant Acres: ` residents for a long; long time. _ , . Another problem with rent control is that the `rent control 'subsidy is'not targeted. There is n 1. o "means testing". Rent control benefits all residents, whether or not they need assistance. It usually benefits even diose mobilehome owners who live elsewhere and rent their mobilehome cruse it `As"'vacation ho' " Many residents can'well afford market'rents Some other residents have liimted incomes. Rent control, a blunt instrument, doesn't distinguish between these groups or`target assistance to those who need'it. Other assistance'programs like the Federal rent subsidy' program known as Section 8, the food stamp program and Medicaid are much Better at targeting assistance'to those in need. Rent control programs tend to dominate local politics.'Cities with rent"control often become, ''-' polarized into divided camps. This is particularly true in cities with" apartment rent control; like San Francisco, Santa Monica, West Hollywood, and Berkeley, but it is also true in some mobilehome rent control communities, like Escondido and Carson. Rent control is a pocketbook issue that arouses passionate advocacy. Mariy'commuuities'prefer to steer J6 iiof rent control in order to avoid these kinds of partisan battles. Rent control programs'are also expensive. Leaving aside the costs of litigation, a rent control _ program in Mariha would cost something like $250,000 in administrative cosfS each year. It could cost much more than that. This would put pressure on a City budget that is already tight,' if 16 Some mobilehome owners in Marina use their mobilehome as a second home. Unfortunately, the survey didnY esk this question, so we don't know how many. It is probably not a high proportioq but some think it might be as high, as 10% Most parks prohibit rental of mobileh'onies by mobilehome owners, but rentals occur sometimes nevertheless. 14 the City covered the cost. The costs might be charged to park owners through registration and. petition fees. If so, it would be normal to. allow the fee or a part of the fee to be passed through to residents, in the form of rent increases, or a rent surcharge. Fair return principles command that, . . under rent control, rent control fees that park owners pay are costs that deserve compensation. One way or, another, the residents, are likely to end up paying at least part of. the fee. This would . add to the cost of mobilehome,residency, undermining the affordability,,goal..,t Andthen there, are the costs of.litigation. Rent control has caused an enormous amount of litigation in the past three decades The legal principles underlying rent control are complex and unsettled, so the same issues are htigated.again and again in different forums. 17 The.cost of litigation has caused several cities to give up on rent control. The most, recent example of this is the City of Santa Cruz, which abandoned its rent control program in 2003 because the costs 'of,' , , litigation became unsupportable. Another example is Hollister, where protracted litigation caused the City, its residents, and the park owners to agree on a.model lease program that replaced rent control in. 1994. , The most basic issue.'with rent control is that itburdens a few individuals (park owners) with;, subsidies that should be paid'for by the entire community. Other,housing assistance programs, like Section 8, Shelter Plns, Care, and first time homeowner programs, are paid for by the taxpayers. The burden is widely spread and shared by all, as public. burdens should be. With, tent control, the financial burden of public assistance is shifted to,park owners alone. Rent control, programs are therefore on weak ethical grounds. Forcing park owners to underwrite rent subsidies so that the community can address a perceived problem with affordability is fundamentally unfair and therefore inherently unstable., , This is not to say, however, that communities should not address the economic insecurity that attends iriobi_lehome residency. It is understandable that residents, would request rent control when'they feel threatened liy actual or potential rent increases`. There is inherent tension between park owners ability to increase rents and residents' investments in their homes. Any of us would. prefer; economic security to economic insecurity, especially at a time when the economy is . unusually unsettled. But rent control is not the only and may not be the best solution to.the,., bilateral insecurity that accompanies the mobilehome arrangement. It is appropriate for cities such as Marina to listen carefully to residents' and park owners' concerns and to explore ways to bring balance to the marketplace 3.2 Mobilehome Rent Control As Affordable Housing Mobilehome rent control is often supported by the claim that it supports the affordability of mobilehome residency., But this is not always so. Whether mobilehome rent control will provide affordable housing long term depends on whether or not rents are controlled or decontrolled.on vacancy., Mobilehome rent control with vacancy decontrol can be expected to assist current residents A comprehensive summary of the issues involved in rent control litigation is.to be•fcund in Karl Manheim s article (see Bibliography)'- , , • . , 15 SECTION 4. ALTERNATIVE PROGRAMS That rent control is expensive, unt'rgeted, unbalanced,'and polarizing does not mean that there is nothing that communities can, do to alleviate space rent insecurity: Here are some of the alternatives that communities in Cahforma are exploring. `t 4.1 Model Leases: More and more communities are looking into a cooperative alternative — model leases negotiated among residents, park owners, and local government. These leases provide protections similar to protections provided by rent control without succumbing to rent controN tend'encyto be one-sided,`16 "go too far", or to become gradually'more restrictive.' Model leases, unlike rent control, are not subject to political influence. Model leases have all the stakeholders at the table when the key decisions are made and therefore have the potential to be fair, stable,"and long lasting: An example of a model lease program is the "Memoranda of Understanding" (MOUs) that were the outcome of a task force effort in Manna in 2003:19 Co'ncern`at 'that time about rent increases in one of the parks led to calls, then as now, for rent control. A task force composed of residents, park owners, and City officials was convened. It was agreed at that time that rent control could be avoided if owners'and iesiderits could agree to moderate limits ou'rent incre'ases.'Agreement was reached. MOUS were established. The MOUS provided for CPI increases, pass-through of tax increases, utilities, and capital improvements, and increases to the County median rent on turnover. A mediation process was set up to handle disputes: Peace reigned for several years. Then, in 2007, Lazy Wheel changed'handsand'the new owner'raised rents significantly, causing the current concern. But the other parkbwners'all abided by`tlieir MOUS. There have been no extraordinary rent increases under the MOU systemia'Manna; except for Lazy Wheel. The MOU system worked in Marina, but broke down upon`We of''park. The new owner was not bound by a MOU and no doubt had costs (like increased property taxes and a larger mortgage) that were higher,than the•costsTacedbythe'prior owner.'It is possible that-die'new owner'would agree, in a negotiated context, to sign a new MOU. It is possible that a new MOU could be a recorded document that would survive sale of the property and be binding on new park owners. The City of Ontario enacted rentcontrol in 1990.1n 1999,' stakeholders ne'gotiate&an Accord that seemed fair to park owners `and residents alike.'Rent control was repealed. In 2003, when the initial Accord would have expired, the Accord was extended for another four years without modification. In 2007 the Accordwas'draepnded and'extended yet again. The' amendments included the'rccognition that 100% CPI rent increases were in some cases not adequate to cover cost increases faced by park owners. The'new standaiilds 120% of CPI,with' a cap of 10%l and a floor of 4%. Property tax, utility, and capital improvements costs can be passed through to residents, but are subject to review by the City. Another recent example comes from Modesto. Otie,park in'Modesto`was raising rents significantly. There were calls for rent control. The city council, city staff, park owners, and residents considered the options. In the end, after a year of study and discussion, it was decided "There was a previous MOU that covered Cypress Grove in the years following 1993. That MOU was too restrictive, however, and eventually failed or was replaced by a more balanced MOU. M that a rent control ordinance would be enacted but that any,park abidingby,a city-pego, tiat'e'd MOU would be exempt from the ordinance. Cooperating parks would use a model lease worked out in negotiations among residents, park, owners, and the city. Park owners would contribute to, ; ; "' , i 'ij.j ki- I-- I , " ) . '' . a fund to lie used to for rent subkdI6s.f&.low income reisidefits.'The tity ag'rcied,to'-, match park owner con�&iidi�sI'ieas6 terms include: �100�%-CPI with a"cap' of7%,"andfloo I r I of 3%, -pass -I through of property taxes, capital improvements, and insurance, and 15610 rent increase on vacancy, 4.2 br4i Memorandum of Understanding (MOO. A balanced MOU look sqinethin mIg might something like, this: I All residents will be gjferid a long-term lease conitaining, the provisions outlined below. 2., eet increases Spacrent an ongoing itfd following , principles: , , '. 4-,. , I goingy. shall be. finz by the f Wing No space rent increase dayingtenancy wijl,exceed.10% in.any one. year Rent -increaseswq��cover- .. I,-, , . 4 - 51 CPI increases since.2000 0 1 - . % - I Amortized capital improvements lyfwfacilities when approved by 51% of residents When ordered by, giRvernment agencies Tor majorTiplacements exceeding $100-pprvace,,... P ftOper(y tax and other, governmental fee increases _Space. rent increases on sale will not exceed 3 %for:, each year• -of the,ending - tenancy., 4. Park owners will contribute X%'of gross revenue to a Park Resident Assistance F, and to subsidizelhe space.rentpfvery low-income residents. The Fund will be ;1administered by the City qfMarina- The, City, Will match park.owner contributions. 5. Disjutesarising under, leases pursuant to this, MOU.wiff be submitted to mediation Tam,4 if necessary, to binding.prbit , ration. TA e cost'ip-fpted'iation and arbitration will - essary, I - . I - -, 1. ' ' big shared,equiqllythy theparficipantq.(5O �ropy residents, 50% hyparko�wner). 6. This MOU shall be reviewed in three years, by a committee composp4,of representatives of the park owners, residents, and the City of Marina to evaluate its qjecdvenqs and to make adiustmemsIjfqpprqp!*te- I.—I 1,9, 4.3 Provisions That Might Be Included in a Model Lease: The model lease concept involves a lease negotiated by park owners; park residents, and City officials. The operating principle should be fairness to all participants — to the tax payers, to residents, and to park owners. The lease'sh'ould lie simple to undeistand and straightforward to administer. Adjudication of disputes 'undei leases should be by mediation, then arbitration. The City might want to participate In arbitrations at order to niaintain`the oiiginal fairness principle and because the City has the responsibility to represent the welfare of all citizens — residents, park'owners, •arid tax payers. The City would promise not to impose rent oomrol on any park owner using the model lease. The City would be at liberty to impose rent control on any park owner not using the model lease. Typical provisions, and their rationale, follow: 1) Annual Rent Increase: -automatic 100%'CPI plus pass-throughs:, [Comment: Some jurisdictions use partial indexing, e.g. 65916 CPI. This is not wise, however, since partial indexing inevitably reduces the real value of tuepark.and is therefore confiscatory. Some jurisdictions use 120% CPI and are more restrictive about pass-throughs.] 2) Floor and Ceiling: '2% and 8% [Comment:• A ceiling 'comforts residents. A floor comforts park owners: The average annual CPP increase in Northern California`has,been 3:2% over,the'past two decades 'The average annual CPI -Rent increase in Northern California has been 3.8% over the past two decades. The ceiling should be higher if rents are low or in the case of pass-throughs. A global ceiling of 10% might therefore make sense in some jurisdictions.] 3) Phase=ln: automatic' CPI increases "are further restricted -to 400%u CPI frout some earlier,base date. = [Comment: This provision would prrovide a -level playing 'field among park owners; since owue`rs who raised rerits'overmuch in recent years would -not be rewarded with further increases and owners who exercised restraint in recent 'years, would not be'punished for their -restraint. The effect would be that park owners who had'irnposed above-Mren6 increases in'the years since the base date would have, below -CPI rencincreases for several years and "park owners who : imposed below -CPI increases since the base date would have the opportunity to catch up with inflation.] 4) Pass-throughs:. [Comment:,It is wise to provide for certain pass-throughs so that park owners are not forced to bear the burden of additional costs not iu•the budget at the time the lease is signed. Pass-throughs' 20 would be in addition to the allowed CPI increases.] .. • Capital Improvements (amortized over appropriate time period): o_ New Facilities, r,only'when approved by 51%o fresidents o Improvements required by government o Major Replacements (those costing more than $100 per space) • Tax Increases, (e _g., property taxes on sale, or if government imposes anew tax or fee) . 5) Vacancy Increases: • When resident sells to new,owner - up to 3% per, year since last.vacancy increase, • When unit is vacant with no new owner, or following eviction or abandonment - , increase to market . • When resident.replaces mobilehome - no increase . [Comment: this "partial vacancy decontrol" provision would mean that all mobilehomes would eventually receive the same vacancy increases. A mobile home selling every five years would be allowed a 15% increase each time. It ten years, there would be a total of 30%;rent increases; just:. as there would be for a mobilehome that sold once in 10 years. Partial vacancy decontrol would allow adjustments to market on vacancy;but would protect against the,possibility that space rent might,be increased so much, that,the value of the, mobilehome would be significantly reduced.] 4.4 Resident Assistance (Subsidy) Programs: Other jurisdictions, believing- that, low; incomes, not high rents, are the problem, have instituted programs similar to the Section 8 program that assist low income residents with their space rent. A significant advantage to subsidy programs is that assistance is targeted -to those who need assistance; Under rent control, -in contrast; there is no targeting, so that much of the rent control subsidy is wasted on people who don't need it. Section 8 -funds, in theory, are available to;supplement space rent for,low-income residents, but . in practice Section, 8 is not a reliable source for mobilehome owners because HUD funding has: been significantly.reduced by, the'Bush. administration in Washington, and because some administering;agencies apparently, won't use Section 8.funds,for spaceaents. Section 8 is therefore not able to assist all mobilehome residents.whose.space rent is unaffordable. The City of Turlock in 2007, acknowledging that income, not rents, were the problem for low- income mobilehome residents in Turlock and that Section 8 couldn't be relied on at this time, rejected rent control in favor of a City -funded subsidy program. The program involved an agreement by participating park owners to accept as space rent for any qualifying resident an amount equal to the median space rent in Turlock. The City would then fund the difference between the median rent and the rent the resident could afford (30% of verified income). In Turlock it turned out that this program cost roughly $20,000 per year. 21 Some park owners fundsubsidy programs'o' dtheir own. There"are park owners who have made an explicit commitment to reserve a percentage of space -rent 'income'for assistance,"to low" income'resid'ems. Another model would-be'a prograin jointly funded by the park'owner`and the city., Siicl 'a ` program'might`be administered by the'cityin'quesnoIn.'The- advantage of a`joindl 'fu'nded ' program is that it would require wider participation by`citizens and 'stakeholders to address a ' ' corrmunity problem'cooperatively'':, .,�: Taking Marina as an example, if the park'owners'agreed to donate 3% of gross rents to a subsidy fund, and if the City agreed to match these contributions; there would' be a fund of rough] y° ` $12,000 per month that could provide rent subsidies averaging $120 per month for 100 households, roughly a quarter of all mobilehome households in Marina. The program might be phased in, with fee payments tied to space rent increases so that park owners''net income would not decline. Such a program would alleviate the affordability problems of the lowest income households in Marina's mobilehome parks without disrupting the'market otherwise. 4.5 Resident Purchase: There are case's in which residents havepurchased their own park, increasing their'economic security' significantly. Ari example is El Rio"Mobile Home Park in Santa Cruz: With'govemnient assistance, the residents were able'in 1988 to'buy'theirpark from the park owner for $2;000,000: Tliepazk became a' cooperative: Residents pay $250 -pet month in homeowner fees. Most homes in th'e'park "were manufactured in the 1950s and 1960s, and many` are'fading, but home's in`El Rio still sell for $50,0 to $200;000., El kio still provide'' affordable housing within a high priced community, and there is no space rent insecurity. Acknowledging the inherent problem caused by split ownership bf home and land the State of California enacted in 1984 the Mobilehome Park Resident Ownership Program. Administered by the Department of Housing and Community Development (HCD), the program offers low- interest loans to homeowner' organizations and low-income park residents'to help finance conversion of mobilehotiie par:io'resident ownership: Bythe end'of'2006 the program had helped fund the conversion to resident ownership in 74 parks in California = ' ' 4.6 Purchase By A Non-ProriCHousing Developer: -There are cases in which parks'are purchased by non-profit housing development corporations. An example is Leisure Mobile" Estates in Santa Rosa. The owner of Leisure was considering condominium conversion. He also had a rent increase application in process before the local rent control commission. Theresidents opposed llie rent increase and'opposed_ the conversiod'But the residents supported purchase'of' ` the park by Millennium Housing; a non-profit housing `development corporation: Residents agreed to a substantial space rent increase in order to make the non-profit purchase pencil -out. _ Residents were confident that their long,run interests, were._best served by the Millennium;:,;, purchase. 22 4.7 Condominium Conversion (Subdivision): A recent, controversial development is the conversion of mobilehome parks, into, condominium subdivisions. The Subdivision Map Act allows property owners to subdivide a park into condominium spaces and then market the spaces to residents and others. This has become controversial because, under current law, subdivision in rent controlled jurisdictions would cause rent protections to lapse. The California legislature has considered the issue and will probably consider it further. There has been and,no doubt will be„ - extensive litigation as the rights and; responsibilities,of residents and park owners are sorted out in the conversion context., Condominium, conversion would presumably be less controversial. in jurisdictions without rent control. Condominium conversion, in theory, would;bring a,measure of security to mobilehome residency. Conversion would not cure the affordability problem, however, because conversion would, require a,substantial additional investment in order for residents to own the land as well as their homes. 4.8 Case Study: Stanislaus County Stanislaus County and several cities in that. county haa ve recently considered solutions to the space rent dilemma. The processes followed and the outcomes chosen are instructive.20 The owner of several parks in the county, Equity Lifestyle Properties, (ELS), was raising rents significantly: in.parks it owned in Ceres. Modesto, and Riverbank, causing considerable public concern. Acounty-wide Ad Hoc Committee was formed to investigate the, situation come up with a county -wide solution. Attomey/Planaer Kenneth Baar did a series of studies.;The Ad Hoc Committee met with ELS to attempt a,negotiated solution. Ultimately the Committee approved a form of mobilehome park rent control ordinance for;consideration by the County and the various cities, but no county -wide solution was agreed upon,, Stanislaus County has taken no steps,toward the establishment of rent control.or any other solution to the,spac,e rent dilemma. { Modesto adopted a rent control ordinance,with the unusual provision.tbat parks that executed a Memorandum of Understanding (MOU)would be exempt from.the ordinance. The MOU . -. specifies that all residents will be offered long term leases including moderate. rent increase limits. Space rents may rise at the CPI plus the pass-through of property taxes and capital improvements, and by 15% on vacancy. All parks in Modesto except the ELS park have accepted the:MOU and are exempt from the ordinance.•The ELS parkas subject to the ordinance. Litigation is expected -:',z Turlock has taken a completely different approach. Using redevelopment funds, the City of Turlock adopted a subsidy program whereby space rents exceeding the residents' affordability,,. limit are, paid by the,City..The subsidy,program applies to 60 households and costs roughly 20 The inforibation in this section is drawn largely from the July 28; 2008 memorandum"Recommendation' Regarding Mobile Home Park Space Rents" by the Ceres Mobile Home Park Ad -Hoc Committee. 21 The draft ordinance was based on a draft by Kenneth Baar for the City of Citrus Heights in Sacramento County. 22 The law provides that a challenge to an ordinance must be brought within a year of its initiation. 23 $20,000 per year. _ Riverside is considering the adoption of an ordinance modeled on the Modesto ordinance. Unfortunately, the draft ordinance under consideration is unbalanced: It allows 100% CPI adjustments; but allows no pass-throughs and includes rgid vacancy controls. Ceres hired'Kenneth' Baar'to conduct a survey and write a report on the mobilehome space rent, situation in Ceres. The Ceres Mobile Home Park Ad -Hoc Committee came to these findings .in its final report: 1: 'That a rent subsidy program'like the'piogram instituted in' Turlock would beTar more expensive in Ceres. 2. That although redevelopment funds could be used for rent subsidies, this use of redevelopment funds would lintif or'eliminate funds that could be used for the creation 'of permanently affordable.housing. _ 3. That competing priorities mean'th'at general fund monies cannot reasonably be used for rent subsidies. 4. That initiating rent control would likely commit the city to costs of litigation that it, cannot well afford.23_- 5. That initiating rent control would stabilize rents in the future but would not roll back rents so that they would become affordable to residents. The Ad Hoc Committee's final recommendation: "Since there is no feasible ordinance or policy solution to the existing circumstances glfectingg certain mobile home park residents in Ceres that the City is legdlly or financially in the position of implementing, the City of Ceres Mobile Home Park Ad Hoc Committee recommends that its activities be concluded and that the C10 Council take no further action regarding mobile home park space rents for the foreseeable future."24 The Ceres City Council followed this recommendation, taking no steps to assist residents with space rent issues. Understandably, some residents were disappointed. No doubt the park owners were relieved. Ceres: Mayor,Canella was quoted as saying of the Baar report "It really showed that [only] one park was out of line as far as the rents go. As, much as I would like to help these residents, I'm not in Favor of rent control that would punish.the other mobile home parks for . keeping their rents down."25 z The report commented that larger cities or counties can better afford rent control litigation, than small cities. It is for this reasoh, among others, that some stakeholders' were hoping far a county -wide solution including litigation cost-sharing. ' - ' ' ' ' " ' u Ad Hoc Committee Report, page 5. ' 25 The Modesto Bee, August 27, 2008. 24' SECTION 5. SPACE RENTS, HOME VALUES, AND MOBILEHOME AFFORDABILITY IN MARINA As a first.step in the investigation of mobilehome space rents in Marina, the City. of Marina sent out survey forms to mobilehome park residents and different survey; forms to mobilehome park owners, collected and collated the responses, and provided this information to consultants Kenneth Baar and, Michael St. John.26 279 out of 396 mobilehome households responded to the residents' survey,- a fairly good response rate for surveys of,this type.Z7 All of the park owners provided responses to the park owners' survey. Consultants Baar and St. John also purchased sales data for Monterey and Santa Cruz Counties collected by the Department of Housing and Community Development (HCD).28 The survey responses.and the sales data provided important information, otherwise unavailable, about mobilehome rents, residents, and home values. As to the residents'. survey, the following chart shows survey responses by park. . .SURVEY RESPONSES- MARINA MOBILEHOME STUDY ,all SURVEYS RESPONSE - senior age spaces RECEIVED ,.RATE Cypress'Square "' X' 87 68 780% i EI Camino X 61 39 64% El Rancho X 96 61 64% `680 Lazy Wheel - X 69 47 . Marina Del Mar Xi 83 64 77% ' TOTAL 396 279 '70% Source: Marina Mobilehome Residents' Survey A note about the survey response rate: The overall response rate was 70%. In the calculations that follow, we use percentages that are computed from the survey`iesponses on the assumption that those who responded are representative of all mobilehome residents, but this may not be true in all eases: There may be bias in the'results due to a higher or lower response rate'among ' different categories of households: Readers should'bear this in mind before drawing conclusions from the survey results. u The survey forms are attached to this, report as Appendix 1. (Residents) and Appendix 2 (Park Owners). D The fust mailing resulted in 173. responses. Hoping;for a better response rate, the City sent out a second mailing explaining the survey purposes more thoroughly. The second mailing brought in 106 additional responses for a total of 279. Of these, 271 were sufficiently complete to use in the study. 28 The HCD data was purchased from Santiago Financial. - 25 5.1 Mobilehome Characteristics in Marina. The following chart sets out physical characteristics of the homes in the five parks. •: • •' • `' •: 7 • `' ' ..� to ::•: _© " � ' � � ��®' Sonrce: Marina Paik Owrieis' Survey Cypiess_Square and ED Camino have. thehighest proportion of doublewide mobilehomes. Accordingly; homes'in these two parks'' have the highest average square foot area. The average age of mobilehomes is just under 25 years, with the highest average age at El Rancho and the lowest at El Camino. The_following chart shows the year'of manufacture of mobilehomes in place in` Mari na's mobilehome parks. The chart has two peaks — older mobilehomes that have been there since the park was opened, and newer, replacement mobilehomes installed in the past decade. 26 18 Number of Mobilehomes by Year of Manufacture Z. 14 12 single m — rent rent survey - � 4 _ spaces wide wide 0 � low '6a0 '661 'yA 'yb '61 _ 6,10 _b1, 'e 66\ . -6A 6y ryry e 'y 91 yry '660 '66\. 660 ,260 '61 660 'e��' ♦6 '6 ♦6 �6 ry2 ry2 •� •� Source: Marina Mobilehome Residents' Survey 5.2 Mobilehome Space Rents In Marina. The survey data indicate that the average space rent in Marina is $434 per month. Broken down.by-'park, average space rents are shown in the' following chart: CURRENT SPACE RENTS - MARINA MOBILEHOME PARKS single double triple rent rent survey rent avg. spaces wide wide wide low high rents rolls incr. Senior Parks: Cypress Square 87 8 76 3 440 • ' -500: 463 471 ' 3:4% EI Rancho 96 78 18 0 310 406 350 355 2.7% Marina Del Mar_,, .-83 ,58 :,..24 1 , 299, 468 • , 351 344 ;- 2.0% average: 349:7 • 458 : ?, 388 .390. 2.7% All -Age Parks: EI Camino 61 14M70 407 500 445 439 3.6% LazyWheel „ ,69 ; , 40 450 675 608 609 5.8% average:428.5 586 .527 . 524 .4.7% total 396 198 3.4% weighted average 4351 4351 1 Sources: Residents' and Park Owners' Surveys 27 The range of rents ("rent low" to "rent high") was reported by park owners in responses to the park owner survey. The actual rents were reported by residents in responses to the resident survey ("survey rents"). Actual rents (100% sample) were also taken from rent rolls provided by park owners ("rent rolls"). Average annual rent increases ("avg. incr.") were computed from survey data. That the rent roll information closely matches survey information confirms that owners and residents reported space rents correctly and that survey information is, as to space, rents, representative of the entire population. There are two ways that we can evaluate the current space rents: • We can ask how space rents have changed over time We can ask how space rents in Marina compare to space rents in other communities in Monterey County The resident survey responses provided information about space•rent changes, over time. Residents indicated what rent they paid on move -in and what rent they were paying today. It turns out that the average annual rate of rent increase at Marina mobileliome parks oventhe past 20 years was 3.4% for sitting tenants. Space rents charged new tenants increased by 3.1% over the same period.29 Meanwhile, the average annual rate of increase of rents in the San Francisco Bay Area as measured by the Bureau of Labor Statistics (CPI -Rent) was 3.8%.30 By this measure; space rent increases in Marina have for the last 20 years been lower than rent increases for apartments in Northern California. If space rents in. Marina's mobilehome parks had increased for the past 20 years at the rate that rents increased in NorthernCalifornia generally, average space rents today would be about 9% per month higher than they are at this time. Park'owners' forbearance and/or the local space rent market has worked to mobilehome residents' significant advantage for this time period. Viewing parks individually, average annual space rent increases for -individual homeowners have been as set out in the final column ("rent incr.") of the chart above — 3.4% for Cypress Square, 3.6% -for. El Camino, 2.7%1or•EI Rancho, 5.8% for Lazy Wheel, and -2.0% for Marina Del Mar.' All except for Lazy Wheel are under'the CPI -Rent rate. The highervalue for Lazy Wheel no doubt results front the large space rent increases recently imposed. Up to.2007,'space rent increases at Lazy Wheel were no higher than at the other parks. The'following graph shows the relationship just described between average space rent's charged' ' new tenants and the CPI=Rent index.' 29 That the rate of increase for new tenants is lower than the rate of increase for sitting tenants probably indicates that park owners sometimes lower rents on vacancy. . "The index is known as "CPI -Rent, Residential" or,"Rent of Primary Residence". *Itis not clear from BLS descriptive materials if mobilehome space rents are included in the index. Mainly, the index covers the rent's of - apartments. W. CPI -Rent vs. Survey Rents 225.0-----',r-----------------J' .• -- — -- u 175.0 — —--`—`-- -- i 125.0—___.__— 100.0 ; 3 ,,,p 0,09 009 o�i'ry 'A 4 ;rP,'69j'^.r'9 0°9' 41 1, r,15' ; r,L� r„r�� r�y.�6 r„O�^�a,101 r. \5' 1'a . \ \'E. q„p4. 4 4 - 4 19 r. 40 �— CPI rent (1988 = 100) —6 kV91. Space Rent (1988 =100) New Tenants Sources: Residents' Suryey and Bureau of Labor. Statistics• As indicated, average space rents for new tenancies have increased by less, over the past 20 years than the increase in the CPI -Rent index for the San Francisco Bay Area. Space rents and the CPI were both indexed to 100.in 1988 for purposes of -this chart. Reliable data on space, rents is hard to come by, but Joan and Marshall Reeves, the managers of El Rancho Mobilehome Park, conducted a space rent phone survey in 2004. They updated their. . survey in 2008. The results are shown in the table titled "2008 Space Rent Survey — Monterey;;_, County” included here as Appendix, 3. The Monterey County space rent survey indicates that average space rents in Marina range from about $400 to about $500 a month, while average space rents in the county.range from almost $500 to over $600 per month. Space rents in Marina's lowest rent parks are in the $300 - $400 range. There may be park, mobilehome, or location differences that account for some part of the gap between Marina space rents and space rents in other jurisdictions, but this information indicates that most Marina space rents are on the low side, not the high side, of county averages. The rents at Lazy Wheel are now near the high end of the range in the county, but there are higher rents at some parks in Salinas, rent control in Salinas notwithstanding: How can we understand these findings about space rents in Marina's mobilehome parks? It appears to be the case that space rent increases in Marina, except for increases at Lazy Wheel in 29 2007 and 2008, have been moderate over the _past 20 years. It is,also.possible that the Memorandum of Understanding (MOU) agreed upon'in 2003 was overly restrictive, causing space rents in the other parks to lag behind rent increases in Northern California generally. 5.3 Mobilehome Values in Marina. It is important that we also pay attention to changes over time in mobilehome values. If mobilehome values decline, space rent increases may be too, high or rising too fast. If mobilehome values increase significantly, space rent increases may be too low. (This principle is explained in Section 2.2 above.) Caution should attend the interpretation of changes in mobilehome values because mobilehome values also fluctuate along with the entire housing market, an effect that has been particularly evident recently. But over long periods and averaged over many home sales, the'rent-value relationship has been demonstrated in several studies. (This too is explained in Section 2.2 above.) Average mobilehome values as reflected in sales prices over the past 20 years are shown in the following chart: Source: HUll.sales data, provided by Santiago Financial , Expressing prices ona, square foot basis controls for mobilehome size No Manna mobilehome .. , sales were recorded in the HDC data set for 1988, 1991,, or 1992., Mobilehome values in Marina were about $30 per square foot in 1990. The per square foot value, reflected in sales prices, rose to average more than $80 per square foot in the years 2000-2008, a.two to three -fold increase , over this time period. The, average,sales price fell in,2007 and 2008 to about $75 per square foot. 01 The Survey and HCD data also allow us to record average,, sales prices for mobilehomes. 30 " AVERAGE MOBILEHOME SALE PRICES" ,it it • •. i .� � .. � I� 140000 120000., 100000 80000' +HCD Daia 60000—Survey Data 46000 20000- 0 9'L Aa p�6 00 00 p'L OP OHO p0 ,�9 �g ,gyp ,�9 �O ,10 ry0 ry0 ry0 The survey data and HCD data show the same general pattern although they don't match very well. It is important to bear in mind several things about this chart: The datasets are imperfect. There are only a few'data points in some years. The variance is large because some sales areof newer mobilehomes,,some older mobilehomes, some double -wide, others single -wide, some in good condition, others in poor or evewsalvage (pull-out) condition. When the variance is wide, averages are not so meaningful.; Nevertheless; the data show that mobilehomes were selling in the $20,000 - 30,000'range in the 1990s,in the $60,000 - $90,000 range in the 2000s, and that sales prices fell in 2007 and 2068. No one;kaows' when the real estate'market will recover, or for that matter whether it will recover fully. Regestate values tend to 'fluctuate in cycles. We are clearly in a down cycle. Economic history suggests that values will cycle up again, but we don't know when that wiffhappen. The HCD data were also evaluated for increase in'sales price over ime. For eachsale; the original sales price is also recorded. The variance is large. Some mobilehomes increased a lot in value. Other's'mairitained their value. A few'lost value. On average; th'g HCD'data indicate that" ' the values of mobilehomes'in parks'in Manna have increased'by' 6.1% per year.- During ear.During the same time` period, rents in'Northerri California' increased by 3.8% per year and the' ` CPI increased by 3.2% per year. Meanwhile; space rents in Marina for new tenants increased by 3.1% per year and rents facing sitting tenants increased by 3.4% per year. That mobilehome prices increased'by'more than the CPI, more than the CPI-Rent'index and more'tHin' mobilehome rents indicates that the mobilehome market has been out of balance during this time period. Rent increases have not matched home value increases. This indicates that mobilehomes in Manna were overvalued in the mid -2000s and may still be overvalued today. 31 These relationships can be seen in the following graph. PRICES, RENTS, & INFLATION aso 900 } ------ - - �' 7- HCD Avg Price/Wt (1988=100) e._.9:meyMg. Price1SgFt(1988=100) .I. — CPIMU(1988=100) t CPI (1988 =100) 1501 __ _—. _ - — _--_ tpvg. Spaze Rent (1988 =100) NewTenams 100 50 Sources: Residents' Survey, Bureau of Labor Statistics, HCD Price Data This graph shows average space rents for'new tenant's in Marina oder the past20 years,'1988 to ` 2008, as reported by residents in the residents' survey (the curve with square markers): The next' `' higher curve (with x -markers) is the'CPI, a measure of iriflaflon, and 'the one above that (star- markers) is'the CPI=Rent index,''a measure'of•inflation in apartment rents. Mobilehome values are shown in the two jagged curves (one from the survey' triangle markers, the other from HCD sales data circle markers)'and`two curved, unmarked [rens lines:'All values are indexed to 100 in 1988. That the 'two price curves and the'two smooth -curved trend lines match closely indicates that the survey,piices were accurately reported: Home values'hay'e fallen in the current downturn and we don't'ldiow'when the'cuirent downturn will end, but these'data'indicate that mobilehoine values in Marina have increased during the past twenty years by significantly more than the CPI; the CPI -rent index, or space rents. 31 st There is no curve for sitting'tenants' rents because we dont have that information: We have the move; in rent, the move -in date, and the current rents for each respondent; but we don't have the pattern of space rents during the tenancies. See Price Increase Trend chaff. : ' ' "` ' ' ' 32 The key relationships can be seen more clearly if mobilehome prices, space rents, and inflation are all turned into straight 20 -year trend lines, as in the following chart. 260.0 225.0 2000. 175.0 750.0 125.0 100.0 Price Increase Trends (indexed to 1988) ^r3'^ci9.�cF'�.�a�',,�a`'ti,°j�,c°A,o•'y.�,�+6,0°''�,�¢°'�.�3 ,4tl' •.�, •:�'�•.p^� �'P'V y��b,�V��O - - - Average move -in purchase price per square foot ®Consumer Price Index (CPI) for rent Average rent increase for sating tenants Consumer Price Index (CPI) Average rent increase for new tenants Sources: Residents' Survey, Bureau of Labor Statistics, HCD Price Data This is a simplified picture. One might,say over -simplified. The year by year variability.in rates Of increase has been removed. The lines are straight, as if the average annual increases applied , every.,year, which of course, they didn't. But. this chart is useful because it shows that the. average, rent increases paid by, new tenants in Marina mobilehome, parks (3.1% per year) is marginally less than.the inflation rate (3.2%), significantly less than the CPI -Rent index (3.8%), and far less than (almost exactly half.of) the raterof: increase in mobilehome values over the past;20 years (6.1%). Rent increases experienced by,sitting tenants (3.4%) are marginally higher than increases in the,CPI,(3.2%), but less than.increases in.the CPI -Rent index (3.8%) and far less than.the increase in mobilehome.yalues (6;,1%) 32;These rates.of increase are summarized in the following chart. 0z We can include a line for sitting tenants' rents in this chart because while we don't have year by .year rents, we do know the beginning and cun-em rems for each tenancy, and cantherefore compute average annual increase from that information: The sitting tenant line represents the average annual rate of space rent increase for sitting tenants. 33 KEY RATES OF INCREASE AFFECTING MOBILEHOME RESIDENCY IN MARINA RATE OF INCREASE IN THE VALUE OF MOBILEHOMES 6.1% RATE OF INCREASE IN SPACE RENTS FOR CURRENT OCCUPANTS 3.40/c CYPRESS SQUARE- EL RANCHO 2.7% EL CAMINO 3.6% LAZY WHEEL 5.80/0 MARINA DEL MAR 2.0% RATE OF INCREASE IN SPACE RENTS FOR NEW RESIDENTS 3.1% RATE OF INCREASES IN PRICES GENERALLY (THE CPI) 3.20/6 RATE OF INCREASE IN APARTMENT RENTS (CPI -RENT) 3.80/c NOTES: All rates are over the past 20 years, 1988 to 2008 Rates are average annual rates of increase Sources: Bureau of=Labor Statistics, Resident Survey, HCD sales data , ' As explained in Section 2.21abovC there is a close (inverse) connection between rents and mobilehome values. When rents are less than market -clearing; mobilehome values will tend to rise. When rents are more than market -clearing, mobilehome values will tend to fall. As explained in Section 2.6 above, it can be argued that park owners' and mobilehome owners' investments should be treated equally: Equal treatment would mean equal increases over time. The analysis shows, in contrast, that homeowners have been receiving a greater return on their investments in their homes than park owners have received on their investments in the parks. This is so because the values of mobilehomes have been increasing at 6.1% per year while the value of space rents, which in large measure determines the values of parks, have increased, from the park owners' viewpoint, at 3.1%. Taking the past 20 years, it would appear that space tent increases overall have been too small, allowing mobilehome values to grow, more than they would in a balanced market. If space, rents , were to -increase at a'slightly faster r"ate the rate of increase in mobilehome values would presumably fall, and the balance between home owners and park owners would be restored'. 34 5.4 Mobilehome Residents in Marina The residents' survey asked a number of questions; about mobilehome residents. -.Some of this , information, together with information from the U.S. Census, is portrayed in the following chart: Demographic Comparisons ' 70.0% 60.0% I — 50.0% -{ ---------`"�=-�----- — 40.0% l-- , ._ 30.0% - - 20.0% „ 10.0% Tl .. '0.0% 'S5 and older - Households Earning <. $15,000,per year Employed (%) Marina Mobilehome Park 37.2% 22.7% 41.0% Survey (2008) _ City of Marina (2000) 14.7%' 12.1% - "' -46.8%' ' County of Monterey (2000) 17.1%' `' ' 11`.3°/a'' 1,1'54.7%' State of CaliforniW(2000)' - 18.4% - - - 14.0% 57.5% - Sources; Residents' Survey, 2000 Census Data Survey and Census data indicate that a higher percentage of Marina mobilehome park residents are elderly'than residents of Marina, Monterey County, or California.33 This is to be expected, since three of the packs are'senior parks reserved for older residents. Survey and Census data indicate that a higher percentage of Manna mobilehome park residents have very low incomes (under $15,000 per year) than households in Manna, Monterey County, or California. " The Census data here and elsewhere in this section comes from Tables DP2 (Selected Social Characteristics), DP3 (Selected Economic Characteristics), and DP4 (Selected Housing Characteristics), available on-line from Census.Gov. 35 Assuming that those -repotting are representative of allresidents, 41% of Marina's mobilehome - residents appear to be eriiployed.- a percentage not far below the percentage for Marina, Monterey County, and-alifomia: C Employment-data is presented in greater detail in the following chart: _. Source: Residents' Survey As indicated in the employment status chart, employment status varies significantly by park, with high rates of retirement in the senior paiks and high rates of full time employment in the all,- age parks. 34 Incomes of mobilehome residents.are shown in the following chart: t i The numbers of respondents exceeds the number of spaces in some parks because some households have more than one working adult. 36 ® '�®®EBE Source: Residents' Survey As indicated in the employment status chart, employment status varies significantly by park, with high rates of retirement in the senior paiks and high rates of full time employment in the all,- age parks. 34 Incomes of mobilehome residents.are shown in the following chart: t i The numbers of respondents exceeds the number of spaces in some parks because some households have more than one working adult. 36 - � � � ua 111 111 'YI 611 11=4 '%•1 IYY •�111'1 ..1111 111 •r. $40,OPO $%000 $74000oi % WITH ess 1 6°/ ':2T/ 17°/ 60/ 11°/ ,-i : 3°/ 100C B Ca ft) X il%3°/ 11°/ 22°/ 27°/ 24% 0'/ 100°/ 9.Ra1ct1D ,. 20°/ 22°/ 33°/ 12°/ 45 6°/ :. —.2 .°/ 100°/ Wlheet .,, . 19% 7°/ 26°/ 28°/ Source: Residents' Survey Assuming that the survey responses portray the mobilehome park population accurately, many resident households of Marina's mobilehome parks have low and very low incomes. Only 12% report household income above $50,000. Fully 23% of responding residents+report household income under $15,000. 61% of all mobilehome park residents have incomes under $30,000 per year. By any measure, these residents are income -challenged. It is fully understandable that residents would be concerned about increases in the cost of food, medical care, space rents, and other necessities. Even modest space rent increase, medical event, -or other unexpected expense, would make a major dent in the budget of a household earning less than $30,000 per year. The survey included other information about mobilehome residents summarized in the following chart: RESIDENT INFORMATION -•MARINA MOBILEHOME PARKS M900 MOT $40,OPO $%000 $74000oi % WITH ess 1 6°/ ':2T/ 17°/ 60/ 11°/ ,-i : 3°/ 100C B Ca ft) X il%3°/ 11°/ 22°/ 27°/ 24% 0'/ 100°/ 9.Ra1ct1D ,. 20°/ 22°/ 33°/ 12°/ 45 6°/ :. —.2 .°/ 100°/ Wlheet .,, . 19% 7°/ 26°/ 28°/ 90y 12°/ . 0°/ 100°/ Wine'dd Ni*' 28°/ 125 37°/Zi 14°/ 5°/ 2°/ 2°/ 100% Tatals 23% 10'/ 28°/ 18°/ 9°/ 10°/ 2°/ 100'/ Source: Residents' Survey Assuming that the survey responses portray the mobilehome park population accurately, many resident households of Marina's mobilehome parks have low and very low incomes. Only 12% report household income above $50,000. Fully 23% of responding residents+report household income under $15,000. 61% of all mobilehome park residents have incomes under $30,000 per year. By any measure, these residents are income -challenged. It is fully understandable that residents would be concerned about increases in the cost of food, medical care, space rents, and other necessities. Even modest space rent increase, medical event, -or other unexpected expense, would make a major dent in the budget of a household earning less than $30,000 per year. The survey included other information about mobilehome residents summarized in the following chart: RESIDENT INFORMATION -•MARINA MOBILEHOME PARKS HOUSEHOLDS RESIDENTS AVERAGE AVERAGE % WITH AVERAGE SPACES REPORTING REPORTED HH SIZE AGE CHILDREN TENURE Senior Parks: Cypress Square 87 67 96 1.4 70 1% 11.2 EI Rancho 96 55 75 1.4 71 0% 11.2 Marina Del Mar 83 64 86 1.3 68 0% 13.6 All -Aa Parks: Jq_EI Camino 611 38 101 2.7 50 28% 10.0 Lazy Wheel 1 69 471132 2.8 49 38% 13.6 All Parks (Total): 1 3961 2711 4901 1.91 61.6 11.9 Source: Residents' Survey 37 The average household size among households,responding to the survey is just under two persons. This vanes by park, -with the senior -parks having more residents living alone and the family parks having more household members. Ab6ut`a third of the households in the two'all=age; parks have children present. The average length of time that residents have occupied their mobilehome is about 12 years.: The resident survey ,also asked-foi information about;mortgages.. Source:Residents' Survey;.:. ! i ,,r ., The mortgage status of mobilehome residents differs, significantly: by park. More than three- quarters of residents in the ,senior,parksrown their homes free and clear, whereas the free and clear, rate is.lower for the:family parks: 5.5 The Affordability of Space Rents in Marina's Mobilehome Parks The federal government says that apartment rentsexceeding 30% of household income are - "unaffordable". The figure. 40% is sometimes used by others. The 2008 draft Housing Needs Assessment for the,City,of Manna indicates,that 23%,of.owner-occupant households and 33% of. renter -occupant households in Manna pay more than 35% of available income for their, housing.35 Since we need to identify an upper limit, not a standard, I will use the 40% affordability limit,in this analysis. The presence or absence of mortgage obligations affects the'affordability of,mobilehome residency significantly. Mobilehome residents are therefore broken into two groups in the following chart — those with no mortgage and those with a mortgage. 3s "Housing Needs Assessment", chapter 2 of draft Housing Element, December 2008, Table 2-25; page 2-17. ` h ..MORTGAGE STATUS OF MOBILEHOME OWNERS Park Name Park .:All Type Total Units in Sample Mortgage Cash On Paid Off ,Purchase Later Homes % Homes Owned - Owned Free Free & 8 Clear Clear, Senior Parks: Cypress Square SENIOR, 66 49 _ 5 54 81.8% El Rancho SENIOR ,- 53 42 1 43 - ,_81:1% Marina del Mar, `SENIOR _ -59- -;..,28 14 42 :" .71:2% All -Age Parks: . El Camino FAMILY; . 37 9 2 11 ,' - 29.7% Wheel = FAMILY ° - 46 �'-22 6 28 -. °` 60.9% All Parks (total): 261 150 281 1781 68.2% Source:Residents' Survey;.:. ! i ,,r ., The mortgage status of mobilehome residents differs, significantly: by park. More than three- quarters of residents in the ,senior,parksrown their homes free and clear, whereas the free and clear, rate is.lower for the:family parks: 5.5 The Affordability of Space Rents in Marina's Mobilehome Parks The federal government says that apartment rentsexceeding 30% of household income are - "unaffordable". The figure. 40% is sometimes used by others. The 2008 draft Housing Needs Assessment for the,City,of Manna indicates,that 23%,of.owner-occupant households and 33% of. renter -occupant households in Manna pay more than 35% of available income for their, housing.35 Since we need to identify an upper limit, not a standard, I will use the 40% affordability limit,in this analysis. The presence or absence of mortgage obligations affects the'affordability of,mobilehome residency significantly. Mobilehome residents are therefore broken into two groups in the following chart — those with no mortgage and those with a mortgage. 3s "Housing Needs Assessment", chapter 2 of draft Housing Element, December 2008, Table 2-25; page 2-17. ` h Source: Residents' Survey These.summaries indicate that mobilehome residents with no mortgageare,,dri average; abk-ta:r.'. afford their housing payments. Mobilehorne owners with mortgages have more income, on average;,than,mobilehome.owner'with:nomortgage. NeVertheless;;ffibbilehorn , e residents paying` a mortgage are- Paying.relatively high percentages of theirinoornes forhousing costs. Using the 40% affordability standard, housing costs are unaffordable foiroughly,half.of all mobilehome owners with a mortgage. For the other half of the with -mortgage group, and for roughly three- quarters of the no -mortgage group, housing costs are affordable, by the 40% affordability standard. If housing costs are unaffordable for 50% of those with a mortgage and 25% -of those with no mortgage and considering, that 68%'have no rnoitgageand 32% haV6 a mortgage; housing costs are unaffordable for, roughly 33%jof mobilehome resident households in Man"'na;'or about'131 households .36. What would it take to address this problem? Following the 40% affordability principld,:ft, would! - appear that the entire problem could be handled by roughly $15,000 per month, an amount that would allow subsidies avqraging $115:per month for those: mceting,the!affordability limit., 36 (.32*.5+.68*.25) = .33. These calculations are based on survey data, and on averages, and are therefore only rough estimates. The results are indicative of what may be true for mobilehome households, but there would have to be confidential, case by case investigations to determine more precisely the affordability -issues among residents of Marina's mobilehome parks. ..i`n'I`M6bll6.homi!Owned*, r eanddiiar,", a -, ' P6rk Name ��N MH Percen S ;AiigTGross, .�of,!V[Hsll'.!.-�, ;.No. �,iXi z� �?.�IWith'iAirg.jent I "A 0 vg.,mc me Aent As,% of -,Mortgage PaidDff., 1*1, 1 1 - I I 11ti, , , f,J Cypress Square 45 86.5% $475 $27,544 34.4% El Camino 13 43-30% -''$433 '$32,731' 24A % ,El Rancho 21. 84.0% 347._,__._$24,810_,___ -25.3% Lazy Wheel', 16 k_.61,-'5%1,) $606$29,812 39.5% Marina del Mar -30 - 83.3%1 $3421 $23,283 29.2% Total:/ Avg.' 125 0,` 74.0%1 '$4291 ,_,.-x$26,892 31.2% Nolbil4hbnies',WkhMortgages 1 - Park -Names Pdrc4nt,lVlHs-" Avg; Housing No. -of MHs - .',With— Avg rent AV9. income -do S.% of, ZNOt Moi�t§�gesi HH' -income, CVpress Square 1 7 -13.5% $460 -:$53,214 37.4% '---EVCamino 17 ""%56.7% $452'40.4% $47,500 El Rancho 4 16.0% $359 $40,000 32.7% Lazy Wheel. 10 38.5% 1653 $42,500� �49.3% Marina del Mar, 61 '_ 1§ 0 ��Og �E,8331 0/ 41.5% ,Total / Avg. 441 �,�NOZI $4861 41.4 $44,1821 % Source: Residents' Survey These.summaries indicate that mobilehome residents with no mortgageare,,dri average; abk-ta:r.'. afford their housing payments. Mobilehorne owners with mortgages have more income, on average;,than,mobilehome.owner'with:nomortgage. NeVertheless;;ffibbilehorn , e residents paying` a mortgage are- Paying.relatively high percentages of theirinoornes forhousing costs. Using the 40% affordability standard, housing costs are unaffordable foiroughly,half.of all mobilehome owners with a mortgage. For the other half of the with -mortgage group, and for roughly three- quarters of the no -mortgage group, housing costs are affordable, by the 40% affordability standard. If housing costs are unaffordable for 50% of those with a mortgage and 25% -of those with no mortgage and considering, that 68%'have no rnoitgageand 32% haV6 a mortgage; housing costs are unaffordable for, roughly 33%jof mobilehome resident households in Man"'na;'or about'131 households .36. What would it take to address this problem? Following the 40% affordability principld,:ft, would! - appear that the entire problem could be handled by roughly $15,000 per month, an amount that would allow subsidies avqraging $115:per month for those: mceting,the!affordability limit., 36 (.32*.5+.68*.25) = .33. These calculations are based on survey data, and on averages, and are therefore only rough estimates. The results are indicative of what may be true for mobilehome households, but there would have to be confidential, case by case investigations to determine more precisely the affordability -issues among residents of Marina's mobilehome parks. 5.6 The Availability of Affordable 13ousing in -Marina - 5.6 some jurisdictions in Califomia;Marin a has a varied supply of relatively affordable housing. Mobilehomes themselves are relatively affordable in Marina. Both mobilehome prices and space rents are moderateas compared with,mobilehome prices and space rents in'other communities in Northern' California. A two-bedroom mobilehome can be purchased in Marina for $40,000 to $80,000 with a monthly rent oVabout $550. Imputing the annual codof the dome at 8%, and adding estimates of taxes and insurance, a home in a Marina mobilehome park might cost -between $1,200.and $1,500 per month. If'the-home is paid in full, as many are, the monthly'' cost of mobilehome park residency might be between $600 and $800 per month. These ranges. are relatively affordable, considering the cost, of housing in Northern California.,, But mobilehomes are not the only affordable housing option. Apartments are also relatively' - affordable in Marina. One -bedroom apartments rent in Marina for $850-$1,000 per month.-T_wo- bedroom apartments in Manna rent for $1,IOQto $1,400 per month .37 Signs for.vacant. apartments abound, indicating an active market. Single-family homes were relatively, expensive until the mortgage crisis, but homes are said'to have dropped in value by something like 40%. Some are now -available as rentals. There are therefore several ,different -relatively affordable „- home choices in Marina — single-family homes, apartments„and mobilehomes. The phrase "relatively affordable” means "affordable as compared to housing alternatives elsewhere in Northern California".. Whether a particular home, aparttnent,;or mobilehome•is;,• • - affordable.to a particular household depends on household income. An affordability, problem• stemming from low income, is an income problem; not a housing problem. Housing, ;however , affordable, cannot be expected,to compensate for low, or very low incomes. Communities have to decide what they, can and should do to alleviate the affordability problems of very, low income. •., residents. In making these choices, communities should be clear. about the source of the, problem. The Proforma Tenure Cost Comparison,chart on the following page gives.a rough idea of.the , al, costs of typicmobilehome, apartment, and single-family home residency,in Marina.;The costs. of mobilehome residency were taken from survey responses. The costs of single-family home and apartment residency are estimates based on interviews and the draft Housing Element. 31 City of Marina, "Housing Needs Assessment", Table 2-19. M1 PROFORMA TENURE COST,COMPARISONS :-Mobilehome Single FamilHome• rtment'•l HOME VALUE 80,000 350,000 MORTGAGE, •.,533 1,896 • . 0 PROPERTYTAXES -67 292 0 INSURANCE 22 97 0 RENT. _ 550 0 1,100 TOTAL COST With Mortgage: 1;172 2,285 No Mortgage: 639 .. 389 1,100 REQUIRED INCOME ' With Martage: 35,167 68,542 No Mortgage: 19,167 11,667 " 33,000 ASSUMPTION: 2-BEDROOM'IN EACH CASE ' AFFORDABILITY LIMIT: RENT =40%INCOME • - Source: Residents' Survey, Interviews The affordability estimates are based on housing costs being up to 40% of available income. This is higher than the HUD standard — 30% ='but matches reality -on the ground:'The fact is that many California households,do spend 40% or even' 50% of their available income on housing. In the case of mobilehomes, the monthly cost may be little more than the rent because the home may be paid in full. In the case of single -,family homes, the monthly cost may be lower still -if thehome is owned'free and clear, since there is no rent: 1 • - , These calculations indicate that 2 -bedroom' apartments in Marina are affordable to a household having a combined family income of $33,000 (or more); that a modest 2-bedroom'single family home in Marina would be` affordable to a household having a combined family income of $69,000 if 'they are paying a mortgage; or'$12,000 if the home is owned free and clear: and'that a' typical 2 -bedroom mobilehome in Marina would be affordable to a household earning $35,000 if there is a mortgage, or $19,000 if the home is paid for. These calculations indicate that mobilehome residency is affordable to some households, especially when the home is paid for. The calculations also indicate that other tenure choices may be affordable as well. In particular, the most affordable housing arrangement is a single family home owned free and clear. The calculations also indicate that even when mobilehomes are owned free and clear, there is an affordability problem for residents having very low incomes. 41 6. CONCLUSIONS AND RECOMMENDATIONS 6.1 Answers to Questions Po§ei3'at the Beginning ofthis Report 1. Afe' mobilehome space lents in Marina too high, too low,' or'about average? ` Except for the rents at Lazy Wheel, the space rents in Marina aid moderate. They'are" " lower than average space rents in Monterey County, have increased at close to the' ' inflation rate, and have increased by less than apartment rents in Northern California over the past, 20 years. The rents at Lazy Wheel did increase sharply, in 2007 because of the sale/purchase of the'property It would, therefore be appropriate`for rents at Lazy Wheel to remain close to their'ciiirent levels for 'several'years: Oth&than Lazy Wheel, the park owners have been unnecessarily restrained in the rent increases they have imposed in the past several''years.'It would therefore be appropriate if rents at other parks in Marina'were"to mcrease'gradually'to close the gap with market ren6' elsewhere in the county. 2. Is there a problem' 'about space rents that the City of Marina should'address? :r No. There is an income problem for some mobilehome residents, but'there is no'" problem with space rents per se. Space rents In Marina are lower than they might be in the case of El Rancho, El Camino, Cypress Square, and Marina Del Mar. Space rents at Lazy Wheel are at the top of the local market and should therefore remain fixed or increase only moderately' for several year's: Tfiere' is, however, insecurity'About space rents and mobilehome values that might be addressed through a'ienewed'MOU'or''' model lease program. No'one likes rent or priceincreases, but inflation is a reality We cannot change. The cost of housing, like'the cost of gas, food, and most other necessities, does increase over time. As much as we might -want to';'tliere is nothing the City of Marina or any of its can do to stop or slow inflation. Attempts to ignore, contradict; or le'gi'slate againstiriflation are doomed to failure. ' 3. Are the prices at which mobilehomes are selling in Marina reasonable, considering the overall market? Mobilehome values; overall; have'increassed by more than the CPI and by more than space rents over the past 20 years. Mobilehome prices are influenced* the'overallre'al'' estate market as well as by space rents. In the late 1996s and into the 2000s there was a bubble in housing prices generally that contributed to increase's in the prices atwhich mobilehomes in Manna sold: The bubble burstiri 2007-2008 and prices of ' mobilehomes declined,justas"prices of single 'family'home's and condominiums," ' declined.'Nevertheless" there'is an active market- in nrobilehomes at prices significantly greater than purchase prices in the 1990s and before. 42' 4. Is there an actual or perceived problem that rent control might address? ., There certainly is.a perceived problem, ;but it is unclear that there is an actual problem. , Rent control would be a mistake, for reasons outline in Section 3.1. There are other solutions that would be far less divisive and. far more cost-effective, as outlined in Section 4. 52 Has something changed from the situation that has, prevailed in Marina. and. surrounding communities, without rent control, for many,years? _ No. Nothing fundamental has changed The mobilehome market in Manna works today much as it has worked fora half century. What has changed in some communities is that land values continue to increase by more than inflation and that the real estate and financial markets are currently in turmoil. As land value increases, the pressure on scarce urban and coastal land increases, driving the costs of housing higher. At present, the market is in.a downturn and financing is harder to secure. Nevertheless, nothing fundamental has changed. M6bilehome sales are active, the real estate turmoil+ notwithstanding. Mobilehomes continue to,provide relative,ly,affordable, housing for Marina mobilehome residents, as they have for 50 years. 6. Are park owners in any way exploittng;the captive nature of the mobilehome mobilehome.park relationship? , There is no evidence that park owners are exploiting the captive nature of the mobilehome / mobilehome parkxclationship. To the contrary, park.owners,(other than the owner of Lazy,Wheel) have increased space rents less than,they might have„ considering inflation and the market generally: At Lazy, Wheel the average, annual rate. of.rent increase over the last 20 years.(5.8%) matches, closely the average annual rate of, increase in mobilehome values over this time period (6.1%). In the other parks, over., this 20 year period, increases in mobilehome values have exceeded increases in space rents and increases in goods and services generally, as measured by the CPI and CPI - Rent. 7. Are mobilehome residents more.financially, challenged than homeowners or . apartment dwellers in Marina? Some mobilehome reside111 nts have low 1111 and very low,incomes but many of Marina's low and very low income residents live in• apartments;,not mobilehomes. Some low;and very low income residents live in single,family,homes. Space rent control,would obviously not help low or very low income residents who live in apartments or single family homes. 43 Mobilehome rent control would subsidize mobilehome residents irrespective of income level and without cohsideradon'of need. A subsidy program, on the other'hand,"would target subsidies to those most in`iieed of assistance. Section 8, subsidies are available to some very low income apartment residents. -' 8. Is it possible or likely that space rents in Marina would increase significantly, in the foreseeable int ure'as they have' iu some surrounding'communities? It is both possible and likely that space rents in Marina will continue to increase at or near the inflation rate'for'the foreseeable future. Considering the need for infrastructure improvements in the parks an&considering'the fact that space rents have not kept up with inflation at some parks, space rents will have to increase during some periods by more than the inflation rate whether or not there is rent control. It is not likely, however, that space rems'in Marina 'will The increased'to'the levels 'ptevailing in the luxury parks ' in Castroville and Santa Cruz. 9. How do mobilehome parks fit into Marina's plans for'fuiure`development, 01 including plans for creating and'preserving affordable housing? Contrary to a stated intention'in the 2004 Housing Element, Marina seers poised to' approve thousands of new housing units in several major new developments in'the city' without allocating any land for new mobilehome park development. In accordance with another section in the Housing Element, Marina seems poised to re -zone existing mobilehome parks so as to lock in the present mobilehome use for Marina's five mobilehome parks. It is not clear, however, that mobilehome use matches the City's ` vision for the downtown redevelopment area. It is possible that locking in the mobilehome zoning would.be counter-productive in long run planning terms; ; 10. What might be the effects of rent control on residents, park owners, taxpayers, and the City of Marina? Rent control ,has side effects tharare not obvious before these programs are'initiated. Parks under rent control tend to become run down. Public discourse in cities with rent control tends to be dominated by pro -rent -control and anti -rent -control factions. Rent 'control•routinely causes protracted litigation: Rent control is also expensive in other. ways;•, diverting :civic.energy,from projects and programs that can truly help residents and advance a city's goals to a program that does no more than shift income and assets from one group (park owners) to another (park residents) without helping those most in need of assistance (very low income residents). 11. How do the costs of mobilehome residency compare to the costs of.living in a' single family home or an apartment in Marina? Mobilehome residency is one among, several affordable housing options m Marina Depending on whether there is a mortgage or the home,is owned free and clear, mobilehome, single family home, or apartment hving maybe the least-cost,housing , arrangement. 12 ilre there alternative programs that miglit balance the market and address financial insecurity more effectively'than rent control? Yes. A program involvu g a memorandum"of understanding, a model lease,,and rent subsidies for low income residents would bea better alternative than rent control , 13. Are there mobilehome,residents.for whom paywg space rent is a financial burden? Yes. There are some mobilehome residents whose incomes are very low. For these residents, space rent increases would be burdensome. Indeed,, for these residents, even: current rents are burdensome I[ is noteworthy, that for these residents a subsidy . program would be far more useful than rent control. Rent control might decrease the rate of future space rent increases, but.rent.control would do-nothing to,assist low.,... u- income homeowners withmace rent. burdens right - now.., 6.2 RECOMMENDATIONS , • That the City sponsor a transparent, inclusive process.involving all stakeholders in order to workout a cooperative solution to residents' insecurity regarding mobilehome space rents and mobilehome values. • That the City, mobilehome park owners, and mobilehome park xesidents eziplore the, possibility that a renegotiated memorandum of understanding (MOLT) and model lease program would bring, lasting stability and'genuine balance.to the Marina'mobilehome market ■ That the' City abandon the proposal to re=zone mobilehome:parks and. continue to seek locations for additional mobilehome park -space outside,the,downtown revitalization, project area.. • That the City cover the administrative costs and:consider making a matching contribution to a rent subsidy program otherwise funded by park owner contributions of 3% of gross space rentals, in order to address the income needs of the lowest -income mobilehome park residents.. t 45- APPENDIX I SURVEY OF MARINA MOBILEHOME PARK RESIDENTS (if a question isnot applicable -' write" tN/A!')' In what year was yoiif'm6bile'h'o'me'ifiahidactired? What;iype of mobilehome d6you livelfil(cfie&6ne) - Singlewide,,, DoubIewW 'Triplewide ;.What 'are thedimensioni10- Uyou r mob ilehoib,0Length "'' " Width In what year did your household move into the mobilehome? Before you moved into the mobilehome park where did you live9 city state,. - Before you moved into the mobilehome park where did you reside? apartment refital,mAt house you house you owned condominium you owned another mobilehome park'; ---other (please descr&)- What was the monthly space rent when,your household moved into the inobilehome that You now live in? L What is Your cu rrcjnt monthly. space rent? .What utilities do you pay for in addition to the space rent? (check those that apply) Gas Electricity— Water — Sewer— Garbage_ Other (list) .0. Does your household own or rent the mobilehome? Own (the home, not the space) Renf .1. What was the purchase price of your mobilehome? M =12. Did you pay in full (all cash) for your mobilehome?" YES' 13. If you did not pay all cash, how much was your downpayment? 14. What is the total mortgage now due on your mobilehome, if any? 15. What are your monthly mortgage payments, if any? NO' 16. Including yourself, how many persons live in your:mobilehome? 17. Please fill in the following information about the adults (persons 18 or older) in your household 18. -What are the ages of any children in your household? Child #1 Child 41 ` ` `` 'Child #3 'Child' 19. What was the total income of your household in 2006 before taxes? (please include income from all sources including social' security, pension, interest, ' dividends, and any public assistance) .- -. _.. ! 'i' _ 5: tai: _- ,. •.. ,. under $15,000 = ' $15,000 - $19,999 - - - - - $20,000 - $29,999 $30,000 - $39,999 $40,000 - $49,000 $50,000 and above 47 Household Household Household Household Member„ #1 Member,,,.. #2 Member... ,#3 Member.,, #4 . Age Employed- Full4time Employed Part-time:;; Not worldng ' Retired 18. -What are the ages of any children in your household? Child #1 Child 41 ` ` `` 'Child #3 'Child' 19. What was the total income of your household in 2006 before taxes? (please include income from all sources including social' security, pension, interest, ' dividends, and any public assistance) .- -. _.. ! 'i' _ 5: tai: _- ,. •.. ,. under $15,000 = ' $15,000 - $19,999 - - - - - $20,000 - $29,999 $30,000 - $39,999 $40,000 - $49,000 $50,000 and above 47 APPENDIX 2 MOBILEHOME PARK OWNER SURVEY 1. Park Name 2. Name of Contact 3. Phone Number. 4. In what year was the park built? 5. How many mobilehome spaces are in park? "o. How many spaces are occupied by: Singlewide mobilehomes Doublewide mobilehomes e'Y. Triplewide mobilehomes 7. What is the average rent for occupied spaces? and/or describe the ranges of rents B. What is the rent for incoming purchasers of mobilehomes? 9. Does the park offer lower rents for low income tenants? If yes, please describe the park policy M ,, 10:`How man'yrresidents have entered into leases of one year or more? 11. Are incoming residents required to enter into a lease? a. If yes, what is the length of that lease? 12. What are the requirements for_mobilehomes.that.are moved into the park - size, age,condition etc. 13. Does the park own any mobilehomes? a. If yes, how many? b. Is the park selling or renting those homes c. If the spaces are rented, what is the rent Including the space and mobilehome rent?' 14. When did the current owner purchase the -park?.. - 15. How many spaces are covered by leases of more than one year. If the park has a standard lease please provide a copy M 'APPENDIX 3' 2008 SPACE RENT. SURVEY'=:,MONTEREY COUNTY. RENT NO. OF BASE RENT BASE RENT LOCATION PARK CONTROL SPACES LOW HIGH Castroville Monte Del Lao NO 310• 985' -- 1135 '985. 1135 King City Pine Canyon - NO_ -, .. 123 - 255 280 - - 255 - 280 Marina C ress Square NO ' 92 440 500 Marina .v EI Camino - W'. NO 62 •' 407 500 Marina EI Rancho NO 97 310 406 Marina Lazy Wheel... NO;:. 69,' - 550 1650 Marina Marina del Mar NO 83 299 468 average 401 505 Moss Landing Trail's End - 'NO 40 475' ' 495 Moss Landing Moss Landing' NO -104 370 ` 405 average 423 450 Prunedale Cabana NO 49 550 550 Prunedale Ponderosa Oaks, , NO 60- 465 575 average 508 563 Salinas Lamplighter YES 250 600 750 Salinas Cal -Hawaiian YES - "157 455 ' - 755 Salinas Alisal :YES .82 383 740 Salinas JMW=Town YES 80 575 600 Salinas La Canada YES 119 424 571 Salinas Rancho Salinas YES 137 528 570 Salinas Village YES 118 350 475 Salinas Del Monte YES 64 350 450 average 458.' "'.614. - Seaside SeasideNO, 98 480 635 Seaside" Greer Parrot NO 47 400 400 Seaside Traller'Terrace NO 59 "' 355 410 average 1. 1 412 " "' 482" Soledad Soledad NO 30 `411 '461 Soledad Nielsen's NO 27 265 265 Soledad Santaelena NO 100 200 200 average 292. 309 totals aces '' 2457 weighted average 496 50' BIBLIOGRAPHY Baar, Kenneth, "Mobilehome Park Space Tenancies in -Ceres",, -February, 2008.. Baar, Kenneth, 1992,,"The Right To Sell'The'Itn'mobilehome in its Rent Controlled Space.in the 'Im'mobile Park: Valid Regulation -or Unconstitutional Taking?", The Urban Lawyer; 24, 1. Ceres Mobile Home Park Ad Hoc Committee; "Recommendation Regarding Mobile Home Park , Space Rents", July 28, 2008. City of Marina, Housing Element, 2004. City of Marina, "Housing Needs Assessment", draft Housing Element, December 2008. Fulton, William, "Mobile Home Rent'Control Conundrum: Free Market versus Affordable Housing", California Planning & Development Report, 10/1/04. Hirsch, Werner Z. and Joel G., 1988,; "Legal -Economic Analysis of Rent Control in a Mobilehome Context: Placement Values and•Vacancy Decontrol UCLA Law Review, 35. r Manheim, Karl, "Rent Control in the New Lochner Era", UCLA Journal of Environmental Law & Policy,December 2005. Mason," Carl and Quigley, John M., "T'he Curious Institution of Mobile Home Rent Control", Journal of Housing Economics, 16(2007),.189-208. St. John, Michael, "Fair Returnand the California.Courts", March 2004. St. John, Michael, 1990, "The Effect of Rent Controls on Property Value — A Test of the Capitalization Hypothesis", Doctoral Dissertation, Economics Department, UC Berkeley, 1989. U.S. Bureau of Labor Statistics, "Consumer Price Indexes for Rent and Rental Equivalence", 2/9/07. U.S. Census (census.gov), Tables DP2 (Selected Social Characteristics), DP3_(Selected Economic Characteristics), and DP4 (Selected Housing Characteristics); ; Zheng, D., Dale,Jorgenson, D., et al, "An Examination of the Impact of Rent Control on Mobile Home Prices in California", Journal of Housing Economics, 16(2007); 209-242. KEY INFORMANTS In order to better understand mobilehomes, Marina; •and the citywide context for the mobilehome, study, the author`interviewed stakeholders and others. Many thanks to all who shared their time', and thoughts. Unless attributed specifically, all opinions in the report are the author's. Marshall and Joan Reeves, park managers Billy Griffin, park manager Ryan Gillian, mobilehome dealer Ken Waterhouse, park owner Doug Johnson, park owners' association representative Dave Evans, park owners' association representative Fran Hirsch, park manager Dean Moser, park owner and manager 51 Bill Schweinfurth, park manager Albert Vieira, park owner Bill and Sue Denhoy, park owners Manuel Vieira, park manager D.B. Jacobs, realtor Gege Winton, realtor Michael Tate, park owner Kenneth Baar, attorney and city planner Sharon Attebury, resident Gene Doherty, resident Cindy Virtue, resident and mobilehome loan specialist Inez Lockwood,realtorrra- Tony Altfeld, Marina City Manager Ron Lucas, Resident " Christi Di Lorio, Marina Community Services Director Doug Davis, park manager` Greg Evans, park owner and manager Peggy Matsuda, park owner David Spangenberg, attorney SPECIAL THANKS TO: Adam Lang for expert statistical calculations Albert Sukoff for advice and consultation about the study Joan and Marshall Reeves for the Monterey County Rent Survey, Ken Baar for drafting the survey forms and for assistance with the mobilehome price data Maria Teresa Alvarez for data entry, technical support, and proof-reading Barbara London for editorial overview ABOUT THE AUTHOR Michael St. John, Ph.D. is an economist, housing advisor, and property management consultant. His particular expertise is in rent control and, within that context, in fair return calculations. Dr. St. John has served as consultant and expert witness for park owners throughout California. He has also advised California cities and counties about rent control programs and fair return applications. Michael's bio -data, more information about his services and experience, and copies of some of his papers and reports can be found at his website, stiohnandassociates.net. He can be reached at 510-845-8928 or at msietal@pacbell.net. 52 '13 AMERICAN BAR ASSOCIATION Defending Liberty Pursuing Justice The• Right to Sell the "Im"mobile Manufactured Home in Its Rent Controlled' Space in 1 "Im"mobile Home Park: Valid Regulation or Unconstitutional Taking?' Author(s): Kenneth K. Baar Source: The Urban Lawyer, Vol. 24, No. 1 (Winter 1992), pp. 157-221 . Published by: American Bar Association Stable URL: http://www.jstor.org/stable/27894752 e. Accessed: 07-09-2016 19:42 UTC JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build'upon a wide range of content in a trust, digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more informatic JSTOR, please contact support@jstor.org. .. Your use of the JSTOR archive indicates your acceptance of theTerns & Conditions of Use, available at r. , http://aboutjstor.org/terins ' American Bar Association is collaborating with JSTOR to digitize, preserve and extend access to The Urban Lawyer Itis content downloaded from 137.150.34.41 on Wed, 07 Sep 201619:42:35 UTC All use subject to http://about.jswr.org/terms r The; Right.to.,1Sell,,the, ``Im,"mobile Manufactured, Home in Its. Rent Controlled ` Sace in, the `"Im"mobile Home Park:- Valid Regulation . or. Unconstitutional F, .,.;. Kenneth K; Baar**. ,,: Attorney, Urban Planner, Berkeley;:California; _ T „ Ph.D., University of California -Los Angeles, 1989; ,., I,.; , ,t•_ M.A., University of California=Los Angeles, 1983; J.D., University of California, Hastings College of Law, 1973; B.A.,,Wesleyan University,. 1969.;; L,Introduction " ' , IN THE UNITED STATES, the ownership of mobilehomes on ' rented spaces within mobilehome parks is a widespread form of tenure. Presently, over two million dwelling, units Mi the: United':States are in this form of tenure.' Most of these units are the primary residences of,tlieir owners. Z A substantial,portion.of themnits are concentrated in Florida and California. Florida has 4.1 8,352 mobilehome spaces in 2769 mobilehome. parks.'. California has 371,14' spaces in 5817 *In January 1992, the U.S. Supreme Court held a hearing in a case that raises the issues that are the subject of thisarticle. Thisarticle.was submitted in the fall of 1991. **The author gratefully acknowledges'Ahdassistance of Kathleen P. Reilley and Timothy Lee. The research for this article was supported'in?partby the Golden State Mobilehome Owners Leaguet . , i'�; ' 1: The.1990 census contains data on the total number of mobilehomes, but does not indicate whatpercentage of the homes are in mobilehome parks. Some states compile data.on:the number of mobilehome park spaces.. One source estimated that in 1974 there.were 1.6 million mobilehomes in mobilehome parks.. ARTHUR 'D. BERNHARDT,' BUILDING TOMORROW:THE. MOBILE/MANUFACi TUBED HOUSING INDUSTRY,217 (1980),(Project Mobile Home estimate): - Current data for California, Florida; Michigan, and, Ohio. indicate the number of mobilehome park spaces are about fifty"percent above the'1974 estimates made,by: Project Mobile Home., For current data;, see.infra:notes 2-5.,'t l _.t. 2.,E.g.,,in California, three percentof the mobilehome spaces in mobilehome parks are rented by persons who live elsewhere. CALIFORNIA DEPARTMENT OFHousiNG AND COMMUNITY DEVELOPMENT, MOBILEHOME PARKS IN CALIFORNIA 17 (1986). . 3. STATE OF FLORIDA,FINAL'REPORT OF THE MOBILE HOME STUDY COMMISSION (VOL. I), at 57, 59 (June 1990). This content downloaded from 137.150.34.41 on Wed, 07 Sep, 2016 19:4235 UTC All use subject to http://zboutjstor.oiglt&iAk 158 THE URBAN LAWYER VOL. 24, No. 1 WINTER 1992 parks ° Michigan and Ohio each have' oveu.I100,000 spaces, in mo- bilehome parks.' Mobilehomes usually range in siz&from 500 to 1500 square feet;' which is, typically the size -of an,apartment or two bedroom house.. The costof new inobilehomes, including moving and setup costs, is in the range of $30,000 to"$50,000.7 These expenses are in addition to monthly mobilehome, park space rents. While these homes are called' "mobile" in fact, they are a form of immobile prefabricated housing that has been constructed in a factory and transported to its site.8 The cost of moving these structuies'and' setting them up in their spaces is substantial.' (Costs for setup, and associated improvements for such items as the cement foundation, car ports, steps, porches, and landscaping are typically in the range of $5000 to $15,000.) Furthermore, in metropolitan areas with tight hous ing markets a virtual absence of vacant spaces in mobilehome parks makes it impossible to move them even if moving costs were not a consideration. When mobilehome owners move they ,sell their mo-. bilehomes "in place." . 4. , CALIFORNIA DEPARTMENT OF HOUSINGrAND COMMUNITY DEVELOPMENTq DI VISION OF CODES AND STANDARDS SUMMARY OF MOBILEHOME PARK STATISTICS, Aug. 28, 1990. The data segregates the count of'mobilehome lots and recreational vehicle- lots; ehiclelots; however; it does not indicate whatportion of the parks have only recreational vehicles. Id. Most of the mobilehome spaces are in southern California. The major counties have the following number of spaces: Los Angeles -52;142; San Diego -42,351; Riverside -34,659; San Bemadino-31,408; Orange -30,803. Id. 5. Michigan has 122,489 spaces. KATE WARNER, SOCIAL AND ECONOMIC IMPACTS OF MomLE HOME PARKS 5 (1987). Ohio has 108,499 spaces. Telephone conference with staff, Ohio Department of Health (1991). 6. See infra notes 60-67 and accompanying text.. 7. In 1989, the average price,of single -wide mobilehomes was $19,200 and the average price of double-wides was. $34;800; 'MANUFACTURED MOUSMG INSTITUTE, QUICK FACTS 1990191. These amounts do not include set up costs. Id. - , 8. "98 percent of these homes make only one trip—from the factory or showroom to. the installation site:" JONATHAN SHELDON & ANDREA SIMPSON, MANUFACTURED HOUSING, PARK TENANTS: SHIFTING THE BALANCE OF POWER i (1991).' Only about three percent of all mobilehomes are relocated from one park to:another. Werner Z;: Hirsch &'Joel G: Hirsch, Legal -Economic. Analysis bf Rem Controls in a Mobile Home Context: 'Placement Values and Vacancy Decontrols, 35 UCLA.L.<REv:.399'(1988). In 1980, the Department of Housing and Urban Development proposed that ".the term mobile home be changed to manufactured housing in all federal law and literature," 46 Fed. Reg. 41,708-10"(1980) (amending 24 C.F:R.'pts. 3280, 3282, 3283). However, "mobilehome" is stil the standard term in state and local legislation and common usage: In 1991, a federal circuit court of appeals:declared: "The mobile homes themselves really aren't [mobile]." Azul Pacifico; Inc,,v. City of Los Angeles, No. 90-55853, 1991 WL 224528.(9th Cir: Nov:, I; 1991) (petition for rehearing pending). 9.. See infra, discussion accompanying,notes-91-94., . ... This content downloaded from 137.150.34.41 on Wed, 07 Sep 2016 19:4.2:35 VTC All use subject to http//abouLjstovorg/terms RIGHT TO SELL THE "IM"MOBILE .HOME 1S9 In areas with tight housing markets', mobilehomes in mobilehome park spaces are quite valuable,10 while mobilehoines'without a space are virtually worthless. •As a practical matter, mobilehomes and mo- bilehome owners are thus completely dependent on the right to keep the mobilehome "in place" and are captive to park owners' rents and'other regulations. - ' " ' ' - The principal attractions of ownership of'mobilehorries in' mo- bilehome parks are'its relatively low-cost compared to single-family dwellings and condominiums (while still offering the characteristics of a detached structure), and the organization of mobilehorries into small tightly knit social communities:" On the other hand, mobilehome ownership in'inobilehome parks presents special problems. Because mobilehome park spaces and mo- bilehomes constitute a package of complementary goods with jilteide- pendeut'values, the interests of mobilehome owners'and park owners are in direct opposition. The'higher the'space rent the lower the mobile home value and vice versa. Mobilehome owners' desire'to preserve their'investments and the affordability""of their hornes while parkowners' desire to maximize their 'return on the underlying land. 12 ' Mobilehome space rent controls and legislation granting mobilehome owners the right to sell their mobilehomes in place became'widespread in'response to concerns about mobilehome owners' `interests. Approxi- mately severity California cities have'"adopted mobilehome space rent controls:" Other"states with municipal mobilehome space rent Ord - nances' include New'Jersey' and Massachusetts: 14 Florida recently'en- acted legislation which author zes'courts to'refu'se to enforce "unrea- sonable" mobilehome space rents, Is but it does not permit municipal' rent control ordinances ezcept'upon'a finding 'of grave emergency. 16' In, 10. Iu California, mobilehome prices ranging'from $50;000 to $100,000 are'stan- dard. - - - 11. See, infra discussion at notes 30-87. 12. A survey of mobilehome park owners and mobilehome owners in Los Angeles indicated that, on the average, mobilehome owners have triple the investment of park Owners in their Spaces. CITY OF LOS ANGELES, RENT STABILIZATION DIVISION, COM- MUNITY DEVELOPMENT DEPARTMENT, RENTAL HOUSING STUDY: MOBILEHOME PARKS UNDER RENT STABILIZATION 11, 33 (1985). 13. This -estimate is based on the author's interviews with mobilehome owner attorneys and public officials in 1990 and 1991.. 14. Interviews with mobilehome owner representatives in New Jersey. and Massa- chusetts (Summer 1991). 15. FLA. STAT. ch. 723.033 (West Supp: 1991). 16. FLA. STAT. ch. 125.0103 (West Supp. 1991). This content downloaded from 1317.150.34.41'on Wed, 07 Sep 201619.42:351J1'C All use subject to http://about.jstor.oig/terms 160 THE URBAN LAWYER VOL..24, No. 1, WINTER 1992 each of these states, mobilehome owners have the right to sell their mobilehomes in place. 17' `r A critical element of many mobilehome space rent control ordinances has been that they do not contain "vacancy. decontrol", provisions which permit unlimited rent increases upon changes in ownership of,a mo-, bilehome when it is sold in place in a mobilehome park. Instead, they contain "vacancy controls.", In the absence;of restrictions on.rent increases upon a sale of a mobilehome in place, a park owner may capitalize the mobilehome value into the rent. If.the rent becomes exorbitant the mobilehome cannot be sold to anyone else or can only be sold at a reduced price. On the other hand, when rents are restricted upon sale, the mobilehome owner may capitalize a portion of the land value into the value of the mobilehome. In the past four years, the constitutionality of "vacancycontrol" provisions in mobilehome space rent regulations has been brought into serious,question. Two U.S. circuit courts of appeals have overruled dismissals.of complaints, which contained allegations that_mobilehome rent controls with vacancy controls constitute a -physical taking when combined with,regulatory. schemes,which give themobilehome owner the right to sell the, mobilehome in place. In the. leading case,. Hall v. Santa Barbara,"' the U.S. Court of Appeals for the Ninth Circuit ruled that ordinances which: grant mo- bilehome`owners the right to sell their mobilehomes in their rented park space at a regulated."reduced'.' rent may effectuate a permanent physical invasion, by virtue of the fact that they,transfer, a permanent possessory interest from the park owner to the mobilehome owner. 19 Subsequently,, the. Supreme Court denied a petition for hearing, thus leaving the ultimate validity of Hall's legal conclusions unresolved.20 As a result of the Hall decision, most of the California cities with mobilehome rent controls have adopted vacancy decontrols in order, to avoid suits for damages .21 In some parks, owners have instituted large rent increases in space rents upon changes in mobilehome ownership 17. FLA. STAT: ch. 723.058 (West 1991); N.J. STAT. ANN. § 46:8C-3 (West 1991); MASS. GEN. LAWS ANN. ch. 140; § 32M (West 1991). 18. 833 F.2d.1270 (9th Cir. 1986), cert. denied,,485'U.S: 9401(1988). 19. See id. at 1278. 20. City of Santa Barbara v. Hall, 485 U.S. 940 (1988): 21. This conclusion is based on comments by municipal attorneys and the author's review of numerous local ordinances. This content downloaded from, 137.150.34.41 on Wed, 07 Sep 2016 19:42:35 UTC All use subject to http://about.jstoz'.org/terms RIGHT TO' SELL THE "1M'MOBILE HOME 161 (e.g.-, $100 to $300 per'm'onth).22'Accordingto tnobilehome owners and brokers, the vacancy decontrols'have caused mobilehome owners to experience severe problems and/or losses of equity in selling their mobilehomes 23 Also, the viability of investment in'mobilehome owner- ship has been brought into question by the potential of unlimited rent increases uponsale of the ,investment an =_ ' I In' 1990, a federal 'circuit court of appeal in New Jersey adopted the reasoning of Halt in Pinewood Estates v. Barnegat Township' Leveling Board.'S In'1991,,tw6"6ther circuit courts -of -appeals panels, which included the judge who authored the Hall decision; followed its'reason- ing.2' However, apart from-these'decisions;• federal and state courts have consistently rejected the -view that m6bilehomespace rent control's constitute a physical taking Since October 1990; five California appel- late court panels have, declined to 'follow its reasoning on' the ground that it is not persuasive:27tFurtherm6re, federal courts that'have been bound by Hall, which have not included the author of the Hall opinion on'its panel, have criticized its'reasoning and/or avoided its substantive conclusions by finding ihafchallenges to ordinances were barred by the statute of limitations or h4been resolved by -state court proceedings.. 2a Up to'this time,' 'chaos., uncertainty-, and' irresolution have: Ueen'the winner's in the legal debatet'o'ver the constitutionality of mobilehorne space rent regulations which have vacancy controls. Presently;`chal- lenges based on Hall's theories are pending in California and New 22. E.g., information sheet prepared by the Golden State Mobilehome Owner's League (1990 Survey, Garden Grove, California) listing, parks with exceptional in- creases. 23. Interviewswithbrokers and-mobilehome owner association reprsentatives; Alameda, Santa Barbara and Ventura Counties, California (1990-91). 24. The MOmLEHOME PARKs REPORT reported that: The number of sources for financing consumer purchases of mobilehomes in Califor- nia has fallen from 18 to just three or.four major sources;according to ritobilehome dealers :... Other. [lenders] havepulled out because of the impact of the Hall 'decision and the -lifting of -rent controls when rnobilehomes'are resold in parks: Lenders worry; that higher rents' will force a drop iq resale the in-place rle values of mobilehomes. ' MOBILEHOME PARKS REPORT. 1-2. (ThomasT. Kerr, Apr. ' 1990). Lenders are very nervous because they've lent substantially cn the "in-place value" of mobilehomes in rent contiolled-jurisdictions. Id.,at 4. 25. 898 F.2d See347, (3d Cir. 1990). See infra text at notes 243-46. 26. , e:g. Sierra Lake Reserve v: Cityof Rocklin, 938 F.2d 951 (9th Cir. 1991); Azul Pacifico, Inc., v. City of Los Angeles, No. 90-55853, 1991 WL 224528 (9th Cir. Nov. 1,'1991) (petition for. rehearing pending). , 27. See infra text at notes 172 275. , 28. See infra text at notes 267-73.... . This content downloaded frbin 137.150.34.41 on wed, 07 Sep 20161 9:42:35 UTC All use subject to iiitp://abouijst6i.org/ter 162 THE URBAN LAWYER. VOL.-24,.No. I , WINTER 1992. Jersey 29 Until the issues raised by Hall are resolved, cities, mobilehome owners, and park owners can only speculate over what their respective. rights, and burdens may be.., The purpose of this Article is to address the constitutional issues raised,by, mobilehome;-rent control laws that, do not contain vacancy decontrol provisions. Part II containsa description_ of the nature of mobilehome..ownership. It includes discussion, of the development -.of mobilehomes asresidences and their ;economics,. the growth of mo- bilehome ownership financing mechanisms, and -zoning restrictions on mobilehomesand-Mobilehome,parks: The monopoly nature of the mobilehome park landlord -tenant rela-, tionship is described.in Part III. This relationship is a primarily a product of the immobility jDf mobilehomes and exclusionary_ land -use policies which restrict the supply of mobilehome spaces... , . In Part IV;, the evolution of public regulation of mobilehome park landlord -tenant;_ relationships is discussed. -, Part V then examines 4all and other .cases which have considered the constitutionality, of; regulatory, schemes • which give, mobilehome, owners the right to.sell their mobilehomes in.their park spaces at regu- lated rents. Finally, Part -VI analyzes the constitutional theories sur- rounding the debate,over the constitution_ ality,of mobilehome park space rent. regulations. , U. The Growth of Mobilehome Ownership and Mobilehome Parks 30 A. The Emergence of Trailer Courts "Trailers" were first introduced in the 1920s,' primarily as structures for autocamping .3 1 At first they consisted of wood frame, structures 29. In New Jersey, cases are pending in the Jackson and Dover,Townships. See Mobile Village Home Park v. Township of Jackson, No. L-1407-90PW (N.J. Super. CL Law Div.); Rivkin v., Dover Township Rent Leveling Bd., No, L-6650-90 (N.J. Super. Ct. Law Div.). A trial court invalidated the vacancy,control. in the Borough of Highlands ordinance on the basis that it constituted a taking. Highlander Ass'n v. Borough of Highlands, No. L-59130-90 (N.J. Super. Ct. Law Div. June 7,1991) (Order of Judgment). The decision was not appealed. '30. =For history and'discussion of mobilehome ownership see EARL W. MORRIS & MARGARETE.WOODS,HOUSINGCRISISANDRESPONSEC THE PLACE OFMOBILE HOMES IN AMERICAN LIFE (1971); MARGARET J. DRURY, MOBILE HOMES'(THE'UNRECOG= NIZED REVOLUTIONINAMERICAN HOUSING) (rev. ed. 1972);INSTITUTE'FOR LOCAL SELF GOVERNMENT, WHY THE WHEELS:' THE IMMOBILE HOME (1972); ARTHUR D. BERNHARDT, BUILDING TOMORROW (1980); THOMAS E. NUTT-POwELL,•MANUFAC- TURED HOMES (MAKING SENSE OFA HOUSING OPPORTUNITY) (1982); ALLAN D. WAL- LIS, WHEEL ESTATE (1991). These Works are the principl0 soarceS Of the following discussion. 31. WALLIS, supra note 30, at 31-39. This content downloaded from 137.150.34.41 on Wed, 07 Sep 2016 19:42:35 UTC All use subject to http://alboutjstor.orgiter RIGHT To SELL THE _"IM"MOBILE-HOME _ ° : 163 covered with canvas.` Most of themwere homemade-: 33 Typically, they were a few hundred square feet in size and could'e'asily" be'hitched fo vehicles, and did'nothave toilets or showersi34°The emergence of a "mobile" form of housing stimulated widespread curiosity, interest, and'concern during an era that revered the popularization of the automo- bile... The spread of trailers led to the development of thousands of trailer canips,for travelers in the 1920s.35 In the early 1920s, the camps were constructed . y municipalities for the purpose -of encouraging tourism.3B However, when long-term occupants of -"tin can" trailers started to occupy the camps, the mu nicipally'operated'camps"were' closed or lengths of,stay,were limited to.a,few.weeks.37, In the 1930s, the.use-of trailers as -a form of permanent housing became more widespread .38 Trailer`s with solid exteriors were produced on -,a mass scale and `;luxury;', camps were,open'ed.39 At a time of economic depression when mortgage and tax default -rates, were astro- nomical, trailers freed families -from the "oppression", of mortgages, taxation, employers, immobility; politicians, and'unsightly'changes,in neighboring land uses., 46' They offered a cheap and mobile, form.of housing when mobiliy as well -as low cost were essential:"[M]unicipal or private camps [may provide] electric light, ' water, aiid`sewage dis- posal .... at [a] reasonable charger ., .. They, permit families to live without heavy outlay.for land ownership, or. rent ...."41 37: Id. at 35-39: 33. Id. at 38. 34. In 1942, the Supreme Court of Ohio noted that: "[Tlhe evidence discloses that the average trailer isapproximately 7 feet in width'and 17 feet in length.:. .'No trailer is equipped with a toilet or shower." Renker• vi+Village of Brooklyn;'40'N.E.2d 925; 927 (Ohio 1942). 35. WALLIS, supra note 30; at'39. - 36. Id. 37. Id, at 38-41. One commentary provides the following account: The evolution of the house trailer user may be traced tlirough'three stages. The first was the era of the "tin can tourist" jail "auto gypsy. "These earliesttrailer users were transient families, for the most part indigent or otherwise socially maladjusted, who roamed about the country in dilapidated cars. Their trailers were makeshift crate -like affairs, usually contrived of materials from junkyards.... For nearly a decade the trailer was closely identified with this class of family transients. Naturally real estate owners, hotel and cottage camp proprietors, and others dependent on the tourist trade; as well as civic officials and social woikers, looked askance upon these modern gypsies. - r + .: - .: ' .. Carroll D. Clark & Cleo E. Wilcox,;The House Trailer Movemen, 22 SoctoLocy & Soc. Itcs. 503, 505(1938). . 38. MORRIS & Woons, supra note 30,. at 8: , 39. WALLIS, supra note 30, at 42-63. - 40. Id. at 58-59. 41. Philip H. Smith, After Cars Come Trailers, 156 Sm. Ant. 94, 96 (Feb. 1937). This content downloaded from 137.150.34.41 on Wed, 07 Sep 2016'19:42:35UTC All use subject to hup://about.jstor.org/terms 164 THE URBAN LAWYER : VOL. 24, TIO. 1 WINTER 1992 By 1936, about 300,000 households were. using trailers for year- round or vacation. living. There were predictions, that a substantial portion of the population would be living in such,homes within a few decades .4' A commentary. in Time magazine explained the nature of the drastic transformation that took place between the 1920s and 1930s: No one knows who devised the automobile trailer, but everyone who participated in the mass movement of, the American people onto the; highways in, the early 1920's remembers the occasional ones which careened past on the road. Lopsided, homemade wooden Boxes lookiug'like outhouses on wheels, they usually provoked snarls or sneers from motorists forced to cutaround them.As th'e automotive industry pregressed;.trailers remained static. As late as 1932 they were rarities. Then, sud- denly public resistence broke down., All over, the U.S. trailers rolled onto the high- ways.... The modern trailer is no longer an ugly'woodeh-box: Anywhere from 14 to 30 feet long, it is a streamlined'lozenge;of lighbmeial withicurtained windows .... Inside, it is,as compactly luxurious as the cabin of a small cruiser ..... Inside. important"than their effect upon tourist cabins is the effect trailers might have upon real estate and liodsiiig: Modern trailers are cheaper, more adaptable, more comfortable than many.summer coatages. As permanent homes, they at present have the advantage of avoiding propeny,taxes.railermen therefore hold that it is not very far-fetched to . T believe that the increasing popularity of trailers may delay, the much -mooted housing boom.... William Stout ... designed a super -trailer called the "Stout Mobile Home." Made of metal, it is towed behind the'automobile to wherever the owner -wishes to live. There he�unhooks-it; jacks it onto cement blocks, unfolds it like an envelope into a four -room buogalow.44, . One source explained that [h]aving.discovered,the cheapest living in the U.S., many of these.gasolineBedouins settled down at congenial oases; they unhitched the tow car, hiked up the trailer on blocks and called it home. s45 -These trends were viewed negatively. and continually ran into stiff resistance. In -response, zoning and other,types'of regulator 'restrictions on, mobilehome living became widespread. 46 [A] tax war is impending. Real estate interests,, small, hotels, tourist camps, and other businesses have in some localities launched a movement in tax the trailer out of existence,• believing, that it represents a serious threatto their welfare. Their forces will bejoined by many municipalities confronted.b� troublesome problems of regulation, and, rcluc.tant•to,provide essential services °,J. .42. ; WALLIS, supra note 3Q,: at 68-70.., - „ . 43. See, e:g., Lawrence-E..Saunders,,RoU Your Own Home,. SATURDAY, EVENING PosT, May 23, 1936, at 12; Smith, supra note 41. 44. Nation of Nomads?, TtntE, June 15, 1936, at 53. '45. 200;000 Trailers; FORTUNE, March 1937; at 104-14, reprinted in READER'S DIGEST, May 1937, at 99-101. - 46. See infra discussion at notes 98-148. ' 47. Clark & Wilcox, supra note 37, at 513.' This content downloaded from 137.150.34.41 on Wed, 07 Sep 2016 19;42:35 UTC AB use subject to htfpY/about.jstor.orgherms RIGHT TO SELL THE "Ilii"MOBILE HOME 165 WorldWar II labor force requirements for immediate and temporary lodging led to the widespread creation`of mobilehome' parks` in defense industry areas and 'reversed 1he movement to curb the employment of trailers as'a nlode'of meeting year=found housing needs. During this period; "the use ofmanufactured trailers for yeai`-round housing shifted from 10 percent of anunal`jif6duction to 90 percent. "48 However, they continued'.fo be viewed as a form of temporary housing withlconiinued emphasis on their m6bilityd4v- , • . Also, trailer parks did nof'shed their image as a form of slum hous- ing.50 `The public image of the mobile home resident in the 1.940's and 1950's was ofteu'one of social'undesirability, rootlessness; and lack of I responsibility;i51 although --sociologist's studies of mo- bilehome owner's did not confirm these conclusions 52 B.. From "Trailer "hood to "Manufactured," Housing. The period -from the 1950s through.1990 has been marked by. a combing= tion of trends that has increased the demand, feasibility, and respectabil ' ity of mobilehome ownership, ,and has transformed "mobile" home ownership into ` `immobile` `,home ownership. The average size of mo- bilehomes has tripled.53 Financing ternis;liave been steadily improved. The park owner industry has conducted campaigns to increase the qual- ity of parks.54 There has been increasing federal approval and advocacy of mobilehomes as an affordable housing alternative. 55 National build- ing and safety standards have been adopted thereby enabling standard- ized production and`addressing safety concerns 56 The outcome of these trends has been that rriobilehorries have`constituted a substantial portion of low-cost housing production; 'notwithstanding`stiff institutional re'sis- tence. This section summarizes these developments. 48. WALLIS, supra note 30, at 87. 49. These houses that "can be folded up and inoved elsewhere" overnight are "proving particularly useful" in alleviating the housing shortage near new war plants. Mobile Housing Popular in Warhiduskry Sections, Sct: NEWSLE77ER,'Iune 26, 1943, at 403. - . . 50. "Much of the stigma that accompanied mobilehome residency was the product of the public's'image of the�home slum. The early unplanned parks and the 'mom and pop' parks were indeed' eyesores,'they often containedhigh densities and slumlike conditions." DRURY, supra note 30, at 111. 51. Id. at 15. 'S2. Id. at, 16-17. 53. See infra text accompanying note 81. 54. DRURY, supra note 30, at 111-13. 55. See, e.g.; WALLIS, supra note 30, at 207-08.'. 56. Id. at 212-15. Tltis content' downloaded from 137.15034!41 on Wed, 07 Sep 2016 19:42:35 UTC All use subject to hUp:/Iabout.jstor.org/tchiii 166 THE URBAN LAWYER VOL. 24, No. 1 WINTER 1992, Starting jn.the 1950s, immobile. forms of trailer. homes were .pro - duced.s' Theten-foot-wide `,`mobilehome," which could only be moved. by trucks was.introduced 58 It quickly became the standard product, after manufacturers overcame state highway regulations that prohibited shipments.of such w,ide,units.s' A few years.later twelye-foot-wide homes were manufactured.E0 Loan terms.were extended to. -five years anddownpaymentrequirements were reduced to twenty-five percent.bt FHA insurance was authorized for mobilehome park construction6' and purchases of mobilehomes. In the,)950s and 1960s, mobilehomes cost about forty percent as,much.as single-family dwellings,, but their lower 63 cost was partially,offsetby less. favorable financing terms., From 1955 to 1965, the average size of new mobilehomes doubled; and their price decreased in terms of square footage,and,relative to single-family dwellings." In 1966, the average mobilehome size was 720 square feet and the average price was $5700 ($8.00/s'q. ft.) com- pared to a 1955 average size of 360 square feet and average price of $4130 ($11.50 sq. ft.).65 Also; the average loan term was extended from five years to seven to, eight years.66 AVERAGE MOBILEHOME SIZES" Year Mfd. Sq. Ft. 1955, 360 1966 720 1973 882 1980 1050 The improvement of mobilehornes was accompanied by extensive industry efforts to.improve the quality of mobilehome-parks. This m-. volved a transformation from small unplanned parks, with very small 57. Id. at 129-36. 58. DRURY, supra note -30, at 93. - 59. WALits,'supra note 30, at 129-36. For data on the distribution of new mo- bilehome consiiuction by width of unit, See DRURY, supia.note 30 at 95-97. 60. For data on sizes of new units, see DRURY, supra note 30, at 96. 61. DRURY, supra, note 30,, at 94. 62. In 1956, Congress authorized the FHA.to insure loins,to'finance up to sixty percent, of the value of a mobilehome park for new park construction.. Id. . 63. Id. at 102-03. 64. Id. 65. For average mobilehome price data for 1954 through 1970, see id. at 103, Table 24. 66. Id. at 115. 67. DRURY, supra note 30, at 102 (1955 and. 1966 data); NUTr-POwELL, supra note 30, at 53 (1973 and 1980 data). This content downloaded from.137.150.34.41 on Wed, 07 Sep 2016 19:42:35 UTC '- All use subject to h,qp://about.jstor.org/tert RIGHT TO SELL THE "IM"MOBILE HOME 1167 spaces to large;` carefully planned- parks with a,few thousand square feet of land per mobilehbme and'comiiliinity facilities, including such amenities ",club houses, swimming pools, and other sports facilities.69 In response to widespread concerns that mobilehomes were unsafe structures that were subject to substantial fire, flooding; hurricane, and tornado risks, the mobilehome industry pushed for, standardized safety regulations.70 In 1963, the Mobile Home Manufacturer's Association contracted with the American National Standards Institute to develop construction standards,lwhich became obligatoryfor-members oftheAs- sociation." By 1973, these standards were in effect in forty-five states:'? In 1974, Congress passed the Mobile Home Construction and Safety Standards Act." This, Act authorized HUD to'adopt standards which preempt, local regulation and thereby prevent, localities from having diverse standards.74 Two years later, 'HUD implemented national per- formance standards as an alternative to the design specifications in local building codes, thereby overcoming local code obstacles to mobilehome production.75 The new HUD code drastically reduced the incidence of fire -related deaths in mobilehomes, principally by banning the use'of aluminum wiring. 16' The 1960s and 1970s were marked by a process of increased legitimi; zation of mobilehome ownership and-inereasing,recognition of them as a source of affordable housing.77 This process was accompanied by increasing levels of regulation as mobilehomes were recognized as permanent housing.71 While the adoption of national uniform building standards helped delegitimize local zoning and building code exclusions of mobilehomes, the legitimization process was not always; an aid to mobilehome, owner - 68. "[N]ew parks planned or under construction in' 1977•hadan average size of one hundred seventy-five spaces ., up from an average size of all existing quality, parks -of-ninety-sbe in 1974',' of seventy-five'in 1970, and of only thirty-six in 1958." BERNHARDT, supra note30, at247.+. 69. DRURY, supra note 30, at, 111-14.. 70: WALLIS, supra note 30, at 212-15. 71. 'Id. at 213... r u.. .72. Id. - 73. Housing and Community Development Act df 1974, Title IV, Pub. L. No. 93- 383, 88 Stat. 633 (1974) (codified as amended at 42 U.S.C. §§ 5301-5320 (1988)). 74. See WALLIS,,supra note 30,,at 214. 75. Id. A specification code might, for example, require that a wall -has 2x4 studs 16" on center, while a performance code will simply require that the wall meet certain strength standards. 76. For discussion, see NUTr-POWELL,-supra not&30;'at 20-25. ' 77. WALLIS, supra note 30, at 211-12. 78. Id, at 212-15. This contenrdownloaded from 137.150.34.41 do Wed, 07 Sep 2016 19:42:35 UTC All use subject to http://about jstor.orgtt6iins' 168 Year 1955 1956. 1958 1959 ` 1960 1961 . 1962 1963 1964 1965 , 1966 1 1967 1968 1969 1970 1971 Seventeen THE URBAN LAWYER. ; TABLE 1:,,T ota I Prodr eluding Mobile, Homes in 24, No. 1 ; WINTER i of Housing Units, United States,, 1955-71 Total Private and , Public Conventional Production Housing Starts - 'Mobile Homes Including Farm' Produced '1,646,000 111,900 1,349,000 124,330._ 1,224,000, ;, 119,300 1,382,000 120,000 "1;553,500 120,500' ' -1,296,000 103,700 1,365,000: 90,200 1,492,400 118,000 1,640;000 ' 150,840 1,590,700 191',320 11542;700 216,470 1,196,200' 217,300.. 1,321,900 ' 240,360 1,545;500 317,950' 11,499,600 412,700 1,462,700 401,200 . 1,850,000 485,000 24,957,200 3,523,070 ii?:.Adflrit Mobile:Homes as Total Housing Percentage of Production Total Housing in United States Production ' 1,757,900 6.4 1,473,330. 8.4 . 1,343,300;; 8.9. 1,484,000 6,9 1',674,000 "7.2 1;399,700 '- 7.4' 1,455,200 6.2: 1,610,000 7.3 1,790,840 "8.4 1,782;020 10.7 1,759,170. 12.3' 1,413,500 ., ., 15.4 '1,562,266 ' " 15.4 1,863;450'''' 17.1 1,912,300 21:6 1,863,900 21.5, 2320,000 20.8 28,465,270 12.3 Note: The 1971 figures are an estimate based on the housing starts and mobile home shipments during the first nine months of the year. i !, Sources: Construction Reports, Housing Stars, Series C-20, U.S. Department of COmmeree, Washington, D.C. and the Mobile Homes Manufacturers YAssociation. , -�' ' H ship: The'prior refusal of conventional housing -institutions to acknowl- edge mobilehomes'as'a form of housing led to a lack 'of'regulation which, in turn, reduced their cost.79 C. Production Levels Soar,in the 1960s and 1970s. In'the early,;,1960s,' mobilehome production level's 'averaged about 100,000 units per year, approximately seven - percent, of all housing starts.80 In the latter part of the decade,'a period in which single family sales plummeted, mobilehome production was in the range of 300,000 to 400,000 units per year,, approximately twenty percent of all, housing starts.8, F . There is no comprehensivedataon the percentage ofmobilehomesthat 79. See DRURY, supra note. 30, at 120-22.. 80. See id. at 6. 81. Id. This content downloaded from 137.150.34.41 on Wed, 07 Sep 2016 19;42:35 UTC AHusesubjmttohtip://about.jstor.org/tems RIGHT TO SELL THE '9[iA"M0BILE HOME-` 169 were installed in new'spaces in mobilehome parks: One source estimates that production of mobilehome park'spaces'ranged from'100,000 to 200,000 between 1969 and 19731 but then became negligible until the late 1970s!2 The production of new spaces'did not, teet the demand. 13, By 1974, out of a total of 3:9 million mobilehome units; there were 1.6 million mobilehomes in,24,500'mobilehome parks." California and Florida'each had a gtiarter'of a million-Inobilehomes in parks." D. Increasing Federal Approval. and Advocacy of Mobilehomes as,an Affordable Housing . Alternative The foregoing developments were accompanied by federal recognition of the role of mobilehomes as a vital .source of affordable housing.: President Nixon's 1970 message on, national housing goals declared that "for many moderate income American families,'the mobile home is the only kind of housing they can reasonably afford. "S6 In 1982, the Presid'ent's'' Commission on Housing. commented that: Manufactured housing is,a significant source of affordable -housing for American families, particularly first-time home buyers, the elderly, and low- and moderate - income 'families. Manufactured homes aecounied for almost 36 percent of all single-, family homes sold in the United States in 1981; and for the vast majority of those sold for, under $50;0(10. Manufactured housing ,has competed effectively in a national housing market characterized by a vast'atra,y of,Federal credii programs, institutional financing facilities, and regulations that favor conventional housing competitors .. i . Many of the remaining impediments to a free choice of manufactured housing are the result of Federal policies, while others are the result of actions at the State or local levels." E. The Inability of Mobilehome Parks to Compete in the Face of Soaring Land Values In the past decade, mobilehome production has, been in,the range, of, 200,000 to 300,000 units per year.88_Overall data on the creation of new mobilehome park spaces is not.available.,However; in urbanized areas with tight markets, soaring land values and limitations on mobilehome space densities, as compared to density levels for single-family dwell- ings have made it impossible for parks.to compete with alternate uses. 82. BERNHARDT, supra note 30i at -218: 83.. DRURY, supra note 30, at 43.., 84. Project Mobile Home Industry projections as reported in BERNHARDT, supra note 30, at 217 (Table 10.7)., 85. Id. 86. WALLIS, supra note 30, at 207., 87. THE REPORT OF THE PRESIDENT'S COMMISSION ON HOUSING 85-86 (1982). 88. MANUFACTURED HOUSING INSTITUTE; QU16K FAcrs (1990)." . This content downloaded from 137:150.34.41 on Wed, 07 Sep 2016 19:42:35 UTC Alfuse subject'to http9/about.jstoi.org/tenns 170 THE URBAN LAWYER , VOL.; 24, No. 1 iWINTER 1992 In the early 1970s, -when houseprices averaged in the; range of $30,000,,lan1. amis.were d values for single -fly usein the range of $10,000 per unit and approximated land ,values for mobilehome spaces, with a potential rent of $100 per_month.89 Under,such circumstances, park development was feasible. Today, in areas with, tight housing markets, with house.values in the range of $150;000 to $300,000, land values A.for single-family dwellings may be in the range of $50,000 to $100,000 or more. Furthermore, allowable densities for other competing forms of moderate cost housing -condominiums and apartments -are typically double or triple the allowable densities for Inobilehoine spaces; thereby making mobilehome space development unattractive. III:: The. Moriopoly'Relationship Between „Mobilehome-Park Owners and:' <Mobilehome Owners, . A central characteristic Of'Inobilehome space rentals is the monopoly nature sof the relationship. The Florida Supreme Court found 'a form of "economic servitude": "If mobile home park owners are allowed unregulated and uncontrolled power to evict mobile home, tenants, a form of economic servitude ensues rendering tenants subject to oppres- sive treatment in their relations with park owners and the latters' over- riding economic advantage over tenants. 5 X90 This'servitude isthe prod- uct of the prohibitive costs of moving mobilehomes and public policies which severely restrict the supply of mobilehome spaces. A. "Spatial" Monopoly—The Prohibitive Cast of Moving Mobilehomes and '"Quasi -Rent" State and local legislation governing mobilehome space rentals consis- tently note the' high costs'of moving mobilehomes.91 Moving costs are typically 'm the range of 'seyeral thousand dollars. In'addition, there are additional costs of setting up the infrastructure associated with the 89. The discussioirin this paragraph is based on the author's conclusions based on ' his research on California housing markets over the years. 90. Stewart v. Green, 300 So. 2d 889, 892 (Fla. 1974). 91. For example, the California code states that: The Legislature finds and declares that, because of the high cost of moving mo- bilehomes, the potential fdr'damage resultiug'therefrom, the requirements relating to the installation of mobilehomes, and the cost of landscaping or loCpreparation, it is necessary that the owners of mobilehomes ... be provided with the unique protection from actual or constructive eviction. CAL. CIVIL CODE § 798.55(a) (Wes[ 1982). This content downloaded from 137.150.34.41,on Wed, 07 Sep 2016 19:42:35 UTC All,use subject to hup://alwut-istoaorg/terms RIGHT TO SELL THE "Im"momim HOME" placement of a'inobilehome in its new space, which'are typically in the range of $10,000 for a double -wide. 11- As.a result of the impracticality of moving mobilehomes, park owners may obtain "quasi -rent" in'addition to "competitive" rents. One econ- omist's analysis of the mobilehome park_ landlord -tenant relationsliip describes this•phenomenen:;,: If a coach owner is cotifrom dwith a rent increase; he may decide to move his coach to a pad where the rent's"are lower. Assuming both pads"are of equal quality, an optimizing,individual chooses, the least.. costly -solution. Consequently,, the coach owner will move only if the present value of the" expected difference in the rent exceeds the costs of transporting' the coach and preparing and landscaping the"new site..... The.fact that it is quite costly for a tenant to move after having located in the park gives landlords.the opportunity:to seek larger,rent increases than they otherwise would be'able to obtain. Thus, the park owner earns a quasi -rent .% Other things being equal, a rn iWlehome owner is better off 'pa ying an additional $100 to $150 per month in space `rent to stay in place, rather than moving 14 The immovability of mobilehomes and resultant total lack of mo- bilehome owners' bargaining'power has been -used as a basis for ruling that their "absence of choice" meets "the class action requirement of 92. A report by the California Department of Housing and Community Develop- ment includes the following table of representative costs for 198846i doublewide mobilehomes: , .. ... . . Unit wholesale price Transportation -to site Set-up'inclading attachments, 'piers; carpet laying' 10''x 40'.hwning ' Skirting (masonite to match painted hardboard) Carport, [one -car] Plywood Deck 8' x 20' Rear and front steps Air conditioning Wholesale cost to dealer• $26,000 500 . 2;150 1,150 1,175 1,200 1,040 400 1,500 Typical dealer add-on charge • " 12,290 (admin. profit of 35%) Dealer's price to buyer 47,405 . '- Price per square foot:$32.92.., CALIFORNIA DEPARTMENT OF HOUSIN&AND COMMUNITY DEVELOPMENT, MANU- FACTORED HOUSING FOR FAMILIES: INNOVATIVE LAND USE AND DESIGN*8 (Jan. 1990)' (footnotes omitted). 93. Hirsch & Hirsch, supra note 8; at 120-21. ' 94: This calculation is based on the range of increased mortgage payments associ- ated with $10,000 to $15,000 in moving and set -tip costs. — This content downloaded from 137.150.34.41 on Wed, 07 Sep 2016 19:42:35 UTC All use subject to hap:daboui jstonoretemu 172 THE URBAN LAWYER, VOL. 24, NO. 1,WINTER 1992 procedural unconscionability.i95 The;Florida Supreme Court com- mented: Where a rent increase by a park owner is a unilateral act, imposed across the board on all tenants and imposed after the initial rental agreement has been entered into, pazk residents have little choice but to accept the increase. They must accept. it or, in many cases, sell their homes ortundertake the considerable expense and burden' of uprooting and moving. The "absence of meaningfulchoicefor these residents, who find the rent increased after their mobile homes have become affixed to the land; serves to meet the clasa action requirement of procedural unconscionability 96 Subsequently, a Florida appellate'court commented that "[b]ecause of the difficulties inherent in moving the home from one settled location to another, it is hard to imagine a situation where the park'owner. and the,tenants are in an equal bargaining position on rent increases:"" B. Publicly Created Monopoly on Permitted Locations of Mobilehomes .,_, 1. PUBLICLY CREATED MONOPOLY CONDITIONS" In addition.to benefiting from, the high costs of moving mobilehomes; park, owners benefit from stringent. restrictions on, competition. From the time of their introduction, the use of mobilehomes and the develop- ment of mobilehome parks have been severely curtailed by local land- use.controls and building codes. The following types of exclusions have been, common:.:,' (a)' confinement of mobilehomes to mobilehome parks ,99 95. Lanca Homeowners, Inc. v. Lantana Cascade of Palm Beach, Ltd., 541 So. 2d 1121, 1124 (Fla.), cert. denied, 493 U.S. 964 (1989): However, unconscionability theories have been rarely used in cases involving apartment'rentals. This conclusion is based on the author's interviews with tenant attorneys. 96. Id. 97. Belcher v. Kier, 558 So. 2d 1039, 1042 (Fla. Dist. Ct. App.), review denied, 570 So. 2d 1305 (Fla. 1990) (citation omitted).. , 98. For general discussion of the creation of monopoly conditions through zoning, see Bruce W. Hamilton, Zoning and the Exercise ofMonapoly Power, 5 J. URB. ECON. 116 (1978); William A. Fischel, Zoning and the Exercise of Monopoly Power: A Reevaluation, 8 J. URB. EcON. 283 (1980): For discussion of potential construction of antitrust law to forbid legal monopolies from pricing above competitive levels, See LAWRENCE A. SULLIVAN, HANDBOOK OF THE LAW of ANTITRUST 116-18 (1977). Sullivan indicates that little in the case law or literature deals with this issue. Id. at 116. He concludes [hat such an approach would be counter to the thrust of antitrust policy which'has been to forbid pricing below profitable levels in order to exclude competition.,/d. at 118. Profit maximizing tends to encourage entry. Id, at 117. Also, such an approach would be practically impossible to implement. ' `[I]t would be difficult to deternune objectively what would be a reasonable non -monopoly price for the purpose, of forbidding monopoly pricing." Id. at 1.17. 99. Atone time, such restrictions were even supported by the Mobile Home Manu- facturer's Association. WALLts„supra.note 30, at 179. , This contentdownlomed from 137.150.34.41 on Wed, 07 Sep 2016 19:42:35 UTC All use subject to httpi%/aboutjstor.org/terms RIGHT TO SELL THE "1M"MOBILE HOME- . ' 173 (b) exclusions of mobilehome parks from all locations within a juris- diction'orfrom" all'desiiable locatious,10° (c) exclusions from residential districts, (d) makiutum stayperiods`for mobilehome occupants (e.g., thirty to niney days); and (e) minimum size requirements for mobileholnes. The following comment, appeared in. a dissenting opinion from. an Iowa appellate court decis]on.upholding a •restrictiowof mobilehomes to mobilehome parks:Iol It is undoubtedly an easy matter, for the nation's elite to decide for the less affluent that they simplyshould not live.in mobile homes '..,:. The elite see no,appreciable difference between the trailer house of yesteryear and the. prefabricated homes of today which are;`of course; necessarily mobile until they arrive at their destination: Although limes have'changed,`•a`nd "mobile homes" can no longer be equated with trailer houses, the elite do not change,102,;; , For the past -few decades, legislative declarations, court opinions, and public and privat'e'studies have consistently noted 1he'widespiead exclusions of mobilehomes and, mobilehome_ parks, the lack of vacant spaces, and the existence of monopoly conditions. It is generally ac- cepted that vacant"spaces are virtually nonexistent in parks iii urban areas with tight�hous' ' I arkets.lo3' ,In Massachusetts, as of.1970, twenty-eight,out of 351 communities allowed parks under their zoning code, thirty `'ssix allbwed parks under special permits, and thirty-one permitted mobilehome parks by virtue of the fact that there was IIO zoning code. 104' Out 'of twenty-seven commu- nities in the Boston area, only`,two allowed parks:, 105 In New Jersey,' `as of 1972; 0.1 % of all residentially. zoned land in sixteen urban counties was zoned for mobilehomes: however, seventy 100. "1D]iscriminatory zoning frequently relegates parks to nonresidential areas .. Haphazard placement leads to parksin poor surroundings, which ;reinforces anti -mobile home zoning attitudes, which'in turn force new parks to be located in undesireable areas -and the circle begins anew: ", BERNHARDT, supra note 30, at 245. 101. See City of Lewiston v: Knieriem, No. 13792 (Idaho May 12, 1983) ,(Bistline, , J., dissenting) (opinion after preliminary hearing). 102. Rita L. Berry, Restrictive Zoning of Mobile Homes: The Mobile Home Is Still More "Mobile "Tian "Home" Under ihe'Iaw,`21'Ionlio L. REV. 141, 157 (1985) (quoting City of Lewiston v. Knieriem, No. 13792, slip op. at 12 (Idaho May 12, 1983) (Bikline, J., dissenting) (opinion after'preliminary hearing)). . 103. Vacancy surveys are not performed on any kind of systematic basis. ` 104. Lyle F. Nyberg, The Community and the Park Owner Versus the Mobile Home Park Resident, 52 BOSTON U. L. REV. 810, 812.n.22 (1972) (citing'BORn`AU'OF PLANNING PROGRAMS, MASSACHUSETTS DEPARTMENT OF COMMUNITY AFFAIRS, STA- TUS OF ZONING REGULATIONS RELATIVE TO MOBILE HOMES IN MASSACHUSETTS:` A; SUMMARY REPORT 12-26 (1970)). „ 105. Id.,, . This content downloaded from 137:15034.41 on Wed, 07 Sep'2016 19:42:35 UTC All use subject to http://about.jsior.org/t6= 174 THE URBAN LAWYER VOL. 24, No. I WINTER 1992 percent of that land was in one county.106 In twelve of the counties, no land was zoned for mobile homes and, in two counties, less than fifty acres were zoned for mobile homes.107 A report of the Connecticut, General Assembly commented: A basic problem with mobile home living in Connecticut involves the landlord -tenant relationship in mobile home parks. Because most communities prohibit mobile homes or restrict them to a small number of established parks, the'r'e is a scarcity of land available upon which to place a'mobile home. The immediate effect of this _situation is to place owners of existing mobile home parks in an economically dominant position ....108 ,In 1984, the Connecticut Department of Consumer Protection esti- mated that there were only twenty-five to fifty vacant spaces in 230 parks`, in the state and that most of these spaces had Been reserved. 109 .The Maryland Court of Appeals described the monopoly nature of mobile home space rentals and the the resulting consequences: Despite the rising popularity of relatively low cost mobile homes, many communities have enacted zoning regulations which exclude them, entirely or severely limit the areas where they may be placed; frbquently restricting them to mobile home parks. Thus; the mobile home owner is compelled to rent space from the park owners who, because of the limited availability of space and the high cost of relocation, are able to dictate unfavorable rental terms and conditions. As a result,:mobile home owners often have been forced to buy mobile homes from the park owner in order to obtain a site, to pay excessive entrance fees, to buy specified "eommodities'from specified dealers; to pay the park owner a commission on the sale of the mobile home, or, upon sale, to remove it and pay an exit,fee.u0 , One nationally prominent real estate newsletter 'explained that "[w]ith today's parks having virtually'no vacancies and.tenanfs with limited options you get a base cash flowf that is'as predictable as the first of the month."n I The preamble to Wisconsin legislation states that: 106. STATE OF NEW JERSEY, LEGISLATIVE STUDY COMMISSION, REPORT AND RHC-, OMMENDATIONS OF THE MOBILE HOME STUDY COMMISSION 36, (Oct. 1980) (citing NEW JERSEY DEPARTMENT OF COMMUNrFY AFFAIRS, LAND USE REGULATION: THE RESIDENTIAL. LAND SUPPLY 10A (Table 17) (1972)). , 107. Id. 108. OFFICE"OF LEGISLATIVE RESEARCH, MOBILE HOME PARKS IN CONNECTICUT 4(1973). ' 109. Shortage of Mobile Homes Creates Crwch„THE DAY, Dec. 31, 1984, at 6 (New London, Conn.). 110. Cider Barrel Mobile Home Court v. Bader, 414 A.2d 1246, 1248 (Md. 1980) (footnote omitted). 111: Mobile Home Parks: A Profitable Niche for Partnerships, I I REAL ESTATE OUTLOOK; Fall 1988, at 1; see also Bailey H. Kuklin, Housing and Technology: _The Mobile Home Experience, 44 TENN. L. Rev.765, 807 (1977) (discussing high rates of profitability in mobilehome park investments). This content downloaded from 137.150.34.41 on Wed, 07 Sep 201619:42:35 UTC All use subject to http.-//about.jstor.orj/terrhs RiGiiT,TO SELL THE "IM'MOBILE HOME '' `" 175 _ Zoning restrictions imposed by local units ofigovernment omthe development and use of land for the parking,of mobile homes,have. resulted in a severe shortage oS rental sites available to the public, seriously restricting. competition in the sale of mobile homes and rentafof residential sites for the location'of suchhorms. Dr' • ,fir. .:�' �. - -� -. Recent California studies note the virtual absence, of vacancies and/ or the extensive nature of zoning restrictions: I" A study by the City of Los, Angeles. notes that .'.no: land, [is] zoned for mobilehome, park use.' 114 A study of Ventur%a. C1.ounty revealed that there were only about twelve vacant spaces, out, of:approximately 00 t, spaces in the County.II5.A study of mobilehome parks in;Alameda,County indicated that there, was not• one single.vacant.space in the parks that were sur - 116 'PIC = When Hallv., City of. Santa Barbara was; handed down, only a.tiny fraction of the vacant land that was available for reside ntialdevelopment was zoned for mobilehome parks.I" On this small amount of land, park densitie's Were:limit ed toseven ;mobilehomes per acre,I's while 112. Wis. ADMIN. CODE § Ag..125.01 (1974). 113. However, Hirsch connects the lack of development of new parks in California to inadequate profitability. Hirsch & Hirsch, supra note 8, at 417. This author does not know of any published evidence to support this conclusion.' As in the case of apartment rent controls, newly constructed units (mobilehomespaces). are -exempt from rent regulations; CAL. CIVIL CODE § 798.45 (West Supp. 1991). Furthermore, inadequate development of parks has plagued mobile home production for decades. See Lawrence"A. Mayer, Mobile Homes Move,hito the Breach, FORTUNE, Mar. 1970, at 126, 145. - 114.' Vacant Oads were found oto be virtually rion-existent—only two'out of 1,226 appeared in the sample..;:.. Mobile home dealers interviewed agree that the shortage of spaces is acute in the City of Los, Angeles and in. the. metropolitan area. They, indicate that few'Southern'California'dealers stock new coaches because so -few spaces are available. The dealers observed that some people who can afford it buy small lots of their own for their mobilehomes, but it is difficult because of the high cost of land in the Los Angeles basin. CITY OF LOS ANGELES, COMMUNITY DEVELOPMENT DEPARTMENT, RENT STABILIZA- TION DIVISION, RENTAL HOUSING STUDY (MOBILEHOME PARKS UNDER RENT STABILi- zATIoN) 57 (1985). "New mobile home parks would only be permitted under use permits obtainable after individual scrutiny by the City of the site and the potential placing of a variety of development and. usage conditions'onthe granting of the use permit." Id. (Of course, such permits are discretionary.) ,"' 115: SANCHEZ-TALARICO ASSOCIATIONj' ALTERNATIVE LOCATIOWAND REPLACE- MENT HOUSING OPPORTUNITIES FOR OXNARD MOmLi'HOME LODGE (Sept. 1988, pre- pared for the Housing Department, City of Oxnard). 116. KENNETH K. BAAR,;'MOBILEHOME OWNERSHIP IN`FREMONT 13-14. (Aug. 1991). Twenty-three out of the twenty-six parks in'the county that'had fifty or more spaces responded to the survey. Id. at -13. -They contained 4786'space's. Id. A survey of parks in Santa Clara County, which 'had '3730 spaces, yielded the same result—a total absence of vacancies. Id. at, 14. = 117. This information, is based' on the author's review of.housing elements and interviews with planningstaff and developers in Santa Barbara County in the fall of 1990. 118. See SANTA BARBARA,' CAL.; COUNTY CODE; § 35-241.5..- This 41.5:- Thus content downloaded from 137.150.34.41 on Wed; 07 Sep 2016 19:42:35 UTC All use subject to http://about jstor.orgftetms 176 THE URBAN LAWYER. VOL. 24, NO. 1, WINTER 1992• apartment and condominium, densities of twelve units per acre were standardly permitted,on the•same land.['' Minimum parks sizes of ten acres were Standard. Discretionary use peri niit requirements subjected all park proposals to public hearings.'` Water moratoriums prevented any development in substantial portions of the county.122 Asa practical matter, the supply of park spaces was frozen. In 1990, a federal district court in California commented that "[t]he mobile home market is an example of a monopoly, which is a market failure, rather than• a market; and is a prime candidate for government regulation. 9024 However, on appeal,- the circuit court of appeals de- clared that the housing market was a "normal market" which could increase in response to rising prices, without any acknowledgement of public regulation of the supply through' zoning and'other regulations. It"explained that: In fact, the California housing,market is not an exampleof "market failure" at all; it reflects the'operation'of no inn market forces..'.: If the price of hb6sing in Los Angeles is high, this is simply the free market's mechanism for ensuring efficient allocation of existing housing resources and creating incentives for an increase in the supply of housing which, eventually, will drive,down the, price. 2. THE CONSTTfUTIONALITY OF •MOBILEHOME EXCLUSIONS The'path of judicial responses. to exclusions ofmobilehomes and mo- bilehonle parks has been the' subject of extensive literature. 126 These exclusions have commonly been based on rationale related,to health and safety, aesthetic concerns, and preservation of property values, which have been justified.by negative conclusions, about'mobilehome,life. 119. See id. §§ 35-222.7, 120. See supra note 117. 121. Id 122., Id. J23. Author's interviews with developers and.planners in the County of Santa Bar- bara, California (Fall 1990). 124. Azul Pacifico, Inc; v. City of.,Los Angeles, 740T. Supp. 772; 781 (C.D. Cal. 1990), a,(pd, 1991 WL 22452$ (91h,Cir. 1991). 125. Azul Pacifico, Inc. v. City. of Los Angeles, No, 90-55853, 1991 WL 224528, . at *5 (9th,Cir. Nov. 1,.1991) (petition for rehearing pending). 126. See, e.g., BARNET HOPES & G. GALE ROBERSON, THE LAW OF MOBILE HOMES (3d ed. 1974); Howard J. Barewin, Rescuing Manufactured Housing From the Perils of Municipal Zoning Laws, 37 J. URB. & CONT. L. 189 (1990);.RichardlW: Bartke &: Hilda R. Gage, Mobile Homes: ZoningandTaxation,55CORNELLL.REV. 491(1970); Kathleen.M. Flynn, Impediments to the Increased Use of Manufactured Housing, 60 U. DET.. URB: L., 485,(1983); Byron D, -Van Iden, Zoning Restrictions,Applied to Mobile Hames, 20 CLEVE ST. L. REV. 196 (1971); RobertL. Schwartz; Note, 'Mobile' Homes?—Public and Private Controls, 29 WAYNE-L.;REv. 177 (1982).; , This content downloaded from 137.150.34.41 on Wed, 07 Sep 2016 19:42:35 UTC All use subject to http://aboutjstor.org/tenas RIGHT TO SELL THE "IM"MOBILE.HOME _ ..177 Also, mobileliomes have been widely opposed oti'the basis that they, do not carry their share of the property tax burden. 127 From the onset of m6bile6ome ownership and throughout the follow- ing decades, courts have commonly concluded That the foregoing types of rationale provided'a constitutional basis for exclusionary ordinances. In 1939, the Michigan Supreme Court concluded that a municipal exclu- sion of trailer -parks hada rational basis and' was, therefore, constifu' tional.i28 The city's justification was that trailer parks led to a host of social and moral darigers.'29. •[L]iving conditions for children in trailers are ,not conducive to their best interests; 'that they have no privacy or opportunity to visit and play in a home with other children, and to'meet.the needs of their leisure hours in amormal way; that,,as a general rule, such children are obliged to be outside their home most of the time, and that such a life militates against parental supervision of the child; that a social problem is created by crowded quarters, when children are required t6live with adults in such close'proximity, and that under these circumstances they acquire a ' precocious knowledge'of sex matters which should normally come'to them later and more naturally: B is'further objected that'the common use,of toilets'and,bathing facilities by members of the same sex'of different ages creates undesirable'situations with potential danger to the morals'of the young. [I]t is contrary to the best. interest of the` municipality to have' large groups of people continually shifting from one place .'C :4o another, living in homes for which they pay no real estate taxes'. while the trailer serves a useful function for outings and vacation periods,'it is'not a proper permanent home..: •.'� '' In this case, the ordinance's+ prohibition of parking of trailers for more than a ninety -day period was applied to an existing trailer camp which was occupied by permanent residents who could not afford alter native'accommodations or by persons who lived in trailers for health reasons"31 As'the colrt'noted: At present, 400 people live at plaintiffs' camp in trailers, equipped with oil bumin& 'heaters, beds, tables, benches, stoves, and refrigerators. Many have become trailer, dwellers because of health considerations and on the advice of physicians; others have lost their homes during the depression by mortgage foreclosure; and others do so because they can live in comfort on small and diminished incomes which would not permit them to live in equal respectability in houses or apartments.... Living 127. See, e.g., discussion of the "The Fair Share Controversy" in BERNHARDT, supra note 30, at 367-70. r • 128. See Cady v: City of Detroit, 286 N.W. 805 (Mich. 1939). 129: See id: at 806. These rationale were reminiscent of the rationale of the first quarter of this century that were used tojustify the exclusion of apaitments even if they were properly constructed. See Kenneth K: Baar, The Naiional'Moveinent to Hali the Spread of Multifandly Housing, 58 J. AM. PLAN. Ass'N 39 (Winter' 1992). 130. Cady, 286 N.W. at 807. 131. Id.'at 806. ' This content downloaded from 137.150.34.41 on Wed, 07 Sep 2016 19:42:35 UTCC All use subject to http://about.jstor.org/terms 178, THE URBAN LAWYER.. VOL. 24, No. 1. , WINTER 1992 conditions ... are superior to those in so-called sub -standard premises in which 'thousands of citizens in`Deiroit live ...'.13Z' rr. In the following decades, exclusions of mobilehome parks from resi- dentially zoned areas or all.areas in a city, were commonly, upheld. In. 1962,: the. New Jersey.Supreme'Court upheld:municipaLbans on, mobilehome parks. "° At that time, two-thirds of all New Jersey munici- palities had such ordinances. 135 Limitations restricting mobilehomes to mobilehome parks were also consistently upheld. 136 In some cases, however, courts avoided constitutional issues by hold- ing that mobilehomes were permanent structures and therefore did not fall within municipal bans on "mobile" homes. Often the legality,of mobilehomes turned on "semantic games" over whether mobilehomes are;buildings or vehicles: The semantic game of skill, as applied to mobile homes put more or less permanently on residential lots, takes various guises,.. In certain cases, municipalities have argued that such mobile, homes are."buildings" or "single-family dwellings" within -the meaning of the ordinance, and because they do;not meet all the requirements as to side yards,: size; jet any other feature, the mobile homes are illegal. In those cases the owners just as strenuously have claimed that their structures are not buildings but vehicles, and therefore outside thepurview of the ordinance.,In other cases the roles are reversed, the municipal authorities arguing that the structures are vehicles, trailers or what have you, and therefore. illegal under the zoning _provisions,,the owners replying with equal vigorthat the structures are buildings fully, complying with the zoning and building codes involved." Some courts have held that ordinances which limited inobilehomes to' mobilehome parks did 'no t apply tomobilehomes once they became permanently sited or held that limitations were unconstitutional.139 As state courts became more critical of exclusionary zoning policies_ in the 1960s and 1970s, some started to strike down mobilehome restric- tions, often reasoning that theyare indistinguishable from conventional homes-'"°. , 133. See BARNET HODES, ZONING OF MOBILE HOMES AND MOBILE HOME PARKS 189-281. 134. Vickers v. Township Committee of Gloucester Township, 181 A.2d 129 (N.J. 1962). . . , - 135. Alfred A. Ring, The Mobile Home, 25 URB. LAND 1 (July -Aug._ 1966). 136. See cases cited in Robert F. Stubbs, Note, The Necessity for Specific State Legislation to Deal with the Mobile Home Park Landlord-Tenaar Relationship, 9 GA. L. REv..212, 215'n:11 (1974).. 137: Barike'&, Gage„supra note 126, at 504-07. 138. Id. at 500-61. 139. See Schwartz, supra note 126, at 187. 140. See, e.g., Knibbe v. City of Warren, 109 N.W.2d 766 (Mich; 1961). Thus content downloaded from 137.150.34.41 on Wed, 07 Sep 201619:42:35 UTC All use subject to http://about.jstor.org/terms RIGHT_TO SELL -THE "IM"MOBILE HOME_ ..:_ .179 ln'1981; the Michigan 'Supreme'Court overruled prior holdings and struck down an exclusion ofimbilehomes from single-family dis-- tricts.141 The court held that the public concerns about mobilehomes could be addressed in a less'restrictive manner, 'Such 'as by design restrictions; tat .- In 1983, the New Jersey Supreme Court overruled a twenty-one- year-old precedent that upheld mobilehome exclusions and held that cities must permit mobilehomes unless they had- alternative, means of providing affordable housing ;143A found that.the health, -safety, and aesthetic grounds for its earlier decision were' no longer applicable due to changed circumstances.144 But in other states, the courts have continued to uphold limitations of mobilehomes to mobilehome" parks. 14s Judicial reform -.has been supplemented by state'1'egislative efforts requiring that localities permit mobilehomes and mobilehome parks.14" Some states have''prohibited'exclusions of mobilehomes from -single" family lots:147 However; the cost of single-family lots may be prohibitive for the class of households that would seek to benefit from the affordabil-' ity of mobilehome ownership. Inany case;'communities'that are intenton preventingthe develop- ment of mobilehomeparks can use a host of indirecttstrategies to aecom- plish such a result. A report by the California' Department of Housing' 141. Robinson Township v. Knoll, 302 N.W.2d 146 (Mich. ,1981). "142. Subsequently, one state appellate courtupheld a 720 square foot minimum and a minimum width of fourteen feet for homes not located in mobilehome parks. Bunker Hill Township v. Goodnoe, 337 N.W.2d 27 (Mich. Ct. App. 1983). In another case, a state appellate court struck down a 1000 square foot minimum and minimum width of twenty-two feet on the basis that it was a per se exclusion of single -wide mobilehomes. Tyrone Township ,v. Crouch; 341 N.W.2d 218 (Mich: Ct. App. 1983). - .. . . 143. Southern Builingtoii County NAACP v. Township of Mt. Laurel;'456 A.2d 390,450 (N.J. 1983):'Similar'decisions in otherjurisdictions'include In re'Shore, 528 A.2d 1045 (Pa. Commw. Ct. 1987) and cases cited therein. - •144. Southern Burlington County NAACP, 456 A.2d at 450-51'. 145. E.g., City of Lewiston v. Knieriem, 685 P.2d 821 (Idaho 1984) (mobilehome park'subdivisions permissible in half of the areas that were zoned for single-family dwelling's); City of Brookside Village v: Comeau, 633 S:W'2d 790 (Tex.), cert denied, 459 U`!& 1087 (1982):, ' .'.:, .• 146. In 1986, the Pennsylvania Supreme Courtstruck down an ordinance which prohibited single -wide mobilehomes. See Geiger V: Zoning Hearing Bd., 507 A.2d 361 (Pa. 1986). 147. See Berry, supra note 102, at 162 an. 173-76:'See', a:g.,`CAL. GOV'T CODE, § 65852.3 (1983); IND. CODE ANN. § 36-7-4-1106 (Mlchie1981), MINN. STAT. ANN. § 462.357 (Supp. 1984);' VT. STAT: ANN. tit. 24, §-4406(4)(A) (Supp: -1984); see also Gerald L. Hobrecht Comment, California Govern'men't Code Section'65852.3: Legislature Prohibits Exclusion of MobileHameson Single-FaniilyCots, 16 U.q DAVIS L. REV. 167 (1982). " This content downloaded from137.150.34:41 on WK 07 Sep 201619:42:35 UTC All use subject io hup://iboutjgtor.org/tems 180 THE URBAN LAWYER ; VOL. 24, NO. I WINTER 1992 and Community Development described the panopoly of land use tools that are, commonly used to exclude parks. As for mobilehome parks; the: surveys. indicate that localities have many ways.to discourage park development without violating the law: set allowable densities;too . low (six/acre or less); set minimum acreage too high; require developer -provided sewerage to otherwise feasible sites; require conditional use permits or PUD -type' amenities.:d8 IV. Monopolistic'Practices'and the Evolution- - of Public. Regulation of Mobilehome Park Landlord -Tenant Relationship 149 A. Landlord -Tenant Regulations The imbalances of power in the park owner-mobilehome owner rela- tionship have led to widespread abuses.15D Common practices included tying arrangements and entry and exit,fees, until they were; declared illegal by the courts on antitrust grounds or were otherwise outlawed. rsr (Under tying arrangements park owners were compelled to purchase'. their mobilehomes from mobilehome owners, sometimes at_even higher: prices than those set by mobilehome dealers.152) Other practices in cluded the imposition of.arbitrary rules, 153 requirements that particular services be. puchased from the park owner,'. 54 and, the use of evictions in order to curb protests." .- , As mobilehome park occupancy became increasingly widespread, demand for regulation of landlord -tenant relationships emerged. 156 Ini- tial targets were tying arrangements, entrance and exit fees,, and security 148. CALIFORNIA DEPARTMENT of HOUSING AND COMMUNITY DEVELOPMENT, IN- CENTIVES FOR FAMILY MOBILEHOME PARKS 21 (June 1986), 149. For a summary of the provisions of each state, see SHELDON & SIMPSON, supra note 8. This publication includes a summary table of the types of.provisions in effect, in each siate. 150. See, e.g., Tyranny in Mobile -Homeland, CONSUMER REP., July 1973,; at 440. 151. See Classen v. Weller, 145 Cal. App. 3d 27 (1983); Ware v. Trailer Mart, Inc:, 623 F.2d 1150 (6th Cir. 1980); Suburban Mobile Homes, Inc. v. Amfac Commu-. nities; Inc., 97 Cal. App. 3d 9,32 (1979); People v. Mobile Magic Sales, Inc., 96,Ca1. v App. 3d 1 (1979); Sherman . Mertz Enters., 42 Cal. App. 3d 769 (1974); Jomicra v. California Mobilehome Dealers, 12 Cal. App. 3d 204 (1970). -1 152. CONSTANCE B., GIBSON, POLICY ALTERNATIVES FOR MOBILE HOMES 20-21. (1972). 153. See, e.g., Kuklin, supra note 111, at 785-88. 154. See, e.g., Stubbs, supra note 136, at 220-21.. •155. In Lavoie.v. Bigwood, 457 F.2d 7 (1st Cir. 1972);,the court of appeals ruled that an eviction constituted state,action in the -context of zoning restrictions that gave , a park ;owner a monopoly on mobilehome spaces. 156. Stubbs, supra note 136, at 225-33. This content downloaded from 137.150.34.41 on Wed, 07 Sep 2016 19:42:35 UTC -'All use subject to http://about.jstor.org/telms RIGHT TO SELL THE "IM"MOBILE HOME - ;_ _ iH1 of tenure'issues:157'In 1969 and the following few years, California passed a series of measures including a requirement of "just cause" for eviction of tenants, 158 and provisions'anowing a tenant to sell a mobilehome in place, with parkowner rights' of disapproval limited to, specified grounds.'" Florida'limitedthe -grounds for' evictionst60 and prohibited exit fees.` 'Between -1972 and 1974;, ten states adopted legislation governing ttiobilehoine'-space rentals. 162 Four -of those states either restricted or banned'entrance fees. 16; Also, four'states guaranteed mobilehome own- ers the right to `sell their homes iii place'without having to pay a commis-' Sion. 164 Since the 1970s mobilehome regulations have become- more wide- spread. As of 1990, states had the" following types of reulations: STATE REGULATION'f)F MOBILEHOME SPACE RENTALSIm Type of regulation No. of states Tie-ins prohibited 13 One year lease term '• -13 - .Automatic renewal., 7 Entrance Fee Prohibited 17 Good cause eviction 28 ' B. Rent Controls AS; previously indicated„ mobilehome space rent controls;have been a central. issue in Califortlia;and Florida. •In.1977,'.Florida authorized: tenants', to petition to the state Tenant -Landlord Commission for review' of any rent increase„in excess of the percentage increase reflected,in the, Consumer Price;Index.166-,That law was struck down by the. state,su-, 157. Id. 158. Mobilehome Residency Law, CAL. CIVIL CODE §§ 798.55498.86 (West 1982). Under the current code, grounds for eviction are limited to the reasons•specified in'CAL. CIVIL CODE §'789.56. ' 159.'/d. §§ 798:70-798.81.: 160. FLA. STAT, ANN. § 83.759(1) (West Supp. 1982). 161. FLA. STA'T.'ANN. § 723.041(e)(2)'(West'1990). 162. Robert R. Stubbs, Note, The Necessity of Specific State, Legislation;to Deal with the Mobile Home Park Landlord -Tenant Relationship, 9 GA. L.1EV. 212, 226 (1974). r 163. See Robert S. Hightower,"Note;'Mobile•Home� Park, Practices:,Ae Legal Relationship Between Mobile Home Park Owners and Tehantd'Who Own Mobile'Hornes, 3_FLA. Si.U. L..'REv. 103, It3 d53 (1975).'. '164; Hightower, supra note 163, at 117 n.79. 165. 'SHELDON'& SIMPSON, supra note 8, `ai 30.'.' 166: 'Departmentof Business. Regulation v. National Manufactured Hous: Fed'n, 370 So. 2d 1132 (Fla. 1979) (citing FLA. STAT..ANN. ch. 83.770-.794 (1977) (re= pealed)). r - . This content downloaded from 137.150:34.41 on Wed, 01 Sep 2016 19:42:35 UTC All use subject to http://about.jstor.oig1telms 182 THE URBAN LAWYER VOL. 24, No. 1 . WINTER 1992 preme court on the grounds that its criteria were unconstitutionally vague..'&..In 1984, Florida adopted an unconscionability standard specif; ically for mobilehome,space rentals.' That standard was replaced by an "unreasonable" standard.in.1990.164 Municipal mobilehome space, rent control ordinances became wide- spread in California in the early 1980s, shortly after the spread. of apartment rent controls. "c Presently, approximately seventy California cities have some form of mobilehome rent controls. "' In the initial years, after their introduction, ,these ordinances were subject to a string; of legal challenges, which ultimately, turned out to be unsuccessful,"' Most of the ordinances permit annual across-the-board rent increases which aretied, to a portion of the increase in the, Consumer Price Index. Additional increases are permitted to cover capital improvements and operating expense increases which are not covered by across-the-board increases. . C. Regulations of Park Closings The other major concern of mobilehome owners that has stimulated widespread response in recent years ,has been'park, closings, pursuant to conversions of land to more profitable uses. As land values have soared, economic incentives to convert to alternate uses have intensi- fied. In response to this trend, several states and localities have adopted regulations of mobilehome-.park closings. Twenty_ states have adopted notice periods for changes in use; and nine states require relocation benefits;'73 The constitutionality of ordinances that strictly regulate park' closings. has been brought into-question:174 Some states have granted mobilehome park tenants first rights of refusal to purchase parks. "1 167. Id. at 1133. 168. 1984 FLA. LAWS ch. 84-80. 169. See supra text accompanying note 15. 170. See Kenneth K. Baar, Rent Control. An Issue Marked by,Heared Politics, Complex Choices, and a Contradictory Legal History, LX, WESTERN CITY 3 (June 1984). 171. Interviews with mobilehome owner attorneys (Summer 1991). 172. See, e.g., Gregory v. City of San Juancapistrano, 191, Cal. Rptr. 47 (Cal, Ct. App. 1983); Palos Verdes Shores Mobile Estates, Ltd. v. City of Los Angeles, 190. Cal. Rptr. 866 (Cal. Ct. App. 1983). 173. See SHELDON & SlmpsoN,:isupra ,note 8, at 30. 174.; In 1990, a; Califoinia,Court of Appeal.strutck down a municipal conversion regulation in Rooke v. City of Scotts Valley, No. H004794 (6th Dist. C.A. 1990) (unpublished) (requestto certify forpublication denied, No. S016991,1990 Cal. LEXIS 4460 (Cal. S.C. June 13, 1990)). A companion case was also brought in.federal court, but that court abstained. Rooke v. City of Scoits Valley,.604 F :Supp. 1342 (N.D. Cal. 1988). , , 175. E.g., FLA. STAT. ANN. § 723.071 (West 1990). This content downloaded from 137.150.34.41 on Wed, 07 Sep 2016 19:42:35 UTC All use subject to http9/aboutjstor.crg/terms RIGHT.TO.SELL_THE "IM"MOBILE HOME183 D: Overaiftrends'' Overall, the mobilehome space rental' industry is a heavilyregulated field, more heavily regulated than apartment,rentals.176 The concerns over rent increases and park closings that have emerged in the past decade,are-likely",to'_become more widespread. In many urban areas with, tight housing maikets,_there is no land available, for additional rliobilehome'parkcs and the supply of mobilehoine park spaces is becom- ing frozen or even declining. V. Judicial, Treatment of Phykieal Taking,. Claims in Mobilelionie Space Rent Control Cases The introduction of mobilehome space rent;controls triggered,a new round in the legal battle over competing claims to economic and possess- ory interests ,.in�mobilehome-park spaces. Constitutional challenges based -on permanent physical occupation theories followed the failure of a host of other types of challenges.177 A possessory taking argument was first raised in Oceanside Mobilehome Park Owners'Association v. City of Oceanside; '78 but was not central, to the challenge in that case. The park owners argued -that "where rents, are reduced more than required for the purposes' of the: police power, an artificially reduced) rent ceiling results, which constitutes a valuable interest to the existing tenant which,may be sold'to the buyer of a mobilehome. s 179 This result was characterized as an uncompensated taking which "transfers the monopolistic advantage over residents from the park owner to the sell- ing tenant ... to the detriment of the park owner, a share of whose unregulated profit is now shifted to the selling tenant.s18o The Court of Appeals rejected the parkowners' underlying premise 176. See Lawrence Berger, The New Residential Tenancy law: AielandlordsPub- lic Utilities?, 60 NEB. L. REv. 707 (1981). 177. E.g , Gregory v: City of San Juan Capistrano, 191 Cal. Rptr. 47 (Cal. Ct., App. 1983) (preemption theory rejected); Palos Verdes Shores Mobile Estates,. Ltd. v. City, of Laos Angeles; 190 Cal. Rpu: 866 (Cal. • Ct. App. 1983)'(vagueness and preemption theories rejected).178."204 Cal. Rptr:'239 (Cal: Ct. App; 1984). In May 1984, a similar taking claim was also'mised in Romany. City of Morgan Hill, No. 54335; (Cal. Superi Ct.). See Casella'v. City of Morgan Hill, 280'Cal. Rpu. 876,'878-79'(1991) (discussing the disposition of the Roman case). The trial court rejected the claim in that case in response to a motion for summary judgment. Id. at 877. Howevei, the order was'never put into writing and the case was abandoned. Id. - 179. Oceanside, -204 Cal: Rptr. at 252; 180. Id. - Ms content downloaded from 137.150.34:41 on Wed, 07 Sep 2016 19:42:35 UTC All use subject to blip://about.jstor.org/terini 184 THE URBAN LAWYER . VOL. 24, NO. 1, WINTER 1992 that an artificially reduced rent would result. Instead, it concluded that. the ordinance would permit a "just and reasonable rate of return. s181 A. Hall v. City of Santa Barbara - Two years After ihe'decision in Oceanside, the possessory, taking argu- ment was raised in federal court•in a chalIlenge18z to a SantalBarbara ordinauce,183 that was, typical of California`mtibilehome rent ordi- nances. It authorized annual across-the-board increases equal to three- quarters of the increase in the Consumer Price Index.' Additional increases of ten percent were permitted upon changes in mobilehome. ownership. 185 Also, park owner's could seek increases under the ordi- nance's fair return standard. 186 ' The ordinance included provisions restricting the grounds for termi- nating:a rental to specified just causes, which paralleled thosb•set forth in the state code, rather than augmenting them. 18' The one ground for eviction other than.a default by.the tenant was fora change in the use Of the park.18' In 'effect, the ordinance provided mobilehome owners with the right to sell their mobilehomes in place at a rent controlled rent. . .,. Hall alleged that the ordinance effectuated a taking,of her. property `.`by giving tenants the right to a perpetual lease at a below-market rental rate.',"89 The trial court dismissed the complaint for failure to.state a cause, of action.190 On appeal, in an opinion authored by Judge Alex Kozinski, the circuit court of appeals concluded that a perrse taking claim had been_pre-- 1'81. Id. at 253. 182. See Hall v. City of Santa Barbara, 833 F.2d 1270 (9th Cir. 1986). 183. SANTA BARBARA, CAL. ORDINANCE ch. 26.08 (Aug. 14, 1984). 184. Hall, 833 F.2d at 1273 n.3 (citing SANTA BARBARA, CAL. ORDINANCE § 26.08:040C (Aug. 14,,1984)). 185. -Id. 186. Id. at 1283 (citing SANTA BARBARA, CAL. ORDINANCE § 26.08.020C, D (Aug. 14, 1984)). 187. See id. at 1273 n.2 (Citing SANTA BARBARA, CAL. ORDINANCE § 26.08.040A (Aug. 14, 1984)). In its discussion of evictions restrictions, the court never acknowl- edged the existence of the state regulations or of the fact that the.mobilehome owners would have been'subject to the same eviction protections, even if none were included in the local ordinance., Compare the above-cited Santa Barbara Code provisions with California Civil Code, §,789.55. 188. Id. (Citing SANTA BARBARA, _CAL..ORDINANCE.§, 26.08.040A (1984)). 189. Id. at 1273-74. 190. No written opinion was prepared. For discussion of the trial court's dismissal, see the Court of Appeals' decision, id. at 1274. This content downloaded from 137.150.34.41 on Wed, 07 Sep 2016 19:42:35 UTC, All use subject to http://about.jstor.drg(ternfs RIGHT TO SELL THE "IM'MOBILE HOME ' • 185 sented.191 This conclusion rested upon'the court's'finding that the exis- tence of the combination of the rent control and the right of assignability' resulted in a permanent "physical occ6pation."192 In the words of the court, the permanent'"physical occupation!"consisted of "theright to occupy the property" in peipetuitylwliile'paying'only'a fraction of what it is worth in rent .". ' : . [An] interest that is transferable, has an established market and-a'.market value. ,,193 The court's acceptance'of the allegation that the'ordinance would result in reduced" rents (which had been rejected in Oceanside) was central to its analysis; becausd the "reducedrents", created,the value that was tansferred, The concept of a per se physical taking was contrasted with a "regula- tory taking claim in which dimunition' in value must be shown:194 In reaching' its "conclusion that a per se taking claim had been presented, the court:largely. relied on the Supreme Court's ruling in Loretto v. Teleprompter -Manhattan CATV Corp. 195 that "a permanent"physical occupation is a government action of such a unique character that it is a taking without regard to other factors that a court might ordinarily 191. See id. at 1276. The court also reversed the dismissal of the rational basis challenge to the ordinance. See id. at 1280-81. It concluded that if the park owner's allegations were substantiated there;would be d'significant doubt" as to whether the ordinance's purpose of alleviating a "critical shortage of low and moderate income housing" would' be `achieved. Id. Instead,' "it would seem that the Santa Barbara ordinance would do little more than give a windfall to current mobile park tenants at the expense of current mobile park owners." Id. at 1281. The court further commented that "the'rationality of rent control vel non may have, to be reassessed in light of this growing body of thought on the subject. "Id. Specifically; it noted that there was growing consensus that rent control exacerbates the problems it is intended to ameliorate and cited a "survey which found that ninety-eight percent of U.S: economists agreed that rent control reduces the quantity and quality of housing. Id. In effect, the court revived the "Lochner" standard of review of social legislation that was designed to protect mobilehome owners by ensuring that their investments in mobilehomes were not eliminated by evictions or excessive rent increases. The opin- ion'strajectory was directly contrary to the Supreme -Court's direction that ' `empirical - debates .. '. over the wisdom.. , of socioeconomic legislation , are not to be carried out in the federal courts." Hawaii Housing Amh v: Midkiff, 467U.S: 229, 243 (1984).. The Court undertook a review'of the wisdom of.ihe legislation under the guise of reviewing. its rationality. In the subsequent challenges to mobilehome lent controls, which have primarily been Hall -based claims, courts have consistently dismissed claims that mobile home space' rentcontrols, including yacancy'conttols, do not have a rational basis. See, e.g., Azol., Pacifico, Inc. v. City of Los Angeles, 740 F. Supp. 712,780 (C.D. Cal. 1990); Casella v. City of Morgan Hill, 280 Cal. Rptr. 876, 884-85 (1991); Sierra Lake Reserve v. City of Rocklin, 938 F.2d 951, 958 (9th Cir. 1991). 192. Hall, 833 F.2d at 1276. 193. Id. 194. Id. at 1275. 195. 458 U.S. 419 (1982). This content'downloaded from 137.150134.41 on Wed, 07 Sep 2016 19:42:35 UTC All use subject to http://aboutjstor.oreterms 186 THE URBAN LAWYER, ; , VOL. 24; No. I WINTER .1992' examine .. ;; ,[including] whether the action ... has only minimal economic impact on the owner:s196 „ .The courtfurther explained that the ordinance's creation of atransfer- able possessory interest which had a "market value",distinguished the•mobilehome rent control scheme. from. conventional apartment rent controls, which had been consistently upheld by the courts.' The apart- ment rent controls did not grant occupancy rights which; were transfer- able:'98 In contrast; under;the mobilehome:regulations."tenants were reaping -a monetarywindfall."r99 In none of the cited cases has the landlord claimed that the tenant's right to possess the property at reduced rental rates was transferable to others, that it,had a market value, that it was in fact traded on the open market and that tenants were reaping a monetary windfall by selling this right to others. This is not a minor' difference; : it is crucial`... . That tenants normally cannot sell their rights in rent controlled property provides .important_ safeguards for landlords..... [Under conventional rent controls] [w]hen the premises become vacant, the landlord is able to reassert a measure of control over the property:... ' [A]s the Santa Barbara ordinance is alleged to operate, landlords are left with the right to collect reduced rents while tenants have practically all other rights in the property they occupy. As we read the Supreme Court's pronouncements, this over- steps the boundaries of mere regulation and shades into permanent occupation of the property for which compensation is due.M The court went on to note that under mobilehome space rent controls a mobilehome park ownercan never realize a host of rights that are available to landlords of rent controlled apartments as their units become vacant. The court stated that,under apartment rent controls, the land- lord: may, choose to occupy it himself; or to allow a friend or relative to'stay there; or to keep it vacant; or make improvements in the hope of raising the rent to the extent 196. Hall, 833 F.2d at 1275-76 (citing Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 433-35 (1982)). In Penn Central Transp. Co. v. City of New York, 438 U.S. 103 (1978), in the course of an opinion addressing historic preservation restrictions which were not considered to be's physical taking, the Supreme Court had commented that "[a] 'taking' may be more readily found when'the interference with property can be characterized as'a physical invasion'by'govemment, .. , than when interference: arises from some public program adjusting the'benefits and burdens of economic life to promote the common good." Id. at 124'(citations omitted) (empha'sis' added). '197. See id. at 1276. 198. See id. at 1278-80. 199. Id. at 1278 (emphasis added). 200. Id. at 1278-80. This content downloaded from 137.150.34.41 on Wed, 07 Sep 2016 19:42:35 UTC All use subject to httpl/aboutjstor.orgitei v RIGHT TO SELL. THE "IM"MOBILE-HOME - — 187 allowed by'law; oI'to rent it to a new tenant; pie3Umably making the'selection-on ,the basis'of•factors.thatwill•,maximize his total'.remm from4he property201 •',•.- In essence, the landlord was'left only 'with the iight'to' collect Ithe "reduced" rent, without any "meaningful say, as to,who will .live on the,property, now or in the,future X202 r.: ,<< In contrast, to the holdings in earlier mobdehome cases,203 the Hall court held.that the park.owner's,right to evict for the purpose of con verting the,park to,other uses did not obviate the, taking,claim.204 This c ,uclusion,was based on the conclusion in Loretto that aphysical -taking, claim could not be defeated merely by.,offering a landlord,the,.option of avoiding a permanent occupation by a third party by ceasing to rent , `a. landlord's ability.,to rent his property may, not be conditioned.on his for feitiin ,the ri hi to com enation for. a h sical occupation X205 g . g _ . P.. P.,Y P HallJcited a dissenting opinion; from, a recent Supreme. Court case,, Fresh Pond Shopping Ctr , Inc, v. Callahan, 2D6 to support its conclusion that,a taking clalm,had been presented In,that dissenting opinion„ Justice Rehnquist concluded:that,a,permanent physical invasion had been effectuated by a Cambridge rent control law which prohibited an apartment owner_ from demolishing a building and converting. the property to .Other UseS.208 The argument that a dissent 'would not be guiding was'couniered with the reasoning diaf the citedcase was "distin j201. Id. at 1279.1f 7; 202. Id. atk=12761 - - - r"- - 203. Cider Barrel -Mobile Home Court wEader;414,A.2d-1246,'1252(Md:1980);• Commonwealth v: Gustafsson,,346 N.Et2d 706 (Mass.'1976); Palm'Beach Mobile Homes, Inc..v. Strong, 300 So. Bd 881' (Fla: 1974). The Florida Supreme Court com' mented that without the right to go out of the mobile home park business such acts would have left the court with "serious doubts about its constitutionality [since] perpetual occu- pancy rights on another's property'. cannot .. be granted by law .... Palm Beach, 300 So. 2d at 887?88:.,, 204.; See Hall, 833 F;2d at•1278 n:•18:, ,, 205: Id. at 1278'(quoting.Loreno'v. Teleprompter Manhattan CATV Corp., 458 U.SA19, 439 nA7 (1982)). The court noted that it was skepticalthatthe right to go out of themobilehome businesswas "realistically available'+due to the obstacles posed- by state'anddocal:laivs, including a six-month notice provision and'a requirement that the park owner obtain a permit to convert the park to another use and submit a relocation. plan subject to approval by the city's Community DevelopmentDepartinent. Id: at 1278 Such provisions,which grant a great deal of discretion; are common in local ordi- nances.: Parkiclosings options are "realistically.available". and have occurred in some, cities; but;notothem - ..,, 206. 464 U.S. 875 (1983) (Rehnquist, J., dissenting):' 207. Hall, 833.F.2d at 1283.(citing Fresh Pond. Shopping Ctr., Inc. Y. Callahan, 464 U.S.,875 (1983) (Rehnquist, J., dissenting)). 208. Fresh Pond, 464 U.S. at 876-77:- , This content downloaded from 07.150-34.41-6n, -Wed, 07 Sep 2016 19:42:35 UTC All use subject to hiip://aboutjstoi.org/terms 188 THE URBAN LAWYER VOL., 24, NO. 1, WINTER 1992 guishable from this case, in. material ways ,we presume were.the basis 'm for iheajority'sdecision: We do not interpret the Fresh Ponddismissal as repudiating everything_said by Justice. Rehnquist in his dissent. "20' : : B., Was Adequate Compensation Paid? In order to find a cause of action, the court -also had to find'sufficienf grounds for a claim 'that just compensation had not been provided', since the, Constitutiondoes not prohibit all takings, but iatherprohibits taking§' wihout "just compensation. s210 It found that the'ordinance provisron' allowing a fair return on investment -did -not meet the justcompensation' requirement; noting that rents had not been consid'e'red as compensation in Laretto.zn. . , ... More significantly, the court' decided that the benefit to the tenant from the rent controls; rather ttiari the loss to the park owner due to the regulation',-was'the'meak'ire of the'taking 212 It held'that"'the [trial] court, musf ascertain the ire the interest allegedly transferred'to'' each tenant'and'the value ofwhat t}ie'[plaintiffslreceived], if anything,' in`addition to nornlal rental' payments.,+213 1 209: 'Hall, 833 F.2d at4276 n.14 (emphasis added). In essence, the court developed a new,theoretical basis .for transforming the reasoning of a, dissenting opinion into authority—the theory that the decision of the majority could not be seen asrepudiating, all of the reasoning of `the dissent. , -' ' ° = , , 210. "Nor shall private property be taken for public use, without just compensa- tion." U.S. CONST. amend. V. 211. Hall, 833 F.2d at 1281. 212. -Hall, 833 P.2d at 1281. In a subsequent federal court trial,in which challenge to the Los Angeles ordinance was under consideration, the trial court explained: "The Hall court, breaking from, the traditional 'lass': measure of'damages for taking cases, requires this Court�to look, to.the•windfall gain of the tenants caused by. the [Rent Stabilization ordinance] and•award that amount to compensate [the plaintiff].': Azul Pacifico, Inc:•v. City of Los Angeles, 740 F. Supp. 772,:178 (C.D.. Cal. 1990). Subsequently, the circuit court of appeals expanded the scope of the trial court's conclusionsregarding liability. See Azul Pacifico,. Inc. v: City of Los Angeles, No. 90-55853, 1991 WL 224528 (9th Cir. Nov. 1, 1991) (petition for rehearing pending).' The trial court had limited liability to instances involving sales which had occurred within the year_priontathe,institution.of:the action. SeeAzul Pacifico; 740 F. Supp. at 779: The court of appeals extended liability to cover the increases in value of all the' mobilehomesinthe park. SeeAzulPacifico,No. 90-55853,199LWL224528 of*11. 213. Hall, 833 F.2d at 1281. Hall's taking equation has posed new practicatissues for trial courts, requiring a determination of what portion of the value of mobilehomes inrent controlled parks is attributable torrent control (die value to the tenants of "the:: possessory interest in the land ... transferred to each of their tenants."). Id. - Such analysis has been highly problematic due:to a lack of:compambility between rent controlled; and noncmurolled parks: Often all parks within an area,are'subjeeb to rent controls, forcing experts to develop noment controlled "comparables" from locations which are not comparable. : An econometric analysis that was published in U. C.LA. Law,Review estimated that the increased value due to rent control was $8800 for mobilehome sales o&iirriug from 1984 through 1986. Hirsch At Hirsch, supra note 8,, at 440-44'. This conclusion was based on the fad mobilehome sales prices were thirty-two This content downloaded from 137.150.34.41 on Wed, 07 Sep, 201619:42:35.UTC All use subject to http:Ualioutjstonorg/tenn"s RIGHT TO SELL THE "IM"MOBILE HOME - 189 The use of the benefit to the tenant as'the measure of required compen- sation was critical to the outcome of the court''''analysis: If the measure of required compensation was limited to the'loss incurred by the park owners due to the assignability; an argument could have been tirade that no compensable taking of property had occurred since the rentat income was the same whether, or not-the,tenauts-could assign their interest and, therefore, there was no transfer of value. In Pinewood Estates v. Barnegat�Township�Leveling Bd.,214 which adopted the reasoning of Hall, :the court acknowledged this difference and commented that: We realize that'it could be argued that the appellants are not prejudiced by;the Bamegat Ordinance since under a straight rent control plan in which they select their own tenants and a tenant when moving must remove his mobile home, their incomes might be no more than' they, are now. But such an argument would miss the point as this is a physical invsion case in which the actual economic impact on appellants is'accorded'little weight."';. C. Petitions for Rehearing En Baric`' and Certiorari , Denied; , A petition for -an en banc,hearing-to review theldecision of the three- judge,panel in Hall was denied. 116 The three dissenters from the denial criticized the court foc resting a taking`conclusioti'upon the notion that an "economic regulation can 'shade into a physical ihvasion. s217 They noted that Loreito-had specifically distinguished "physical invasions"' percent higher in rent controlled jurisdictions. Id. at 443. The analysis used median rent to consider the role of location independent of the rent controls. Id. at 441. However, house price differentials may have been -a more, reliable measure of the differences in locational value. 7d. ai 434-35 n. 118: - On remand in the Hall case, the trial court found that the damages were $30,000 per mobilehome space. Hall v. City of Santa Barbara, No. CV-84-9506-LEW (C.D. Ca. 1989) (Findings of Fact and Conclusions of Law; at 14, July 18, 1989). , ,, In a subsequent.case involving the Los Angeles ordinance, which -was before the same trial court judge, it was determined that the damages were $20,000 for. each mobilehome that had been sold. Azul Pacifico v. City,of Los Angeles, 740 F. Supp. 772 (C.D. Cal. 1990). The court ruled that damages were limited to one year by the state statute of limitations and, therefore; were limited to premiums from sales of mobilehome' that took place within the one year period priordgthe filing of the lawsuit. Id. at 779: , A California Cour[ of Appeals questioned the, conceptual underpinnings of. such, analysis.. It commented that "the increase in the sales prices of mobile homes resulting from rent control may simply reflect the artif cially,low price caused by excessive rents charged prior,to its enactment." Casella v; City pf Morgan Hill, 280.61. Rpm 876, 882 (1991). 214. 898 F:2d 347 (3d Cir. 1990)..,. 215. Id. at 353 n.10.. 216. Hall, 833 F.2d at 1282. 217: Id: at 1283 (Schroeder, J., dissenting) (citing Loretto V. TeleprompterManhat_ tan CATV Corp., 458 U.S. 419, 441 (1982)). Thus content downloaded from 137.150.34.41 on Wed, 07 Sep 2016 19:42:35 UTC All use subject todittp://aboutjstor.org/terms 190 THE URBAN LAWYER. -VOL. 24, No. 1,; WINTER 1991. from regulations oflandlord-tenantrelationships:, "This Court has con- sistently affirmed that, States have broad, power. to regulate.. the. landlord-tenant,relationship•in particular without paying compensation for all economic injuries that such regulation entails." 218 The dissenters criticized .the, panel for accepting the argument that the Supreme Court "refused to consider,in Fresh Pond"219 and for acting as a ",'superlegislature' second-guessing the wholly economic regulations of state and local governments. X220 Finally they delivered a warning that the decision would authorize wholesale attacks upon rent control and bemoaned the money and court time that would be expended in litigation over its effects ul Subsequently, a petition for certiorari to the U.S. Supreme Courtwas d'enied." Appellant's request for Supreme Court review stood iiia weak position in light of the fact that the case was still in the pleading stage. D. Hall's Irresolvable 7heoretical.Construct; While the court of appeal remanded Hall for a determination of factual claims, in fact its conclusions of law.left a theoretical construct that could not be resolved through a fact-finding process. In the Hall, opinion; its legal analysis was conducted within, the framework of plaintiffs factual allegations that mobilehome owners had been granted permanent.possess- ory, interests in "reduced" rents and had been provided with a "wind- fall. s223 These allegations countered the legislative justifications for mo- bilehome rent and evictions controls which were based on the need to 218. Id. at 1283-84 (Schroeder,'J., dissenting) (citations omitted). ' 219. Id. at 1283 (Schroeder, J:, dissenting). 220. Id. at 1284 (Schroeder, J.,'dissenting). 221. See id.-at1284 (Schroeder, J., dissenting). 222. City of Santa Barbara v. Hall, 485 U.S. 940 (1988). 223. Hagman's classic work, Windfalls for Wipeouts defines a "windfall" as "any Inctease in the value of real estate-other'than that caused by the owner -or by general inflation." DONALD G.'HAGMAN & DEAN T.'MISCZYNSKI, WINDFALLS FOR WIFE - ours: LAND VALUE CAPTURE & COMPENSATION 15 (1978): The plaintiff in Hall alleged that mobilehome owners were able to sell their mo- bilehomes at prices far above industry "blue -book" values. Hall, 833 F.2d at 1274. However, the Blue Book is not a reliable indicator of mobilehome values in a particular' localility.`In a subsequent' case, a federal court used the, Blue Book,,not to determine the value of the mobilehomes sold'in plaintiff s park; but as ameasuring Stick to determine the amount of the alleged sales premium caused by the [rentstabilization ordinance]. Forexample; ifa mobilehomeinplaintifrsparksells " for $10,000 over the ... Blue Book price, and a [comparable] mobilehome , in a comparable, but non -rent controlled park sells for $5,000 over the :.. Blue Book price, this is evidence of a premium of $5,000 caused by the rent control ordinance. Azul Pacifico, Inc. v.; City of Los Angeles, 740 F. Supp, 772,.779m.2 (C.D. Cal. 1990). This content downloaded from 137.150.34.41 on Wed, 07 Sep 2016,19:42:35 ITIC. All use subject to h,ttp://about.jstor.org/tems RIGHT TO SELL THE "IM"MOBILE HOME _ .. -. 191 regulate :rents in light of'the'tenants lack ofbargaining power and the practical immobility of mobilehomes.114 Such allegations were largely` 111, the nature of socio-economic and legal 6bhchisions'abbut the impact of the mobilehome' rerifandevictiori"r'egulationS on rents and property rights: The`court concluded'thaf'tliese'allegations required-aaresofution of fact-bound"`issues:"- But, 'a'resolution of the question of whether'the ordinance resulted in "reduced" rents' depended on how "reduced" rents Were defined; lither�flrart on fact issues. (E.g., were they defined as 'rents belowlevelsthat ooalilte obtained in the absence of rent control', orients below "balanced" market level's, or rents below fair,return levels?) - While the court used the concept of "reduced"rents to find a'basis•for a takings claim, it never defined that concept 716 The court noted that "mobile homes are'mobile only in the sense that they are not permanently anchored to a foundation. "'''However, it.did not give any acknowledg� Ment or weight to the potentiafty' monopolistic features of the relationship and the obvious consequences of theYtotai immobility of mobilehomes, the fact that their values could be effectively appropriated by park owners via unlimited rent increases. Furthermore, the court did,not make any note of tenants' substantial . investment in mobilehomes - (and accompanying improvements). Reviewing virtually the same factual allegations, the Cali- fornia Court of Appeals had declared that: "Rent control attempts to restore free market conditions by limiting rent increases to that level which would occur undengeneral market conditions—a competitive housing mar- ket as opposed. to a monopolistic, or oligopolistic one. "221 1. TREASURED STRANDS The Hall court also concluded that there were allegations to the effect that Santa Barbara's eviction regulations transgressed what Loretto con- sidered as "one of the most treasured strands in an owner's bundle of property rights"—"[t]he power, to exclude: ""',The potentially treas- ured strands included the right of, a•park,owner to. "occupy [a space] himself; or to allow a friend or relative to staythere; or to keep it vacant 224. 4ee, e.g., FREMONT; CAI:.,"MUNICIPAL CODE §3-13101 (1987);'OCEANSIDE,' CAL., MUNICIPAL CODE § 16.B.1 (1982). 225' Hall, 833 F.2d at 1282. ''I - 226.. At one point; the court stated that the trial court must determine "the value of what the Halls, received ... in addition'to normal rental payrridats:"-Id. at 1281. .. 227. /d. at 1273. - '' ` 228. • Oceanside Mobilehome Park Owners' Ass'n V. City of Oceanside, 204 Cal. Rptr. `239; 251 -(Cal. Ct. Appi 1984). ' ' 229. Hall, 833'F.2d at 1277 (citing Kaiser Aetna 444 U.& 164, 179-80 (1979)); see also Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 435-36 (1982)). . . I • _ This'Content downloaded from -137.150.34.41 on Wed, 07 Sep 2016 19:42:35 UTC All use'mbject to http://about:jst6r.org/terms 192 THE URBAN LAWYER-,, VOL. 24; NO. I WINTER, l9?21 ... or to rent it to anew tenants230 or to "select attractive pleasant, applicants .. z3l In the context of mobilehome park ownership, it stretches the imagi , nation232 to conclude that.the rights,,of owner occupancy,and selection of tenants ori the basis of personal friendship are "treasured strands." These .rights, are, associated with 1. the ownership of small. residential properties., Asa practical matter, ;the power to exclude may be seen as almost solely. an `.`.economic" right that .may; be„used to, increase, profits through. increased rents or conversion to a more profitable use. 23a 2. LIFE AFTER HALL: ,CONSIDERATION OF THE HALL TAKING DOCTRINE BY OTHER COURTS ` As the ,following chart demonstrates,, since the Hall decision, state appellate courts have consistently rejected`its legal conclusions on the basis that they are not persuasive. In most instances, federal courts have either criticized Hall's conclusionsorhave dismissed, challenges which are based on its theories on procedural grounds'. FEDERAL COURT AND STATE APPELLATE COURT OPINIONS?35'IN RESPONSE TO, `HALL BASED TAKING CLAIMS Case/Decision Date Court Ruling Eamiello (8/88) Conn. S:'Ct. 'Flail not-persuaside Pinewood (3190) U.S.C.A. (Nid.) followed' Mill 230: Id. at 1279.- 231.4d. at 1279 n.23: n . 232. The plaintiffs park had seventyone mobilehome spaces. See id. at 1276. Parks, typically have one hundred or more spaces. DRURY, supra note 30, at `16. ` t-233. A New•Jersey appellate court ruled that an,owner of three=unit building had the right to evict for, owner-occupancy..See,Sabato v. Sabato,,342•A.2d,886 (N.J., Super. Ct. Ifaw Div. 1975). However, it indicated that it probably would have taken a different view if a larger building had been involved. It distinguished between "build- ings or structures ordinarily utilized for owner occupancy as opposed to large apartment houses or garden apartment complexes clearly representing ,investment typel•proper- ties.” Id. at 897. New York City rent regulations permit eviction for occupancy by a landlord or the.landlord's immediate family, without a showing of ','immediate and, compelling necessity" only in,buildings containing not more than twelve units. N.Y. U?XONSOI.. LAws § 2104.5 (McKinney 1991). 234. In situations in which increases are permitted upon yacancies, the right to select tenants may be valuable to the extent that park owner can select tenants who are likely to remain a shorterperiod of time and thereby increase the number ofvacancy.increases. See Hall, 833 F.2d at 1279 n.23. , 235. Case citations are included in the following discussion. This content downloaded from 137.150.34.41 on Wed,, 07 Sep 2016 19:42:35 UTC All use subject io,http:%/aboutjstor.org/terms ' - RIGHT TO SELL THE "IM"MOBILE HOME. 193 Azul'Pacific6'(4190)' •U:S.D:C. (S. •Cal.) bound by Hall but criticized reasoning Yee (10/90) Cal.•Ct. App. Hall not persuasive . - (4 Hall not, persuasive Hall -not persuasive Hall not persuasive Carson'(4/91) U.S.D.C. �(S."Cal:) - Hall criticized federal abstention . Casella (5/91) Cal. Ct. App. .. (6tli Dist.) 'U[S.C.A. (N. DeAnzd (6/91) Cal:) Sierra Lakes (7/91)' ' I U.KC.A: (9th' Cir.) AzulPacifieof(11/91) U.SC:A.°(9th•Cir.)" Hall not persuasive ,.., challenge'to ordinance &, damages barred by statute of limitations followed Hall followed'Hal1 In 3988, inEamiello v. -Liberty MobileHome Sales,Z1bthe Connecticut Supreme Court rejected Hall's'conclusions, on'the taking issue, although it also found that its case was distinguishable on the basis that the regula- tions in issue didnot include rent controls:2".The Connecticut court con- cluded that the mobilehome rent regulation ''scheme that was the subject oftheHall casediffered significantly from the physical invasion that was found in Loretto."a It explained that Loretto involved the case of a build, ing owner who was "compelled to allow the attachment of objects to his building for the purpose of supplying a service to which he had never 236. 546 A.2d 805 (Conn. 1988). 237. Id. at 816. In 1989, a U.S. District Court rejected a taking challenge to Connect- icut's mobilehome eviction protections. See Gibbs v. Southeastern Investment Corp., 705 F. Supp. 738 (D. Conm;1989). Gibbs distinguished Hall on the basis that Connecti- cut'a regulations did not include rent controls; while the plaintiffs in Hall alleged that the applicable ordinance provided for "a perpetual lease at a below-market rental rate Gibbs, 705 F. Supp. at 743 (quoting Hally, City of Santa Barbara; 833 F.2d 1270, 1274 (9th Cir. 1986)). 238. See Eamiello, 546 A.2d at 816. This content downloaded from 137.150.34.41 on Wed; 07 Sep 2016 19:42:35 UTC All use subject to http://aboutjstor.org/terms 1st.) Tubach,(12/90).,, ' ' Cal.;Ct. App. (unpublished),,. :. (4th,Dist.) Peppard (1/91): 'Cal. Ct. App. (depublished)` (2d Dist.) Palomar (2/91) Cal. Ct. App. (unpublished) ''(4th Dist.) Hall not, persuasive Hall -not persuasive Hall not persuasive Carson'(4/91) U.S.D.C. �(S."Cal:) - Hall criticized federal abstention . Casella (5/91) Cal. Ct. App. .. (6tli Dist.) 'U[S.C.A. (N. DeAnzd (6/91) Cal:) Sierra Lakes (7/91)' ' I U.KC.A: (9th' Cir.) AzulPacifieof(11/91) U.SC:A.°(9th•Cir.)" Hall not persuasive ,.., challenge'to ordinance &, damages barred by statute of limitations followed Hall followed'Hal1 In 3988, inEamiello v. -Liberty MobileHome Sales,Z1bthe Connecticut Supreme Court rejected Hall's'conclusions, on'the taking issue, although it also found that its case was distinguishable on the basis that the regula- tions in issue didnot include rent controls:2".The Connecticut court con- cluded that the mobilehome rent regulation ''scheme that was the subject oftheHall casediffered significantly from the physical invasion that was found in Loretto."a It explained that Loretto involved the case of a build, ing owner who was "compelled to allow the attachment of objects to his building for the purpose of supplying a service to which he had never 236. 546 A.2d 805 (Conn. 1988). 237. Id. at 816. In 1989, a U.S. District Court rejected a taking challenge to Connect- icut's mobilehome eviction protections. See Gibbs v. Southeastern Investment Corp., 705 F. Supp. 738 (D. Conm;1989). Gibbs distinguished Hall on the basis that Connecti- cut'a regulations did not include rent controls; while the plaintiffs in Hall alleged that the applicable ordinance provided for "a perpetual lease at a below-market rental rate Gibbs, 705 F. Supp. at 743 (quoting Hally, City of Santa Barbara; 833 F.2d 1270, 1274 (9th Cir. 1986)). 238. See Eamiello, 546 A.2d at 816. This content downloaded from 137.150.34.41 on Wed; 07 Sep 2016 19:42:35 UTC All use subject to http://aboutjstor.org/terms 494 THE URBAN LAWYER . VOL. 24,,No.-1 WINTER 1992 agreed.,"2791n contrast, the mobilehome space regulations only. require owners to continue to allow a use to which they had consented. There are significant differences in the degree of infringement upon common law property rights between a governmentally authorized placement of wires and related devices by a private cable television company on a building without the consent of the owner, as•in Loretto, and the right given by our statutes to mobile home owners and their transferees to continue to occupy sites within a mobile home park tliat were originally leased,to,them or their predecessors for. that purpose consensually.. , [The park owner] is not being compelled to permit his land to be occupied for a use to which he never consented.2dD The court went on to note that the Connecticut mobilehome space rent and eviction regulations were less restrictive than the scheme upheld in Fresh Pond Shopping Center v. tCallahan241,that prohibited a property owner, from ceasing to retain an apartment building on the property because, under Connecticut law, park owners retained the right to evict in order,to leave the mobilehome-park business. 242 Four years after the Hall decision, a challenge based on its theories reached the U.S. Court of Appeals in New Jersey. In March 1990, in Pinewood U.S. v. Barnegat Township Leveling Board,243 the U.S. Court of Appeals for the Third Circuit adopted the reasoning of Hall.2A4 In that case, as in Hall, the trial court dismissed the complaint.' The•court'o ' f appeals concluded that the rent control law granted, the tenants, an intrest in property, -that belonged to ,the landlord: , This is not a case in which a property owner has simply been told that he cannot do something on'his property or thathc must use his property a certain way.,The situation is aggravatedby. the fact that the,transfer is accompanied by the payment not to the landlord but to the departing tenant of what amounts to rent for the use of the'pad.-The "rent" is for the'possessory interest of the landlord. Thus this is a case where other persons, tenams,;have been granted interests in property which properly belongs to, the appellants, the landlords 246 From October 1990 through May 1991, California Courts of Appeals in three districts rejected the reasoning of Hall. 247In each case, the state 239. Id. 240. Id. at 816-17. 241. 464 U.S. 875 (1983). 242. Eamiello, 546 A.2d at 817. 243. 898 F.2d 347 (3d Cir. 1990). 244. See id. at 353-54. 245. See id. at 348. 246. Id. at 353. 247. See Yee v. City of Escondido, 274 Cal. Rpir. 551(Cai: Ct. App. 1990); petition for hearing denied No. S018568, 1991 Cal. LEXIS 353 (Jan. 24,'1991), cert. granted, 112 S. Ct. 294 (1991); Casella v. City of Morgan Hill, 280 Cal: Rptr. 876 (Cal. Ct. App. 1991), reviewed denied, (July 17; 1991). This comen[.downloaded from 137.150.34.41 on Wed, 07 Sep 2016,19:42:35 UTC All use subject to http://aboutigtor.org/;em RIGHT tO'SELL THE. "1111"MOBILE HOMH ' 'f.� {. _195' supreme court'den ed petitions for hearing to'review the decisions:24a The first rejection by 'al California appellate court, in Yee v. 'City of Escondido,249 was by the same' appellate panel that had previously ruled against the possessory"taking challenge in Oceanside. In response to the new Hall -based challenge, the'parieh noted that "Hall . does not discuss or 'even' citeour'prior decision in Oceanside.' v250 , .. The'panel' explained that mobilehome park spaces and mobilehomes were "complementary"'goodsiu' Therefore, `it was' "inevitablethat where government acts to ::: limit inc'r'eases in therental prices charged for mobilehorne'spaces; the price of mobilehomes'will increases"252 It concluded that' `[wlhere a government regulation purports to'reduce the excessive and unfair price to a reasonable `level, the'mere fact that the price for:cornplementarygoods and services rises as a result does not transmute anothe'rwise reasonable price regulation'into`a compensable taking:' ''':This assumption prodided the undeipinning'for a different conclusion than that of the Hall court, which had relied on the allegation that the ordinance resulted in "reduced" rentals.2m We panel look issue with Hall's conclusion that the creation.of a mouetizable possessory interest'eievated the regulation to a physical a 255,.:, taking. It noted that; in tfie case`of mobilehome. rent control',:'the benefit of the regulation was limited to those inobilehome owners rent ing spaces at thetime the ordinance was enacted while, in the case of apartment rent controls, the economic benefit of the regulation is spread 248. Yee v. City of Escondido, No. S018569, 1991 Cal. LEXIS 353 (Jan. 24,1991); Casella -v._City of Morgan Hill, (July 17, 1991). 249. 214 Cal. Rptr. 551. One justice dissented from the denial of the petition. See id. at 557-59 (Huffman, J., dissenting). 250. ,Yee,.274 Cal. Rptr.,at555. 251. Id. at 553. 252. Id. 253. Id. (emphasis added). 254. The dissent commented that the panel's conclusion in Oceanside Mobilehome Park -Owners' Ass'n v. City of Oceanside; 204-Cal.,Rptr. 239 (Cal. Ct: App. 1984), that -the Oceanside ordinance was fairly structured not to reduce rents more than required for the purposes,of the police power;:. •. does not in any fashion analyze the issue presented here." Yee, 274 Cal. Rptr. at 558-59. The two diverse premises about the impacts of the rent ordinances on rents were central to the opposing opinions. on the panel.. -Hirsch's article, which provided a background for the Hall analysis, assumes that. "the fair rental value of the space would,be the rental thatthe space,would bring in. a relatively, free market context _(i.e. a,comparable market without rent control).". Hirsch & Hirsch, supra note 8, -at 427,'n.98, _. 255. SeeYee; 274 Cal. Rptr., at 555. This content downloaded from 137.150.34.41 on Wed; 07 Sep 2016 19:42:35 VTC Altuse subject to http://About.jstor.orgite= 196. THE URBAN LAWYER VOL. 24, No.. 1 WINTER 1992.; among all succeeding tenants 256 ",In both cases,, however, the value `taken' from the property is conceptually identical. s257 Three months later, in January,199,1, another division of the Califor- nia Colirt,of Appeals adopted the reasoning set forth in the,Yee opin- ion 7SB However, that opinion was,not,published,259 In February 1991, another panel. of the same district that had issued the Yee decision followed its reasoning, in, an unpublished decision.260 Six months after Yee, the court of appeals of another district delivered a,biting rejection of Hall.z6l.T1.he court."reject[ed] Hall's,espon al of:. the notion that,economie.regulation.such as,the rent control. measure challenged here could.metamorphose into the type of.physical occupa- tion described in Loretto.'2b2 It also commented: :It is apparent-to;us,that-the Nintli,Circuit's analysis in Hall.—that the:effecti' occasioned,by the, combination of the state regulations and the local ordinance, - was a , I `physical invasion"—was no more. than a convenient means of . •'distinguishing'a=loss the =court considered "efearly compensable" from one which it dideri The court then concluded that the allegations about transfers of wealth and "windfalls, "which "Hall found'to be crucial, [were] a truism; an inevitable part of the unique relationship between a mob]lehome park owner 'and his or'her, tenant. "'64 In the" court's view, the fact,that the mobilehom'ee owners reaped an economic benefit does not address the issue of whether the regulation constitutes a taking. 265 ' Furthermore, the courtquestioned the"view that: the -rental income' which park owners lost by virtue of the rent controls was even their property. 256. -Id. at 555:= , 257. Yee, 274 Cal. Rptr. at 556. 258. See Peppard v. City of Carpinteria, 278 Cat: Rptn 98, 100 (1991)'(Review denied by the California Supreme Court and order that opinion not be officially pub- lished March 21, 1991). 259. See id. 260. 'See Palomar Mobilehome Park Ass'n v> City of San Marcos, No. DOI 1494, 1991 Cal: LEXIS 2026 (Cal. CL App. Feb. 6; 1991), petition for review denied;'(Cal'. 1991). Petition for.hearing by the U.S. Supreme Court was, filed in June •1991. 261. See Casella v; City of Morgan Hill, 280 Cal. Rptr. 876 (Cal.'Ct. App'. 1991). 262. Id. at 881: 263. Id. 264. Id. at 881-82. The court noted that it was not bound to admit all allegations in a complaint. "=`A demurrer does not admit contentions, deductions orconclu- sions of fact or law alleged therein.' ....[W]here an allegation is contrary to law of to a fact of which a court may take judicial notice, it is to be treated as a nullity.' " Id. at 878 (quoting Daar v. Yellow Cab Co:; 433 P.2d 732;-745 (Cal. 1967); Dale v City of Mountain View, 127 Cal. Rptr. 520, 522 (Cal. Ct., App. 1976)). ' 265. See id. at 882. This content downloaded from 137.150.34.41,on Wed, 07 Sep 2016.19:42:35 UTC All use subject to hgpJ/about.jstor.org/terms. RIGHT TO SELL THE '"IM"MOBILE HOME .: :: - " : 197 Professor Manheiutshas suggested the premise'underlying Hall's conclusion -that the "economic fruits of enhanced site value are.naturally,the•property of the park owner',' -is itself subject to question.... [the question is,rather.whether the concept Of propeity includes the right to charge"`quasi-rent;" the amount attributable to 'space scarcity and moving costs]:z�' - 3. PROCEDURAL. BARS''TO-HALLBASED . CLAIMS - .. Since the Hall decision, federal courts have found procedural obstacle's to Hall -based 'claiius.'Prior'to therecent'-California'appellate`court decisions rejecting the Hall theory, some fede 7a1 courts abstained; pend- ing the exhaustion of state court remedies. Subsequent to the state decisiong;',one federal trial court'rtiled"that a state determinat]on in a Hall -based claim is a final determination onithe merits; which can only be appealed! td"the U. S. ' Supreme Courtl766 In Carson'Harbor'Village,'Ltd.- v"Citybf Carson;269 the same trial court judge who had been overruled in Hall ruled that state claims must be exhausted before a federal claim can be brought,270 notwithstanding state appellate rulings that no cause of action existed in Hdll-type'chal- lenges. The trial court held that. the denial of review is not equivalent to an affirmation by the Supreme Court,, even though some lawyers might treat the two as having the same effect...: The Supreme Court is not bound by the denial of review of the appellate decision and could decide to review another of the -many Hal type claims pending in the state court system. Moreover,.other.appellate departments are not bound by the decision of Department One in the Yee case. _ , This•court realizes that, in a practical sense, this ruling makes it very difficult for .these plaintiffs. to have their claims heard.in.any court. Plaintiffs will have to take each one of these cases to state court where they will be dismissed undenYee at the trial level, then they will have to appeal, probably up to the California Supreme Court which may or may not grant review. However, the fact remains that this issue _should be addressed by the California courts under state law before coming to the federal courts;nr.--_ .. . .. - ,. Subsequently, the U.S. courtofappeals (in a decision authored by Judge Kozinski);"held.that,park owners do not have a remedy_in state 266. Id: (citations'omittcd)- 267. McDougal'v; County of Itnperial;'942 F2d 668 (9th Cir. 1991); Kuchler v., ity of Escondido, 933,F:2d 101'4{9th Cir. -1991) (unpublished): Bur'see Richardson Honolulu;`759 F. Supp. 1477'(D: Haw: 1991). " 268.' See Y6&v: City'of Escondido; 274 Cal: Rptr: 551 (S.D.'Cal: 1989). 269.'No.''CV-90-3428-LEW (C. D: Cal. April 16, 1991),(Order). 270. Id.-`ah11-12: r_ 271. Id. This content downloaded from 137:150:34:41 on Wed, 07 Sep 2016 19:42:35 UTC All use subjectto http://ab6utjstor.orgftermi 198 THE URBAN LAWYER :VOL. 24,., NO. I WINTER 1992 courts for takings claims based on the theories of Halla'.? Therefore, they may bring their.actions•in federal court. However in June 1991, after years of costly litigation without resolu- tion, a Ninth Circuit panel ruled tliatHall-based constitutional chal- lenges and damages claims were subject to a one year statute of limita- tions, running from the date of enactment of the ordinance.2' The effect of this decision, if it stands, will be to eliminate virtually all" potential Hall -based claims to the ordinances which still have the vacancy, control provisions which were in effect at the time of the Hall decision. 4. PETITION FOR U.S. SUPREME COURT., .., REVIEW'& HALL -BASEL) CLAIMS ;I, . In June 1991,.after the California, Supreme Court denied a petition for review of their claims and.the,federal trial court held :that it had no jurisdictio,n,274 Escondido and San Marcos. park owners, petitioned to the U.S. Supreme Courtfora.writ of certiorari '275which :has been granted., t;. .. VI. Does 1the Combination of Lease Assignability and Vacancy Control Constitute a Per Se Taking of .,'Pro p 1 '2161 ,�: ... .. ,... .. The central, issubs in Hall and its progeny have been: (1) whether space rent and occupation regulations constitute a "permanent physical occupation" which is a per se taking, and .. .. ,. (2) whether what Hall and;Pinewood describe as the "windfall" or "premium" is ". the "property" of mobilehomepark owners .that has been taken without just . compensation. . , .. 272. See Sierra Lake Reserve v. City of Rocklin, 938 F.2d 951 (9th Cir 1991). 273. See DeAnza Properties Ltd. v. County of Santa Cruz, 936 F.2d 1084 (9th Cir. 1991). 274. See Yee v. City of Escondido,; No. 89-0234B(CM).(1991); Palomar Mo- bilehome Park Assn v. City of San Marcos; No 91-0157B(JEG); 1991 Cal: LEXIS 2026 (S.D. Cal.) (judgment filed Feb. 6, 1991), petition for hearing by the U.S. Supreme Court filed in June 1991. See also Casella v. City of Morgan Hill, No. C91- 1035EFL, 1991 U.S. Dist. LEXIS 14904 (filed Oct. 4, 1991). 275. Yee, 112 S. Ct. 294 (1991). 276. Alternative views of the application of taking theories to, mobilehome rent and eviction regulations are presented in KarlManheim, Tenant.Eviction Protection and the Takings Clause, 1989 Wig -L. Rev, ,925; -Thomas G. Moukawsher, Mobile Home Parks and Connecticut's Regulatory, Scheme;,A Takings Analysis, 17 CONN. L, REv., 811, 826-28 (1985); Neal,Stout, Making Roo",ibe Inn:, Rent Control asa Regulatory Taking, 38 J. URB. o CoNTEMe. L. 305 (1990); 'Mary E. McAlister, Hall v.. Cityof Santa Barbara: A Nety Look a(California Rent Controls and the Takings.Clause; )7 ECOLOGY L.Q. 179 (1990). This content downloaded from 137.150.34.41 on Wed, 07 Sep, 2016 19:42:35 UTC Alldse subiect to,http://atioutjstor.org/tei-ms RIGHT TO -SELL THE "IM"MOBILE HOME ' .199 The puipose'of this'section'is to provide additional comment and per- spective on the'analysis'of these issues. A. The Permanent Physical Invasion Issue While there has, been: extensive consideration by the courts of•what constitutes a regulatory taking, consideration of what types of govern- mental actions are physical occupations that are per se takings has been more limited,27' 1. HISTORICAL PERSPECTIVE An understanding of the development of he' tconcepf�that a,permanent physical invasion constitutes aper se taking is useful, in providing a perspective on an appropriate scope of the'doctrine: The concept' is not based on the intent of. -the Framers of the Constitution. In fact, constitutional taking concepts;in general are a,product of judicial inter- pretation, rather than any design by the Framers of the Constitution 278 Early taking theories rested on "natural justice" theories regarding private property rights and were countered by theories that compensa- tion was not required. because all property was originally held at -the 279 " sufferance of the sovereign, From the outset, the taking concepts,did not have a precisely defined scope. Taking discussions arose primarily in response to claims.related wartime seizures of private, property,280 water rights, or flooding cases .21' The debate,was over whether there could be a taking without a taking of title and/or physical entry, rather than being over whether a physical invasion constituted a per se taking. Most courts took the position that taking of title or physical entry was 277. The debate,over whether "permanent' %physical occupauons.constitute per se takings may be seen as an inversion of the debates.of earlier eras over whether a taking could occur in the absence of a physical invasion. I . 278. Much of the early consideration oftaking principles was based onstate constitu- ttonal'principles because the just compensation provisions in the Bill of Rights only applied to takings by the federal government: Only two of the`original thirteen states included property protections in the declarations of rights that were included in their original constitutions. Prior to the adoption of 66 Amendment; state courts of the original thirteen states relied on'natural' lawtheoiies. See-J.A.C. Grant, The "Higher Law" Background of ihe'Law of Eminent Domain, 6' Wis. L:, REV: 67;10; 77-81 (1931). 'ii . Virtually all of the states that were subsequently, admitted to the Union provided, for compensation in -their first constitution. See LAX. Grant, The 'HigherLaw' Back- ground of the Law of Eminent Domain; 6'Wis. L. Rev. 67 (1931). ' 279. MORTON J. HORWITz, THE TRANSFORMATION OF AMERICAN LAW 63-66 (1977). 1 ... 280. Joseph L. Sax, Takings and the Police Power, 74 YALE L.J. 36; 56 (1964). 281. See, e.g.; Sanguinetti v. United States, 264 U.S: 146, 149 (1924); Monooga ` hela Navigation Co. v. Coons, 6 Watts & Serg: 101 "(Pa. 1843). This content dow'Woaded from 137.150.34.41 on Wed 07 Sep 2616 19:42:35 UTC All use 'sbbject to http://abou[.jstor.6rg/ter 200 THE URBAN LAWYER VOL. 24, NO. 1 WINTER 1992 a prerequisite to.a taking.282 A related questionmas whether a physical invasion had occurred. In some cases„public acts that totally, destroyed private property through flooding or other means were not considered takings.283 The formalistic approach of requiring an actual •physical;appropria- tion became the, subject of widespread criticism. In 18574: a constitu- tional scholar -commented that: - - . To differ from the voice of so many learned and sagacious magistrates, may almost wear the aspect of presumption; but I cannot refrain from the expression of the opinion, that this, limitation of the term taking to the actual physical appropriation of property or a divesting'of title is, it seems to me,' far too narrow a construction to answer the purposes of justice; or to meet the demands of an equal administration of the great powers of government. O However, these arguments were countered by widespread concerns that consequential damage concepts -could have ruinous economic impacts for'public' 6ntities.215 By `the'second half of the century, courts awarded compensation in instances in which public action destroyed the usefulness of a'property, although it did'not take title, and many states amended their constitutions to iequire compensation for "damaging” as well as'"taking"'property through public action .216 In a leading case, Pumpelly v._Green BayCompany,281 the Supreme Court found that there had been a taking where a public dam caused 282. It seems to be -settled that, to entitle the owner to protection ... the property must be actually taken in the physical sense of the word, and that the proprietor is not entitled to claim renumeration for indirect or consequential damage, no matter how serious or clearly and unquestionably resulting from the'exercise of the power'of eminent -domain. This rule has,been repeatedly' declared in many of the States of:the Union. Joseph M. Cormack, Legal Concepts in Cases of Eminent Domain, 41 YALE L.J. 221 (1931) (citing THEODORE,SEDGwIOK, STATUTORY AND CONSTITUTIONAL LAW 519 (1857)). , - .. 283. E.g., Monongahela Navigation Co. v..Coons, 6 Watts & Serg. 101 (Pa, 1843) (no compensation requited for flooding of a mill resulting from public obstruction of a stream);,Besematt v. Pennsylvania R.R.; 13 A. 164 (1888) (no taking when a railroad company rendered land unfit for habitation by permitting cars with offensive freight within ten feet of a house), 284. Joseph M. Cormack, Legal Concepts of Eminent Domain, 41 YALE L.J. 221 (1931) (Citing SEDGWICK,-THEODORE SEDOWICK,.STATUTORY AND CONSTITUTIONAL LAw 519-24 (1857)). 285. See HORWITZ, supra dote 279, at 69. 286. For discussion ofthese developments, see Robert Kratovil & Frank.l. Harrison, Jr.,, Eminent Domain—Policy,and Concept, 42 CAL. L. REV..596 (1954). 287. 80 U.S: (13 Wall.) 166 (1871). - This content downloaded from 137.150.34.41 on Wed, 07 Sep 2016 19:42:35 UTC All use subject to http://about.jstor.org/tu s' RIGHT To SELL THE " INi"MOBILE HOME 20f overflowing of private land.281 Subsequently; the Court found that when the government "takes away theuse"and value : . . it is of little conse quence in whom the fee may be vested. X289 The movement during this era was from'analysis based•on the physical nature of the government action to analysis based -on its impact on property. At the same'time that courts differed over whether physical invasions were required in order for takings to occur; they also split over whether permanent physical invasions were per se takings which required'com- pensation in the absence, of a substantial loss in value. In Loretto v. Teleprompter Manhattan CATV Corp. ,290 the Court stated that- it had squarely "affirm[edl thetraditional rule that a permanent physical occu- pation ofproperty is a taking' _291 "without regard to whether the action ... has only minimal economic impact on the owner:7 However,' in the nineteenth century the rule was far from settled'. + ' Until 1851,.openings'of public roads on unimprovedland were not a taking; based) on the theory, they ,increased! the value oUproperty 293 In 1899, the Massachusetts Supreme Judicial Court held that: even the carrying away or bodily destruction of property might be; of such small importance that it would be justified under the police power without compensation. We assume that one"of the Vs'e' s of that convenient phrase, police power, is to justify those small diminutions of property rights ,which, although within the letter. of constitutional protection are hecessarily incident to the free play of the machinery of, government.° - In 1910, the Supreme.Court ruled that the laying of a street across a privately owned right of way did not constitute a taking when no loss. "' 1",1 ' in 'value occuired ' as ;a lresuf_t of the p4blic ;action: In a subsequent . case,'the -Court stated that "it i - the character of the invasion, not the amount of damage' resulting ffotn it, so long as the damage,i_s, substan- tial, that determines the question of whether, it a taking."296. But in other cases courts ruled that a physical taking required.compen-, .,288. Id. at 180-81. But, the Court did.nobfind.that there was a taking when the. construction of a coffer -dam and accompanying excavations adjacentto private property. obstructed access to a privately owned dock. Transportation Co. v. Chicago, 99 U.S. 635.(1878). „ , 289: United States v. Lynah; 188 U3.445 (1903)., .290. 458 U.S.-419,(1982). .291.Id.,at441. 292. Id ..,at 434-35. 293: Grant, supra note 278;, at 67: ` 294. Bent v. Emery; 53 N.E. 910, 911 (Mass., 1899). 295. Boston Chamber, of Commerce v. City:of Roston,;217.U.S. 189(1910), 296. United`States v. Catigby, 328 U'S. 256; 266 (1946)'(ciiing United States v. Cress, 243 U.S. 316, 328 (1917)). This content downloaded from 137;156.34.41 on Wed, 07 Sep 2016 19:42:35 UTC All use subjecf to http://aboutjstor.org/feims' 202 THE URBAN LAWYER . VOL." 24, No. 1 WINTER 1992 sation even if it did not result in a diminution in ,value._ In, 1851, the Georgia Supreme Court requ]red compensation for the placement of a road on unenclosed land.29, The court,explained that compensation was essential in order to protect private property, from; public abuse.Z's In, 1906, the New York Court of Appeals ruled that,stringing:telephone wire over a.property constituted a taking. "'[A]n owner is entitled to the absolute and undisturbed posession of every part of lis premises. ...' "?"-The West Virginia Supreme Court explained in a case inyoly- mg n physical invasion that. "a question of right is involved, and not a,question,of value:"300 In the.twentieth century, the general rule has-been that utility installa- tions constitute takings, "even if they occupy only relatively insubstan- tial amounts of space and do not significantly.interfere with the landown- er's use of his land. "301 „Loretto's facts, tested. the, hypothetical. limits of the, per. se taking doctrine:302,The state requirement that compelled apartment landlords 297.. Parham v. Decatur County, 9 Ga. 341 (1851). , 298. Id. at 354-55. 299. United States v.Causby,328U.S.256,(1946j(quotingButler v.Frontier Tel. Co., 79 N.E. 716, 718 (N.Y. 1906)). 300. Lovett v. WestVa. Cent. Gas Co., 65 S.E: 196, 199 (W., Va. 1909): ' 301. Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419,430 (1982). On the one hand, during this century, the judiciary has worked toward a substantive approach to determining what constitutes a regulatory taking. On the other hand, it moved towards creating a mechanical iest of what, constitutes a per'se taking. 302. Loretto's per se taking doctrine has been subject to widespread criticism. See Loretto v. Telepromptei Manhattan CATV Corp., 458 U.S. 419, 442 (Blackmun, J., dissenting) (' `[T]he Court's approach `reduces the constitutional issue to a'formalistic quibble' over whether property has been 'permanently occupied' or 'temporaiily,in- vaded'. "); see also Casella V. Ciry of Morgan Hill, 280 Cal. Rptr. 876,880-81 (Cal. Ct.'App. 1991). ! _ See also Ray Mulligan, Comment; Loretto v. -Teleprompter Manhattan CATV Cor- poratioq;,Another Excursion into the -Takings Dilemma, .17 URB. LAw. 109 (1985); Robert M. DiGiovanni,"Note, Emineaf Domain -Loretto v. Teleprompter Manhattan CATV Corp.: Permanent Physical Occupation as a Taking, 62 N.C. L. REv. 153 (1983). One of the leading constitutional scholars of the era has sharply criticized the' `fetish- ism" associated with the approach pursued in Loretto and the illogical.results-that ensued. Professor Laurence Tribe wrote: The majority opinion [in Loretto] contains several pages of hyperbolic rhetoric in'. which a few feet of 1/2 inch cable and a couple of small silver boxes—the totalityof the offending installation—are described as having effectively destroyed the land- lord's use of his roof space. We are told that to allow a -stranger" to "invade" and "exercise complete dominion" over the landlord's property is "literally to add insult to injury." The majority even takes the dissent to task for underestimating the size of the CATV [cable TV] installation, which actually displaced more than 1'/:feet! This obsession with permanent physical invasions of even the most deminimis variety borders on fetishism: The majority apparently finds merely temporary limita- This content downloaded from 137.150.34.41.on Wed, 07 Sep 2016 19:42:35 UTC All use subject to.hqp-./4ab6ut.j'stor.org/tems RIGHT TO SELL THE "IM"MOBILE HOME'-,- "`4j' 26 to accept cable TV lines in their buildings;, was minimal in terms; of a 1. physical invasion. Furthermore, it differed from prior physical occupa- tions that were found to be, per se takings. In the case of the cable .TV line, the physical occupation was,for the benefit of the tenant occupants of the property,,- while. in the other, physical occupation, cases, which typically involved utility ,lines or roads, the. occupation, was for the benefit, of the general public and not for.the parties. that had either nonposessory:or possessory interests in the property., In order to distinguish its, holdings in Loretto from its prior decisions upholding regulations of. landlord -tenant relationships, the Court,noted that none of the landlord -tenant cases involved a `.`permanent occupation of the landlord's property by a third party."aoi The Supreme Court has not applied the per, se taking, rule. in cases where`ihe physical invasions were not "permanent." In Pruneyard Shopping Center, v. Robins,304 a case involving stateauthorization of free speech in a privately owned shopping _center, the, Court held that "the fact that [the'speakers] may have 'physically invaded' appellants property cannot be' viewed,as determinativeai3os 'tions on the right to- exclude,'such'as those in Pruneyard,Kaiser Aetna, and -the intermittent flooding cases; to be Iess constitutionally offensive even though the ,economic deprivation of those incursions far exceeds that worked by CATV installa- tions .. 1- .The fmaLoddity �of �the Teteprompter decision is that the majority concedes that its analysis turns upon the fact that the CATV company, rather than the landlord, owns the offending installation. The Court claims that its holding does not affect the state's power to require landlords to provide such things as mailboxes; smoke alarms, and utility connections. The reason'is that; although the expense in those situations is imposed directly on the landlord, and her dominion over the property is certainly impaired, she owns the installation, albeit unwittingly, LAURENCE H. TRIBE,. AMERICAN CONSTITUTIONAL LAW, 602-03 (2d. ed., 1988),' The distinctions between physical and regulatory takings have been repeatedly criti- cized as,attificial. Hirsch concludes that the;mobilehome,space regulations constitute a taking, but suggests that a nexus test should be used "instead of stretching doctrine to conclude that government.has. `physically occupied' property.", Hirsch & Hirsch, supra note 8, at 466.- .303. Lorena, 458 U.S. at 440. While Loretto considered "permanency" for the purpose, of; finding a taking even in the absence of economic' impact, it may be that "permanency" was originally considered for the purpose of showing the serious impact of the invasion, in Sanguinetti,v. United States,�264 U.S. 146 (1924), the Supreme Court explained that a,flooding m " ust constitute an actual, permanent invasion of the land, amounting to an appropriation of and not merely an injury to, _the property." Id: at 149. Among the Court's;bases for not finding a taldng,was that "Appellant was not ousted, nor was his customary use of.the land prevented." Id., 304. 447.U.S.'74 (1980).,. 305. Id.,at 84. This 'content downloaded from 137.150.34.41 on Wed 07 Sep 2016 19:42:35 UTC All use subject to http://about.jstbr.orgtterms 204 THE URBAN LAWYER VOL. 24, No. 1 WINTER 1992, 2. DO MOBILEHOME PARK RENT.AND - EVICTION CONTROLS CONSi1TUTE PER SE TAKINGSUNDERdLORRETO?- a :... Loretto stated that "whether a peiimanent physical occupation9ias oc- curmd presents relatively few proble'ms'ofproof ' and found a per'se taldng in'a situation'involving "[tjhe placement of a fixed stiticit re`on land an obvious fact that will rarely be subject to dispute: "306' ince Loretto, the question of whether or not there has been a physical invasion has been the "subject of dispute" rather than an "`obvtons'fact.-"307 E6`1l and Pinewood distinguished the landlord tenant regulation's that would remain'untouched under Loretto fror'-the-regulations'in'the mobilehorne cases on'thebasis that the mobilefiome'rentcontrols author' ized occupations in "perpetuity. "308 The 'uAilehome rent `regulations inay be distinguished' from the "perlrianent'physical occupations"'that were subject to the per se' rule of Loretto 309'None'of the numerous occupations'wlii& were cited by Loretto as examples of per'se physical`occupation takings were occupa- tions entered' into" pursuant'to�rental agreements for the benefit of the landowner, 310 as is the case in" mobilehome space tenancies: None bf them involved readjustments of preexisting landlord -tenant relation- ships. The "third party" nature of the physical occupation was, critical to Loretto.. At one point, the court notes that the outcome of its analysis Would not have been the same if the governmenf'had'required landlords to.`,`provide" cable installations ratherthan authorizing installations by 306. Loretto, 458 U.S..at 437,(emphasis added). , 307.. Hall'is not,ttie onlycasedu which it has.notbeen obvious whether or not goveinment'action constituted a physical taking. Sec United;States v. Sperry Corp., 493 U.S. 52 (1989), rev'g Sperry Corp. v. United States, 853 F.2d 904 (Fed. Cir. 1988)' (reversed on the issue of -whether a physical taking occurred). - - ' 308: See Hall v. City' of Santa Barbara, 833 F.2d' 1270; 1276 (9th, Cir:' 1986); Pinewood Estates v. Barnegat Township Rent Leveling Bd.; 898 F.2d 347, 355 & iia (3d'Cir. 1990): I .. , 309: -These distinctions are subject,to.'the caveat that "formalistic distinctions" should not prevail over substance. 910. The -types of cases cited by Loretto as per se takings we're as follows: Flood- ing—United States 4- Kansas City Life'Ins. Co:, 339 U.S. 799 (1950); Sangvinetti'v:. United States, 264 U:S. 146:(1924); United 'States v. Cress, 243'U.S.'316 (1917); United States v: Lynah; 188 U.S 445 (1903);;Pumpclly v. Green Bay Co., 80 U'S. (13 Wail'.) 166 (1871); telephone & telegraph lines—Southwestern Be11Tel. Co. of Webb, 393 S:W.2d 117 (Mo. Ct'App.1965); Western Union Tel. Co. v. Pennsylvania R.R., 195 UiS. 540 (1904); St.�Louisv; Westehi Union Tel.Co., 148 U.S. 92 (1893); utility lines—Lovett v. West. Virginia CenC�'Gtis' Co., 65; S.E. 196 (W. Va. 1909); overflights—United States v. Causby, 328 U.S. 256 (1946); permanent military:'guns directed over private land—Portsmouth Co. Y. United States, 260 U.S. 327,(1922); seizure of property—United States v. Pewee Coal Co., 341 U.S. 114 (1951). This content,downloaded from 137.150.34.41 on Wed, 07 Sep 2016 19:42:35 UTC All use subject to http.-//aboutjstor.org/terTs RIGHt TO SELL THE "IM"MOBILE HOME 205 thiid,parties:311 It explained that "[o]wnership would give the landlord rights,to the placement; manner; use',' and possibly the disposition of the installation.' The fact of ownership is':. -:1 not simply incidental. s312 In the case of the mobilehorne space regulations, the park owners au- thorized the installation of the mobilehomes and'control' their "place= ment, manner [and] use" for the purposes of advancing the returns from their ownership:"' - . . . The invasion=:in Loretto may also be distinguished, from the mo-' bilehome rent control on the basis that the cable TV occupation involved an occupatiomwhich extinguished all'nonpossessory as well as possess- ory uses. The, Court noted that,,in. the area occupied by the cable TV lines, the apartment owner "not only cannot exclude other s,•but can make no nonpos's`essory use of the property. s314 Under the'mobilehome space regulations, "the park owner retains the primary "nonpossessory" use of the property—the' righf to collect rent—which,''in' fact,is its primary function for park owners.. 'Loretto poinwtoa situation in which "even' though the owner may retain the bare legal right to dispose of the occupied space by transfer or sale; the permanent occupation of that space by a stranger will ordinarily empty the right of any value. "315 =In: contrast, in the case of the rho- bilehome park, the `permanenibecupatiori of that space by a stranger" creates substantial value'inthe form of a'secuieincome stream. In -fact, the occupation was proposed tiy'the park`'oviner for the purpose of creating value. One, commentator states:" "Indeed, where physical possession by others i ,the very1hature"of the enterprise carried on by-the'property owner,. `occupation'•,'not only doe's notinteifere*with 'investment backed expectations;?tit is the essence of them. 016, However, as previously indicated, because the regulations provide mobilehome owners with assignable permanent tenancies; they raise questions which the Court specifically declined to resolve in its consid- eration -'of the:occupaiion by the cable TV lines."'' Other Court opinions of the past two decades have also undercut the notion that the type of occupation authorized by the mobilehome space 311. Loretto, 458 U.S. at 440. 312. Id. at440 n.19. 313. Id.' 314. Id. at 436 (emphasis added). 315. Id. 316.'Manheim,�sup'ra note 276; at -961. - ' 317. See infra text accompanying notes 334. - This content' downloaded from 137.150.34.41 on Wed, 07 Sep 201619:42:35 UTC All use subject to hkp://about.istor.org/tei 206 THE URBAN LAWYER,,,! VOL, .24„ No. I WINTER, 1992 regulations falls into the,categories,targeted by:Loretto. They find:that there are takings only where "treasured" strands:of ownership have been destroyed by,the public action. In regard to the physical occupation addressed in Pruneyard Shopping Center v. Robins '118 the right to politi= cal expression in a shopping center, the Court commented, "[A]ppel-. lants have failed, to,demonstrate that the `right to exclude others' ,is so essential to the use or economic value of their property, that the state -authorized limitation of it amounted to a-`taldng'.',''l9 Penn. Central, Transportation Co. v. City of NewYarO?lendssupport to the, view .that mobilehome, rent and eviction regulations, do;not:fall. into .the.category of a physical occupation. The Penn Central Court concluded ,that a landmark preservation law was not a physical inva- Sion, 3", : and ,distinguished its circumstances from. United States: v. Causby, Z Where the CourLfound that overflights that destroyed the underlying land constituted a physical invas ion :32'.In Penn Central, the Court noted that "New York City -law has in nowise .impaired the present use of the Terminal, the Landmarks, Law neither exploits appel- lants' parcel for city purposes nor facilitates nor -arises _from anyentre- preneurial operations- of the, city.',"24 Similar-, conclusions may -be reached, about the mobilehome, space regulatory scheme. The mostfundamental weakness of the Hall analysis may; be,thatit relies on_aHations about,the economic characteristics, of the park; owner, mobilehome owner/landlord-tenant relationship in order to find; a per se physical taking. Loretto found that economic, consequences were irrelevant: "[W]hen the `.character of the governmental action' is a permanent physical occupation of the,property;,our cases, uniformly have found;a taking to, the extent of the occupation,,without regard to, whether the action ... has only minimal economic impact on the owner. „325 . .111 . , In contrast, the taking claim in Hall is anchored in the scope_of• the alleged economic consequences. Hall.states that a taking claim hasbeen presented because the ordinance has •"transferred,a;possessory. interest r 318. 447 U.S. 74 (1980). 319. Id. at 84. 320. 438 U.S. 104 (1978). 321. See id.- at 130-31. 322. Id. at 135 (citing United States v. Causby, 328 U.S. 256,(1946)).`; ' 323. See id. at 128 (citing United States v. Causby, 328 U.S. 256, 262-63 n.7 (1946)). 324. Id. at 135. 325. Loretto v. Teleprompter Manhattan,.CATV Corp., 458 U.S:.419, 434-35 (1982) (citations omitted). This content downloaded from 137.150.34.41 on Wed, 07 Sep 2016 19:42:35 UTC An use subject to http://aboutjstor.org/tert RIGHT .;TO,SELL THE "IM"MOBILE' HOME ,- ; , 207. ... this:interest consists.of the right to occupy -the property in perpetuity while'paying oely a frdcdon of 4*atit'is'wortii'in rent — ,32b The court distinguishes the mobilehome space rent control from apartment, rent controls on the basis that rent control gives,the tenant a right which is "transferable to others, [has] a market value, [is] traded in the -open market and [result : ul] a monetary wiiidfali:"3?7 The c&u f then rioter that "[t]his is not a minor difference; it is crucial: The fact that the tenant can sell his interest to'thir' d parties drastically affects th'e economic realities of the landlord/tenant relationship. Since Hall, the Supreme Court has issued an opinion which provided. clarification on'pei se takings analysis in th'e'coritext of lagdlord-tenant relations but specifrcally'declined to resolve the issues raised by Hall. In FCC v. Florida Power Corp: ,329 the U.S.:Snp eme; Court ruled that continued cable attachments to its utility poles by a cable TV company, after the state drastically reduced the rents; did' -not constitute "third ply" occupancy :330 .r In the Florida Powercase the U;S`.',Courbof'Appeeals concluded that the cable'TWcompanies were not invitees in the sense that they were not invited at the rate they were allowed to occupy their space: They "certainly. weren't •invited at thCrate imposed'by'the',FCC. In our opinion, the cable companies'- occupation of lorida-Power'spoles at the rate specified+by the'•FCC [which was'aboutone=quarter t}ie agreed' upon rate] is anything' but ,invited.""' However',! the Supreme Court rejected this basis for concluding that-theywere not "invitees?'; it is` the "invitation," rather thanthe "rent,' that niakes'the difference:332 326. ,Hall v. City of Santa Barbara; 833 F.2d 1270;-1276 (9th Cir. -4986) (emphasis added). 327. %d. 'at 1278'."� " 328. Id. at 1279 (emphasis added). In United States v. Sperry, I10 S. Ct. 387 (1989), the Supreme Court rejected the view that deductions ofapercentage of a monetary award constituted a physical appropriation of property. `-'Itis artificial to view deductions of a percentage of a monetary award as physical appropriations of property. Uulike'real or personal property, money is fungible." Sperry,. 110 S. Ct.'at 395. n.9: -A critical element of the taking analysis in Hall and.Pinewbod is the reduction in rent. 329.-480 U.S. 245 (1987)-. .330. I&,ae252-53. .' r . ,-331. Florida Powerv: FCC,.772 F.2d 1537;1543 (11th Cir. 1985). In contrast;;in the mobilehome owners',case,.rents increases have been regulated,: but rent were not substantially reduced.::.-, , %Mobile homerent-ordinances usually provide for rent rollbacks to levels,in effect before their adoption. Rollbacks of up to six months are typical. In some cases rollbacks, have been for periods of up to several years. The purposes of the rollbacks are to offset exceptional increases due to the tightening market and/or increases in anticipation of regulation. .. 332. Florida Power, 480 U.S. at 252-53. This content downloaded from 137,150.34.41 on Wed; 67 Sep, 2016'19:42:35 UTC All use subject to http://A6o6tj'stdi.orgttei 208 THE URBAN LAWYER ' VOL 24, No.. I WINTER 1992 Appellees contend,, in essence, that it is a taking under Loretto for a tenant invited to lease at a rent of $7.15 to remain at a regulated rent of $1.79. But it is the invitation, not the rent, that makes the difference. The line which separates, these cases" from Loretto is the unambigouous'distiiiction between a commercial lessee'and an'inter- ' Loper with a'governmeht license."' In contrast; under the Hall and Pinewood analysis,it was the "reduced rent" that was central to the analysis. While the Court's reasoning in Florida Power may distinguish rent, controlled tenancies from physical takings, the Court,specifically, stated that it was not,deciding "what the application of Loretto ... would be if the FCC in a future case required utilities, over objection, to enter into, renew, or refrain from terminating pole attachment agreements; s334 . 3. "COMPULSIONS" TO RENT OUTSIDE OF THE MOBILEHOME CONTEXT ' While Loretto may provide the closest "semantic" link to the issues raised in Hall based on the permanent physical occupancy question, cases involping "compulsions" to rent may -raise the closest substantive link,to the issues raised by the:mobilchome space rent,controls.335 Such "compulsions" have taken ,varying forms:- Some have com- pelled landlords to continue to rent space that is tenant occupied.:Others have re,quired .the rental; of vacant space. Such laws maybe seen as comparable to the mobilehome,space regulations in the sense that,, like the mobilehome_regulations, .they require that; the property.be put to. rental use, as well as regulating the rent that. may be.charged: a. "Compulsions.:' to Continue to Rent: Pinewood comments that, the Supreme Court has distinguished the rent and eviction control ordi- nances that it has upheld from permanent occupations on the basis that the laws it considered either did not compel any landlord to rent or were only temporary measures. 116 A World War I case, Block v. Hirsch,"7 333:1d. (emphasis added). 334. 480 U:S. at 251 n.6. 335. Another type of regulation that may parallel mobilehome space rent and.evic- tions in a significant way are historic preservation laws. They require a permanent continuation of the current use of the property. As the California Supreme Court explained: "Ordinances which prohibit -demolition of historic monuments, such as the one upheld in Penn Central ... !not only.limit the freedom of choice of the owner as to the use of his property, and as to the type of business or occupation he may engage in upon the premises ..;::" Nash v. City of Santa,Monica; 688 1?1&894', 899-900 (Cala 1984): . 336.: Pinewood Estates v. Barnegat Township Leveling Bit., 898 171d 347 (3d Cir. 1990).: ,,:. . 337. 256 U.S. 135 (1921). This content downloaded from 137.150.34.41 on Wed, 07 Sep 2016 19:42:35 UTC All use subject, to htip://about jstor.crg/terms RIGHT TO SELLTHE`-`IM"MOBILE HOME -- 209 is *cited for the propositionthat a rent control measure was valid only because it involved a "temporary measure.,A limit in time, to tide'over a passing trouble, well may justify` a lain that could not'be upheld as a permanent change.''33S However, that -conclusion was pursuant to a doctrine that has since'been discarded,'the rule that price regulations and rent controls are only valid in an'emergency.39 Pinewood goes on to'notIe that, in a challenge to World War H rent regulations, the Supreme Court pointed out that " `[wJe are not dealing here with a'situation that involvesIa "taking" of property ..... [N]oth- ing in this Act shall be construed to'require any person '. .. to offer any accomodaiions for ient'.' s340 But, that language onlyseems tdindidate that landlords could not be -compelled to rent vacant units, rather than indicating that they could terminate existingtenancies. This decision was in the contezi of the'understanding'thatthe rent control measure in issue was an einergency'nleasure'that'would terminate within a few years.:, , In two cases within the past decade, federal courts upheld ordinances that prohibited evictions for owner occupancy for the'life of the tenant, but did not grant transferable tenancy,interests. In one case;'Ioeterman v. Town of Brookline,34"a district coutt'upheld'a Brookline, Massachu- setts,`, ordinarce'that prohibited evictions'from' condominiums for owner-occupancy'by landlords 'who purchased after the adoption of the restriction'.342 The court reasoned'that the,'landlords "had no legitimate expectation' of occupying their condominium at the time they purchased it. ,,341 . In the other case, Troy Ltd. v. Renna,3" the U.S. Court of Appeals for the Third Circuit rejected the view that a grant of lifetime tenancies to senior and disabled tenants who were in possession at the time of the 338. Pinewood, 898,17:2d at 355:n.1 (quoting Block v. Hirsh, 256 U.S. 135, 157 (1921) (emphasis added): .1. 339. See. Kenneth K. Baar &,W. Dennis Keating, Die last Stand of Economic Substantive Due Process—The Housing Emergency Requirement for Rent Control, 7 URB. LAW. 447-509 (1975), and subsequent state supreme court decisions specifically ruling that an emergency was not a prerequisite to the constitutionality of rent controls as cited in Kenneth K. Baar, Guidelines for Drafting Rent Control Laws: Lessons of a Decade, 35 RUTGERS L. Rev. 723, 755 ni114 (1983). .. :- 340. Pinewood; 898 F.2d at 355 n.1,(quoting Bowles v. Willingham, 321 U.S. 503, 517 (1944)). _ 341. 524.17. Supp. 1325 (D. Mass. 1981). 342. -See id. at. 1326. 343. Id. at 1329 (emphasis in original): 344. ,727 F.2d 287 (3diCir. 1984). This content downloaded from 137.15034.4l'on Wed; 07 Sep 2016 19:42:35 UTC All use subject to fifp://aboui.jsi6r.ori/terms 210 THE URBAN LAWYER VOL. 24, NO..l WINTER 1992 condominium conversion constituted a taking pursuant to the reasoning of Loretto. 345 Courts have also. upheld laws which require apartment owners to remain in the rental business. In Nash v. City of Santa Monica',, the Caufomia, Supreme Court upheld a prohibition of apartment demoli- tions.347;Nash clairned that the prohibitions and evictions constituted a form of involuntary servitude,3a. but did not,raise any taking claims. Nevertheless, the court raised..and then rejected the possibility of a takings claim using the tests applied in Penn. Central -interference with owner's primary investment -backed expectations and, fair;return.349 Such ordinances were seen as an "adjunct to limitations upon eviction which have generally been upheld by the courts. "350 The, Massachusetts Supreme Judicial.Court concluded,that the.right to curb removals is essential to the maintenance of the rental housing stock: "If the power to control rents is to be anything. more than an 1.interim measure effective for only the short period needed to convert the entire rental housing stock, it must include by implication the.power to make reasonable regulations governing, removal1 1.s from the rental housing market. "351 "'la On the other hand, ,after,Hall, a federal trial,court.in the,,Ninth Circuit struck down a commercial rent control ordinance, which was comparable to mobilehome rent regulations, in that it required landlords to continue to rent to'tenants who made substantial -investments in their premises and effectively;granfed them transferable occupancy rights at a controlled rent 352In Ross v. City ofBerkeley,353 a U.S. District Court 345. Id. at 300 (citing Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982)). 346. 688 P.2d 894 (Cal. 1984). 347. Id. at 896. In response to the decision, the state legislature adopted the "Ellis Act," which authorizes landlords to cease renting their units: CAL.'Gov'T CODE §§ 7060-7060.7 (West 1986). The authorization only applies if the landlord ceases to rent all units in a building. Id. § 7060.7(3). 348..Nash, 688 P.2d at 898. 349. Id. 350. Id. at 900 (citations omitted). ' 351. Flynn v. City of Cambridge, 418 N.E.2d 335, 338-39 (Mass. 1981). ..352. See Ross v. City.of Berkeley, 655 F. Supp. 820(1987). The Berkeley ordinance contained a vacancy decontrol provision. Id. at 826. However, vacancies are difficult to track in a commercial situation since occupancy is tied to a paper entity rather than specific individuals. Id. at 837-38. However, the tenancy may beheld by a corporation which has a perpetual life under California law. Id. at. 837. ;.. '. 353. 655 F. Supp. 820. Subsequently, the state instituted'a bail'on commercial rent control ordinances. CAL. CIVIL CODE §§ 1954.25-1954.31 (West 1982). This content downloaded from 137.150.34.41 on Wed, 07 Sep 2016 19:42:35 UTC All use subiect to hup flabout jstonorglterms RIGHT TO SELL THE "IM"MOBILE HOME 211 ruled that the regulation constituted a taking because iTdid'not permit evictions for owner-occupanc354y. ' b. ' `Compulsions" to Make Vacant Units Available for Rent In a decision subsequent to Hall but prior'to Pineivood, a U. S. District Court upheld a Hoboken; New Jersey, ordinance that required landlords to rent'vacaut units:'55 The court applied a regulatory taking standard and. concluded that there was no taking because there was no'evidence that the landlords had been' denied' all economically, viable use of their property.356 Furthermore, the courfubted, landlords had the option of converting their units to`condominiums in lieu -of renting 357 However,'- in a recent case that has received widespread attention, Seawdll Associates'v. `City'of New York; 5' the New York Court of Appeals struck down a New York City ordinance which required own- ers of Single Room Occupancy (SRO) multiple dwellings to rehabilitate and rent up vacant units at controlled reiits.351 The court ruled that the loss of the right io,exclude-and the coerced rental to "strangers" constituted a physical"taking.360' " ' Blit, the court went on to' distinguish this case from other cases'in which landlords were compelled to continue to rent on the basis thatthe other cases merely involved restrictions imposed on existing tenancies wherethe landlords had 'voluntarilyput their piopertiestouse forresidential housing. .. iTjhoseregulations did not force the dwners;'in the first instance, io'subject their'propehieg`to a use which they neither planned nor desired."' - In this case, the rent -hp provisions were particularly onerous because they were preceded by a municipal policy, relied'bpon by the purchas- ers, of encouraging the demolition and redevelopment of, SRO'$ 362 The court concluded that,this exclusion was "far more offensive and invasive than the easements -in KaiserAetna or Nollan or the installation of CATV equipment in Loretto."'63 Hall and Pineivood distinguished their facts from Troy and other landlord -tenant cases on the basis''that the other cases did not authorize 354. Ross, 655 F. Supp. at 836-39.,'", " 355. Help Hoboken Housing y. City of Hoboken_ , 650 F. Supp. 793 (D.N.J. 1986). 356: See id. at 797-98. 357. Id. at 798. 358. 542 N.E.2d 1059,(N.Y. 1989)..- 359: See id. at 1065. 360. Id. at 1072-74. 361. Id. at 1064-65 (emphasis added). 362. See id.' at 1072-74'. 363. Id. at 1064. This content downloaded from 137.'150.34.41 on Wed, 07 Sep 2016 19:42:35 UTC All use subject to hftp://about.jstor.org/tems 212 ' THE URBAN LAWYER , VOL. 24, NO. I WINTER 1992 a permanent physical occup' ation.' In order to reach this conclusion,: these decisionsdistinguished between transferable tenancies and exten- sions of tenancies ("invasions',), that may last the remainder of a life- time.365 As a; practical matter,, the, difference may. be small for the landlord. In cases,where tenants remain as long as they live, the greatest, portion of the value in a property is taken up by the occupancy.rights within a ten or twenty year period.366 4. IS THE `.'WINDFALL" OR "PREMIUM" THE PROPERTY OF THE PARK OWNER? The other central.prong to:the taking conclusions in Hall and Pinewood is that the "premium" or ".windfall". (the benefit of the regulation) is the property of the park owner.367 In Pinewood, the court explained; The operationof the Barnegat Ordinance in connection with state law has created valuable property interests for which [the park owners] have not been compensated. .. This is nota casein which a property owner has simply been told that he cannot do something on his property or that he must'use his property a certain way. The situation is aggravatedbythe fact that the transfer is accompanied by the payment not to the landlord but to the departing tenant'of what amounts to rent for the use of the pad. This "rent" is for the possessory, interest of.the landlord. Thus, this is a case where other persons, tenants, have been granted interests in property which properly belongs to . the landlords --W" a. Defining Property. Two basic and competing precepts of takings doctrine' are that not all potential interests constitute property and,that constitutional protections against takings cannot be nullified simply by redefining what constitutes property. One commentator notes the perils of definition: Justice Jackson's adoption of the Bentham principle, that property is only that: economic advantage that has the sanction of law, is a description not a guide. If this pririciple were followed to lts'logical conclusion, government could redefine property rights as'subordinate"to'all government claims and then destroy, take, or damage without;compensation because no "property rights" were taken.'.", , 364. Hall v. City of Santa Barbara, 833 F.2d 1270,1278-79 (9thCir. 1986); Pinewood Estates v. BarnegatTownship Leveling Bd., 898 F.2d 347, 333-35 (3d Cir. 1990). 365. City of Santa Barbara, 833 F.2d at 1278-79; Bamegat Township, 898 F.2d at 333-35. 366. If the interest rate is ten percent, the present value of a reversion at the end of ten years is thirty-eight percent of its current value; at the end of twenty years it is fifteen percent of its current value; and at the end of thirty years it is six percent of its current value. Annual Compound Jiaerest Tables in STEPHEN A. PHYRR a•. JAMES R. COOPER, REAL ESTATE INVESTMENT 760 (1982) In addition, the income stream during the occupancy period would have value. 367. See Ball v. City of Santa Barbara, 833 F.2d 1270,1280 (9th Cir. 1986); Pinewood Estates v. Bamegat Township Leveling Bd., 898 F.2d 347, 353 (3d Cir. 1990). 368. Pinewood, 898 F.2d at 353. 369. Allison Dunham, Griggs v. Allegheny County in Perspective: Thirty Years of Supreme Court Expropriation Law, 1962 Sup. CT. REV. 63, 81. _ Trus content downloaded from 137.150.34.41 on Wed, 07 Sep 2016 19:42:35 UTC All use subject to http9/about.jstor.org/terms RIGHT'TO $ELL THE "IM"MOBILE HOME 213 On the other hand, if! states `were left without the power to define pioperty,'all interests could'becorne protected property interests! In between these principles is the general rule that property interests are the product,of law.and understandings -that guide our society: "[P]roperty,interests'! .. are not created by the Constitution: Rather, they ,are; created an d'jheir'dimerisioris. are defined by existing rules or understanding that.stem from, an independent, source such,: as state laW.,,370 ' In a case,involving wajr, ter rights, the Supreme.Court explained that: only those economic advantages are "rights," which have the law back of them, and only when they are so recognized may, courts compel others to forbear from interfer; ing with them oi'to compensate for their inva'sion.... We cannot start the process of decision by calling -such' a claim as we have here a "property right";' whether iois a property, right is really,the question to'be. answered.'' , 370. Ruckelshaus v.. Monsanto Co., 467-U.S: 986, 1001(1984) (quoting Webb's Fabulous Pharrukies,'In'L'Clleckwith, 449'U.S. 155, 161 (1980)). ,'Even'if the"premium"'or '"windfall" isth'elproperty of the park'owne'r; a basic precept of the. police powenrsdhat respective,property, rights of parties in economic relationships can be adjusted. In fact, such a power is at the essence of the legislative power. The Supreme Court has repeatedly upheld legislation that has reallocated `prior "rights and burdens." - - . ^• • I • I ' It may be argued that in the case of mobilehome parks, the park owners have benefited from mobilehome'owners'substantial investments in flied improvements in their parks. As a result, they have had a secure income and their park spaces have had an increased rental value. - - - - - In a case involving Black Long Benefits; the Court ruled that Congress could allocate costs associated with work related disabilities to employers "who have profitedirom the fruits of [their eniployees'1'labor."'Usery v. Turner Elkhorn Mining Co., 428 MS. 1, 18 (1976). This reallocation altered the arrangements that governed the, original formation of those employmenCrelatiouships and the parties respective expectations. In fact, the Supreme Court has ruled that "it cannot be said that the Takings Clause is violated whenever'legislation cequ'ires oneperson'to use his or her assets for the benefit of another." Connolly v. Pension Benefit Guar. Corp., 475 U.S. 211, 223 (1986). -In Connolly, the Court upheld legislation which created new pension liabilities.for past employment. It noted that "the United States, has taken,nothing for its own use, and only has nullified a contractual provision limiting liability by imposing an additional obligation that is otherwise within the power of, Congress to impose." Id. at 224: 371. United States v. Willow River Power Co., 324 U.S. 499; 502-03.(1945)[ In a concurring opinion in Pruneyard Shopping Cit. v. Robins, 447 U.S. 74 (1980), Justice Marshall commented: The constitutional terms ''life, liberty, and property" do not derive their meaning solely fromthe'provisions of positive law. They haven' normative dimension as well, establishing a sphere of piivate.autonomy which government is bound to respect. -Quite serious constitutional questions might be raised if a4egislature attempted to abolish certain categories of,common-law rights iri-some'general way. Indeed, our cases demonstrate that there'are limits on governmental authority to abolish "core" common-law rights; ... at least without a, compelling- showing of necessity or a provision for a reasonable alternative remedy. Id. at 93-94'(Marshall; J., concurring) (footnotes omitted).' This content downloaded from137.150.34.41 on Wed, 07 Sep 2016 19:42';35 UTC All use'subject to'hapWabout.jstor.org/terins 214 THE URBAN LAWYER VO.L. 24, No. 1 WINTER 1992 In United States v. General Motors Corp.,7,' the Supreme_Court ex- plains that property rights inhere in a citizen's relation to things, rather than the actual physical thing., It is conceivable that [the term .'property^:in the takings clause] was used in its vulgar and. untechnical sense of the physical,thing with respect to which the citizen exercises rights recognized by law. On the other hand, it may have been employed, i¢ a more accurate sense to denote the group of lights inhering in the citizen's relation to the physical thing, as- the right to possess; use and'dispose of it: In point of fact, the construction given the phrase has been the latter." "In the niobilehome context; the propeity'interests alleged to have been taken are the space rent above the rent -controlled rent and the value created by the assignability of the mobilehome leases'. Pinewood states ;that "[t]he operation.of.the Barnegat,Ordinance in connection with state law has created 'valuable property interests for which appel- lants have not been compensated.s34 In Eamiello v. Liberty Mobile Homes Sales,35 the Connecticut Su- preme Court found that these "'economic advantages"'could be seenas products of the state created "near-monopolystatus of the [mobilehome park] industry. s36It ruled that, no constitutional principle was violated by the state's selection'of the tenant "as "the_recipientof this economic advantage arising from the near -monopoly status of the industry."'77 Ip Yee v.,' City of Escondido, . the"California Court of Appeals' re - 372. See United States,v. General, Motors Corp., 323 U.S. 373, (1945). 373. Id. at 377-78., 374. Pinewood Estates v. Bamegat Township Leveling Bd., 898 F.2d 347,.353,(3d Cir: 1990). , . '375., Eamiello v. Liberty Mobile Home,Sales, 546 A.2d 805 (Conn. 1988). 376. '/d;' at 820. 377. Id. Ina dissent from an opinion upholding a provision in San Jose's rent control ordinance which incorporated the particulai,tenant's income as -a factonin,the rent setting process, Justice Scalia commented: Of course all economic regulation effects wealth transfer. When excessive rents are forbidden ... landlords as a class become poorer and tenants as a class (or at least incumbent tenants as a class) become richer. Singling out landlords to ,be the transferors may be within our traditional constitutional notions of fairness, because they can plausiblybe regarded as the source or the beneficiary of the high -rent problem: .. .._ Pennell v. City of San Jose, 485 U.S. I, 22 (1988) (Scalia, J., dissenting). Before mobilehome rent controls1 1 were considered, one commentator `stated: Zoning restrictions have given park owners oligopolistic controlof mobile home rental sites in many communities. This control of the market permits the abuses catalogued above. Since government, through restrictive zoning, has helped make these abuses possible, it seems unconscionable for government to,refuse to protect helpless tenants from the resulting overreaching by landlords. Stubbs, supra note 162, at 234. 378. Yee v. City of Escondido, 274 Cal. Rptr. 551 (Cah Ct. App.;1990). This content downloaded from 137.150.34.41 on W4.07 Sep 2016 19.42:35 UTC All use subject to http://about isior.org/te= RIGHT TO SELL THE "IM"MOBILE HOME 215 jected the view that a'compensable,taking occurs "[w]here a govern- ment regulation purports to reduce the excessive and'unfair price to a' reasonable level, the mere fact that the price for complementary goods and services rises as�a result does not transmute an otherwise reasonable price regulation -into a conipensable`taking.' "379 b. Income in Excess of Legal Price Limits Is Not "Property Supreme Court treatment of just'compensation and damages issues in th"e context of price regulations also lends support to the'view that the "premium" associated with the rent regulations and'the possessory interest is not the property of the park owners. The Court has repeatedly taken the position that there is no right to compensation• for the taking of revenue in excess of that authorized under the price controls and that market value is'not the appropriate measure of "just" compensation in cases involving shortages resulting from public action .310 In essence, "excess" revenue has not been viewed as property. In one World War II case; the Supreme Court'noted that "it has refused �to make a Tfetish even of market value, since that may -not be the best measure of value in some casesa381 Instead, the'Court held that the right to just compensation'for a tugboat that was requisitioned by the government did`not include the "enhanced price"' created by the war. . In time of war ... the demand of the government ... causes the market to be an unfair indication of value.... It is not fair that the government be required to pay theenhancedprice which its demand alone has created.... That is a value which the government itself created and hence in fairness should not be required to pay."' In another World Wai;II case, three Justices concluded.ihat "under controlled -market conditions, the, constitutionally established maxi- mum price is'the only proper standard of `justcompe'nSat* , ,383•But; another three declined to reach this issue and two Justices concluded that "the constitutional guaranty of just compensation for -private property taken for public use becomes meaningless if the Government may first, under its `war powers;' fix the market price and then make its controlled figure the measure of co mpensation.s384 379. Id. at 553. 380. United States v. Virginia Elec.,& Power Co., 365`U.S.•624 (1961); United States v. Commodities TradingCorp., 339 U.S.,d21.(1950). 381: United States v. Cors, 337 U.S. 325; 332 (1949). 382. Id. at 333-34. 383. United States v. John J. Felin & Co., 334 U.S. 624, 643• (1948) (Reed, 7., concurring). - 384. Id. at 651-52 (Jackson, J., dissenting). This content downloaded from 137.150.34.41 on Wed, 07 Sep 2016 19:42:35 UTC All use subject to h4,.//aboutjstor.org/tel 216 THE URBAN LAWYER VOL. 24, No. .1 WINTER 1992' -Subsequently, the Court explained that regulated, prices, rather than free market prices, may be the measure of value since the price controls compensate for abnormal conditions.,' C. "Windfall" Not the Measure of Damages. In.Hall,.the,`.`wind-- fall" to the beneficiary became the,measure of damages'3B1, in lieu of the traditional, standard of the damage—the loss to, the party suffering from the taking.387In the case.of mobilehome rent controls, this distinc- tion is critical because, as Pinewood acknowledges,3B8 the park owner would not be significantly better off if the rent regulations remained.in Place but the mobilehome, owners did not have the right to sell their homes in place and,therefore, lose their transferable;possessory, in- terest. 3 89 ... . In Boston.Chamber of Commerce v. City ofBoston,390 the Court ruled, that the measure of damages, was dependent on what the. owner. has: "lost," rather than on what the,taker has "gained. s391 The Constitution "requires that an owner of property taken should be paid,for what is taken.from him. It deals with persons, not with tracts of land. And the: question isWhat has•the owner lost not what"has,the taker gained."'. This. rule has been applied to,the,,detrimentof government as well, as; to its benefit:,In a case involving.the question of whether a taking of possession of a laundry for three years for wartime purposes required 385. United States v. Commodities Trading Corp., 339 U.S. 121 (1950). 386: See Hall v. City of Santa Barbara, 833 F.2d'1270, 1278 (9th'Cir. 1986). Plaintiffs claim rested on the fact that mobilehomes sold at far above "blue book" values. Id. a0273. "The blue book is the Kelley Blue Book for Manafacmred Housing (Mobile Homes), published by the Kelley Blue Book Company of Costa Mesa;'Califor- nia. Like the similar blue book for automobiles, it is the standard reference for prices of mobile homes." Id. of 1274 n.5. ' In Azul Pacifico, Inc: v:'City of Los Angeles, 740 F.- Stipp: 772 (C.D.'Cal. 1990); the effect of rent regulations, was measured by comparing the differences between the Blue Book values and average values,for particular. types of mobilehomes in rent controlled and noireint controlled situations rather than by comparing the difference between Blue Book,value and market values. See id. at 779. - � >', 387. See, e.g., United States v. Causby, 328 U.S. 256 (1946). " `It is the owner's loss, not the taker's gain, which is the measure of the value`of the property taken.' " Id. at 261 (quoting United States v. Miller, 317 U.S. 369 (1943)). See also United States v. Virginia Elec. & Power Co., 365 U.S. 624 (1961); United States v. Twin City Power Co., 350 U.S. 222, 228 (1956). 388. See supra text accompanying note 248. .389. "At times some elements included in the criterion of market value have'in fairness been excluded, as for example .. where it has a special value,to the taker because of its peculiar fitness for the taker's project.",United States v. Cors, 337.U!S. 325, 332 (1949). 390. 217 U.S., 189 (1910).' 391. Id. at 194. 392. Id. at 195. This content downloaded from. 137.150,34.41 on Wed, 07 Sep 2016 19:42:35 UTC All use subject to http://about jstor.grg/fe RIGHT TO SELL THE "IM"MOBILE HOME' - 217 compensation for the lost clientele, which had value to the owner but not the taker, the„Court declared:, . Because gain to the taker, on the other hand; may be wholly unrelated to the depriva- tion imposed upon,the,owner, it•.must also,be rejected as a.measure of;public. -obligation to requite for that deprivation. The value compensable under the Fifth Amendment, therefore,is only that value'wiiich'is ca able of transfer from owner to owner ,and thus of exchange for some equivalent. Thedissent opined'that "[t]he truth'of the matter is that the United States, is being forced to pay not for what it gets but for,what the pwner 1oses.,,3vd 5. IS THE APPLICATION OF THE PER SE TAKING 'RULE TO'M6hItEHOME RENT CONTROLS CONSISTENTVITH THE PURPOSE AND •HISTORY OF THE TAKINGS DOCTRINE?,. A basic tenet of legal interpretation is that laws shall be interpreted in a manner designed,to•carry out their intent. This theme is also central to constitutional construction. Beyond these central principles the only uni: form agreement about the meaning of the Takings Clause is that there has; been no agreement. A leading commentary on takings,:whichds typical of,the scholarly literature,on the subject, states that,','the predominant characteristic of this area of law is a welter of confusing and incompatible, results:21'95 Commentary on the -Takings Clause can be:described as a' series of unsuccessful efforts.to find a central thread in takings doctrine. Here, it is suggested that the constitutional analysis depends on the intent and purposes of the "just compensation” requirement,the protec= tion of citizens from:"unfair or arbitrary government;" and,"uncon- trollable power'over the private fortune of every, citizen,. •?396 "The idea is that compensation is_required when the..public helps itself4o good at private expense; -but not when, the, public. simply requires one of its members to stop making a nuisance of,,himself." 39.7• The mobilehome space rent' regulations: insure a -fair retum_while preventing!the abuses that flow from the somewhat unique„economic interrelationships be- tween mobilehome ownership,and park ownership,, _ 393. Kimball Laundry Co. v. United States, 338 U.S. 1, 5 (1949) (citations omitted). 394. Id. at 23 (Douglas, J., dissenting). 395. -Sax, supra note 280, at 36. 396. Id. at 60 (latter passage gtioting 2'JOSEPH STORY, CONSTITUTION 547-48 (4th ed. 1873)). 397. Frank I. Michelman, Property Utility and•Fairness: - Comments on the Ethical Foundations of Just Compensation IavJ, 80 HARv: ,L. REV. 1165; 1196-(1967). This content downloaded from 137.150.34.41 on Wed, 07 Sep 2016 19:42:35 UTC All use subject to http://aSout.jstor.org/teiTns 21,8 THE URBAN LAWYER VOL. 24, NO. 1, WINTER 1992 VII.. Conclusion Currently, the relative legal status of hundreds of thousands of'mo- bilehome owners and thousands of investors turns on a,semantic debate overwhat constitutes a "permanent physical invasion." AAs government regulation, has become increasingly varied in form, constitutional scholars have searched without success for coherent ap- proaches to the taking issue. However,, one unity, among the analyses is that"none'of them have suggested) per se taking'approach based ion a distinction between physical rnbasions and other types of government actions, as was adopted in Loretto. One of the most respected commen- taries on taking analysis concludes that a formalistic physical invasion concept is "preposterous": "For constitutional questions to depend on such formalities is, as these cases demonstrate, � preposterous. The formal appropriation or physical invasion theory should be rejected once and4or all."398 " I � . If the drafters of the Constitution had attempted to develop a formal definition.of a taking, the courts would have been forced to develop a' body of exceptions as its literal terms became unworkable; as occurred in the case of the Contracts Clause: When -the courts :of_the, nineteenth century tried, the formalistic "ap- proach of limiting takings to situations involving actual physical occupa- tions, they created absurd results:"lAsa result;"state legislatures were compelled to redefine takingsto,include,situations in which property was "damaged" by public action400 and courts were compelled to re- formulate their analysis to allow for compensation in situations in which the use and value.of property were destroyed even though -it was not, physically touched by public action.,, Loretto undertakes the task of formulating.a definition when history has made itclear, that definitions -cannot resolve taking issues. Hall and Pinewood illustrate the absurdity of -formalistic approaches to takings analysis. They adopt the flip side'of a type of analysis that failed to lead to reasonable results in•the nineteenth century; The old analysis -used' the mechanical approach of making physical entry a prerequisite to taking. The new approach makes a permanent physical occupation con- stitute an automatic taking. As one commentator noted: 398., Sax, supra note 280, at 48. See also Michelman,. supra note 397, at 1184-90 fora critique of formalistic physical invasion theories. 399.-. See supra text accompanying notes 279-83. - '400.'See,supra text accompanying note 286. This content downloaded from 137.150.34.41 on Wed, 07 Sep 2016 19:42:35 UTC All use subject to http://abou.tjstor.orgttgms RIGHT Tb SELL THE "IM"MOBILE HOME219 If "permanent physical occupation" constitutes a per se taking; no state interest can outweigh the impact on the property owner's interest. But, it hardly�seems reasonable ,that a possessory takings claim is made out simply because theright to reverter (or right to exclude) is abridged: There mustbe'moie to it. That more is an econoriuc analysis of.the law's impact, This vis cleaily�required in regulatory taking cases: Avoidance of it in possessory taking cases obfuscates Mkingstheory:401, -J, Hall and Pinewood have transformed takings analysis into a semantic debate. Up;to now; two federal circuit courts of appeal have'conchided that 'a'pe,rmanent physical inv`asion'occuried.402' Numerous state Opel- late"courts and trial 'courts have reached theopposite view about this technical" question.403 In order to reach their conclusions that a physical taking has'occurred, Hall and`Pinewood: " i 1. Convert �the right to charge in excess of regulated rents and the right to prohibit assignments of tenancies into physical -property. I ' .2. Determine that. the, rights to,rents in;excess of regulated levels (which may be "quasi;'-rents),and the rights to the,benefits of space rental assignability are the . property, of mobilehome,park owner. - 3. Use the.`tbenefit.to the taker'.' rather than the "value lost to the party as a consequence of the regulation" to establish the, damages component of the "taking." 4. Read Loretto in isolation from the vast body, of Supreme Court analysis of takings doctrine. Hall and Pinewood also run countemb the basic power of government to curb" monopoly -type abuses. Up'to this'time igulatiori`s'that protect against monopolies have been considered,bonstitutional, piovided they pemut property' o"wners'a`fair- return.- -- Me mobilehome space -rental regulations of the past two decades constitute'a readjustment of benefits and burdens in response to the monopoly -like realities of the park owner-mobilehome owner relation- ship. They involve a fundamental, institution -home ownersliip—and •a situation in which the.tenants are immobile homeowners with an invest- ment that is three times as great as the investment of their-landlords.405 These relationships were created by the park owners in order to develop their land investments into profitmaking ventures. It is understandable that park owners would prefer not to be, severely regulated, especially as.to,such• basic matters as ,the rents -that they 401. Manheim, supra note 276, at 1013. '4M See Hall v: City of Santa Barbara, 833 F.2d 1270 (9th Cir. 1986)¢Pinewood Estates v. Bamegat Township Leveling Bd., 898 F.2d 347 (3d Cir. 1990). 403.' See, e.g., supra text accompanying notes 247- 266: 404. See, e.g., Munn v:'Minois, 94 U.S. 413 (1887)'. 405. See supra note 12. 1 , This `content downloaded from 137.150.34.41jon Wed, 07 Sep 2016 19:42:35 VPC Mime subject to hup://about.jstor.org/ter 220 THE URBAN LAWYER. VOL. 24, NO. 1 . WIN,TER 1992 charge and the assignability of the.rental interests in their spaces. How- ever, their invitation of immovable investments, with the understanding that these investments would be th_ a shelter and major asset of 1ow- and moderate. -income. households, made the. regulations that followed virtually inevitable.406 The purpose of the just compensation requirement is to protect indi- viduals from government oppression and to,ensure that the public does not enrich itself at the expense of individual property rights..The.pur- pose of the.mobile home space regulations is to protect., individuals from the exploitation of monopoly -like relationships. Turning these regulations into takings is to turn the taking concept on its head. Ina recent mobilehome case,4°' in which the court opinion was written by the author of the Hall opinion, a concurring opinion characterized the Flall analysis as "metaphysical": ` I concur under the compulsion of precedent, but for the record I want to note that I have not forgotten the difference between the physicalandthe metaphysical. Hall reached a commendable legislative resultby calling a'regulatory ordinance a physical taking. I am in somewhat the same position as I found myselfu�on fust`reading Roe v. Wade applauding the result but 'dismrbed by the method. ' In Hall and Pinewood; -two federal circuit courts conducted a "semantic bypass operation" in order to evade the balancing tests which the mobilehome space regulations have repeatedly withstood. Loretto addressed itself to the "obvious fact" of a permanent physical invasion. Hall and, Pinewood. formulated •a concoction, composed of economic consequences in order to find, a, physical;ingasion..Clearly, the "obvious fact". of a permanent physical invasion is a missing element.in,the finding that a mobile home space regulation, scheme May be, a per se taking. The fact that numerous .appellate courts (have concluded that such schemes do not, constitute permanent physical invasions. and.that the Supreme; Court specifically. declined to address the issue, in:thc,Zorida Power409.case are, testimonials to the lack of '406. One commentator stated: [Nlo mobile home purchaser would invest 10,000 aollais for a mobile home unless he had a place in which to locale that mobile home. The assertion that a mobile home tenant may at any time be evicted and his investment made worthless for no valid reason is contrary tothe very purpose of the transaction. Kenneth Meiser, Litigating on BehalfofMobile Home Tenants, 5RUr. CAM. L.J. 453, 468 (1974).' ' .. I . 407. Sierra Lake Reserve v. City of Rocklin, 938'F.2d,951 (9th Cir. 1991), 408. Id. at 959 (Goodwin, J., concurring) (citations -omitted). . 409. See supra text accompanying note 334. - This content downloaded from 137.150.34.41 on Wed, 07 Sep 2016 19:42:35 UTC All use subject to http://ahoutjstor.org/tenns RIGHT TO SELL THE "IM"MOBILE HOME 221 an "obvious fact' in this case .4'o A return to the use of a balancing test in order to evaluate the constitutional issues raised by the mobilehome space rent and eviction regulations would achieve the purposes of the takings clause and take the analysis out of the vagaries of definitional debates. 410. Courts may came to opposite conclusions about whether a taking has occurred. However, one judicial approach is not reasonable by any standard. That would be to permit more delay in resolution of this issue than is necessary. Hundreds of thousands of mobilehome owners and thousands of park owners should not be held in limbo, stuck on the reef of judicial irresolution, buried under doctrines that in effect justify the creation of a judicial maze that continually defers substantive decisions until another day. This content downloaded from 137.150.34.41 on Wed, 07 Sep 2016 19:42:35 UTC All use subject to http://about.jstor.org/te= ]19 Chapter 5.72 MOBILE HOME RENT STABILIZATION Chapter 5.72 MOBILE HOME RENT STABILIZATION Sections: 5.72.010 Purpose. 5.72.020 Findings. 5.72.030 Definitions. 5.72.040 Applicability of chapter. 5.72.050 Exemptions from this chapter. 5.72.060 Permissible rent increases. 5.72.070 Automatic annual increases based on increases in the Consumer Price Index. 5.72-080 Allowable rent following the expiration of an exempt lease. 5.72.090 Allowable rent increases upon in-place transfers of mobile home ownership. 5.72.100 Fair return standard. 5.72.110 Procedures for review of fair return petitions. 5.72.120 Rent increases for new capital improvements. 5.72.130 Rent reductions for service reductions. 5.72.140 Waivers. 5.72.150 Information to be supplied by the park owner to tenants and prospective tenants. 5.72.160 Information to be provided by the city to the public. 5.72.174 Resident representatives. 5.72.180 Rights of prospective tenants. 5.72.190 Annual registration and other notices requires{ from owner, 5.72.200 Retaliation prohibited. 5.72.210 Excessive rents or demands therefor. 5.72.220 Excessive rents—Civil penalties. 5.72.230 Rules and guidelines. 5.72.240 Authority of city council to bring civil action to compel compliance. 5.72.250 Administrative service fees. 5_72 .2^00 Appeal of decisions pursuant to this chapter. 5.72.270 Severability. 6.72.010 Purpose. A. It is the purpose of this chapter to: 1. Prevent excessive and unreasonable increases in mobile home park space rents. 2. Prevent the exploitation of the shortage of available mobile home park spaces in the city and neighboring areas. 3. Enable mobile home owners to preserve their equity in their mobile homes. 4. Permit mobile home park owners to receive a fair return. 5. Help preserve affordable space rents within the city. Ord. 2011-05 § 1 (Exh. A (part)), 2011) 5.72.020 Findings. A. There are five mobile home parks with a total of three hundred ninety-nine spaces in the city of Marina. +Iwww.cadepublishing.com/CAlMarinalhtmi/Madna451MarinaC572. html 1123 4/10/2019 Chapter 5.72 MOBILE HOME RENT STABILIZATION B. Studies Prior to Adoption of Chapter. In 2009, the city commissioned two studies of the mobile home park space rental market by experts with extensive experience on issues related to mobile home park tenancies. C. Rent Increases. From 2002 to 2009, rent increases in the parks substantially exceeded the percentage increase in the Consumer Price Index (CPI). In four of the five mobile home parks in the city, rent increases during this period exceeded forty percent compared with a sixteen percent increase in the CPI during this period. In one park rents increased by sixty-four percent during this period. D. Captive Nature of Mobile Home Park Tenancies. As a practical matter, the mobile homes in Marina's mobile home parks are "immobile" homes. As of 2409, fifty-one percent of the mobile homes were manufactured before 1980 and seventy-three percent were manufactured before 2000. Very few mobile home parks in the area will accept mobile homes that are more than a few years old. The cost of moving and setting up a mobile home in a park is substantial. About half of the mobile homes are "doubiewide" structures that consist of two ten- or twelve -fool -wide sections that are joined together when they are installed on a lot on top of a simple foundation. Mobile homes are rarely moved after they are placed in mobile home parks. When mobile home park residents move they sell their mobile homes in place. Special characteristics of mobile home park tenancies in urban areas generally include the following: 1. The "historical" investments of the mobile home owner (tenants) in mobile homes in mobile home parks generally exceed those of the landlord park owners. 2. The physical relocation of mobile homes is costly. 3. Relocation within metropolitan areas is practically impossible because there are virtually no vacant spaces in mobile home parks. 4. Park owners generally will not permit older mobile homes to be moved into their parks when they do have vacant spaces for rent. 5. The supply of mobile Home park spaces in urban areas in California is either frozen or declining. Mobile home park construction in urbanized areas of California virtually ceased by the early 1980's as alternative land uses became more profitable and land use policies continually tightened restrictions on the construction of new mobile home parks. The investments of mobile home park residents in their mobile homes are "sunk" costs. The benefits of these investments can only be realized by continuing occupancy in the mobile home or by an "in-place" sale of the mobile home. In 2001, the California Supreme Court concluded: BACKGROUND: THE MOBILEHOME OWNERIMOBILEHOME PARK OWNER RELATIONSHIP This case concerns the application of a mobilehome rent control ordinance, and some background on the unique situation of the mobilehome owner in his or her relationship to the mobilehome park owner may be useful. "The term `mobilehome' is somewhat misleading. Mobile homes are largely immobile as a practical matter, because the cost of moving one is often a significant fraction of the value of the mobile home itself. They are generally placed permanently in parks; once in place, only about 1 in every 100 mobile homes is ever moved. (Citation.] A mobile home owner typically rents a plot of land, called a 'pad,' from the owner of a mobile https:l/www.codepublishing.com/CA/Marina/html/Mar naC5/MarinaO572.html 2019 Chapter 5.72 MOBILE HOME RENT STABILIZATION home park. The park owner provides private roads within the park, common facilities such as washing machines or a swimming pool, and often utilities. The mobile home owner often invests in site-specific improvements such as a driveway, steps, walkways, porches, or landscaping. When the mobile homeowner wishes to move, the mobile home is usually sold in place, and the purchaser continues to rent the pad on which the mobile home is located." (Yee v. Escondido (1992) 503 UI S. 519, 523, 112 S.Ct. 1522, 118 L.Ed.2d 153.) Thus, unlike the usual tenant, the mobilehome owner generally makes a substantial investment in the home and its appurtenances—typically a greater investment in his or her space than the mobilehome park owner. [cite omitted] The immobility of the mobilehome, the investment of the mobilehome owner, and restriction on mobilehome spaces, has sometimes led to what has been perceived as an economic imbalance of power in favor of mobilehome park owners. (Galland v. Clovis, 24 CalAth 1003, 1009 (200 1)) Court opinions and academic reviews have repeatedly noted the captive nature of mobile home park tenancies. For example, in one case the Florida Supreme Court concluded that mobile home owners face an "absence of meaningful choice" when their space rents are increased: Where a rent increase by a park owner is a unilateral act, imposed across the board on all tenants and imposed after the initiai rental agreement has been entered into, park residents have little choice but to accept the increase. They must accept it or, in many cases, sell their homes or undertake the considerable expense and burden of uprooting and moving. The "absence of meaningful choice" for these residents, who find the rent increased after their mobile homes have become affixed to the land, serves to meet the class action requirement of procedural unconscionability. Lanca Homeowners, Inc. v. Lantana Cascade of Palm Beach, Ltd., 541 So. 2d 1121, 1124 (Fla.), cert. denied, 493. In response to the special situation of mobile home park residents, California has adopted landlord -tenant laws which provide special protections for mobile home park tenants. (California Civil Code Section 198,) In addition, approximately ninety jurisdictions in California have adopted some type of rent control of mobile home park spaces. Typically the rent control ordinances tie annual allowable rent increases to the percentage increase in the Consumer Price Index (CPI) --All Items. Most of the ordinances do not permit additional rent increases (vacancy decontrol) or limit rent increases to ten percent or less when a mobile home is sold in place. Under all ordinances, park owners are entitled to petition for additional rent increases in order to obtain a fair return. E. Income Level of Mobile Horne Owners. As of 2009, thirty-three percent of the mobile home owner households had annual incomes of twenty thousand dollars or less and twenty-eight percent had an annual Income between twenty thousand dollars and twenty-nine thousand, nine hundred ninety-nine dollars. In comparison, in 2008, the income ceilings for households classified as "very low" income under federal HUD standards (fifty percent of area median income or under) are twenty-two thousand, seven hundred dollars for one- person households and twenty-five thousand, nine hundred dollars for two -person households. The income ceilings for households classified as "extremely low" income (thirty percent of area median income or under) are thirteen thousand, six hundred dollars for one-person households and fifteen thousand, five hundred dollars for two -person households. F. Mobile Home Owners' Investments. Mobile home owners, unlike apartment tenants or residents of other rental units, are in the unique position of having made a substantial investment in a residence which is located on a rented or leased parcel of land. Their investment commonly includes the purchase of the mobile home and the cost of installing the mobile home on its space and installing related improvements such as a foundation, carports, and integrated landscaping. The 2409 studies commissioned for the city found that long-term residents have typically paid prices in the range of twenty thousand dollars to forty thousand dollars for their mobile homes and that mobile home owners who have moved in since 2000 had paid an average of ninety-five thousand dollars for their mobile homes. Their Ilwww.codepu blishing.com/CA/MarinathW/MadnaO5/Marinao572.html 3123 411012019 Chapter 5.72 MOBILE HOME RENT STABILIZATION investment commonly includes the purchase of the mobile home and the cost of installing the mobile home on its space and installing related improvements such as a foundation, carports, and integrated landscaping. Excessive rent increases may drastically reduce or eliminate mobile home owners' equity in their mobile homes, causing mobile home owners to lose a substantial porfion or all of their investments in their mobile homes. G. Fair Return. A "maintenance of net operating income" (MNOI) standard is a "fairly constructed formula," Rainbow Disposal Co. v. Escondido Mobilehome Rent Review Bd., 64 Cal.App.4th 1159 (1998). H. Adoption of Chapter Would Not Have Significant Environmental Impacts. Adoption of this chapter is not subject to the California Environmental Quality Act (CEQA) pursuant to Section 15060(c)(2)—the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment, and Section 15060(c)(3) —the activity is not a project as defined in Section 15378 of the CEQA Guidelines because it has no potential for resulting in physical change to the environment, directly or indirectly. (Ord. 2011-05 § 1 (Exh. A (part)}, 2011) 5.72.030 Definitions. .............. ............................................................... A. "City manager' shall include the city manager or a person designated by the city manager to perform the functions required by this chapter. B. "Consumer Price Index" means the Consumer Price Index—AII Items for all urban consumers for the San Francisco -Oakland -San Jose area (base year equals 1982-1984) as reported by the Bureau of Labor Statistics of the United States Department of Labor. C. "In-place transfer" means the transfer of the ownership of a mobile home with the mobile home remaining on the mobile home lot following the transfer. D. "Landlord" means a mobile home park owner, mobile home owner, lessor or sublessor who receives or is entitled to receive rent for the use and occupancy of any rental unit or portion thereof, and the agent, representative or successor of any of the foregoing. E. "Mobile home" means a structure transportable in one or more sections, designed and equipped to contain not more than one dwelling unit, to be used with or without a foundation system. F. "Mobile home park" means any area or tract of land where two or more mobile home lots are rented or leased, or held out for rent or lease, to accommodate mobile homes used for human habitation for permanent, as opposed to transient, occupancy. G. "Rent" means any consideration, including any bonus, benefit or gratuity, demanded or received by a landlord for or in connection with the use or occupancy, including housing services, of a rental unit or in connection with the assignment of a lease or in connection with subleasing of the rental unit. "Rent" shall not include: 1. Utility charges for charges for sub -metered gas and electricity. 2. Charges for water, refuse disposal, sewer service, and/or other services which are either provided and charged to mobile home residents solely on a cost pass-through basis and/or are regulated by state or local law. 3. Any amount paid for the use and occupancy of a mobile home unit (as opposed to amounts paid for the use and occupancy of a mobile home space). 4. Charges for laundry services_ httpsl/www.ccdepublishing comICAlMarinalhtrnUMarinaO5lMadnaO572.html V2019 Chapter 5.72 MOBILE HOME RENT STABILIZATION 5. Storage charges. H. "Rent increase' means any rent demanded of or paid by a mobile homeowner or mobile home tenant in excess of rent paid for the rental unit immediately prior to such demand or payment. Rent increase includes any reduction in the services provided to a mobile home resident or transfer of the cost without a corresponding reduction in the moneys demanded for or paid as rent. I. "Rental agreement" means a written agreement between a landlord and a mobile home owner or mobile home tenant for the use and occupancy of a rental unit to the exclusion of others. J. "Rental unit" means a mobile home or mobile home lot, located in a mobile home park in the city of Marina, which is offered or available for rent. Rental unit includes the land, with or without a mobile home, and appurtenant buildings thereto and all housing services, privileges and facilities supplied in connection with the use or occupancy of the mobile home or mobile home lot. K. "Service reduction" means a decrease or diminution in the basic service level provided by the park since July 2011 including but not limited to services the park owner is required to provide pursuant to: 1. California Civil Code Sections -1941 1 and 1041-2. 2. The Mobile Home Residency Law, California Civil Cade Section 199 et seq. 3. The Mobile Home Parks Act, California Health and Safety Code Section 18200 et seq. 4. The landlord's implied warranty of habitability. 5. An express or implied agreement between the landlord and the resident. (Ord, 2011-05 § 1 {Exh. A (part)), 2011) 5.72.040 Applicability of chapter. ............................... .............. --- -.--..... ............. ....... ... This chapter shall be applicable to all mobile home park spaces within the city of Marina except as provided in Section 5-72.050 of this chapter. (Ord. 2091-05 § 1 (Exh. A (part)), 2011) 5.72.050 Exemptions from this chapter. ......... ........................................................ .. ................. A. Exemptions provided by State Law. As of August 2011, the following exemptions from local rent regulations are provided by state law: 1. Spaces that are subject to a lease which exempts that space from rent regulation pursuant to the California Mobilehome Residency Law, California Civil Code Section 798 et seq. 2. New mobile home park spaces which are exempted pursuant to Civil Code Section 798.45. 3. Spaces which are not the principal residence of the mobile home owner, which are exempt pursuant to Civil Code Section 798.21. The purpose of this subsection is to provide information about exemptions based on state law which preempts local law, rather than to provide any basis for an exemption based on this chapter. B. Units Owned or Operated by Government Agencies. This chapter shall not apply to mobile homes or mobile home parks owned or operated by any governmental agency or any rental unit whose rent is subsidized pursuant to a public program that limits the rent that can be charged for the mobile home. :/Avww.codepublishing.com/CA/Marina"mi/Marina05/Marina6572-html 5123 4110Q019 Chapter 5.72 MOBILE HOME RENT STABILIZATION C. Mobile Home Parks with Less Than Ten Spaces. This chapter shall not be applicable to spaces in mobile home parks with less than ten spaces. (Ord. 2011-05 § 1 (Exh. A (part)), 2011) 5.72.060 Permissible rent increases. No rent in excess of rent in effect on July 6, 2011, may be charged unless authorized by one of the following sections: Section 5.72.070 (Automatic annual increases based on increases in the Consumer Price Index), 5.72 .080 (Allowable rent following the expiration of an exempt lease), 5.7 2.090 (Allowable rent increases upon in- place transfers of mobile home ownership), 5.72.100 (Fair return standard), or 5.72.120 (Rent increases for new capital improvements) of this chapter. (Ord. 2011-05 § 1 (Exh. A (part)), 2011) 5.72.070 Automatic annual increases based on increases in the Consumer Price Index. A. Annual Rent Increases Starting in 2012. Starting in 2012, on or after May 1st of each year, the rent may be increased over the allowable rent as of May 1 st of the prior year by one hundred percent of the percentage increase in the CPI last reported as of January 30th in the current year over the CPI last reported as of January 30th in the prior year. The percentage amount of said increase shall be rounded to the nearest one-quarter of one percent. However, in 2012, the rent may not be increased over the rent in effect as of January 1, 2010, by a percentage that exceeds the percentage increase in the CPI from January 1, 2010, to the date of the notice of the increase. B. Notice of Annual Allowable Annual Rent Increase. 1. Notice by City Manager. The allowable annual rent increase shall be annually calculated by the city manager and posted by February 15th of each year in City Hall and on the city's website, and on a notice board in each mobile home park and shall be mailed to each park owner and to the mobile home owner representative in each park. 2. Notice in Mobile Home Parks. A copy of the clerk's notice shall be posted in a prominent place by each park owner in each mobile home park within three work days after it is received by the park owner. C. No Decrease if CPI Decreases. 1n the event that the CPI decreases, no rent decrease shall be required pursuant to this section. In the event that the CP1 decreases by more than two percent in any year, said decrease shall be subtracted from the following annual increase(s) allowable pursuant to this section. D. Banking of AllowableAnnual Increases. Increases authorized pursuant to this section may be implemented by the landlord at any future time, subject to the precondition that by January 30th of each year the park owner notify the mobile home owner of each increase allowed pursuant to this section which has not been implemented and notification that the banked increase may be added to the rent at a future date. E. Compliance with State Law. Rent increases permitted pursuant to this section shall not be effective and shall not be demanded, accepted, or retained until the landlord has given the notice required by state law. (Ord. 2011- 05 § 1 (Exh. A (part)), 2011) 5.72.080 Allowable rent following the expiration of an exempt lease. In the event a space was previously exempt under a lease pursuant to California Civil Code Section 79B. 17, the base space rent, for purposes of calculating the annual adjustment, shall be the rent in effect as of the date of expiration of the lease; provided, that space rents can be verified by information required on, and/or documentation submitted with, the annual registration application. (Ord. 2011-05 § 1 (Exh. A(part)), 2011) 5.72.090 Allowable rent increases Capon in-place transfers of mobile home ownership. http s: //www.cod ep u b li sh i n g.co mICNM a ri n alh tm i/MarinaO5/Marin aO572. html 12019 Chapter 5.72 MOBILE HOME RENT STABILIZATION A. Subject to the limita#ions stated in this section, upon the closure of an in-place transfer or other conveyance of a mobile home subject to this chapter the park owner may increase the space rent by five percent. B. No increase may be imposed pursuant to this section when an existing mobile home owner or resident replaces an existing mobile home with another mobile home, occupying the same mobile horse space. C. No increase may be imposed pursuant to this section where title to the mobile home passes to one or more persons) who, at the time of the title transfer, (1) was/were also lawful, authorized resident(s) of the mobile home, or (2) werelare parents, siblings, children, nieces, or nephews of the mobile home owner and the mobile home remains in the same space. D. No increase may be imposed pursuant to this section if an increase was imposed pursuant to this section within the twenty -four-month period preceding the most recent transaction that would justify the increase pursuant to this section. E. Rent increases authorized by this section shall be in addition to any other space rent increases authorized by this chapter. (Ord. 2011-05 § 1 (Exh. A (part)), 2011) 5.72.1 a0 Fair return standard. A. Presumption of Fair Base Year Net Operating Income. It shall be presumed that the net operating income received by the landlord in the base year provided the park owner with a fair return. B. Fair Return. A park owner has the right to obtain a net operating income equal to the base year net operating income adjusted by one hundred percent of the percentage increase in the CP1 since the base year. It shall be presumed this standard provides a fair return. The Mase year CPI shall be the annual average CPI for 2010. The current year CPI shall be the annual average CPI for the calendar year which is used as the current year in the application. C. Base Year. 1. Except as provided in subsection (C){2} of this section, "base year' means the 2010 calendar year. 2_ In the event that a determination of the allowable rent is made pursuant to this section, if a subsequent petition is filed the base year shall be the year that was considered as the "current year" in the prior petition. D. Current Year. The current year shall be the calendar year that precedes the year in which the application is filed. E. Adjustment of Base Year Net Operating Income. The park owner or mobile home owners may present evidence to rebut the presumption of fair return based upon the base year net operating income as set forth in subsection A of this section based on at least one of the following findings: I. Exceptional Expenses in the Base Year. The park owner's operating expenses in the base year were unusually high or low in comparison to other years. In such instances, adjustments may be made in calculating operating expenses so the base year operating expenses reflect average expenses for the property over a reasonable period of time. The following factors shall be considered in making such a finding: a. Extraordinary amounts were expended for necessary maintenance and repairs. b. Maintenance and repair was below accepted standards so as to cause significant deterioration in the quality of services provided. $:Nwww.codepublishirrg.com/CFVMarinalhtmUMarinaO5/Ma6na0572.htrnl V23 4/14/2019 Chapter 5.72 MOBILE HOME RENT STABILIZATION c. Other expenses were unreasonably high or low notwithstanding the application of prudent business practices. 2. Exceptional Circumstances in the Base Year. The gross income during the base year was disproportionately low due to exceptional circumstances. In such instances, adjustments may be made in calculating base year gross rental income consistent with the purposes of this chapter. The following factors shall be considered in making such a finding: a. If the gross income during the base year was lower than it might have been because some residents were charged reduced rent. b. If the gross income during the base year was significantly lower than normal because of the destruction of the premises and/or temporary eviction for construction or repairs. c. The pattern of rent increases in the years prior to the base year and whether those increases reflected increases in the CPI. d. Base period rents were disproportionately low in comparison to the base period rents of other comparable parks in the city. e. Other exceptional circumstances. F. Calculation of Net Operating Income, 1. Net Operating Income_ Net operating income shall be calculated by subtracting operating expenses from gross rental income. 2, Gross Rental income. a. Gross rental income shall include: i. Gross rents calculated as gross rental income at one hundred percent occupancy, adjusted for uncollected rents due to vacancy and bad debts to the extent such vacancies or bad debt are beyond the control of the landlord. Uncollected space rents in excess of three percent of gross space rent shall be presumed to be unreasonable unless established otherwise and shall not be included in computing gross income. ii. All other income or consideration received or receivable in connection with the use or occupancy of the rental unit, except as provided in subsection (F)[2)(b) of this section. b. Gross rental income shall not include: i. Utility charges for charges for sub -metered gas and electricity. ii. Charges for water, refuse disposal, sewer service, and/or other services which are either provided and charged to mobile home residents solely on a cost pass-through basis and/or are regulated by state or local law. iii. Any amount paid for the use and occupancy of a mobile home unit (as opposed to amounts paid for the use and occupancy of a mobile home space). iv. Charges for laundry services. v. Storage charges. https:11www.cadepublishing.com/CAIMarinalhtm11Marina051Ma rina0572.html 8� 1012019 Chapter 5.72 MOBILE HOME RENT STABILIZATION 3. Operating Expenses. a. Included in Operating Expenses. Operating expenses shall include the following: i. Reasonable costs of operation and maintenance. ii. Management Expenses. It shall be presumed that management expenses have increased by the percentage increase in rents or the CPI, whichever is greater, between the base year and the current year unless the level of management services has either increased or decreased significantly between the base year and the current year. iii. Utility Costs. Utility costs except utility where the consideration of the income associated with the provision of the utility service is regulated by state law and consideration of the costs associated with the provision of the utility service is preempted by state law. iv. Real Property Taxes. Property taxes are an allowable expense, subject to the limitation that property taxes attributable to an assessment in a year other than the base year or current year shall not been considered in calculating base year and/or current year operating expenses. v. License and Registration Fees. License and registration fees required by law to the extent these expenses are not otherwise paid or reimbursed by tenants. vi. Landlord -Performed Labor. Landlord -performed labor compensated at reasonable hourly rates. (A) No landlord -performed labor shall be included as an operating expense unless the landlord submits documentation showing the date, time, and nature of the work performed. (B) There shall be a maximum allowed under this provision of five percent of gross income unless the landlord shows greater services were performed for the benefit of the residents. vii. Costs of Capital Replacements. Costs of capital replacements plus an interest allowance to cover the amortization of those costs where all of the following conditions are met: (A) The capital improvement is made at a direct cost of not less than one hundred dollars per affected rental unit or at a total direct cost of not less than five thousand dollars, whichever is lower. (B) The costs, less any insurance proceeds or other- applicable recovery, are averaged on a per unit basis for each rental unit actually benefited by the improvement. (C) The costs are amortized over a period of not less than thirty-six months. (b) The costs do not include any additional costs incurred for property damage or deterioration that result from any unreasonable delay in undertaking or completing any repair or improvement. (E) The costs do not include costs incurred to bring the rental unit into compliance with a provision of the Marina Municipal Code or state law where the original installation of the improvement was not in compliance with code requirements_ (F) At the end of the amortization period, the allowable monthly rent is decreased by any amount it was increased because of the application of this provision. (G) The amortization period shall be in conformance with a schedule adopted by the city manager unless it is determined that an alternate period is justified based on the evidence presented in the :ps://www.cadepuhlishing.corn/CNMadnalhtmllMarina051Marinafl572.htnI 9123 4/10/2019 Chapter 5.72 MOBILE HOME RENT STABILIZATION hearing. viii. Legal Expenses. Attorneys' fees and costs incurred in connection with successful good faith attempts to recover rents owing, successful good faith unlawful detainer actions not in derogation of applicable law, and legal expenses necessarily incurred in dealings with respect to the normal operation of the park to the extent such expenses are not recovered from adverse or other parties, subject to the following requirements: Reasonable fees, expenses, and other costs incurred in the course of successfully pursuing rights under or in relationship to this chapter and regulations adopted pursuant to the chapter including costs incurred in the course of pursuing successful fair return petitions. Said expenses shall be amortized over a five-year period, unless the city manager concludes that a differing period is more reasonable. Recovery of expenses incurred in the course of preparing and presenting a fair return petition shall be limited when a park owner rejects a settlement offer and then does not recover more than proposers settlement. The purpose of this limitation is to encourage both park owners and mobile home owners to minimize, to the extent possible, the cost and expense of fair rate of return mobile home space rent administrative proceedings by providing a mechanism for the early settlement of fair rate of return administrative proceedings. At any time after filing a fair rate of return rent application, the designated representative of the residents of the mobile home park may serve an offer in writing in the mobile home park owner who has filed that petition to stipulate to a compromise amount for the fair rate of return rent increase requested in the petition. The designated representative shall also file a copy of this written settlement offer with the city in a separately sealed envelope and with a statement on the outside of the envelope stating that it is a written settlement offer pursuant to this subsection. The sealed copy of the written settlement offer that is so filed with the city is not to be opened by the city until it is either accepted by the park owner or, if it is not accepted by the park owner, after a final rent increase award or denial has been made on the park owner's petition by either the city manager or by the hearing officer. Upon receiving such offer to compromise, the mobile home park owner has seven days to accept the offer by filing a written acceptance with the city clerk. A mobile home park owner is not entitled to recover a portion of application expenses, fees, or other costs that are incurred following the submission of a prevailing offer and the residents may recover reasonable attorneys' fees incurred by the residents after the rejection of a "prevailing" offer. The designated mobile home owners' representative shall be determined to have made a prevailing offer if a settlement offer has been made and that offer has not been accepted by the park owner within seven days after the making of that offer, and the park owner's rent increase award fails to exceed the amount of that settlement offer. Allowable legal expenses which are of a nature that does not recur annually shall be amortized over a reasonable period of time. At the end of the amortization period, the allowable monthly rent shall be decreased by any amount it was Increased because of the application of this provision. ix. Interest Allowance for Expenses That Are Amortized. An interest allowance shall be allowed on the cost of amortized expenses; the allowance shall be the interest rate on the cost of the amortized expense equal to the "average rate" for thirty-year fixed rate on home mortgages pi us two percent. The "average rate' shall be the rate Freddie Mac. last published in its weekly Primary Mortgage Market https-.Ifwww.cadepublishing.comICA/Marina/htmi/MarinaUSIMarinaO572,html 1012 1 {}12019 Chapter 5.72 MOBILE HOME RENT STABILIZATION Survey (PMMS) as of the date of the initial submission of the petition. In the event that this rate is no longer published, the index which is most comparable to the PMMS index shall be used. b. Exclusions from Operating Expenses. Operating expenses shall not include the following: i. Mortgage principal or interest payments or other debt service costs. ii. Any penalties, fees or interest assessed or awarded for violation of any provision of this chapter or of any other provision of law. iii. Land lease expenses. iv. Political contributions and payments to organizations which are substantially devoted to legislative lobbying purposes. v. Depreciation. vi. Any expenses for which the landlord has been reimbursed by any utility rebate or discount, security deposit, insurance settlement, judgment for damages, settlement or any other method or device. vii. Unreasonable increases in expenses since the base year. viii. Expenses associated with the provision of master -metered gas and electricity services. ix. Expenses which are attributable to unreasonable delays in performing necessary maintenance or repair work or the failure to complete necessary replacements (e.g., a roof replacement may be a reasonable expense, but if water damage occurred as a result of unreasonable delays in repairing or replacing the roof, it would not be reasonable to pass through the cost of repairing the water damage). c. Adjustments of Operating Expenses. Base year and/or current operating expenses may be averaged with other expense levels for other years or amortized or adjusted by the CP[ or may otherwise be adjusted, in order to establish an expense amount for that item which most reasonably serves the objectives of obtaining a reasonable comparison of base year and current year expenses. Grounds for such adjustments include, but are not limited to: i. An expense item for a particular year is not representative; ii. The base year expense is not a reasonable projection of average past expenditures for that item in the years immediately preceding or following the base year; iii. The current year expense is not a reasonable projection of expenditures for that item in recent years or of future expenditures for that item; iv. A particular expense exceeds the normal industry or other comparable standard for the area, the park owner shall bear the burden of proving the reasonableness of the expense. To the extent that it is found that the expense is unreasonable it may be adjusted to reflect the normal industry standard; v. A base year expense is exceptionally low by industry standards and/or on an inflation adjusted basis is exceptionally low relative to current year expenses although the level or type of service has not changed significantly; fps://www.00depublfishing.comlCAlMafina/htmi/MarinaO5/MarinaD572.htmi 11123 4/10/2019 Chapter 5.72 MOBILE HOME RENT STABILIZATION vi. An increase in maintenance or management expenses is disproportionate to the percentage increase in the CPI, while the level of services has not changed significantly andlor is not justified by special circumstances. G. Rent Increases for Periods Preceding Date That a Park Owner May Implement Rent Increases Pursuant to This Section. In the event that the period for determining the allowable rent increase pursuant to this section exceeds one hundred twenty days, the park owner may recover increases that would have been permitted if the rent increase decision had been made within one hundred twenty days. The allowance for these increases may be amortized or may be factored into the prospective allowable increase in order to avoid undue hardship on the mobile home owners. K Per Space Rent Adjustment Pursuant to Fair Return Standard. The allowable rent increase per mobile home park space pursuant to this section shall not be increased as a result of the fact that there are exempt spaces in the park. I. Assurance of a Fair Return. It shall be presumed that the MNDI standard provides a fair return. Nothing in this chapter shall preclude the city manager or hearing officer from granting an increase that is necessary in order to meet constitutional fair return requirements. {Ord. 2011-05 § 1 (Exh. A (part)), 2011) 5.72.110 Procedures for review of fair return petitions. A. Right to Petition. A park owner may petition for a rent increase in order to obtain a fair return. No petition for a fair return rent adjustment may be filed pursuant to this chapter until thirty days after this chapter goes into effect. After 2011, no petition may be filed in November or December except in cases of exceptional unforeseen circumstances. B. Limit on Frequency of Petitions. Only one petition pursuant to this section may be filed for a mobile home park within a twelve-month period. An exception to this limitation shall be authorized in the event of extraordinary circumstances that could not reasonably have been foreseen at the time the prior petition was filed. C. Submission of Petition. 1. Petition Form Required. Such petition shall be on a form prescribed by the city manager. 2. Petition Fee. Upon the receipt of a fair return application, the city manager shall determine if the employment of experts will be necessary or appropriate for a proper analysis of the applicant's presentation. If the city manager so determines, it shall also determine the anticipated cost of employing any such experts. The resulting figure shall be communicated to the applicant. The application shall not be further processed until the applicant has paid to the city the estimated cost of expert analysis. Any unused portion of the advance payment for expert analysis shall be refunded to the applicant. 3. Contents of Petition Form. The form may require any information deemed relevant by the administrator. The form shall include, but not be limited to - a. A list of the names and addresses of all mobile home park tenants subject to the rent increase. b. A statement of the date the rent increase is proposed to be effective. c. The rent for each space in the park in the base year, the current year, and the three prior years. d. An income and expense statement for the base year, the current year, and the three years prior to the current year. https Jlwww.codepuhlishing.comlCAlMarina/htmi/MadnaO5/MadnaO572. html 1212: 411012019 Chapter 5.72 MOBILE HOME RENT STABILIZATION e. Evidence documenting the income and expenses claimed by the park owner. f. All other documentation and opinion testimony upon which the park owner is relying to justify the rent increase. g. A statement of the petitioner's theories in support of the. rent increase application. 4. Notice of Petition. The park owner and the city shall provide notice of a petition by: a. Sending a hard copy and electronic .pdf copy of the petition to the homeowners' representative; b. Providing the city with hard and electronic copies of the petition; c. Notifying each tenant household that the petition has been filed on a form provided by the city. 5. Determination That the Petition Is Complete. The city manager will determine if a petition pursuant to this section is complete within thirty days after the petition is submitted. An application will not be deemed complete if the required fees have not be paid. It the application is incomplete, the city manager will inform the petitioner as to what additional information is required. B. Access to the Petition. The documentation required by this section shall be available for inspection and copying by any person during the normal business hours of the city. The city shall make a copy of all submissions by the park owner and the residents in conjunction with a petition that shall be available in the form of an electronic .pdf file, 7. Cost of Expert Ana lysis. Upon the receipt of a fair return application, the city manager shall determine if the employment of experts will be necessary or appropriate for a proper analysis of the applicant's petition. If the city manager so determines, the city manager shall also determine the anticipated cost of employing any such experts. The resulting figure shall be communicated to the petitioner. The petition shall not be further processed until the petitioner has paid to the city the estimated cost of expert analysis. Within thirty days after a petition and the required fee, if any, is submitted to the city, the city manager shall determine if the petition is complete. Any unused portion for payments so collected shall be refunded to the petitioner. 8. Contents of Expert Analysis. Any analysis pursuant to this subsection shall include a determination of: a. Base year and current year rental income; b. Base year and current year operating expenses by category; c_ Base year and current year overall operating expenses; d. Base year and current year net operating income; e. The percentage change in net operating income between the base period and the current period; f. The percentage change in the CPI between the base period and the current period; g. The ratio of the percentage change in net operating income to the percentage change in the CPI between the base period and the current period; h. The rent adjustment required under an MNOI standard pursuant to chapter. 9. Submission by Mobile Home Owner Tenants_ The mobile homeowner tenants may submit a written response to the park owner's submission within twenty days after the petition is deemed complete. irtpsllwww.cadepublishing.comlCAlMarinalhtmVMarinao5lMarfna0572.html 13123 411012019 Chapter 5.72 MOBILE HOME RENT STABILIZATION D. Review Procedures. 1. An application for a fair return adjustment shall be decided by the city manager within sixty days of the date that the application has been complete. The decision shall be emailed and sent by mail, with proof of mailing to the park owner, the park owner's designated representative for the petition, and a designated representative of the residents. 2. Appeal of City Manager's Decision. The decision of the city manager maybe appealed within twenty days to a hearing officer. An appeal by the mobile home owner tenants must be signed by residents from a majority of the mobile home spaces that are subject to the city manager's decision. The appealing party shall be required to pay for costs of the appeal process in accordance with any fees set forth by resolution of the city council. 3. Procedure for Selection of a Hearing Officer. a. Qualifications. Hearing officers shall be licensed attorneys of the State Bar of California in good standing, and shall have no financial interest in mobile homes, mobile home spaces or mobile home parks and shall not have represented mobile home park owners or mobile home park residents in rent setting cases or park closing or park conversions or any disputes between park owners and park residents. b. A hearing officer shall be selected through the California Office of Administrative Hearings (OAH). In the event that it is not possible to set up a hearing through the OAH, the city manager may elect to contract with another statewide agency that provides arbitration services or may establish a panel in accordance with the following procedure set forth in subsection (D)(3)(c) of this section. c. In the event that a panel of hearing officers is established, the city manager shall make all reasonable efforts to ensure that there are at least five qualified candidates to form a panel of prospective hearing officers. The hearing officers shall be selected on a rotational basis from the panel list. A hearing officer shall disqualify himself or herself from serving as hearing officer in a particular matter where he/she has a conflict of interest within the meaning of the Political Reform Act (Government Code Section 87100 et seq.), and shall otherwise comply with the disqualification provisions of Canon 3.E. of the Code of Judicial Ethics. The parties shall be advised in writing of the selected hearing officer, and advised of their right to disqualify the selected hearing officer. In the event of a disqualification, another hearing officer shall be randomly selected from the panel, and a new notice of hearing sent to the parties. Each party shall have the right to disqualify one hearing officer for a particular matter if there are five or fewer hearing officers on the list and may disqualify up to two hearing officers if there are eight or more hearing officers on the list. 4. Time of and Scheduling of Hearing. a. A hearing on the petition shall commence within thirty days of the selection of a hearing officer unless both parties agree to a different schedule. The hearing shall be completed within fifteen days after it is commenced. These time deadlines may be extended if the hearing officer finds that there is good cause to commence and/or complete the nearing at a later date. b. The hearing may be scheduled during the normal business hours of the city unless a majority of the residents that are subject to the petition requests that the hearing be scheduled during the evening. The hearing shall be scheduled at a time that it is convenient for the residents' and park owner's representatives. haps://www.cedepublishing.comlCNMarinalhtmilMarinaO5lMarinao572.html 14123 411012019 Chapter 5.72 MOBILE HOME RENT STABUZATION c. The presentations of each party at the hearing and of the city staff and experts shalt be limited to ninety minutes each unless there is good cause for providing a greater period of time. Each party and the city shall be permitted one hour of cross-examination of expert witnesses. 5. Notice of Hearing. Written notice of the time, date and place of the hearing shall be given at least ten days prior to the hearing. S. Requests for Additional Information by Opposing Party. a. Either party or the city may request that additional specific supporting documentation be provided to substantiate the claims made by a party. The request shall be presented in writing to the hearing officer. b. The hearing officer may order production of such requested documentation, if the hearing officer determines the information is relevant to the proceedings. 7. Submission of Reports. a. Any response by the residents or the park owner to the decision of the city manager or report by the city must be submitted to the other parties at least ten days prior to the hearing. The submissions shall be in printed and electronic form. b. Rebuttal reports may be submitted by the park owner, residents, and/or city staff and/or a consultant on behalf of the city; it shall be submitted to the parties at least five days prior to a hearing. c. For good cause, the hearing officer may accept additional information at the hearing. 8. Conduct of Hearing. a. The hearing shall be conducted in accordance with such rules and regulations as may be Promulgated by the city council and any rules set forth by the hearing officer. b. The hearing officer shall have the power and authority to require and administer oaths or affirmations where appropriate, and to take and hear evidence concerning any matter pending before the hearing officer. c. The rules of evidence generally applicable in the courts shall not be binding in the hearing. Hearsay evidence and any and all other evidence which the hearing officer deems relevant and proper may be admitted and considered. d. Any party or such party's representative, designated in writing by the party, may appear at the hearing to offer such documents, oral testimony, written declaration or other evidence as may be relevant to the proceedings. e. The hearing officer may grant or order not more than two continuances of the hearing for not more than ten working days each_ Additional continuances may be granted only if all parties stipulate in writing or if the hearing officer finds that there is a good cause for the continuance. Such continuances may be granted or ordered at the hearing without further written notice to the parties. f. A tape recording of the proceedings shall be made by the city manager in a format that is easily made available and is easily usable, g. The hearing shall be conducted in a manner that ensures that parties have an opportunity to obtain documents and to obtain information about the theories and facts to be presented by the opposing parties in adequate time in advance of the hearing to enable preparation of a rebuttal. haps://www.codepuhlishing.oom/CA]Marinalhtml/MarinaC5/MarinaO572.htmi 15/23 41'10/2018 Chapter 5.72 MOBILE HOME RENT STABILIZATION 9. Required Findings In Decision. Any decision pursuant to this subsection shall Include a determination of: a. Base year and current year rental income; b. Base year and current year operating expenses by category; c. Base year and current year overall operating expenses; d. Base year and current year net operating income; e, The percentage change in net operating income between the base period and the current period; f. The percentage change in the CPI between the base period and the current period; g. The ratio of the percentage change in net operating income to the percentage change in the CPI between the base period and the current period; h. The rent adjustment required under an MNU standard pursuant to Section 5.72.100 and this section. 10. Conditions for Allowance or Disallowance of Rent Increase. The allowance or disallowance of any proposed rent increase or portion thereof may be reasonably conditioned in any manner necessary to effectuate the purposes of this chapter. 11. Deadline for Decision. An application for a fair return adjustment shall be decided by the hearing officer within sixty days of the date that the filing of the appeal, including the receipt of fees, has been deemed complete, unless the hearing officer determines that there is good cause for an extension of this period or the city manager extends this period due to the length of time required to accommodate scheduling availability and limitations required to obtain the services of a hearing officer. 12. Notice of Decision. The city manager shall mail copies of the decision to the park owner and all affected mobile home park tenants within three days of the decision. Copies of the decision shall be emailed to the park owner and residents' representative as soon as possible after the decision is made and in all cases within twenty-four hours after the decision is made. 13. Preservation of Record. Any findings pursuant to this section shall be reported to the city in an agenda packet and permanently preserved in the city records, so that they are available in the event of a future rent increase application involving the same mobile home park. 14. Representation of Parties. a. The parties in any hearing may be represented at the hearings by a person of the party's choosing. The representative need not be an attorney. b. Written designation of representatives shall be filed with the city manager or hearing officer. c. The written designation of the representative shall include a statement that the representative is authorized to bind the party to any stipulation, decision or other action taken at the administrative hearing. 15. Modification of Decision in the Event of Mathematical or Clerical Inaccuracies. Any party alleging that the hearing officer's statement of decision contains mathematic or clerical inaccuracies may so notify the hearing officer and the other party within fifteen calendar days of the mailing of the decision. The hearing officer may make any corrections warranted, and re -file the statement of decision within ten working days https:llwww.codepub1ishing.comlCNMarinalhtmllMarinaO5lMarina6572.html 16123 E1f[1Ji'PAGM Chapter 5.72 MOBILE HOME RENT STABILIZATION after receiving the allegation of the mathematical error. Upon re -filing of the statement, the decision shall be final. 16. Calculation of Allowable Application Expenses if a Sealed Offer Has Been Submitted. If any Sealed settlement offers have been submitted to the city by any parties to the dispute, after the hearing officer determines the allowable rent adjustment pursuant to this section, the hearing officer shall open the sealed offers and make a determination of whether there has been a "prevailing party" and shall announce that determination in the hearing officer's notice of decision issued pursuant to subsection (D)(12) of this section_ Within seven days of their receipt of the notice of decision awarding fees, the prevailing party shall submit a written request and accounting of these fees and serve that request simultaneously on all parties by regular mail and electronic mail. Within seven days of receiving the request by the prevailing party, the opposing party may file an objection to that request. Within seven days of the date that an opposition is submitted or within seven days of the deadline for an opposition, if none is submitted, the hearing officer shall submit a proposed supplemental decision stating the amount of fees included in the award, which shall become final in seven days after the proposed decision, unless either party requests an evidentiary hearing within seven days, in which case a final decision shall be made within seven days after the hearing. If the prevailing party is the mobile home owners' representative, then the park owner shall file an affidavit with the city manager, stating that the award of attorneys' fees has been paid in full and shall not be permitted to implement a rent increase pursuant to this section until such payment has been made. For good cause, the hearing officer may modify the procedure set forth in this subsection for determining an award for a prevailing party. E. Overall Period for Review of Fair Return Petition. After a petition is deemed complete, the overall time for a decision of the city manager and conducting a hearing and issuing a final decision by the hearing officer shall not exceed one hundred eighty days, unless the hearing officer determines that there is good cause for extending this deadline or the city manager extends this period due to the length of time required to accommodate scheduling availability and limitations required to obtain the services of a hearing officer. (Ord. 2011-05 § 1 (Exh. A (part)), 2511) 5.72.120 Rent increases for new capital improvements. A. A park owner may obtain a pass-through of anew capital improvement cost under this section. Any capital improvement assessment shall be identified separately and listed on rent statements along with their date of expiration. B. New Capital Improvements. Improvements that did not previously exist in the park shall be deemed "new capital improvements,' unless the park owner was required by law to make the capital improvements. A park owner may charge each affected mobile home owner as additional rent the pro rata share of new service and capital improvement costs including financing costs subject to the following preconditions: 1. Prior to initiating the service or incurring the capital improvement cost, the park owner must consult with the mobile home owners regarding the nature and purpose of the improvements and the estimated cost of the improvements. 2. The park owner must obtain the prior written consent of at least one adult mobile home owner in each of a majority of the mobile home spaces which are occupied by the mobile home owner to the proposed capital improvement. Each space shall have only one vote. (Ord. 2011-05 § 1 (Exh. A (part)), 2511) 5.72.130 Rent reductions for service reductions. A. Definition. "Service reductions" shall mean the elimination or reduction of any service or facility provided as of September 2008. "Service" shall also include physical improvements or amenities. https Wwww.codepublishing. ccmICAlMarinalhtmllMannaO51MarinaO572.h tml 17123 4/14/2419 Chapter 5.72 MOBILE HOME RENT STABILIZATION B. Submission of Service Reduction Complaint to City Manager. A service reduction complaint shall be submitted to the city manager alleging in a written form and should state: 1. The affected spaces; 2. The prior level of service established by the park owner for that homeowner's mobile home space and common facilities used by that homeowner; 3. The specific changes in the prior level of services comprising the alleged reduction in service; 4. The date the service reduction was first noticed by the homeowner; 5. The date of notice to the park owner of the alleged service reduction, and if such notice was given, whether the notice was given orally or in writing; 6. When and how the park owner responded to the homeowner's notice, if notice was given; 7. Whether the condition was improved or corrected, and if so, when and how; 8. The status of the condition as of the date the complaint is signed; and 9. Where such service reduction was the result of a vote of a majority of the affected homeowners. C. Submission of Service Reduction Complaint to Hearing Officer. 1. Thirty days after the service reduction complaint is submitted to the city manager, if the dispute is not settled, either one-third of the tenants in a park or the park owner may request that the dispute be submitted to a hearing officer. 2. If the hearing officer finds that a material service reduction has occurred, the hearing officer shall determine the resultant percentage reduction in the homeowners' enjoyment of their homes due to the service reduction. 3. Rent shall be reduced by that percentage or amount_ The homeowners also shall be entitled to a rebate of the following sum: the monthly rent reduction multiplied by the number of months between the date the homeowners notified the park owner of the reduction in service, and the elate the city manager determined the rent reduction. 4. A service reduction shall not include the elimination or reduction of a recreational facility or service when such elimination or reduction and rent decrease resulting therefrom have the prior written approval of two- thirds of the homeowners. In such cases no rebate shall be required. 5. No recreational service or facility which has been reduced or eliminated shall be reinstituted at any cost to the homeowners without prior written approval of two-thirds of the homeowners. D. Consolidation of Service Reduction Complaint with Consideration of Fair Return Petition. In the event that a service reduction claim is filed while a fair return petition is pending, either the city, the park owner, or the tenants may require consideration of a claim pursuant to this section in conjunction with the fair return claim. (Ord. 2011- 05 § 1 (Exh. A (part)), 2011) 5.72.140 Waivers. A. Any waiver or purported waiver by a mobile homeowner or mobile home tenant of rights granted under this chapter shall be void as contrary to public policy. hftps:flwww.codepu blish ing.com/CAIMar+na/html/MarinaO5lMarinao572.htm] 18123 4110/2019 Chapter 5.72 MOBILE HOME RENT STABILIZATION B. It shall be unlawful for a landlord to require or attempt to require, as a condition of tenancy in a mobile home park, a mobile home owner, mobile home tenant, prospective mobile home owner, or prospective mobile home tenant to waive in a lease or rental agreement or in any other agreement the rights granted to a mobile home owner or mobile home tenant by this chapter. C. it shall be unlawful for a landlord to deny or threaten to deny tenancy in a mobile home park to any person on account of such person's refusal to eater into a lease or rental agreement or any other agreement under which such person would waive the rights granted to a mobile home owner or mobile home tenant by this chapter. (Ord. 2011-05 § 1 (Exh. A (part)), 20 11 ) 5.72.150 Information to be supplied by the park owner to tenants and prospective tenants. A. Posting of Chapter. A copy of this chapter shall be posted in the office of every mobile home park and in the recreation building or clubhouse of every mobile home park. (Ord. 2011-05 § 1 (Exh. A (part)), 2011) 5.72.160 Information to be provided by the city to the public. The city's web page shall include a copy of this chapter, a summary of this chapter and other issues related to mobile home park space rentals within the city, and a copy of California's Mobilehome Residency Law, (Ord. 2011-05 § 1 (Exh. A (part)), 2011) 5.72.170 Resident representatives. The residents of each mobile home park in the city shall annually elect by majority vote, with one vote per space, a resident representative to receive all notices required by this chapter. The residents shall advise the city manager of the name, address and phone number of the elected resident representative in writing no later than January 31st of each year and shall promptly notify the city manager of any change of representative. (Ord. 2011- 05 § 1 (Exh. A (part)}, 2011) 5.72.180 Rights of prospective tenants. Any prospective tenant must be offered the option of renting a mobile home space in a manner which will permit the "tenant -to -be" to receive the benefits of the mobile home space rent stabilization program which includes, but is not limited to, rental of a mobile home space on a month-to-month basis. Such a person cannot be denied the option of a tenancy of twelve months or less in duration. The park owner shall provide each prospective tenant with a photocopy of the written notification (see Appendix A of this chapter) and will provide each prospective tenant with a copy of this chapter. Any effort to circumvent the requirements of this section shall be unlawful. (Ord. 2011-05 § 1 (Exh. A (pari)}, 2011) 5.72.190 Annual registration and other notices required from owner. A. Due Date. No later than February 1st of each year, each park owner shall file an annual registration statement, on a form provided by the city manager. S. Contents of Registration Form. The registration forms shall include the names), business address(es), and business telephone number(s) of each person or legal entity possessing an ownership interest in the park and the nature of such interest; the number of mobile home spaces within the park; a rent schedule reflecting the current space rents within the park; a listing of all other charges, including utilities not included in space rent, paid by mobile home owners within the park and the approximate amount of each such charge; the name and address to which all required notices and correspondence may be sent; and other information required by the city manager. https:/Avww.codepublishing.com/CA/Marina/htmi/MadnaO5/MarinaO572. html 19123 4M 01201 s Chapter 5.72 MOBILE HOME RENT STABILIZATION C. Certification of Registration Forms. All registration forms, and any documentation accompanying any registration forms, shall contain an affidavit or declaration, signed by the park owner or a designated agent, with his/her signature notarized, certifying that the information contained therein is true, correct and complete. D. Notice of Sale of a Park. Upon the sale or transfer of a mobile home park, the seller or transferor shaft notify the city manager of the sale or transfer and of the name and address of the buyer or transferee. Within ten days of the sale or transfer of a mobile home park, the buyer or transferee shall provide a new registration form. E. Notice to Prospective Park Purchasers. The park owner shall provide prospective park purchasers with a copy of this chapter and notice that the following would be a prerequisite to filing a rent increase application pursuant to Sections 5.72.100 and 5.72.110: A statement of the base year income, expenses, and net operating income of the park with a breakdown of income and expenses by category. 2. Documents supporting the amounts reported in the income and expense statement. (Ord. 2011-05 § 1 {Exh. A (part)), 2011) 5.72.200 Retaliation prohibited. A. It shall be unlawful for any landlord to evict a mobile homeowner or mobile home tenant where the landlord's dominant motive in seeking to recover possession of the rental unit is: Retaliation for the mobile home owner's or mobile home tenant's organizing, petitioning government for rent relief, or exercising any right granted under this chapter; or 2_ Evasion of the purposes of this chapter. S. It shall be unlawful for a landlord to retaliate against a mobile homeowner or mobile home tenant for the owner's or tenant's assertion or exercise of rights under this chapter in any manner, including but not limited to: 1. Threatening to bring or bringing an action to recover possession of a rental unit. 2. Engaging in any form of harassment that causes the owner or tenant to quit the premises. 3. Decreasing housing services. 4. Increasing rent. 5. Imposing or increasing a security deposit or other charge payable by the owner or tenant. (Ord. 2011-05 § 1 (Exh. A (part)), 2011) 5.72.210 Excessive rents or demands therefor. It shall be unlawful for a park owner to demand, accept, receive, or retain any rent in excess of the amounts authorized by this chapter. (Ord. 2011-05 § 1 (Exh. A (part)), 2011) 5.72.220 Excessive rents—Civil penalties. A. If any person is found to have demanded, accepted, received or retained any payment of rent in excess of the maximum rent allowed by this chapter, such person shall be liable to the mobile home owner or mobile home tenant from whom such payment was demanded, accepted, received, or retained for damages as determined by a court of competent jurisdiction. hftps:llwww.codepublishing.com/CAIMarina/html/MadnaO5lMadnaO572.htrnl 24123 4/10/2019 Chapter 5.72 MOBILE HOME RENT STABILIZATION B. In the event a mobile home owner or mobile home tenant is the prevailing party in a civil action against a person found to have demanded, accepted, received or retained any payment of rent described in subsection A of this section, such mobile home owner or mobile home tenant, in addition to damages as determined by the court pursuant to subsection A of this section, may, in the discretion of the court, be awarder! an amount not to exceed five hundred dollars or three times the damages determined by the court pursuant to subsection A of this section, whichever is greater. For the purposes of this subsection, a mobile home owner or mobile home tenant shall be deemed to he a prevailing party if the judgment is rendered in such mobile home owner's or mobile home tenant's favor or if the litigation is dismissed in such mobile home owner's or mobile home tenant's favor prior to final judgment, unless the parties otherwise agree in the settlement or compromise. C. Remedies provided by this section are in addition to any other legal or equitable remedies and are not intended to be exclusive. (Ord. 2011-05 § 1 (Exh. A (part)), 20 11 ) 5.72.230 Rules and guidelines. The city manager may adopt rules and procedures to implement the applications, notices, registration, verification and certification required by this chapter, and for the review of rent increase applications and the conduct of hearings. Such rules and guidelines shall be submitted to the city council for review and approval. (Ord. 2011-05 § 1 (Exh. A (part)), 2011) 5.72.240 Authority of city council to bring civil action to compel compliance. .................................................... ................ ... .... ........................................... . The city council may institute a civil action to compel compliance with this chapter. {Ord. 2011-05 § 1 (Exh. A (part)), 2011) 5.72.254 Administrative service fees. A. Definition. "Administrative service fee" or "fee" means a charge upon persons occupying a space within a mobile home park for the privilege granted by this chapter of receiving the specific rent stabilization benefits conferred by this chapter. B. Collection. The administrative service fee is to be paid to the city from every occupied mobile home space except exempt spaces which shall be excluded from paying the fee. C. Purpose and Limitation on Use. The purpose of the fee is to reimburse, in whole or in part, the city for the reasonable costs of conferring the benefits and privileges provided by this chapter to the benefit of the mobile home owners who are collectively paying the fee. These costs may include, but not be limited to, the costs of administering and enforcing the rent stabilization provisions of this chapter; defending those provisions and their administrative enforcement from litigation challenging them; defending the administrative decisions of the city that would result in the preservation of the mobile home spaces receiving the benefits of this chapter as rental spaces that are qualified, under state law, to continue to receive the benefits of this chapter from their conversion to subdivided lots or other uses that would result in their loss of the rent stabilization benefits and privileges conferred by this chapter from litigation challenging them and providing grants to mobile home park homeowners' associations, or legal service providers, to partly cover the costs of providing the legal services necessary for enforcing their rights in administrative proceedings under this chapter. All moneys collected by the city through this administrative fee shall be set aside and used by the city only for the purposes set forth in this subsection and shall not exceed the reasonable costs of conferring the benefits and privileges provided by this chapter to the persons collectively paying the fee, including providing the city with a reserve for covering such future costs, compensating the city for the expenditure of such prior costs and covering the payment of any loans that the city has or may incur to help pay https �lfwww.codepubiishirrg.com/CA/Marina/htmi/MarinaO5lMarinaO572.htmi 21123 4/1 0/2019 Chapter 5.72 MOBILE HOME RENT STABILIZATION for the costs of providing the benefits and privileges of this chapter, including loans to help pay the city's costs of defending against litigation that is covered under this subsection. D. Fees Set by City Council Resolution. The amount of administrative fees and requirements for submission of the fees shall be set by resolution of the city council in compliance with the purpose and limits of this section. Monthly fees applicable to mobile home park spaces covered by this chapter shall be collected by each park owner and submitted to the city on a quarterly basis, within thirty days after the end of each quarter. The payments shall be accompanied by reporting as required on a form provided by the city manager. (Ord. 2811-05 § 1 (Exh. A (part)), 2011) 5.72.260 Appeal of decisions pursuant to this chapter. City determinations pursuant to this chapter, including but not limited to fair return determinations, shall be subject to review pursuant to California Code of Civil Procedure Section 1094.5 as a final administrative determination, within the time constraints established pursuant to Code of Civil Procedure Section 1894.6. (Ord. 2011-05 § 1 (Exh. A (part)), 2811) 5.72.270 Severability. If any section, subsection, sentence, clause, or phrase of this chapter is for any reason held to be invalid or unconstitutional by the decision of any court of competentjurisdiction, such decision shall not affect the validity of the remaining portions of this chapter. The city council declares that it would have passed the ordinance codified in this chapter and each section, subsection, clause or phrase hereof, irrespective of the fact that any one or more of the sections, subsections, sentences, clauses or phrases hereof be declared invalid or unconstitutional. (Ord. 2811-05 § 1 (Exh. A (part)), 2811) APPENDIX A IMPORTANT NOTICE TO PROSPECTIVE HOMEOWNER REGARDING THE PROPOSED RENTAL AGREEMENT FOR THE MOBILE HOME PARK. PLEASE TAKE NOTICE THAT THIS RENTALAGREEMENT CREATES ATENANCY WITH A TERM IN EXCESS OF TWELVE MONTHS. BY SIGNING THIS RENTALAGREEMENT, YOU ARE EXEMPTING THIS MOBILE HOME SPACE FROM THE PROVISIONS OF THE CITY OF MARINA MOBILE HOME RENT STABILIZATION ORDINANCE FOR THE TERM OF THIS RENTALAGREEMENT. THE CITY OF MARINA MOBILE HOME RENT STABILIZATION ORDINANCE AND THE STATE MOBILE HOME RESIDENCY LAW (CALIFORNIA CIVIL CODE SEC. 798 et seq.) GIVE YOU CERTAIN RIGHTS. BEFORE SIGNING THIS RENTALAGREEMENT YOU MAY CHOOSE TO SEE A LAWYER. UNDER THE PROVISIONS OF STATE LAW, YOU HAVE A RIGHT TO BE OFFERED A RENTAL AGREEMENT FOR - (1) ATERM OF TWELVE MONTHS, OR (2) A LESSER PERIOD AS YOU MAY REQUEST, OR (3) A LONGER PERIOD AS YOU AND THE MOBILE HOME PARK MANAGEMENT MAY AGREE. YOU HAVE A RIGHT TO REVIEW THIS AGREEMENT FOR 30 DAYS BEFORE ACCEPTING OR REJECTING IT. IF YOU SIGN THE AGREEMENT YOU MAY CANCEL THE AGREEMENT BY NOTIFYING THE PARK MANAGEMENT IN WRITING OF THE CANCELLATION WITHIN 72 HOURS OF YOUR EXECUTION OF THE AGREEMENT. https:llwww.codepub€ishing.comlCA/MarinathtmIlMarinaO5fMarinaD572.htmi 22123 4/1012019 Chapter 5.72 MOBILE HOME RENT STABILIZATION IT IS UNLAWFUL FOR A MOBILE HOME PARK OWNER OR ANY AGENT OR REPRESENTATIVE OF THE OWNER TO DISCRIMINATE AGAINST YOU BECAUSE OF THE EXERCISE OF ANY RIGHTS YOU MAY HAVE UNDER THE CITY OF MARINA MOBILE HOME RENT REVIEW LAW, OR BECAUSE OF YOUR CHOICE TO ENTER INTO A RENTAL AGREEMENT WHICH IS SUBJECT TO THE PROVISIONS OF THAT LAW. {Ord. 2011-85 § 1 (Exh. A (part)), 2811) The Marina Municipal Code is current through Ordinance 2018-10, passed December 4, 2018. Disclaimer: The City Clerk's Office has the official version of the Marina Municipal Code. Users should contact the City Cleric's Office for ordinances passed subsequent to the ordinance cited above. https:/Iwww-codepublishing.com/CA/Manna/himl/MarinaO5/MadnaO572.htmi 23123