HomeMy WebLinkAbout12/06/1994, 1 - PROPOSED AMENDMENT TO THE MOBILE HOME PARK RENT STABILIZATION ORDINANCE CONCERNING AUTOMATIC ADJUSTMENTS TO RENT. MEETING DATE:
m� pil city Of San tins OBISPO 1216194
ITEM NUMBER:
iZ; COUNCIL AGENDA REPORT
FROM: JEFFREY G. JORGENSEN, CITY ATTORNE
SUBJECT: PROPOSED AMENDMENT TO THE MOBILE 116ME PARR
RENT STABILIZATION ORDINANCE CONCERNING
AUTOMATIC ADJUSTMENTS TO RENT.
CAO INTRODUCE AN ORDINANCE AMENDING SECTION
RECOMMENDATION: 5.44.060 (E) OF THE MOBILE HOME PARR RENT
STABILIZATION ORDINANCE CONCERNING AUTOMATIC
ADJUSTMENTS TO RENT TO MARE SUCH ADJUSTMENTS
APPLICABLE TO BOTH INCREASES OR DECREASES IN
EXPENSES, TO CLARIFY THAT EXPENSES DO NOT
INCLUDE CAPITAL IMPROVEMENTS OR ONGOING
MAINTENANCE COSTS, AND TO EXTEND THE NOTICE
PERIOD FOR SUCH INCREASES ,OR DECREASES TO 90
DAYS, CONSISTENT WITH CIVIL CODE § 798.30.
DISCUSSION:
At the November 15, 1994 City Council Meeting, the City Council
directed staff to prepare amendments to Section 5.44. 060(E) of the
Mobile Home Park Rent Stabilization Ordinance concerning automatic
adjustments to rent, in response to a request from Leola Rubottom.
That request and the previous analysis from the City Attorney's
Office is attached for your information.
The proposed ordinance included with this agenda report will carry
out the City Council's direction at the November 15, 1994 Council
meeting and will make the following amendments to Section 5.44. 060
(E)
1. It will apply automatic adjustments to both increases and
decreases in expenses for common area utilities, new
government-mandated services, garbage service and cable
television.
2 . It will clarify that for the purposes of this Section,
expenses shall exclude capital improvements and ongoing
maintenance costs.
3 . It shall extend the notice period for automatic adjustments to
90 days to bring the ordinance .into consistency with Civil
Code § 798.30.
OPTIONS:
Option 1: If the Council wishes to amend the automatic adjustment
provisions as discussed above and as previously directed, adopt the
attached ordinance (Exhibit A) . This is the staff recommended
alternative.
�r
Option 2 : Take no action and leave the automatic adjustments as
currently written. This would maintain the ordinance as originally
adopted by the voters in 1988.
Option 3: If the Council wishes to change the word "expenses" to
"rates, " give staff direction to return with a revised ordinance.
In light of the previously submitted analysis, this is not
recommended.
FISCAL IMPACT:
If the Council adopts the ordinance as recommended, it should have
no fiscal impact on the City. It may result in a slightly greater
administrative burden in interpreting the ordinance, but will
prevent capital improvements and ongoing maintenance from being
added to rent as automatic adjustments. The impact this may have
on actual rents is somewhat speculative, but could be potentially
significant depending upon the facts of each particular case.
JGJ/sw
cc: (attached distribution list)
Attachments:
Exhibit A (Proposed Ordinance)
Exhibit B (Legislative Draft of Ordinance)
Exhibit C (letter from Leola Rubottom)
Exhibit D (Previous Report)
Owner/Manager I-^sident, 'Tenant Association Owner/Manager JAN
Nillow Creek Mobile Home Park" )w Creek Mobile Home Park Valle Vista Mobile Home Park J
3500 Bullock Lane 3500 Bullock Lane 333 Elks Lane
San Luis Obispo, CA 93401 San Luis Obispo, CA 93401 San Luis Obispo, CA 93401
P ant, Tenant Association Owner/Manager President,Tenant Association
Valle Vista Mobile Home Park Manhew s Mobile Home Park Matthew's Mobile Home Park
333 Elks Lane 274 Higuera Street 274 Higuera Street
San Luis Obispo, CA 93401 San Luis Obispo, CA 93401 San Luis Obispo, CA 93401
Owner/Manager President, Tenant Association Owner/Manager
Mission Trailer Park Mission Trailer Park San Luis Mobile Home Park
546 Higuera Street 546 Higuera Street 2994 Hlguera Street
San Luis Obispo, CA 93401 San Luis Obispo, CA 93401 San Luis Obispo, CA 93401
President, Tenant Association Owner/Manager President, Tenant Association
San Luis Moble Home Park Chumash Village Moble Home Park Chumash Village Mobile Home
2994 Higuera Street 3057 S. Higuera Street Park
San Luis Obispo, CA 93401 San Luis Obispo, CA 93401 3057 S. Higuera Street
San.Luis Obispo, CA 93401
Owner/Manager President, Tenant Association Owner/Manager
Rancho San Luis Moble Home Park Rancho San Luis Mobile Home Park Silver City Mobile Home Park
3395 S. Higuera Street 3395 S. Higuera Street 3860 S. Higuera Street
San Luis Obispo, CA 93401 San Luis Obispo, CA 93401 San Luis Obispo, CA 93401
President, Tenant Association Owner/Manager President,Tenant Association
5i` amity Mobile Home Park Creekside Mobile Home Park Creekside t✓oble Home Park
3b. `j. Higuera Street 3960 Higuera Street 3960 Higuera Street
San Luis Obispo, CA 93401 San Luis Obispo, CA 93401 San Luis Obispo, CA 93401
Owner/Manager President, Tenant Association Owner/Manager
Dceanaire Moble Home Park Oceanaire Moble Home Park Colonial Manor Moble Homes
1121 Orcutt Road 1121 Orcutt Road 1255 Orcutt Road
San Luis Obispo, CA 93401 San Luis Obispo, CA 93401 San Luis Obispo, CA 93401
'resident, Tenant Association Owner/Manager President,Tenant Association
:olonial Manor Moble Homes Laguna Lake Moble Estates Laguna Lake Moble Estates
255 Orcutt Road 1801 Prefumo Canyon 1801 Prefumo Canyon
pan Luis Obispo, CA 93401 San Luis Obispo, CA 93401 San Luis Obispo, CA 93401
owner/Manager President, Tenant Association
tillage Moble Home Park Village Moble Home Park
45 South Street 145 South Street
pan Luis Obispo, CA 93401 San Luis Obispo, CA 93401
Leola. Rubottoir, Deniz Lau. Jam Buttexy
3960 So. H.LgueAa, Space 21 P.O. Box 730 P.O. Box 730
San Lu L6 Obizpo, CA 93401 San Luiz Ob.i.6po, CA 93406 San LtiiZ Obi.6po, CA 93406
E 9 Betty He.nbon .
1860 The.&a Dn.
San Luiz Ob.t,apo; CA 93405
1-3
ORDINANCE NO. (1994 Series)
An Ordinance of the Council of the City of, San Luis
Obispo Deleting Chapter 5.44.060 (E) of the San
Luis Obispo Municipal Code Relating to
Automatic Adjustments to Rent in Mobile Home Parks
BE IT ORDAINED by the• Council of the City of San Luis Obispo:
SECTION 1. Section 5.44.060 (E) of the San Luis Obispo
Municipal Code is hereby amended to read as follows:
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, less 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(B) , 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.
SECTION 2. This ordinance, together with the names of
council members voting for* and against, shall be published once in
full, at least three days prior to its final passage, in the
Telegram Tribune, a newspaper published and circulated in this
City. The ordinance shall go into effect at the expiration of 30
days after its final passage.
INTRODUCED AND PASSED TO PRINT by the Council of the City of
San Luis Obispo at its meeting held on the day of ,
Exhibit A
'_ L�
Ordinance No. (1994 Series)
Page Two
1994, on motion of seconded by
and on the following roll call vote:
Ayes:
Noes:
Absent:
Mayor Allen Settle
ATTEST:
City Clerk, Diane Gladwell
APPROVED AS TO FORM:
City Attorney
1 r 5
ORDINANCE NO. (1994 Series)
An Ordinance of the Council of the City of San Luis
Obispo Deleting Chapter 5.44.060 (E) of the San
Luis Obispo Municipal Code Relating to
Automatic Adjustments to Rent in Mobile Home Parks
BE IT ORDAINED by the Council of the City of San Luis Obispo:
SECTION 1. Section 5.44. 060(E) of the San Luis Obispo
Municipal Code is hereby amended to read as follows:
E. Space rent may be automatically adjusted based on
increasesr >>>irsras; ' ;! ;in expenses for common area
utilities, new government-mandated services,_ garbage
service and„cable television, where applicable < cs g;
C2� tal
F zapxcvemes a cngrsngri + nios. The
spade rent ma
p y be adjusted by' dividing the"t'otal"increase
C?X;..__.ciBC3G '21s in any such expenses incurred during a
twelve'-month period by twelve, less 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(B) , but shall be
considered as additional rent. Notice of the increase"::
o id rea's, ; ; shall be in writing and shall be given as
re fired bylaw no less than
sy r<1i,6.0.t.:'; days
prior to
any such increase :q ? ; ' ] e' sebeing effective. The
notice shall state theamount of the rent increase 6"r
diddX 9M, the new space rent, the amount of the total
increase ❑r` ecreas 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 € ... rex.
based
on this section. There shall only be one sucn increase
er .decrease in any twelve-month period.
SECTION 2 . This ordinance, together with the names of
council members voting for and against, shall be published once in
full, at least three days prior to its final passage, in the
Telegram Tribune, a newspaper published and circulated in this
City. The. ordinance shall go into effect at the expiration of 30
days after its final passage.
INTRODUCED AND PASSED TO PRINT by the Council of the City of
San Luis Obispo at its meeting held on the day of ,
Exhibit B
Ordinance No. (1994 Series)
Page Two
1994 , on motion of , seconded by
and on the following roll call vote:
Ayes: •
Noes:
Absent:
Mayor Allen Settle
ATTEST:
City Clerk, Diane Gladwell
APPROVED AS TO FORM:
City Attorney
1 - 7
Sale Luiz Obizpo, CA
November 15, 1994
flonortabCe Mar=.. %eg Pvmand and Cvunca Membe44 v}' San Luis Obiepo
We neapne$ueot you .to change (V Sectim o� 5.44.060 to
amend thee1 obLCehme %teat Stabi,t ption Ordinance by ch®Tuxg
the uvnd expertoe :to nates &A&L it appevw in this 4ectzon.
ALav, p.Ceaoe add the urvAL, o4 decreaoe, aA&A the uavnd ZwAea6e
uVwAe it i4 «bed in thio 6ec .Loo.
Reganding the bentence, ."Notice d� the incAeaoe on dec)Eeaoe ehaLL be
in uniting and eha l,L be given ao negu i.%ed bac .Caro no Le eo than ALrbl
daYa pneovc to a6uch incneQoe ex big r1/eve." Pteaee
chaiufe. the urvnd aixtr# to ni n� dad o ae the Cour hao changed.
Amppr}� eu6mitted,
L ata Rubot&m
3960 So. f Lgue/ra, Space 21
San Lui.a Obi.opo, 93401
Exhibit C
/- g
p' 1 y� t MEFING DE:
7i1�d city of SAl l UIS OBISpO REMNUMSER:
COUNCIL AGENDA REPORT
FROM: JEFFREY G. JORGENSEN, CITY ATTORNEY
SUBJECT: REQUEST TO AMEND SECTION 5.44.060 (E) OF THE
MOBILE HOME RENT STABILIZATION ORDINANCE
CONCERNING AUTOMATIC ADJUSTMENTS TO RENT.
CAO BY MOTION, RECEIVE A REPORT REGARDING A REQUEST
RECOMMENDATION: TO AMEND 5.44.060 (E) OF THE MOBILE ROME RENT
STABILIZATION ORDINANCE, AND PROVIDE STAFF
WITH DIRECTION ON ANY DESIRED AMENDMENTS TO
THE ORDINANCE.
DISCUSSION:
During the communications section of the October 25, • 1994 City
Council meeting', the Council directed staff to return on a future
agenda with a business item to address a request by Leola Rubottom
to amend Section 5.44. 060(E) of the Mobile Home Rent Stabilization
Ordinance.concerning automatic adjustments to rent. At the October
4, 1994 City Council meeting, the Council directed the City
Attorney's Office to prepare -an analysis of the request which is
attached for your information.
If the Council desires to further amend Section 5.44.060(E) , it'
should provide direction to staff to prepare an ordinance with the
proposed amendments and bring it back as a public hearing item.
JGJ/sw
Attachments:
Letter from City Attorney (10/10/94)
Exhibit D /
MEMORANDUM
FROM THE OFFICE OF THE CITY ATTORNEY
October 10, 1994
TO: City Council
FROM: Jeff Jorgensen
SUBJECT: Request to Amenl Section 5.44 . 060 (E) of the
Mobile Home Rent Stabilization Ordinance
Background:
During the communications section of the October 4 , 1994 City
Council meeting, the Council directed the City Attorney's Office to
prepare an analysis of a request by Leola Rubottom and Bill and
Betty Henson to amend Section 5.44 . 060(E) of the Mobile Home Rent
Stabilization Ordinance (please see attached letters) . As you may
recall, the Council previously amended Section 5.44.060(E) at the
request of Leola Rubottom to exclude automatic rent adjustments
from the calculation of annual cost of living increases allowable
under Section 5.44 .060(B) . That amendment was finally adopted by
.the Council on August 16, 1994 , and took effect on September 16,
1994. At previous hearings, Ms. Rubottom proposed an essentially
identical change to the current request, but formally withdrew it
at the August 16, 1994 meeting.
The requested change is set forth in legislative draft as follows:
"E. Space rent may be automatically adjusted based on
increases 'o;r decease in egesesfat a for common area
utilities, new government-mandated" services, garbage
service and cable television, where applicable. The
space rent may be adjusted by dividing the total increase
o de a e in any such emgenses rates incurred during a
tiaelve-month period by twelve, lei sTa 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(B) , but shall be
considered as additional rent. Notice of the increase ar
decrease shall be in writing and shall be given as
required by law no less than sixty days prior to any such
1
P/0
increase being effective. The notice shall state the
amount of the rent increase, the new space rent, the
amount of the total increase 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 based on
this section. There shall only be one such increase in
any twelve-month period.
Analysis:
As noted in .previous memos on this subject, the City Council has
broad authority to modify the Mobile Home Rent Sstabilization
Ordinance to protect the public interest, so long as an adequate
mechanismremains in the ordinance to ensure a "fair return on
investment" to the park owner. The proposed changes address two
primary issues:
1. Increases and Decreases. The first issue is a request to
apply the automatic adjustments to both increases and decreases in
specified costs. While it seems unlikely in today's economic
environment that such costs will actually decrease, there does not
appear to be any legal reason why such an amendment could not be
adopted. However, it will add to the complexity of the ordinance
and its administration, and may provide additional areas of
contention over when increases or decreases have occurred, how they
are calculated, when and how often they are applied, whether
adequate notice has been given, and whether refunds should be
required. It is a matter of judgment for the Council to determine
whether the perceived benefit of the proposed change (as it
actually affects rent) will outweigh the added complexity and
procedural conflict which may arise. Should the council wish to
pursue this modification, there would need to be additional changes
from those proposed in order to maintain consistency.
2. Expenses 'vs. Rates. The second. issue is a request to
change the way automatic adjustments are calculated from increases
in "expenses" to increases in "rates." This proposal is
problematic in several ways. ' It would represent a significant
change in the way in which automatic adjustments have been
previously calculated, thereby changing the current balance in the
ordinance between the protection of excessive rent increases to
tenants and the provision of a fair return on investment to the
park owner. As previously noted, to the extent this balance is
changed over time, it may simply shift pressure to apply for rent
adjustments under Section 5.44. 080. The City has never held such
a rent adjustment hearing since the ordinance .was adopted in 1988,
and a shift in emphasis toward such hearings would represent a
significant administrative burden to the City, as well as create an
environment for conflict. A more important concern is that the
proposed change would create a potentially significant ambiguity.
2 f
For example, if the automatic adjustment were limited to an
increase in rates for common area utilities such as water, it would
not allow for an automatic adjustment if there is an increase in
water usage. Thus, the change would effectively freeze all charges
for water, regardless of the amount used, after the effective date
of the ordinance until such time as there was a rate increase, and
then only to the extent of the rate increase. This would appear to
create an inequitable relationship not contemplated at the time the
ordinance was adopted. In turn, it could potentially affect the
quality of services provided or, conversely, discourage
conservation. It would further create an ambiguity with respect to
new government mandated services since it could be argued that an
automatic adjustment would only be allowed for new government
mandated services when there is an increase in rates, but not upon
imposition of the new mandate. Finally, changing "expenses" to
"rates" could create several interpretative, timing, and accounting
problems for the City in administering the ordinance.
Based upon the above analysis, it would be my recommendation that
the Council not consider changing "expenses" to "rates. " In a
September 12, 1994 letter to the City Council, Ms. Rubottom
expresses the concern that, "The word 'expenses' could encompass
repairs that are not legal for a park owner to pass through. . . . "
This seems to indicate a fear that expenses would be interpreted to
mean ongoing maintenance and/or capital improvements. As an
alternative to the proposed change, the Council may wish to
consider using the word "charges, " or by specifically excluding
maintenance and capital improvement projects from the definition of
expenses.
If you have further questions or comments concerning this matter,
please feel free to contact me at your convenience.
JGJ/sw
attach.
cc: John Dunn
t 3
NA
.:r
RECEIVED
s"P 1
CITY COUNCIL
SAN 1.1!I'! 0615?0•CP1�.ae
Sept.embwr 12, 1994
San Lui.o Obi j'w.' C1
l�'wzvna6Le rlayor geg 21innand and Cbi CounciC Me bean v�
San Luia Oblapo, CA
;2e: Chargee deeded in the "V-?-LV in the Ci4 4 San Lula 06copo1e
idvbiLehame Rezi!� Lary.
9t ha,e been brought to mit attention that the rwndiruj in Section 04
5.44.(1;10 neede to be cAan u* to mwce cCea&bj dgAne the intention vL the
Ondinwzce.
The rwnd "expenoee" could encwjoa 4 nepaLu that, ane not LegaL An a
pante vanes to paae LWvfh. %he word "nate" more clew L ree the
LwAeaeee in utilitiee; new government" kited Denvicee, ya�cbage
oeAvice and cable teLevieivn. %heee Coate ane identi� 6y aizd amounte
ane detwxined bg "Aa:e".
Foo example: "Space hent marc be aut' "fes adjneted baeed an i zcAeaaee,
(then add thef�hnaee ((or decneaaea)) in the eweneee (change the Waldatea)) arc the common area ut1:Gi.tiee, Hero gvvennment-
expeuu to ((n
mandate� eenvicea, 6envuz and cable televio.i.vn, uhene ap Linable.
he apace hent may be s�uA bcu &vidZng the total incAeaee (a� the
pA&we ((wt. &zaeiae in ouch eT"ee ( clranje :hie to ((nate)) in-
cu&md during. a tweLve-mon'A period by twelve, Leee the percentage in
the C.YJ. index P the tereLve-month penlvd."
Me would oppnerrate . it it you would act on tAL6 as aovn ae pocacRe.
Since jl
iA9 'd
Leola Pubottara
3960 Soufh Aipwwr .Space 21
San Lwi,e Gb<epv, CA 93401
1 r l
.<ECEIVED
b r,P 1 4 Iyy4 ,`
U
CITY COUNCIL September 12, 1994
CAN 1.13!S CrISPP.CA
7n: Honorable Mayor Peg Pinard of San Luis Obispocil Member
T_
Bi11 Roalmans C C'`r '�N�11
Allen Settle `
Penny Rappa
Dave Fromm
SUBJECT: SEC CN (E) of San Luis Obispo City Rent Ordinance, 5.44.060
Dear Honorable Mayor and Council Members:
A great number of Laguna Take Mobile Estates residents request
certain changes in this paragraph, as is listed below:
a. 7b substitute the word "rates" for expenses in line two (2) of Section E.
b.. 7b add "decrease" to line six (6) to read, "total increase or decrease".
Also change "expenses" to read "rates" in line six (6) of Section-E
c. 7b add "decrease" in line thirteen (13) to read "increase or decrease"
in Section E.
The reason for our request is as follows:
Utility =ghmies refer to their charges as "rates", not expenses.
A repair to a utility falls under the heading of maintenance, and main-
tenance is included in C.P.I. figures. Use of the word "expenses" allows
the park owner to add his cost of repairs which he is not legally entitled
to pass through to tenants.
A survey taken from park figures of two years ago, showed a
variation of one hundred and fifty ($150) dollars per month in rents
charged for mobile hones receiving identical services here in this park.
After numerous sales involving 108 ipereases in mobile home rents, we feel
confident that the difference between the highest and lowest rents in
the park is considerably greater-at .this point in time.
Budgets based on fixed incomes cannot cone with constant assaults,
and certainly should not be affected by non-legal Dass-throamghs.
Wee will greatly appreciate your consideration of our fair
request, and we would like to see this matter added to the Council
Agenda as soon as it is possible.
es� l sutrnitted,
'Sill "and tty H son
1860 Thelma Drive
San Iuis Obispo, CA 93405
MEMORANDUM
FROM THE OFFICE OF THE CITY ATTORNEY
],ay 18, 1594
TO: City Council
PROX: Jeff Jorgensen, City Attorney
SUBJECT: Mobile Home Park Rent Stabilization
Automatic Adjustments Pursuant -to 5. 44. 060(E)
At the April 19, 1594 City Council meeting, the attached
corsunication item from Leola Rubotto:, was referred 'to staff for an
analysis and response. Leola has requested the deletion of
Section 5.44 . 060(E) of the Mobile Home Park Rent Stabilization
ordinance, which allows for automatic idjustments of rent based on.
"increases in expenses for common area utilities, new gcvernment-
;..ardated services, garbage service and cable television. . . . " The
apparent reason given for this request is that the owner of
Creekside Mobile Ho-e Park has offered long term leases which do
not include automatic adjustments as set forth in 5.44 . 060 (E) . The
inference is this constitutes a "discriminatory practice. "
A previous inquiry, which asserted that the automatic rent
adjustments allowed by 5. 44 . 060(E) are in conflict with the l,obile
Horne Residency Law (Civil Code § 798. 31) was submitted in December,
1993. (Attached for your information is the analysis of that
previous correspondence. )
CONCLUSION
The City Council has the authority to delete Municipal Code
§ 5.44 . 060(E) provided an adequate mechanism remains in the Rent
Stabilization Ordinance to ensure a "fair return on investment. ',
The fact that a park owner offer's long-term leases with provisions
different from the provisions of the Rent Stabilization Ordinance
is not a "discriminatory practice. " Therefore, should the Council
wish to consider deletion of § 5.44 .060(E) , it should do so on some
basis other than an alleged discrimination.
ANALYSIS
1. Does the City Council have authority to delete the automatic
adjustment provisions of § 5.44. 060 (E) ?
_• 7';e Mobile Home Park Rent Stabilization Ordinance was adopted by
' voter approval as an initiative measure in 1988. However, the City
Council specifically retained the authority to amend the ordinance
1-/5
by majority vote (§ 5.44 . 141) . Therefore, the City Council clearly
has the authority to delete § 5.44 . 060(E) should it choose to do
so. However, it should also be noted that the validity of a rent
control ordinance will rest upon whether the ordinance permits the
landlord to earn a "just and reasonable return." A long line of
court decisions support this fundamental requirement. Birkenfeld
v. City of Berkeley, 17 Cal . 3d 129 (1976) ; Carson Mobile Hone Park
Owners Assoc v. City of Carson, 35 Cal. 3d 184 (1983) ; Palos Verde
Shores Mobile Estates Ltd v City of Los Angeles, 142 Cal.App. 3d
362 (1983) ; Fisher v City of Berkeley, 37 Cal. 3d 644 (1984) ; West
Hollywood Concerned Citizens v City of West Hollywood, 232
Cal.App.3d 486 (1991) . While no case has concretely defined the
terim "just and reasonable return, " one court has described it as
one which ". . . is high enough to encourage good management, reward
efficiency and discourage the flight of capital and is commensurate
with returns on comparable investments, but not so high as to
defeat the purpose of preventing excessive rents. " San Marcos
lobile }ore Park Assoc v City of San Marcos, 192 Cal.App. 3d 1492
Conversely, a denial of a dust and reasonable return
constitutes an unconstitutional taking of property which requires
compensation. Birkenfeld v City of Berkeley, 17 Cal. 3d 129
(1976) . The City's rent stabilization ordinance recognizes the
need for balance by including in the Purpose and Intent section,
the following provision:
"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 home
sites for mobile hone 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 investment.,'
(§ 5.44 . 010(C) . Emphasis added. )
Most rent control ordinances allow an annual increase based on the
percentage change on the consumer price index or a portion thereof
(in the case of San Luis Obispo, 100% of the CPI up to 5% and 75-t
of the CPI in excess of 5%) . ' However, even with an annual increase
provision, a procedure .must be provided by which an owner can seek
&'h increase on the grounds the annual increase isnot sufficient to
2
/—AV
provide a just and reasonable return. Thus, the San Luis Obispo
ordinance also provides for an application for rent adjustment over
and above the CPI increase, and any automatic adjustments, when
appropriate toassure a fair and reasonable return on investment.
(§ 5A4 . 070. )
Some cities provide for automatic adjustments in their rent control
ordinances. Others do not. The potential advantage of automatic
adjustments is the ease. of administration which may result. The
disadvantage is that the adjustments may result in slightly higher
rents than a more complex and staff intensive. hearing procedure.
The difficulty with simply eliminating the automatic adjustment
provisions of Section 5. 44 . 060(E) is that while it may provide for
a modest reduction in rent increases in the short terra, it may also
simply result in shifting requests for rent increases to the for-mal
application process set forth in Section 5. 44 . 070. I am unaware
of any formal rent adjustment hearings having been }field by the City
since the rent stabilization ordinance was adopted in 148a. Given
the extremely contentious, time consuming, and litigious hearings
held in many other cities, this may be an enviable record. In
light of this, the Council nay wish to determine whether there are
significant reasons for changing the current balance in the
ordinance :riot to taking any action on this matter.
2. Does the fact that a park owner offers long-term leases With
provisions different from the provisions of the Rent Stabilization
Ordinance constitute a "discriminatory practice'?
Whether a park owner decides to offer a long term lease, and
whether a tenant decides to accept such a lease, is a purely
private, voluntary decision between the parties which has nothing
to do with discrimination and is largely beyond the ability of the
City to regulate. A park owner is not obligated to offer a long
tern lease, but has a right to, and if such a lease otherwise
cosplies with the provisions of Civil Code § 748. 17 (G) the owner
" . . . shall be exem;t from any ordinance, rule, regulation, or
initiative measure adopted by any local government entity, . . . . "
(Civil Code § 748.17 (A) . ) The owner's decision may be motivated by
a number of reasons (such as stability and predictability) , but
generally will be based upon the perceived economic- berm fit of a
lease as opposed to the Rent Stabilization Ordinance. On the other
hand, a tenant is not required to enter into a long term lease, and
may opt for the protection of the Rent Stabilization ordinance if
the tenant perceives a greater economic benefit in doing so. . It
depends upon the relative value of benefits offered in the lease.
In both instances, it is a matter of choice based upon the terms
and conditions of the entire agreement. To call such a process of
negotiation a "discriminatory practice" does -not seem to be a
supportable premise. Further, to single out ..one provision of a
_ long term lease as a reason for amending the Rent Stabilization
; Ordinance to delete automatic adjustments would essentially
3
1_,7
penalize owners for offering long term leases that do not exactly
mirror the ordinance, and may take away incentives to offer such
leases at all .
RECOMMENDATION
Based upon the above analysis, it is respectfully recommended that
§ 544 . 060(E) not be deleted based upon an unsupported notion of
"discriminatory practice. " Issues which might properly support
such a deletion would include whether the automatic adjustments
have resulted in excessive rent increases or have been abused. I
an, unaware of any such instances having been brought to the
attention of the City.
JGJ/sw
cc: John Dunn
Deb nossli
Attachnents:
1. Leola Rubottom Letter, dated April 18, 1994
2. Jeff Jorgensen (demo, dated December 22, 1993
3 . California Civil Code § 798. 15, et sea.
4
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Sun L. u, Ubiopv,
,i'ppit is, i9�j4
/�vnu.able P1ar�v.2 'i�tn��d cnd CZE Council i4eaue,a vL
San L, ;"+ Lbcopv, C'4
i'e: %he tt✓.vurta bu. e ek to i C bane re+:t <n
:.eehaide jI)QUiehv-.e PC.-A
r°ccv: tv a llsz r-Da f Yati.ce d a Ant 9nc:ewe dated Oct. 231 1993,
C.�ae e .:e=" i`at have not .ai fined Zwwc.4 a-at have :he i993 pa"
th.:vicrh.e iizted eep:.ra'Cc % on the :.ent statement aul a U be inrJuded
<n ;he 6W rete.#.
I tae ped n r✓ouplw 4L-t ct,:e Listed aide�ec.'.ive ;�mular.,t 1, ;•.u,4 axre
� a
. Jared on he cvet d c0:7 on area new gvvc1rrrent =%-Ued
be+:vjc" ycrbare Ge:Y1Le, PwC. tv the pciik J 1:1J3.
he -.= ;994 bane lent caui6ted vt ;he cur✓.e:it -zest in 1993 ;,1
tka C.P.J. ir.C.:ea e. f 2;i aid ,:.e cam.-✓.ert 1993 pca� .'.i✓.vurte.
Tka 1995 C•i'•✓•, 104 .Jhwe nvt vn Lca4"' U4.0 be baZCd on .:a new
re^t LF;:a pL:ie wry new pcae th4vu04.
Ei1e rear j� re�,eat the daetzan o'p (6.) eeCiiuri at* 5.44.660 vL
; Artae biCer=4 Rent S:abiLiaati-n Up.-iizv=z P4 San Lulh Obiopv that
pr.ac.;i.ce.
Siue.:elf,
Leola Aubwj 'aa
3960 Sou'A !llfuew, Space 21
San "' . Obispo, C4 93401
6ne4oced: Six;tV Day ,1'otice vL Rent .Iria:eahe Aa% thv.ee not wa Leasee.
v�L Rent .9nCreaeewt ;hvee an Leaeeb.
Si+4 Dai Nvtite
ATTACINFNT 1
Spacer
E=EEKSIC•E 7•:0=ILEHC-ME COMMIL :1T'f `�•��—
�3e3
S. SICUERA STREET
SAN LUIS OBISEM Ca 9's�il
Cctober Si, M3
SIXTY DAY NOTICE OF RENT INCREASE
Dear Res:dent:
The Lease movi=es fcr 1•1.,ts to be adjusted annually on January 1st. This lettel•
is notice of 'tvl`1 adjust:ent. F;ca a•jgust, 135^ to August, 199s the Cansu:et• Price
index appl :cabie to the Lease :oved from 4::+. 1 to 44:.8 which is a 2. ii% inet'2dSe.
Thel'efor?, y...; r{M' :'Jill Ye lieTeased by ;5. 4/ to 5278..79.
Tha _a ate f'u ther p1':'l•ires for ;ass thl•l15 Jf costs related directly i0 the park
costs as fct•thtl• adjusted for- inflation. 'These costs include- utilities, govitn.er.t
sit-vices and fees, which this fear affects electricity, gas, watel•, trash and
govtlnte:.t fEei, All :;.cl'eases and dacreases listed nave been adjusted fc1• the CPR.
Palk use of electricity has risen slightly and the eoomodity -cest has again
l'isin, 1'esu1t:ng in an overall :ncrease. T:'Erefore, lest year' s Fass thru of 51. 25'
:+i 11 increise by 5. =5 to S:. E1.
khile t;:e c;,st of ;as has increased this year, the pa,•k' s cOnsu:ption of gas to
heat the t'EC1'Edtic:l ��lidlnp, swi::ing pool anti spa has again decreassi. YG-it• rl'Gt`dta
share :f this decrease is a S I.L4 pet` :onth reduction fol` a new pass thl•u of S2. 27.
,,.,IS yell' beth �atcl` consuzptiin and tld- co:dudlty ter. haV2 :nCI•eaSEd
ct•a:atieally. Your p.erata share of this i:lel•ease is j4. 33 per- :oath fora total
watel• pass th1,u of i!;. ?c.
The cost for du:p fres will increase an additional $1. 1 for a total rasa thio of
SZ. :•c. TLt rel•mit to :;.trate fee t`is yea,- 1•e J.ained the sa:e. Adjusting last ytat'' s
cost for C?I results in a ?rcr•ata 2eerease of s . �1 fol• a total Sovet•nnent fees pass C�
t�ir•� 0 5. 3�. a �71'CrEi ty tax asieSi3enIS will re=ail at S1. vim.
prs�
Ya• r r:s: th:_:yh, effective :anuary 1, 1924 will be ;13.54 qnd will t•e listYO..;-
S al'atel" -0.'1 "O;t• 1'e^t %%sttient and N:il not ,t subject to CrI lriel'eas.±s. 'A1'. of
the above pass thru: reflect act':al cost increases and do SOT
include utilities and
other• Chat b:i:Ed drectiy to you. L•octi.sntatlon for the pass tfi,-da is avai'able
at the park office.
;his notice applies to all residents under the 9800a2m pruvisions of the San
L.vis Cbispo Rent C.Ynt1-01 Ordnance. 7h: Base Rant baCo2es affective for- January 1,
IS94 a-.d will 1'e:aln so t1rvuyh ieee::tir 21, • 1391.
S2.1cerely,
Pat Fleming,
Manager
MEMORANDUM
FROM THE OFFICE OF THE CITY ATTORNEY
December 22, 1993
TO: City Council
FROM: Jeff Jorgensen
5
SM3JECT: Mobile Hc:a,e Rent Stabilization .
I have reviewed the attached letter dated December 7, 1993 from
Leola Ruhcttom, which asserts that the automatic rent adjust—ments
allowed by Municipal Code Section 5.44 . 60 (E) (5.44 :C6O (E) ) are in
conflict with the Mchile He-:e Residency Law, and therefore invalid.
CONCLUSICM
Municipal Code Section 5 . 44 . 060 (E) is net in conflict with the
1:obile Ho.-_e Residency Law and is a valid subject of municipal
regulation.
ANALYSIS
It is correct that the Mobile Home Residency Law, Civil Code
Section 790. 31, requires that; "a homeowner shall not be charged a
fee for other than rent, utilities and incidental reasonable
charges for services actually rendered. " However, what constitutes
rent, particularly under a rent control ordinance, is not preerpted
by state legislation and is left to the broad discretion of the
local agency. Grecory v. City of San Juan Camistraro, 142 CA3d 72,
191 Cal.R_tr. 47 (1983) . in addition, in the absence of a rent
control ordinance, rent can be established at whatever level the
park owner determines, subject only to market forces.
The only case addressing the issue raised by Leola's letter is
Karrin v. Ocean-Aire Mobile home Estates, 1 Cal.App.4th 1066, 2
Cal.Rptr.2d 581 (1591) . The Kam n case invalidated a rent control
ordinance of the City of Oxnard which permitted a mobile home park
owner to add a monthly capital improvement assessment to the
nonthly bill in addition to regular rent. The rent control
ordinance specifically provides that such assessments should not be
considered rent. The Court invalidated this provision because it
directly conflicted With Civil Code Section 798.31. However, the
Court was careful to point out that had the increase been added to
rent rather than billed separately as an assessment, it would have
been valid.
ATTACHMENT 2 I/r,2/
city Council
December 22, 1993
Page Two
The San Luis Obispo Mobile come Rent stabilization Ordinance is
significantly different from the Oxnard ordinance which was
invalidated in {arrin. The adjustments permitted under the San
Luis Obisro ordinance are specifically included in space rent and
are not a separate fee, charge, or assessment. Under this
situation, it appears clear that the San Luis Obispo Mobile H=e
Rent Stabilization Ordinance is valid under the Karrin decision.
(In addition, the 60 day notice of rent increase provided to the
tenants of Cree±side J'obile Home Community appears to rest the
requirements of our ordinance as to form and effect. )
Finally, the reference to Civil Code Section 798..43 (b) does net
aooear to be relevant or related to the question raised.
If you ),ave fa=rther questions or comments, please feel free to
contact r.e at your convenience.
JGJ/sa
attach.
cc: Leola Rubottom
Pat Fleming
Jolin Dunn
ScR L_i e LEvtcv, C,4
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ifvry:.a51e cc�v:c Pi.^^✓•1d c d C Cvc:�C" r"•enb�a ur
San LI-l" Gbcepv, Cr?
Re: %x ZUa;^L paced ✓a -',4 Eei✓ a2?-ed :.1L ba a rers� i�
/1 / ( �,i s1 l j r� ,S2Ca CJ/L 5.�1�1.W, �7Vl.O7l�i./L II�r,
✓L L4 veer 6.-& '�'.... 4J mi atter�,.cvn .+
v� .jja San L,,U ObLopo 14 ,nvbiZ.Lo-.e RUV-Un Lace i4 in dL-,ett cor
Li:h tip C i7Jbf.Ce�i�-e ?e i Jew [_u.
�✓LR :r.�.4 " ,/ v! Section 5.44.6) cZ tie San Luigi i'IvEi. e-ble du,2e lGil
rG�Clic ✓�o:ed E 4ed in
%ay Ee `.U4,r%-!i
iR ez,-er.4e G:ea & -';d4, r.W sJVQJ.R^.a'JL� .• • ' �eG/ Le.:VLCFiI,
gAba jz service cod orale ev�vn vie:e eppLerr:le.'
Tie ,"vbiLetone ietidev-y L--v; :Vo. 759.43 Se .4LwL N
"a'.2,^.evena Rv-.eJ::Y.�'C ie ,:edpvrr..iLls !1:r. ^^4, vn
i ,
r..ana7e-rJ7t oAi-zz L/i4GCUde 4j, ;"e �.reUren Ee!vre tPJG^Lf, u�^E:EJL iii
fw"".e;;-rxA'd rete% C.LzJ .•✓ed j=4 W[ el-pr-"- L.CjJ�L �2rf
r�U/C c6vrrLrL a,--ea iJie6,
JR e�::iY2^.�, i.Zcliir72 44- L7"n- /.iii a can Ee AL✓7GCed 5y: ,7 '-� ;.'.e �v-e-
L"S~.fJL S t:'�. �;.r..1Un C?, tAz za. vlce to std Ci%:.?URtt-
in� :'•e ne...e i an 4.e LJ-CUe,^efd tL,te "JR A:c Ge�Le� u�T e G3::va r_:,,Z ^ei1-
.
.7.R CAJ j"'n tJ GvllectLv Lu '^ ri:.:d v" rvc vt Ounez L-s mxv S'yV
40 Cid ::Ple p^14 :'✓'.U•1j^.�.4 tO Lte alzoD :.Le
Lent a tJ be Jd riff b=.:e .1Q•: C r"/^1%''nd V� •:e'w �iP.^Tll✓ rF>Ct I.
e v�'7� a rva v:he�t taut
Srent, c,�iLi.:iee ar a <:�Gcc./zr�^ :.e=eJrable
. . ,r
G''L^�JLjed Ort 4er.vitt4 uc:1:c,.c.cf r,C'j..��,:�.
Tie pada tiruunj�.d live been iLL .4.nce a thein"PULA C=K" nj tv oma:
�verr.<nz S:c:a r'ivSi.Lerure ,'?et Lacy.
riccv�,t�i,Rj tv lki6t'4 Annotated CalLfap;n.ia Co.: CL)114 J„f;0 6,
Section 50 %.J=je lsrrJ dti7Pl.Ceaed Came.;-Aal OR ci4 /.=.”
We are aahiv the frvn. Play .t a-nd 444 Ca-aa' rr�rbe,:A O� the cit'. 4 San
L ,; , Obi apo to delete that pc✓st 0.0Serb m 5.44.60 pa,=Vwa h "�, i -� v
iuepl OU4 i 1 obileJi:Ye Raj- //e j L--W,
_ %lia/ALV you in adva/rce rvR trout cone!A :ion.
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