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HUMAN RELATIONS COMMISSION
Post Office Box 8100 • San Luis Obispo, CA 93403.8100 • 549-7150
M I N U T E S
MOBILE HOME RENT REVIEW BOARD
July 16, 1985
(TAPE #,fl)
MOBILE HOME RENT REVIEW BOARD MEMBERS PRESENT:
Tom Swem, Patricia Barlow, Gaye Benson, Denny Wheeler and Naoma Wright.
STAFF PRESENT:
Roger Picquet and Steve Henderson
CALL TO ORDER:
The meeting was called to order by Acting Chairperson Gaye Benson at 1:10 p.m.
in rhe City Council Chamber. Board members and Staff were introduced.
STAFF PRESENTATION:
Steve Henderson reviewed the packet presented to the Board which includes cor-
respondence from Darlene Hall and Adele Raymond, information requested by the
Board during the meeting of July 3, 1985 regarding a comparison between Creek -
side Mobile Home Park and Chumash Village Mobile Home Park focusing on purchase
price. This information was gathered from the County Tax Assessor's office by
Board Member Pat Barlow. The number of spaces, amenities, acerage involved,
personnel, etc., were taken into consideration in the computations.
(NOTE:) Board Member Barlow corrected the figure of $3,705,000 (Under "Per
Space Computations") to $3,750,000.
PARTNERSHIP EXPENSES:
Roger Picquet presented information on the issue of Partnership Expenses which
were addressed in the last meeting and reported as being approximately $278,000
during the discussion regarding the Return on Investment Methodology. Staff
has been unable to locate any specific mandate for the treatment of Partner-
ship Expenses. Mr. Picquet has received information from Mr. Buttery explain-
ing various ways which partnership syndication costs can be treated, however,
Mobile Home Rent Review Board
July 16, 1985
Page 2
nothing has been found stating hat as a matter of law or as a matter of gener-
ally accepted principles of , that they are included either as a
capitol expense or as part of the initial cash investment on the property.
Therefore, Staff recommends that the $278,000 listed as Partnership and Syndi-
cation Expenses not be included in the cash investment of the applicant.
RE -OPENING OF HEARING:
At this time, Chairperson Benson re -opened the hearing specifically regarding
receipt of information concerning the investment which had been made in the
purchase of Chumash Village in 1980.
MR. BUTTERY'S COMMENTS:
Mr. Buttery pointed out that the number of spaces in the Creekside Mobile Home
Park are somewhat less than those in Chumash Village and that Creekside's land-
scaping expenses are greater than those of Chumash thus decreasing the Net In-
come.
Mr. Buttery stressed that the Board take into consideration the impact of the
1982 Ordinance on the purchase of the two properties.
Mr. Buttery also indicated that according to the Chumash site plan there are
237 spaces in the park, however, two spaces encompass two lots leaving 235
spaces subject to lease.
Mr. Buttery stated that his client would abide by Staff recommendations to de-
lete Partnership and Syndication Expenses from the cash investment figure, how-
ever, he reserves his right to object at a later point.
MR. OLPIN'S COMMENTS:
Mr. Olpin stressed the considerable space cost difference with consideration
to the correct total number of spaces.
Mr. Olpin also indicated that the investor was imprudent in the purchase of
Chumash Village due to his lack of concern regarding various aspects of the
purchase.
MR. WILLARD'S COMMENTS:
Leigh Willard, President of the Chumash Village Homeowner's Association in-
dicated the impact an inflation adjustment of 18.37% (occurring between 1980
and 1983) would have on the purchase price of 3.75 million dollars resulting
Mobile Home Rent Review Board
July 16, 1985
Page 3
in a $3,635 difference perspace and using the Tax Assessor Rolls, there is a
$4,500 per space difference.
CLARIFICATION OF EXHIBIT #11:
Chairperson Benson requested Mr. Picquet to address the issue of the City's
Rent Moratorium Ordinance as mentioned in Exhibit 11 - letter of 7-1-81 to
Chumash residents from LaCumbre Management Co., Inc. Mr. Picquet checked his
files and advised the Board that the Ordinance was an "Interim Urgency Ordin-
ance" to be effective from June 1, 1981 to October 31, 1981. The Ordinance
number was passed on June 16, 1981 and made retroactive to June 1, 1981.
STAFF REPORT CORRECTIONS:
Steve Henderson indicated that the acreage figure should be 24.04 rather than
24.64.
(TAPE #2)
ADELE RAYMOND'S TESTIMONY:
Mr. Picquet swore in Mrs. Raymond.
Mrs. Raymond commented on the number of spaces in the park as well as the con-
dition of the park, extra fees for corner spaces and fees for parking recreat-
ional vehicles, boats, etc.
CLOSURE OF HEARING:
Chairperson Benson closed the hearing at 2:15 p.m. Deliberation was re -opened
at that time.
A lengthy discussion followed regarding methodology for Rate of Return focusing
on the MNOI method.
(TAPE #3)
Chairperson Benson declared a break at 2:45 p.m.. The meeting was reconvened
in Room 9 of City Hall at 3:10 P.M.
RATE OF RETURN METHODS:
The following Rate of Return Methods were exhibited on the board by Steve
Henderson:
Mobile Home Rent Review Board
July 16, 1985
Page 4
RETURN OF EQUITY FORMULA
$175,635 (Operating Expenses)
- 9,000 (Due to accrual method)
1 35 (8%)
$166,635 (Operating Expenses)
355,039 (Mortgate)
100,000 (8% of $1,425,000 equity)
$621,674
$621,674
15,000
TC3-6—,67T+ : 235 = $2,709.25 ; 12 = $225.77
MAINTENANCE OF NET OPERATING INCOME FORMULA
Gross Rent - $491,350 + Operating Expenses ($166,635 - $143,051)
$143,051 = $627,639 (Total Operating Expenses for 1981 -Exhibit 2)
-342,997 (Mortgage Interest
�,
- 88,591 (Utility Expenses - Gas, Electric, Cable TV)
196,051
- 53,000 (Mgmt. fees, repair & Maint., Janitorial, Acctg., etc.)
+ 9,000 djustment Tax)
152,051
$520,934 235 = $22,167 a 12 = $184.73
MOTION:
Naoma Wright moved, Gaye Benson seconded to addopt the MN01 Formula. (APPROVED)
VOTE: Aye: Barlow, Benson, Wright. No: Wheeler
Mobile Home Rent Review Board
July .16, 1985
Page 5
NOTE: Discussion of MNOI Formula is on Tape A.
DIRECTIVE TO STAFF:
Chairperson Benson stated that since the Board has now determined the Formula
for determining findings in this application that Staff be directed to prepare
findings for the Board in order that they may take final action regarding this
application.
RECONVENTION DATE:
The next meeting will be held on Monday, August 26, 1985 at 1:00 p.m.
ADJl1l1RNMFNT.
The meeting was adjourned at 4:25 p.m.
Respectfully submitted,
4 O
o s Barton,
Recording Secretary
Mobile Home Rent Review Board