HomeMy WebLinkAbout09-18-1985 MHRRB Minutescity osan lues ovspo
oil- HUMAN RELATIONS COMMISSION
"' L Post Office Box 8100 a San Luis Obispo, CA 93403-8100 • 549-7150
M I N U T E S
MOBILE HOME RENT REVIEW BOARD
September 18, 1985
(TAPE #1)
CALL TO ORDER:
The meeting was called to order by Chairperson Tom Swem at 1:10 p.m. in the
City Hall Council Chamber.
INTRODUCTION OF MOBILE HOME RENT REVVEW BOARD MEMBERS:
Chairperson Swem introduced Board members, Denny Wheeler, Patricia Barlow,
Gaye Benson and Naoma Wright.
STAFF PRESENT:
Steve Henderson and Roger Picquet
AGENDA:
Chairperson Swem announced that today's Agenda would include:
Approval of minutes
Staff Report and -Analysis of Findings on the Chumash Village
Application (August 23, 1985)
Consideration of Ordinance Adjustments has been removed from the Agenda
for today's meeting.
APPROVAL OF MINUTES:
MOTION: Gaye Benson moved, Denny Wheeler seconded to approve the following
minutes with noted changes:
Minutes of Meeting of June 3, 1985 - (Page 8, line 20).- Replace
the word "is" with the word "it".
11VU1 IC 11VII1C ReIll nevICw ouara
9-18-85
Page 2
Minutes of Meeting of July 3, 1985 - (Page 2, SUPPLEMENTAL STAFF REPORT,
line 2) - Replace the word "datee" with "dated".
Minutes of Meeting of July 3, 1985 - (Page 3 - MAINTENANCE OF NET OPERAT-
ING INCOME FORMULA, line 3) - Replace "ot" with "to".
Minutes of Meeting of July 16, 1985 - (Page 2, line 2) - Replace "the
county" with "accounting".
(APPROVED)
RELINQUISHMENT OF THE CHAIR:
At this point Chairperson Tom Swem turned the meeting over to Acting Chairperson
Gaye Benson.
ANNOUNCEMENTS BY STEVE HENDERSON:
The Human Relations Commission is sponsoring a Mediation Training session for the
Rent Review Board as well as other Commissioners for the City.of San Luis Obispo.
A number of staff members will also attend.
The session is scheduled for Friday, October 4 from 6:30 p.m. to 9:30 p.m., and
Saturday, October 5 from 9:00 a.m. to 4:00 p.m. Dinner on Friday will be pro-
vided by the City as well as lunch on Saturday.
Daytime parking in City parking lots now requires temporary parking permits is-
sued by the City Administrator's office.
GENERAL FINDINGS ON METHODS TO DETERMINE JUST AND REASONABLE RETURN AND OTHER
ISSUES:
Findings #1 - 5 were read aloud by Steve Henderson and discussed as follows:
NOTE: Mr. Henderson stressed that these are draft findings and are open to ad-
justment.
Roger Picquet commented that the Board may have other general findings in mind,
however, these findings are the ones he felt comfortable with after reviewing
the evidence as well as his notes and some of the discussion and deliberations
in past meetings. He felt the purpose behind splitting general findings from
the more specific issues dealing with this particular application was a reflect-
ion of the dual role presented here, in not only looking at the application, but
as a preliminary matter determining what might be an appropriate methodology for
determining just and reasonable rate of return. He stated that this was not in-
tended to be an all inclusive list of possible findings, but a list of those he
felt a majority or all of the Board had agreed upon.
Addressing a question from Mrs. Benson, Mr. Picquet clarified that in terms of
the specific findings that it will be formally presented to the City Council and
'Mobile Home Rent Review Board
9-18-85
Page 3
and ultimately to the Court within the context of the goals and purposes of this
Ordinance so it is not necessary to repeat it with the substance of findings here.
After the findings have been determined by the Board, as an administerial act,
Staff will put together decision and a list of those findings for the Board to
sign on. The decision basically reflects the tentative decision on the appli-
cation to deny the rent increase and the .support for that decision is the find-
ings. That will be the format that will go to the City Council and in the in-
terim will be sent to the Court indicating the results of this Board.
Denny Wheeler volunteered to present a "Minority Report" to the Board regarding
his views on the items listed in the Draft Findings of August 23, 1985. After
some discussion, Mr. Picquet stated that Mr. Wheeler's report .would be included
as an exhibit to the decision in order. It will be indicated to the Court and
the City Council if necessary, that this is being done with the consensus of the
entire Board.
THE -GENERAL FINDINGS WERE REVIEWED AS FOLLOWS:
I. General Findings
I. ADD: "The use of this method would encourage excessive sales of mobile
home parks." NOTE: Mr. Wheeler feels the return on value method is an
extremely important one to consider and disagrees with the majority of
the Board on that point,
2. No change.
3. Add: "The percentage NO11 method is an inappropriate method to use to t.
determine just and reasonable return since it allows a disproportionate
increase in rent to the tenants. Under the MNOI current Gross Rents
should equal base period rent + (current operating expenses minus base
period operating expenses). NOTE: The last sentence was added near the
end of Tape #3•
4. No change.
5. No change.
ii. More Specific Findings Regarding Chumash Application:
1. No change.
2. No change.
3• Change to "Based on sales of roughly comparable parks at or near the time
that the Chumash Park was purchased (San Luis Bay Mobile Estates and
Creekside) the owner paid too much for the park on either a per space or
total price paid basis.
4. No change.
Mobile Home Rent Review Board
9-18-85
Page 4
(TAPE #2)
5. Change to: The park owner's belief that rents could be increased be-
yond that of other San Luis Obispo parks after purchase to compensate
for an initial minimal or negative return contributed to the appli-
cant's imprudent purchase decision. (Discussion on Tape #4)
6. Delete entire statement. (Discussion on Tape #4)
7• Change to: Under ideal conditions, including proper management, a
mobile home park should generatesufficient income to allow for reason-
able operating and replacement reserves.
8. No change.
9. No change.
10. No change.
11. No change.
RECESS:
Acting Chairperson Benson declared a recess from 2:25 p.m. to 3:00 p.m.
12. Chnage to: The park in question has 235 mobile home spaces for which ;
rent is received.
13. Change to: It is the responsibility of .the investor to make a prudent
investment. The MNOI method operating in conjunction with the City's
Rent Stabilization Ordinance results in a fair method of providing a
just and reasonable return. The Ordinance provides for automatic annual
increases based on the rate of inflation and further, allows owners to
recover unusual expenses.
In applying the MN01 in this case, the Board made a series of adjustments
in the base year favorable to the applicant's position.
14.. (C) Add: Neither is utility Income considered as a part of Gross
Rentals. (Discussed .on Tape #4)
(E) Add: (i.e., $284,642 minus $88,591 minus $53,000 = $143,051)
ADO: (H) Gross Rentals for 1982 are $529,315.
(TAPE #4)
15.. Given the assumptions,in Number 14 above, calculation of the MN01 for this
application is as follows:
Expected 1982 Gross Rents = $491,350 + ($166,635 minus $143,051) _
$491,350 + $23,584 - $514,934
Actual 1982 Gross Rentals = $529,315.
On this basis the applicant's request for a rent increase is denied.
Mobile Home Rent Review Board
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Page 5
RECONVENTION DATE:
The Board will reconvene from 9:00 a.m. - 11:00 a.m. on Thursday, October 3,
1985 in order to continue action regarding the Ordinance.
ADJOURNMENT -
The meeting was adjourned at 4:22 p.m.
Respectfully submitted,
0
oTs Barton, Recording Secretary
Mobile Home Rent Review Board