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Home My WebLink About05/01/1990, 2 - THE CONTROL OF RENTS UPON THE SALE OF MOBILE HOMES LOCATED IN PARKS SUBJECT TO MOBILE HOME RENT STA EETKG City of San tuts OBISpo _ M 90TE. ASER COUNCIL AGENDA REPORT ff "'"TU"' From: Jeffrey G. Jorgens CCk/ Prepared By: Robert S. Illman City Attorney Senior Legal Assistant subject: The control of rents upon the sale of mobile homes located in parks subject to Mobile Home Rent Stabilization. CAO Recommendation: Introduce to print an ordinance amending Section 5.44.:060C of the San Luis Obispo Municipal Code to provide for decontrol of rents upon the sale of mobile homes • located in parks subject to Mobile Home Rent Stabilization. Discussion: Background The present version of San Luis Obispo Municipal Code Section 5.44. 060C provides for a control upon the level of rent which a mobile home park owner can charge if a mobile home located on a space subject to rent stabilization is sold. (Because legislation such as this controls the rent upon vacancy of the Mobile Home, it is frequently referred to as a "vacancy control" . ) This section of the municipal code limits rental increases upon sale to a maximum of ten percent (10%) , and then only once every three years. In the fall of 1989, the Federal District Court rendered a final decision in the Hall v. Santa Barbara case. The court reasoned that if rents were controlled at the time of sale, this made the mobile homes affected more valuable. This value is, according to the court, created by the rent control, and is only available to the mobile home owner. The owner of the park is prevented by vacancy control from sharing in this valuable right, and therefore an unconstitutional "taking" of the park owner' s property occurs. Because of the holding in this case, most California cities and counties which have controls on rental levels at the time of sale have amended their regulations to remove such controls. (This is often referred to as "vacancy de-control". ) Because the Hall case has now been finally settled and is binding law, staff recommends amending our ordinance to make it consistent with Hall. This requires deleting the language from 5.44. 060C which controls rental increases at the time of sale. At the same time, . staff recommends the addition of language which makes it unlawful for a park owner to utilize vacancy de-control unfairly, as would occur if a park owner raised the rent so high that no one would buy the mobile home. Such action would become CAO Report on Vacancy Decontrol Mobile Home Ordinance Page 2 a violation of the code as redrafted. The new 5.44.060C would provide as follows: 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. rsvidd, hoiW&eer*, it shall. be uni l�f aid v �siatiott c� th�:s �ap .ter owner to intentaar a i�r d wil e inr.xease thecsnti�i t c a tenant vs—then zk ... in the commulli r far s p ztse farang- the.; tend$ `acs ��, 27�i; acaYi�Iefame tc tha, OW�t+k�r, ��.� mgt ?r: represtnat$Yb in rease s.&-.. n--emeeed--tee pereee't—e€ the the emisting spaee rent and may net be welled open any th perled Um basis to Inerease—rent—In the—event- ef subletting of the mebileheme spaee as may be allewed by state law, sheeld sueh beeeee state law, open any seeh subletting fahen the spaee rent may be inereaseel up to ten pereent—ef the then existing spaee gent. in the event of ehange of ownership resulting Even vaeatien e€--the spaee, 'ehen the—spaee rent may be adjested to fair marleet rent in she ;t.. Concurrences For information purposes, staff involved in implementing Chapter 5.44 have been informed of this report, and concur in the adoption of the recommendation. a>7_40Z CAO Report on Vacancy Decontrol Mobile Home Ordinance Page 3 Fiscal Impact There are no anticipated impacts on city funding, either in terms of expenses or savings. The potential fiscal impact of doing nothing is discussed below. Alternatives Staff believes that viable alternative actions are limited in scope. To do nothing would invite certain litigation. In light of the Hall decision, we could expect to lose, and the impact on city finances from the litigation alone, not counting any provable damages would make doing nothing inadvisable. Attachments Proposed Ordinance ORDINANCE NO. (1990 Series) AN ORDINANCE AMENDING SECTION 5.44.060 (C) OF THE SAN LUIS OBISPO MUNICIPAL CODE, ELIMINATING CERTAIN RESTRICTIONS ON MOBILE HOME RENTAL ADJUSTMENTS BE IT ORDAINED by the Council of the City of San Luis Obispo: SECTION 1: Section 5. 44.060 (C) of the San Luis Obispo Municipal Code is amended to read as follows: 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. Provided, however, it shall be unlawful and a violation of this Chapter for an owner to intentionally and wilfully increase the monthly space rent of a tenant above the fair market rent in the community for the purpose of forcing the tenant to sell his mobilehome to the owner, his agent or representative. SECTION 2 . This ordinance, together with the names of councilmembers voting for and against, shall be published once in full, at least (3) days prior to its final passage, in the Telegram-Tribune, a newspaper published and circulated in this city. This ordinance shall go into effect at the expiration of thirty (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 , r_ s- Ordinance No. (1990 Series) Page Two 1990, on motion of , seconded by and on the following roll call vote: AYES: NOES: ABSENT: Mayor Ron Dunin ATTEST: City Clerk Pam Voges APPROVED: City Adm nistrative Officer ------------ 1 At or y J Community D lopment Director a-s- �.AEETING AGENDA DATE S:I- f ITEM # s Lf t aa Fetaon i t pnc(j9fr;h•; 1 l�ai!'d1:Ci� i yr iikgv(A�/ig,/n d r.T. 4,7.t crack 1836 Caao4a &ive San. Lu1 a 061 dpo Ca i f oan,i a 93401 5/1/90 Pam Voges City Clerk San Luis Obispo CA 93403 Re : Council Meeting Public Hearing Mobile Home Rent Control Thank you very much for sending me the Agenda and the :Agenda Report. I received them Friday. I contacted Morro Bay and Grover City for information about hteir decontrol amendments. The difference were interesting. Although my Park would not be much involved, there are a lot of -vital issues elsewhere ., The matter seems to call for clarification and probably further study. I have sontribut- ed some thoughts for this purpose . I hope you can disdribute copies for to-night I greatly regret that conservation of my own energy does not permit me to be there E C E I E!o Sincerely, v 14AY 1 1990 CITY CLERK SAN LUGS O&(SPO.CA RE. : COUNCIL ?AGENDA 5/1/90 P.5. PUBLIC HEARING MOBILE HOME RENT CONTROL This is submitted for Discussion,. which may result in further study. Two ordinance precedents :- Amendl�emts for Vacancy Decontrol . Morro Bay. Bases Decontrol or. "change in occupancy" (4A realist approach! Restricts Park Owner to one suc)i increase in a year. Grover City. Bases Decontrol on occurrence of a "Vacancy" . "Vadancy" defined as "a change of ownership of a mobile4ome" or "when a mobilehome is removed or replaced with a different mobilehome ." (this could be dust "up-grading" (even here , joint title changes might be really allowab"le . )` The Change proposed for San Luis Obispo 5/1 /90 The Recommemdation of Staff is for "decontrol of rents upon the sale of mobilehomes" Does thie.: aotua3 proposed ordinance language provide a much broader and -de.batubly us-tl�ilL.ble allowance ? The emphasis should be , even on this basis,. Dn 9� real sale , and yet the. angu&ge -used , 'Change of ownership affecting a mobile home" ,o woul nc ude all of those nice little informal arrangements between the tenant,. v t occupier in :bhid�. and anyone he can get to help him (br her) : make a go of it. These may involve all kinds of personal amalgamations and affairs , arising out of marriage , divorce , death,. friendship, even beyond his sitters , his cousins and his aunts . We should be careful that we do not construct language that will be a bar to these living arrangements , even if they involve( some Incidental equity interest in the mobile .. Real Estate news resorts the statistics and ,joint sales to persons in many personb.i categories is new up to 10% and - growing. Fewer marriages and inflationary prices are citee . So , perhaps , we need to stress the real sale factor and have due reca.rd for the importance e_ continzir_K occunancv . InDuch situations as mentioned above the Park Cwnei- can hardly say that the tenant is utilizing his ri ht to "sell" at great profit, denrivins7 the Park- Owner arkOwner of great Prcfi," . Ther. the Park owner is not entitled to it . The following revision bf the lan`ua_ge of the proposed ordinance is offered as a basis for starting to fit some of these consideration£ together for further stud-y. ex t Jack 5/1 /00 p.2 Re . : Council .Agenda 5/1/90 Mobile Home Rent Control . This relates to the staff proposal of a new section 5.44.060C. The idea of certain changes is suggested. For expediency, the ordinance proposal is repeated verbatim except where changes are suggested by addition, and these are indicated by the use of CAPITALS. It should be stressed that the suggested word changes and additions form simply part of a format for discussion and fubther study.. This is not gust a consideration of an allowance to a Park Ownership, but daily living arrangements and deastically needed personal financial assistance are predominating factors. r4 C.. The maximum monthly space ret of a tenant may be increased by the MU,- owner when there is AN ACTUAL SALE OF THE MOBILEHOME WITH A SIGNIFICANT CHANGE IN THE LEGAL TITLE, EXCEPT, EVEN THENv.WHEN THERE IS NO SIGNIFICANT CHANGE IN THE CONS. TINUING ELEMENT OF OCCUPANCY BY THAT TENANT16 CONSIDERATION SHALL BE GIVEN TO LIVING ARRANGE--- IdENTS AFFECTING THE-' USE AND STATUS OF .THE MOBILE HOME , SUCH AS ARISING OUT OF ESTATE PLANNING,. MARRIAGE, DIVORCE, FRIINDSHIPS,. FAMILY RELATIONi SHIPS ,AND VARIOUS APPLICATIONS OF FINANCIAL ASSISTANCE. WHEN AN INCREASE BECOMES ALLOWABLE UNDER THIS PROVISION THERE SHALL NOT BE ANOTHER LATER INCRESAE UNDER THIS PROVISION FOR A PERIOD OF THE REMAINING CALENDAR YEAR PLUS THE FOLLO14ING FULL CALLENDAR YEAR. . Provided,however, it shall be unlawful and a violation of for an owner to increase ,,-intentionally and wilfully, the monthly space rent above the fair market rent in the Community SO AS TO RESULT. IN fording the Tenant to sell his mobilehome to the owner,. his agent or representative ,. OR ANY PERSON OR ENTITY IN COMMON CONCERN OR INTEREST CONNECTED WITH THAT OF THE 0WNER. Again, it is stressed that this is presented for possible help in discussion and further study. I might add tnat although I reside in a mobijehome park, my particular one is a long-term lease park and is also undergoing a conversion process. My interest is therefor related to mobilehome tenant.- generally . , without a lease etc. zz;c-41� q Art Jack 18-86 Carolyn Dr. 544-0764 Sar. Luis Obispo