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01/25/1982City Council Minutes January 25, 1982 - 12:10 p.m. Page 2 decision would probably be made. She then declared the public hearing open. Mark Woolpert, representing SLO -MOTA, the San Luis Obispo Mobile Home Owners and Tenants Association and mobile home owner, explained that at this point: he felt the situation was a matter of lack of supply and, therefore, a monopoly existed. He felt that the tenants carrot move .. anywhere else. when the rents go up except out of town:_ as there are simply no other mobile home parks that they could move into. He then explained other advantages that the park owner had over the mobile home tenant and asked that the Council look closely at the interest, appreci- ation and leverage that the park owner has. Further, look at the difference between income (capital gain) and sale of park property. He also explained the differences of investors, how some are looking for a negative cash flow regardless of the rents. On the matter of inflation, they are not just trying to keep up with it but they are far in excess of the inflation factor. Clint Lefler, representing the owners of Chumash Mobile Home Park, explained that on today's market a rental space should cost between $325 and $376. He then went on to explain the replacement cost values and stated he could refute any point brought by the tenants on a one -to -one basis and would be happy to do so. The Mobile Home Park was now offer- ing leases anywhere from one month to five years and 98 individuals had already signed up but others who were going to sign leases are not, at this time, as they feel that the rents will go down later on if this ordinance is enacted. He-felt-the-owners were just trying to keep up with the rate of inflation and explained that the benefit of owning real estate in parks are threefold: 1) The tax shelter, 2) hedge against inflation, and 3) cash flow. He stated that few individuals are investing in cash flow because it is so low. They are also not invest- ing for the purposes-of tax shelter so much as the hedge against infla- tion. If the return on the investment does not keep pace with inflation, it is going to lose. He explained that the days of the wind -fall profits simply do not exist any longer. This is primarily because the fixed rate financing will not be seen again. It is now on a variable rate, which is true of Chumash. The owners of the Chumash Mobile Home Park are everyday people trying to make this hedge against inflation, not for today, but for the future. They are not getting anything out of it now. He felt the residents were receiving a great deal in return and to add up all the amenities that they have received at the park would be almost unobtainable on the open market for what little they now pay. Charles Long, owner of Village Mobile Home Park, stated that he was opposed to any type of rent control. With regard to the HRC survey on rules and regulations that tenants must live by, he felt this was no different than the rules and regulations that are imposed by City and County Governments on low -cost housing. On the matter of utilities, mobile home parks are given the very same rates as outlined by the Public Utilities Commission. By metering each individual user, there appears to be more energy conservation, which he felt was important. Regarding the matter of park maintenance, he felt that the average tenant wanted a clean -mobile.home•park. He-again urged against rent control; he felt that if the Government were to take control of the mobile homes, it would also probably cost between $50,000 and $100,000 to provide this rent control by city forces. Morris Levin, representing the Legislative Committee for SLO -MOTA and a resident of Pismo Beach, explained that the City of Pismo Beach had recently adopted condominium conversion and rate stabilization ordin- ances. He supported both of them and briefly outlines them for the City Council. He explained that Pismo's ordinance uses the C.P.I Indexing, which amounts to approximately 75 percent of the C.P.I for a 5 -year lease. He would ask that a similar ordinance be drafted for adoption for the City of San Luis Obispo. Lois Rinehart, mobile home tenant, asked the Council to look again at the HRC survey as she felt that it was not totally accurate. City Council Minutes January 25, 1982 - 12:10 p.m. Page 3 Additionally, with rules and regulations imposed on them, she would support removal of the requirement that over -night guests not be allowed to use the pool on weekends. She explained that this is the only time that she has visitors and when she moved into the mobile home park, this rule did not exist but four years later they changed it. She also addressed the matter that 31 percentlof tenants in mobile home parks are widows, as such, she used herself as an example that when you become a widow, you lose a lot of benefits and cannot afford these types of increases. Gary Byrne, representing owners of the Creekside Mobile Home Park, explained to the Council that normally a rent stabilization ordinance would be imposed only if the matter was very much out of hand. He did not feel that this was the case here. He explained the proportional percentage of family income for standard housing is approximately 33 percent. The average person in a mobile home park pays between 15 and 20 percent for housing. He, therefore, did not feel that the proposed increases were exorbitant. Doris Pauley, resident of Creekside Mobile Home Park, 3860 South Higuera Street, urged the Council to adopt a rent stabilization ordinance as she could no longer afford the rent being raised because she lived on a fixed income. The next raise is intended for March, and she did not understand why the mobile home park owner is raising it at this time when the Federal Government will be giving them a huge tax relief. Craig Amspoker, representing SLO -MOTA, explained that he had invested in a mobile home so that he would not have to pay the 30 percent.of his income in his old age for housing knowing that he would have a restricted income. He would urge the Council step in and protect people such as himself. Ward Spencer, Creekside Mobile Home Park, did not feel that the mobile home park owner invested any more than the mobile home tenant in that the mobile home tenant has a limited income, unlike the park owner. He feels the tenants should have some say in the rules and regulations governing them, especially due to the fact that they are unable to move out when an increase occurs. John Moody, representing the Chumash Mobile Home Park, explained that: 1) The residents of the park keep emphasizing that they have as much invested as the owner of the park; he felt this was not correct and as an example, he stated that the average mobile home owner bought their home for $20,000 a few years ago and at this time, could probably sell for 200 to 300 percent increase. 2) Rules and regulations; these rules were made by the residents inasmuch as they were established because some individuals abused them, and he felt that all tenants have a say in the rules that are adopted. Paul Dunmire, member of SLO -MOTA, felt that 75 percent of the C.P.I. seemed to be a reasonable figure. He felt this was a fair amount and would like to see the City enact an ordinance using this stipulation. With regard to investment figures, he explained that Chumash was built for a total of $947,000 and recently sold for over $4 million. The investor gets the higher return. In the case of the tenant, if you cannot afford the rent, you must sell both your home as well as the space. Mark Woolpert -again urged Council's adoption of the proposed ordinance and explained that if it proves not to work, it could always be amended. He also cautioned the Council on the unreliability of using the C.P.I. Index. Gary Byrne again cautioned the Council in having the Government act as a third party liaison. He would rather the tenants and the mobile home park owners be given more time to work out their differences. I 1 City Council Minutes January 25, 1982 - 12:10 p.m. Page 4 Paul Dunmire, felt that the ordinance was imperative and using Pismo Beach as an example, explained that now both sides can get together and work better using the ordinance as a guide and format. David Brymer, President of Chumash Village Association, explained why 98 people had signed the one to five -year leases. He felt that a statement included in the lease was a matter.of-�.intimidation as it read "in other words, if you remain on a month -to -month tenancy, your rent may be increased at any time after given the notice as given by State law" (60 days). He would consider this statement an intimidation message. Further, the lease was so complicated their lawyers couldn't even understand it. Most of those people in the park were widows or in their late 60's. Mayor Billig declared the public hearing closed. Mayor Billig stated she appreciated all the comments received from both sides although she was disappointed that so few owners spoke at today's meeting. Councilman Griffin felt that there had been a substantial disparity of the bargaining power between the owners and the tenants. There seems to be an on -going pattern of not keeping communications open between the tenant and landlord. This, therefore, requires the Government to act as an intervenor, which he does not like. He would like additional time to look at the materials submitted by both sides today. Councilman Dunin agreed that there seemed to be a lot of problems that needed to be worked out between the tenants and the landlords. He would not be supportive of the Government getting involved as the negotiator but this problem has been with the City for a long time and although not as acute a problem -as it was, there still.needs to be better understand- ing established. This should not be the function of the Government and making anyone feel totally. secure,- would.be wrong. After hearing both presentations, he was unsure if he could make a. recommendation today, especially with regard to what.the fair investment return and cash flow numbers should be. He would be supportive of another study session to address those issues and look to other communities with similar problems as well. Councilwoman Dovey agreed with comments made by both Councilmembers Griffin and Dunin. She was also disappointed, after hearing presen- tations from both sides and considering there were 13 mobile home parks, that very few park owners had anything to say. She would also prefer to see the differences worked out between the tenant and landlord so that the Government did not have to get involved as this would also cost the City a great deal of money to implement. She would encourage both sides to continue to work together and although time is critical, she would not want to take action too hastily until all information was in. Mayor Billig added that for almost three years there has been an in- creased number of complaints from people living in mobile home parks, and it is unfortunate that a resolution could not be made without going to the City, forcing the City to act as a final arbitrator; this would Councilman Settle felt that this was a common problem with most commun- ities. A mobile home community is in a unique position because they do have to live with the rules and regulations and cannot move out as easily as an apartment dweller who is unhappy with the rules. He felt that maybe the land use could be changed in the future to allow a tenant to buy his own coach space. He cautioned the Councilmembers not to jump into something as important as rent stabilization without all facts looked at. He would like to see a better communication link with the idea of a lease with 75 percent of the C.P.I. as there seems to be a 1 common denominator here. There is a definite need for research to be done in the near future focusing on the finer points on what type.of rent control or lease is to be established. He felt that now that some of the information had become available, he would like time to look at it closer. Mayor Billig added that for almost three years there has been an in- creased number of complaints from people living in mobile home parks, and it is unfortunate that a resolution could not be made without going to the City, forcing the City to act as a final arbitrator; this would City Council Minutes January 25, 1982 - 12:10 p.m. Page 5 be unfortunate. Cooperation and working together is what she would prefer to see between the tenant and landlord. Rents are part of the problem as much as the rules and regulations, etc. The tenant feels a captive and is in a unique position. The land use issue she did not feel was the crux of the problem i.e. more mobile home parks don't necessarily reduce or lessen the problems, i.e. City of Carlesbad. She agreed that the Council should not make a final decision today but come back at a future study session, possibly directing the City Attorney to prepare a possible draft rent stabilization ordinance to be used as a discussion guide only. Councilman Dunin stated he would not be opposed to this approach, but he would like to see a better repport established between the two groups. After the proposed draft is submitted by the City Attorney, he would like to see it referred first to the mobile home park owners and associa- tions for discussion and resolution of those items that they can come to agreement with and then let the City only discuss those items that are still at issue. Before coming back to the City, he would like to see their comments submitted to the HRC for further discussion and comment and then forwarded to the City Council. He would prefer to avoid a rent control concept. Councilman Griffin stated he would be interested in seeing a rent stabilization ordinance be drafted and conceptual observations made. He felt there was an urgency to finalize this. He would also agree to referring this item to a work study session and having the City Attorney prepare a draft rent stabilization ordinance with as many options as staff could come up with. Councilman Settle would also support this. Mayor Billig then suggested that the City Attorney be directed to prepare a draft rent stabilization ordinance by the end of February to include optional approaches and then send a copy of this to both the 1 park owners and tenant representatives, as well as the HRC (possibly an HRC subcommittee). She would also encourage both sides to try toy resolve as many of these issues as possible before coming back to the City Council and then this draft could be returned to Council for a future study session. There was general consensus to concur with Mayor Billig's remarks. There being no further business to come before the City Council, Mayor Billig adjourned the meeting at 2:00 p.m. to Tuesday, January 26, 1982, at 7:00 p.m. /, /Z',1:; amela o es, ty Clerk APPROVED BY COUNCIL: 2/16/82 1