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HomeMy WebLinkAbout10-18-1986 MHRRB Minutescity of sAn tuis93403-8100 I--1 - .. - - - 990 Palm Street/Post Office Box 8100 9 San Luis Obispo, MOBILEHOME RENT REVIEW BOARD OCTOBER 16, 1986 TAPE *1 I. WELCOME/INTRODUCTIONS --------------------- Acting Chairperson John Grden declared that the regular meeting of the Mobilehome Rent Review Board come to order at 1:45 p.m. with the following in attendance: BOARDMEMBERS: Barlow, Grden, Label, Wheeler, Wright STAFF: Henderson, Kemper II. APPROVAL _OF_ THE _ MINUTES_ OF SEPTEMBER_251_1986 The minutes of the meeting of September 25, 1986 were approved as mailed. The minutes of October 8, 1986 were postponed for approval to the next meeting. III. REVIEW OF PACKET ---------------- Mr. Henderson reviewed the packet presented to the Board, which included: 1. handout from Adele Raymond, re: recreational vehicles and mobilehomes; 2. agenda and minutes. At this point, and with the permission of the Nicas', the Board reversed the order of agenda items #4 and #5, thus allowing the Silver City application to precede the Nicas presentation. Prior to action on the Silver City application, though, the Board requested that Staff brief the Board concerning the recent Council decisions regarding the (appeal of the) Creekside application and the related MHRRB recommendation. ADD ITEM Mr. Henderson explained to the Board that the Council overturned their (MHRRB) decision and upheld the appeal by the Creekside Mobilehome Owner's Association. He also noted that the Council did not agree with the MHRRB's recommendation on water consumption, usage, and allowance, concerning Creekside Mobile - home Park. MHRRB Minutes - 10/16/86 Page 2 IV. CONTINUATION_ OF SILVER_ CITY_ APPLICATION The Board entered into deliberations and discussion concerning the Silver City Application. With the intent of propelling toward a decision in these, the Board first made a number of comments and qhs rvations. In sum, the Board discounted, wholly or in rt, each of the ethodologies presented by the applicant in rationalizing a rent increase. These methods, as presented in an appraisal report (Exhibit *16), include: 1. Replacement Cost Approach; 2. Income Approach; 3. Return on Value Approach; and 4. Maintenance of Net Operating Income Approach. The Board took a break from 2:25 - 2:35 p.m.. TAPE *2 Although the Board recognized weaknesses inherent in the above formulas, it became apparent they found some basic direction from the assessments provided. Soon thereafter, a consensus of the Board held the opinion that Silver City did in fact experience "below market" rents, and this effected an unfair financial hardship upon the owners. The Board began to establish some estimates, and, thus, focus the discussion on the amount of a rent increase, not if an increase would be granted The lower and upper limits of an average. a space rent to be allowed in 1985 that had support from th Boar were, $170 - $185, respectively. 1r�OCYJ �_O� The cu age base rent at Silver City was $166.00. After some discussion, the Board stated it could not support a three-year rent increase as requested by the applicant. Any increase granted would extend only one year. Additional increases in the future would have to be submitted to the Board, via the application process. The Board also emphasized the desire to address the application with two separate motions, one concerning the installation of individual water meters (Change in Service), and the other considering a rent increase. The issue of individual water metering would first be decided on, followed by action on the issue of a rent increase. The Board thoroughly discussed the issue of individual water meter installation as proposed by the applicant. The concept itself seemed to have the general support of the Board, but the formula for establishing a rent reduction allowance, to off -set an (effective) rent increase, appeared to be unclear, as did consequences. Action soon hinged on the intent outlined in the amendment to the application which concerns the establishment of the water rate, by formula. The amendment stated the water rate utilized for the purposes of calculating the rent reduction allowance would be that which existed "at the time this application is granted." MHRRB Minutes - 10/16/86 Page 3 IV. CONTINUATION OF SILVER_ CITY_ APPLICATION -------------- ---- - ---- ----------- (continued) TAPE *3 Discussion ensued over using the original language in the amendment versus amending it to read "prevailing water rates." Issues and consequences pertaining to each were addressed. The Board understood that if the original language was left intact, the rent reduction allowance would become a fixed -sum. That is, tenants' rent would be reduced this amount consistently, and in the event of a change in City water rates, tenants would be responsible for the new rate. The Board also understood that if it went to such language as "prevailing water rates," that as water rates change, the rent reduction allowance would be adjusted according to a direct, inverse proportional relationship. The Board also suggested amending the amendment to the application to allow for a usage equaling "660 cubic feet for double wide spaces," rather than the stated "650 cubic feet." Neither concerned party to the application had a problem agreeing to this change. There was a motion "to approve the amended application by Silver City allowing for the installation of water meters combined with a base space rent reduction allowance for water calculated at 610 cubic feet for single-wides and 660 cubic feet for double-wides. This rate would take effect at the time this application is granted" (Wheeler, Barlow). The motion was carried after a voice vote with the following votes recorded: AYES - 5; NAYES - 0. The Board then moved toward action on the (separate) issue of a rent increase. The Board considered the idea of adopting a single method on which to base their reasoning for/against a rent increase, versus letting individual Boardmembers use their own judgement concerning this matter. The consensus reached concluded that individual Boardmembers were free to use their discretion on the approach to use in making a decision on the rent increase. At this point, the Board discussed and analyzed a number of methodologies with the intent of developing an outline to incorporate reasoning leading to a decision on the subject application. These include: maintenance of expense to income ratio; Maintenance of Net Operating Income; Maintenane of Net Operating Income adjusted for inflation; maintenance of return on investment ratio (percentage); and comparable rents. On the issue of comparable rents, the Board did spend some time looking at past and current figures concerning average base space rents at other mobilehome parks throughout the City. Acknowledging a number of inconsistencies among the comparisons, the Board sought to establish some sort of base from which to work. MHRRB Minutes - 10/16/86 Page 4 IV. CONTINUATION OF SILVER CITY APPLICATION r (continued) The Board soon established the parameters between which a rent increase would be granted; $170 - $185. ey noted that the owners of Silver City have followed a hi t0rically consistent pattern concerning rent increases; one which paralleled the rise in the cost of living. The Board declared it would entertain a motion to allow a similar increase in line with this historical intent of the owners TAPE #4 There was a motion "to have average base space rents for Silver City in 1985 be established at $180, with no retroactive reimburesment for the owners." Using this figure as a base, would allow the owners to calculate the CPI (as outlined in the Ordinance) for 1985, and the new total (increase) would be the responsibility of the residents 60 days following approval of the application. There was no second. Also there was a motion "to allow Silver City to take the CPI adjustment which they overlooked in 1985, and consider this amount to be their rent increase. There was no second on this motion either. .f h.Jr,.,,rrd'-{� TAPE *5 �f�� ��-�, There was a motion "to have average base space rents for Silver City in 1985 be established at $176, with no retroactive reimbursement for the owners" (Label, Grden). The motion was carried after a roll -call with the following votes recorded: AYES - Wheeler, Label, Grden; NAYES - Wright, Barlow. Staff suggested that a subcommittee be formed to assist Staff in drafting Findings to bring to the next meeting. TAPE #6 V. PRESENTATION__ Edward _&_Betty_Nicas Mrs. Nicas, resident �f Oceanaire Mobilehome Park, came before the Board requesting protection under the Rent Stabization Ordinance. Mr. & Mrs. Nicas live in a recreational Vehicle, known as a "Travel Trailer," which are not protected under the current Ordinance. They urged the Board to amend the Ordinance to include Travel Trailers under its jurisdiction. Mr. Clairmore Fenderson, owner of Oceanaire, spoke out against the Nicas' request. Mr. Chris Lundberg, resident manager of Oceanaire, also spoke out against the Nicas' request. Charlene Powell, Pismo Beach resident, spoke in favor of the Nicas request. Mr. Wilson, owner of Matthews Trailer Park, spoke out against the Nicas request. MHRRB Minutes - 10/16/86 Page 5 V. PRESENTATION: _Edward _&_Betty_Nicas (continued) The Board moved to table the matter for a later date, for further study and in anticipation of the Board/Council study session which will review the intent of the Rent Stabilization Ordinance. VI. ADJOURN The meeting was adjourned at 6:00 p.m— Next meeting was set for Thursday, November 13, 1986 from 1:30 - 5:00 p.m.