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HomeMy WebLinkAboutAgenda Statement 1982/08/17 Item 5 COUNCIL AGENDA STATEItKNT Item 5 Meeting Date: 8/17/82 ITEM TITLE: Public Hearing: Consideration of rental increases on mobile home spaces within the City of Chula Vista Ordinance 1111- Amending Title 9 of the Municipal Code by Adding Thereto a New Chapter 9.50 entitled "Mobilehome Park Space Rent Mediatiorr' to create a Mechanism for Mediating Mobilehome Park Space Rents SUBMITTED BY: City Attorney (4/5ths Vote: Yes_No_) The City Council has previously received copies of the proposed Mobilehome Park Space Rent Mediation ordinance which would establish a process of review of any proposed rent increases in excess of the Residential Rent Component of the Consumer Price Index first by a negotiation committee in the particular park where the increase is proposed and, if unsuccessful at that point, by a mediation panel. RECOMMENDATION: Conduct the Public Hearing and evaluate any suggestions for modification of the proposed ordinance BOARD/COMMISSION RECOMMENDATION: The Ad Hoc Committee on Mobilehome Issues considered the proposed ordinance on August 5, 1982. The spectrum of opinions ran from the desire for no ordinance mediating rents to a desire for binding arbitration. The consensus of the committee was that, if the proposed ordinance was adopted, a threshhold should be included; however, there was much discussion as to the proper index to use to trigger application of the ordinance mechanism. Additionally, the committee was in agreement that the ordinance should contain a sunset clause. The committee members have been invited to convey their comments to you this evening. The Affordable Housing Subcommittee of the Human Relations Commission was not prepared at its meeting of August 11, 1982 to make any recommendation on the ordinance and will be present at the Council meeting and provide suggestions during the course of the public hearing. BACKGROUND : As indicated in the memo of August 6, 1982, it is not likely that the ordinance will satisfy any of the parties involved in the problems of mobile home park rentals. Both Mr. Gustafson and the City Attorney have received many criticisms of the proposed ordinance. The mobilehome owners strongly object to the fact that the ordinance does not provide for binding Item 5 Meeting Date: 8/17/82 Page Two arbitration or an outright process of rent control. The homeowners, as they have indicated in the past, feel that they are captives and that because of the unique circumstance of being virtually tied to a particular space in a particular park and faced with a minimal or virtually nonexistent vacancy factor, their only recourse is through governmental intervention. Council is fully aware of the fact that a limited number of communities have established mandatory arbitration procedures, but the vast majority of the cities in the State of California have either considered and rejected regulations or the issue has not been raised. The mobilehome owners contend that some 91 cities have adopted some form of regulation. Again, there are many, many variations in the nature of the regulations. For instance, the regulation recently sustained in San Marcos, although loudly proclaimed as a triumph for the mobilehome owners, establishes current value as the sole criteria for evaluating a proposed rent increase. This means that if one were to take an independent appraisal of property or a leasehold interest, the reasonable rate of return on such an investment would be the measure of the rents allowed in a particular park. There is no clear cut means of effecting such a proposal. One example would be the Rose Arbor Mobilehome Park. This is one of the smaller, older parks in the City which I aSSume has a relatively low rental for the spaces. Although the park is not located in the exclusive mobilehome park zone, and thus could more readily than other parks which are so located be converted to commercial and multiple family use, we must still aSSume for the purpose of an appraisal, that the zoning classification most appropriate for the area, rather than the mobilehome park zoning, would be the basis for evaluating the land. If one were to approach the setting of rents in Rose Arbor, using the San Marcos formula, it would seem that a fairly high rental would be allowed in order to receive a reasonable rate of return on a valuable piece of property located along Broadway. However, the mobilehome owners do feel strongly that the ordinance simply does not address the real concerns of this captive audience and they have presented a list of specific objections which are summarized as follows: 1. The ordinance does not limit rent increases to one per year. 2. The use of the Residential Rent Component of the Consumer Price Index of 9.8% is excessive for the majority of the owners who live on a fixed income, e.g., the increase in Social Security this last July was only 7% nearly 3% below the Residential Rent Component and those who rely upon Social Security would suffer a real loss of 3% in their purchasing power. '\'\ ,~ 0'\ Item 5 Meeting Date: 8/17/82 Page Three 3. If the mediators use the Arbitration Association, the excess of what the mobilehome standard fees charged by the American cost could be $300 or $400 a day, far in owners could possibly afford. 4. The ordinance requirement as contained in Section 9.50.050 for compre- hensive written minutes to be presented to the City Council would necessitate hiring a secretary at a cost of anywhere from $5.00 to $30.00 per hour which these parties could ill afford. (It may be that the Council would wish to reevaluate that particular section so that there would not be a requirement for detailed minutes.) 5. As a result of the initial request of the mobilehome owners on February 16, 1982, the City requested SANDAG to make a study of the conditions in the mobilehome parks in the City of Chula Vista. It is the conten- tion of the mobilehome owners that that study no longer reflects the fact that from 30-35% of the mobilehome owners are paying rents in excess of that which their limited incomes make affordable and that the Affordable Housing Committee of the Human Relations Committee should seriously consider opposing the ordinance because the existing rent structures preclude the mobilehome as affordable housing. I am attaching a copy of the letter presented to me by Mr. Roland con- taining these points. At the present time, I have received no comment from the park owners who have all been forwarded copies of the ordinance. I would again reiterate some of the comments made in my report of August 6, 1982 which was the cover letter for the draft ordinance: For example, the basic line for bringing the negotiation and subsequent mediation processes into play has been established as the San Diego Metropolitan Area Residential Rent Component of the Urban Consumer Price Index. There has already been disagreement as to the use of the Rent Component of the cpr. Some of the mobilehome owners, without knowing actual figures for the increase of that Component over the past twelve months, have registered the objection that similar housing is far more expensive, for example, in La Jolla than in Chula Vista and in Chula Vista vis-a-vis Imperial Beach. However, I do not feel that such obvious differentials would unfavorably distort or skew the CPI in terms of percentages of increase. Marilyn Leuck has obtained the Rent Component increase fran May 1981 to May 1982, which was a 9.8% increase for the San Diego Metropolitan area. This certainly is less than the total CPI and more appropriately reflects the rental market than a CPI which would include food and housing costs. At any rate, this is likely to be an issue raised by either side. ,,'\ '\' 0/\ Item No. 5 Meeting Date: 8/17/82 Page Four Essentially, the ordinance provides for the establishment of negotiation committees in each mobilehome park. In the event a proposed rent increase does exceed the residential rent component of the CPI, the committee would meet and thoroughly air the basis for the addi tional increase. In the event that the committee could not resolve the matter, a mediation process has been established which would call for the City Council to compile a list of potential mediators through leading citizens in the community and each party to the dispute would select one mediator and the two mediators would then pick a third to carry out the mediation process. The ordinance clearly provides that there are no criminal sanctions for a violation thereof, but in addition to the rights granted to parties on either side to pursue civil action, the Council could, after making a finding that one side or the other had failed to adhere to the procedures set forth in the ordinance, direct the City Attorney to seek appropriate judicial redress to require compliance with those procedures. This does not mean that the Councilor the courts under the terms of this ordinance would be empowered to mandate the acceptance of a final result of mediation. Although several of the mobilehome owners have already indicated their displeasure with the lack of a mandatory and binding arbitration, I am confident that in virtually every instance, if the procedures as set forth in the ordinance are followed, that the parties will arrive at a mutually agreeable resolution of any rent dispute. There is a very strong feeling as indicated on the part of the mobilehome owners that some form of binding arbitration is necessary to relieve what is conceived to be an intolerable situation. The City Attorney has previously indicated that rent controls are sustainable under the police power concept only if: ". ..They are reasonably calculated to eliminate excessive rents and at the same time provide landlords with a just and reasonable return on their property." Birkenfeld v. City of Berkeley, 17 Cal.3d at 166, 130 Cal.Rptr. at 491. In a well-reasoned opinion, the City Attorney of Carlsbad, Vince Biondo, offered the following partial summary of some conclusions on the legal questions involved in establishing some form of mandatory regulation of rents: 1. The City does have the power at the present time to impose rent controls generally. In Birkenfeld the California Supreme Court held that rent controls are within a city's police power and may be imposed if a sufficient '\~^' '0'\ Item No. 5 Meeting Date: 8/17/82 Page Five factual basis exists to support such controls as a rational curative measure. The main factual basis involved in Berkeley was the existence of a housing shortage and the adverse effects of the exploitation of such shortage by the charging of exorbi tant rents on poor people and the elderly. 2. A rent control ordinance must be based upon sufficient constitu- tional facts and be only as restrictive as necessary to deal with the problems disclosed by such facts. The primary "constitutional fact" upon which the necessity and validity of rent controls depend is the actual existence of a housing shortage. Prior to enacting a rent control ordinance, it is essential that reliable factual information be obtained per- taining to the shortage of mobilehome spaces. Additional factual information must then be obtained as to the adverse consequences of such shortage. Such information would include data as to rent levels and increases, the nature and number of persons affected, their inability to withstand such increases or to move, and other ill effects of the shortage of spaces which would provide a basis for the controls to be imposed. It must be emphasized that any rent control ordinance must be adopted on the basis of such facts and not merely on the basis of lay opinions and complaints. Rent control, unlike other matters subject to the police power such as zoning, is not an area where the necessity and justification of regulation is well established. Thus, considerable effort must be directed toward establishing the constitutional facts and insuring that the regulations are reasonably related to curing the problems disclosed by such facts. 3. The City could impose rent control of mo bilehome parks wi thou t imposing controls on all types of rental units. On the basis of fact s such as lack of mo bili ty and high cos t of moving, mobilehome parks appear to be sufficiently different from other types of rental property to justify special regulation. Indicative of the unique nature of mobile home parks is the special legisla tion (Civil Code Sections 789.4 - 789.13) applicable only to evictions in mobilehome parks based upon legislative findings as to the unique protection required for mobilehome park tenants. The facts marshalled under Question (2) above would need to include adequate basis for a legislative finding that the situation requires regulation of mobilehomes and not other types of rental uni ts. ","\ r..., '\ >\ " ,-' Item No. 5 Meeting Date: 8/17/82 Page Six 4. The key element in a rent control program must be provisions which assure a reasonable return to the park owner. Any ordinance would have to satisfy procedural as well as substantive due process by providing prompt adjustment of rents where needed without unreasonable delay. We cannot discuss in advance what would constitute a reasonable return in fact any more than we could comment upon the abstract reasonableness of any other administratrive decision in the absence of specific facts and circumstances. What we must assume is that any program undertaken would present no unreasonable obstacles to providing an owner with a reasonable return recognizing that the potential exists for significant disagreement over what is reasonable. FISCAL IMPACT: The actual cost of administering the proposed ordinance is not readily ascertainable, but it is evident that a signif- icant amount of staff and Council time will be required to monitor the program. GDL:lgk r-i;:;J;~i ~ "'''''-'-:-'--;c'''------'------ I "".... , !l --. " ;J " l ::,J"tl-:j'l.::_f?::-_ -~--~"'-,._---_._..."....._~......,~ r-~/\ D\' ,\ o