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Home My WebLink About1995-10-10 - AGENDA REPORTS - LETTER RECEIVED CITY ATTORNEY (2)AGENDA REPORT City Manager Approv: Item to be presented Carl Boyer CONSENT CALENDAR DATE: October 10, 1995 SUBJECT: LETTER RECEIVED FROM CITY ATTORNEY DEPARTMENT: City Council BACKGROUND An inquiry was made by a citizen asking if there are City regulations that prohibit or limit the ability to rent mobilehomes in a mobilehome park. On September 26, 1995, the Mayor and Councilmembers received a confidential letter from the City Attorney stating he had analyzed the inquiry. At the request of Councilmember Boyer at the City Council meeting of September 26, 1995, this item is on the agenda to release the confidentiality status of the City Attorney's letter. RECOMMENDATION City Council approve the release of the confidentiality status ATTACHMENTS City Attorney letter in City Clerk's Reading File agnrpt.conf.dmg Agenda Item: LAW OFFICES BURKE9 WILLIANIS & SORENSEN 611 WEST SIXTH STREET, SUITE 2500 LOS ANGELES, CALIFORNIA 90017 121 31.236-0600 JAMES T, BRADSHAW. JR.• RITA J. MUNSON MARTIN L. BURKE• STEVEN J. DAWSON CARL K. NEWTON' STEPHEN R. ONSTOT V. ROBERT FLNIDRICK• MARK O. HENSLEY TELECOPIER: 1213):236-2700 NORMAN E: CAARI JOSEPH P, BUCHMAN EDW ARO M. FOX' GREGORY T. DION DENNIS P. BURKE•JANET S. GANASt "LAND C. OOLLEY• BRENDA L. DIEOERICHS HAPLY C. WILLIAMS COLIN IENNARD WILLIAM A. VALLEJOS 11912 1 96 7) RICHARD H. HARGROVE THOMAS L. ALTMAYER NEIL F. YEAGER• A. PERHK• BILLY D. DENSMORE PATRICK L. ENRIGHT Ri'•.^L M. SORENSEN CHARLES M. CALDERON• NEAI- E. COSTANZO 1191 L1083) PETER.. TH. RSON• FUNNY PA TON JERRY M. PATTERSON♦ GREGORY G. DIAZ HAROLD A. BRIDGES' KENNETH D. ROZELL—'—'— CHERYLJ.KANE• DEANNA L. BALLESTEROS RAYMOND J. FUENTES' ELIZABETH NT CALCIANO OF COUNSEL BARRY S. GLASER CAROL R. VICTOR MARK C. ALLEN, in. VIRGINIA R, PESOLA HEATHER C. BEAM S. PAUL BRUGUERA C DIANE WSHBOUGH B. DFREK STRAATSMA ELIZABETH R. FEFFER DON 0 KIRCHER CRAIG S. GUNTHER MICHELE R. VADON JOHN O. SCHLOTTERBECK SCOTT F. FIELD THOMAS P. CARTER MARY REDUS GAYLE• ROBERT F MESSINGER RUFUS C. YOUNG, JR MINA PARK KANG JUDITH A. ENRIGHT JOSEPH M. MONTES Ser 26, 1995 KATHRYN P. PETERS. DAVID R. ALOE PAI THOMAS C. WOOD CATHERINE T. MOORE • PROFESSIONAL CORPORATION t A PROFESSIONAL AGROCIATION ADMITTED IN KANSAS 1 MISSOURI I ADMITTED IN CALIFORNIA, KANSAS A MISSOURI ♦ ADMITTED IN CALIFORNIA & WASHINGTON. 0 C o ADMITTED IN KANSAS LAX2:137955.1 VENTURA COUNTY OFFICE .2310 PONDEROSA DRIVE SUITE 1 CAMARILLO, CALIFORNIA 83010 1905) 9873608 ORANGE COUNTY OFFICE 3200 PARK CENTER DRIVE`. SUITE 750 COSTA MESA, CALIFORNIA 92626 V 161 645-5569 7108 NORTH FRESNO STREET SUITE 601 FRESNO, CALIFORNIA 93720 2938 (2091 261 01 63 BURKE, WILLIAMS, SORENSEN & OAAR LICHTON PLAZA 1300 COLLEGE BOULEVARD SUITE 220 OVERLAND PARK, KANSAS 86210 19131329-6200 WRITER'S DIRECT DIAL 1213)238-2708 OUR FILE NO. 02012-035 CONFIDENTIAL Mayor and Members of the City Council City of Santa Clarita 23920 Valencia Boulevard, Suite 300 Santa Clarita, CA 91355 Re: Mobilehome Park Owners -- Ability of City to Restrict Rental of Units Dear Mayor and Members of the. City Council: The City Manager provided a memorandum to the Council, dated September 6, 1995, a copy of which is attached. I was asked to review this memorandum and to analyze whether any different result 'might be possible. Also attached is a memorandum setting forth research which was done on these issues. The conclusion is that the City would not be able to restrict mobilehome park owners from renting units which they own, because such a restriction could subject the City to potential compensable takings liability under the U.S. and State Constitutions. In addition, it is unlikely that the City could restrict the power of park owners to prohibit unit owners from rental of their units, in that such a restriction as to existing leases between the park owners and unit owners would.be in violation of the constitutional impairment of contract provision. Furthermore, such a restriction as to future contracts or leases between the parties would be difficult to justify as to adequate Mayor and Members of the City Council City of Santa Clarita September 26, 1995 Page 2 public purpose and a potential intrusion upon private contract interests of the parties. If you have any further questions relative to this matter, please don't hesitate to contact me. Sincerely, CARL K. NEWTON of BURKE, WILLIAMS & SORENSEN CKN/sjw Enclosures cc: George A. Caravalho, City Manager Ken Pulskamp, Assist. City Manager/ Dir. of Comm. Dev. LAX2:137955.1 CITY OF SANTA CLARITA INTEROFFICE MEMORANDUM TO: Mayor Darcy and Members of the City Co eil FROM: George A. Caravalho, City Manager / ` DATE: September 6, 1995 z SUBJECT: Inquiry Regarding Renting of Mobile homes in Mobile Home Parks Councilmember Boyer received a citizen's telephone inquiry on August 27th; asking if there are City regulations that prohibit or limit the ability to rent mobile homes in a mobile home park. The precise question posed is: Does the City have the legal right to restrict park owners from renting units (mobile homes) if the park owners do not allow their space tenants to rent their homes? The answer is no. No regulations exist that authorize the City to set limits on who can rent a mobile home, or other residence. In mobile home parks, it is a common practice for the owners to disallow mobile home owners from renting their coaches. This provision is stated in the tenant leases. However, the park itself will rent out mobile homes which it owns. On the surface this may seem discriminatory; but this practice enables the park owner to personally and directly approve any new residents. If a resident decides to rent out his/her mobile home, then the park owner doesn't have the ability to approve the new resident. In essence, the park owner would then have a "third parry" sitiiatiorewhich it understandably prefers not to have. The resident Ao made the inquiry was contacted by staff, and given a thorough explanation. MAR:lep curren0mhcorr02.mar _ BURKE, WILLIAMS & SORENSEN O F F I C E M E M O R A N D U M TO: EMCrn` FROM: CRC DATE: September 25, 1995 CC: CKN FILE NO. 02012-035 RE: City of Santa Clarita: Ability of City to Restrict Mobile Park Owners' Renting of Units Although California law has generally upheld rent -control ordinances which limit rents and rental increases, a regulation or ordinance which limits or prohibits mobile home park owners from renting their own units would not withstand judicial scrutiny. The protection of private property rights is guaranteed by the Fifth Amendment to the United States Constitution: "No person shall be deprived of . . . property, without due process of law; nor shall private property be taken for public use, without just compensation." Article I, section 19 of the California Constitution similarly provides that compensation is required when property is "taken or damaged." Whether a regulation constitutes a taking depends on such factors as the economic impact of the challenged action and the extent to which it interferes with reasonable investment -backed expectations. Sandpiper Mobile Village v. City of Carpinteria, 10 Cal. App. 4th 542, 528 (1992). Unless the regulatory ordinance denies the property owner substantially all economically "viable use of the land," there is no compensable taking. Id. at 550. Generally, in the mobile home context, a constitutional rent - control ordinance must provide the park owner with a "fair". return on his or her investment. For example, in Westwinds Mobil Home Park v. Mobilehome Park Rental Review Bd., 30 Cal. App. 4th 84, 95 (1994), a California appellate court indicated that whether a taking has occurred will depend on whether the rent increase granted under an ordinance will permit a fair return on the owner's investment. LAM:137558.1 EMC September 25, 1995 Page 2 A regulation as part of a mobile home rent control ordinance which prohibits or limits the park owner's ability to rent his or her own units would likely deprive the owner of all economically viable use of the property and would not provide a fair rate of return. Therefore, such an ordinance would likely subject the City to potential compensable takings liability and should be rejected at this time. Issue $2: May the City Prevent Park Owners From Prohibiting Rentals by Unit Owners? Generally, the federal Constitution, Article I, S 10, and the California Constitution, Article I, S 9 provide that legislation impairing the obligation of contracts may not be passed. Because California cities are subdivisions of the state of California, this prohibition against the impairment of contracts applies to cities as well. See Oceanside Mobilehome Park Owners' Assn v. City of Oceanside (1984) 157 Cal. App. 3d 887 (upholding provision in mobile home park rent control ordinance against contract clause claim because provision only affected prospective contracts). The contract clauses of the state and federal Constitutions protect vested contractual rights. Welfare Rights v. Frank, (1994) 25 Cal. App. 4th 415, 423. Therefore, a City of Santa Clarita ordinance that modifies existing contracts between mobile home park tenants and landlords by forbidding landlords from restricting tenants from re-leasing their units would implicate the "contract clauses." In evaluating impairment of contract claims, courts will generally consider, among other factors: (1) does the legislation operate as a substantial impairment of a contractual relationship; (2) does the legislation have in justification a significant and legitimate public purpose behind the regulation; and, (3) is the adjustment of the rights and duties of the contracting parties of a character appropriate to the public purpose justifying the legislation? See Rue -Ell Enterprises v. City of Berkeley, (1983) 147 Cal. App. 3d 81, 88. Based on an analysis of the factors discussed above, the contract clauses mandate that Santa Clarita .should not seek to regulate private contracts between mobile home park owners and tenants by restricting the owners' ability to prohibit tenant re -leases of LAX2:137558.1 EMC September 25, 1995 Page 3 their property. This is particularly true with regard to existing leases between park owners and tenants, which are subject to the highest judicial scrutiny. While the City could conceivably regulate future leases between owners and tenants with regard to the tenant's ability to re -lease his or her property, this regulation is probably equally unadvisable. The ordinance would likely not withstand judicial scrutiny due to the difficulty of providing an adequate public purpose to justify the intrusion into private contract rights. IAX2337558.1