HomeMy WebLinkAbout1995-04-25 - AGENDA REPORTS - MH RENT STABILIZATION (2)AGENDA REPOR"
City
Item to be presented by:
PUBLIC HEARING
DATE: April 25, 1995
SUBJECT: An appeal of the Manufactured Home Rent Stabilization Panel's approval
of a 1994 calendar year rental increase totaling 12.9%, granted to the
owners of Soledad Trailer Lodge mobilehome park ('Park"). The Park is
located at 18300 Soledad Canyon Road (Assessor's Parcel Nos. 2844-001-
038 & 039), and is zoned CC (Community Commercial). Project
Appellant(s): Carl Boyer, as a member of the City Council; and Bill
Reed, as a representative of the Park owners.
DEPARTMENT: Community Development
BACKGROUND
On November 9, 1994, the Manufactured Home Rent Adjustment Panel met in order to
consider a 90 -day notice of rent increase filed by the property owner(s) of Soledad Trailer
Lodge Mobilehome Park ('Park"). Through the 90 -day notice, the Park proposed a rent
increase of 22% to be effective December 1, 1994, which is a percentage of rental increase
approximately 19% higher than the Consumer Price Index of 2.9% set in January of 1994;
The owners of the Park had determined that a rental increase of 22% was justifiable due to
the decrease in the Park's net operating income over recent years, due to the fact that the
Park had not been granted CPI rental increases for each calendar year since adoption of the
Manufactured Home Rent Stabilization Ordinance ('Ordinance"), and due to capital
improvements to the property performed since 1991,
The action of the Manufactured Home Rent Stabilization Panel was appealed by two parties.
The first appeal was filed on March 10, 1995, by Councilmember Carl Boyer as a
representative of the residents of the Park. The basis for this appeal is so that the City
Council may review the decision and so that the residents of the Park have an additional
opportunity to be heard. The second appeal was filed on March 23, 1995, by the Park
manager, Bill Reed, as a representative of the owners of Soledad Trailer Lodge.. This appeal
was based on claims of an unfair board hearing, on the rules of appeal to the City Council
changing over time, flaws in the Ordinance, the decision of the Panel being viewed as a
Agenda Item:__
compromise of power, failure of the Panel to grant adjustments deemed reasonable as
provided for in the Ordinance, and failure of the City Council to respond in a timely manner
to the vacancy rate of mobilehome parks in the City of Santa Clarita, inasmuch as suspension
of the Ordinance would have permitted the Park to have a greater rental increase.. Both
letters of appeal are attached for your reference.
MANUFACTURED HOME RENT STABILIZATION PANEL ACTION
The meeting of November 9, 1994, was continued by the Panel to the meeting date of
December 14, 1994, at which time the Panel granted a 2.9% increase in rent to the owner(s)
of Soledad Trailer Lodge, retroactive to the month of October, 1994. However, City staff
records show that the specific motion made by the Panel was for the 2.9% rental increase to
be effective to the original date of notice, this date being December 1, 1994. Thus, the 2.9%
rental increase granted to the owners of the Park on December 14, 1994, was approved to be
retroactively effective to the date of December 1, 1994, as opposed to the date of October 1,
1994. This modification was later reflected in the resolution of approval adopted by the Panel
in March of 1995.
During the December 14, 1994 meeting, the Panel also determined that a continuance of
Manufactured Home Rent Appeal #94-005 was appropriate, so that City staff could review
financial documentation submitted by the Park manager Bill Reed in order to assist the
Panel in determining whether the financial status of the Park warranted an increase in rent
as great as the 22% proposed by the owners of the Park. The Manufactured Home Rent
Adjustment Panel continued Appeal #94-005 to the date of January 11, 1995, at which time
the determination was to be made as to whether an additional increase in rent should be
granted to the owner(s) of Soledad Trailer Lodge.
In order to determine the existing financial status of the park, staff required that the Park
manager submit legal documentation to the City for analysis. Staff had forwarded a list of
information that was necessary for an appropriate fiscal analysis of the Park to the Park
manager, Bill Reed. Mr. Reed had responded by submitting documentation which contained
a portion of the information requested. The information submitted, though, was insufficient
for the fiscal review of the Park, thus, during the meeting of January 11, 1995, it was agreed
upon by the members of the Panel that after submission of the appropriate information, staff
would be given four days to review the documents, and would then return to the Panel on
February 8, 1995, in order to more accurately inform the Panel on the financial status of
Soledad Trailer Lodge. The additional information was not submitted in a timely manner,
although staff was able to complete a financial analysis of the Park within the time frame
originally requested by the Panel..
Per the Mobilehome Rent Stabilization Panel's request, staff performed a review of the
additional financial information provided by Soledad Trailer Lodge. As a part of the process,
an analysis was made of the Park's net operating income for calendar years 1991 through
1994, as defined in the Mobilehome Rent Stabilization Ordinance. This included a review
of financial documents which relate to the history of Soledad Trailer Lodge's net operating
income compared to industry standards. To verify information provided by the applicant,
amounts were compared to annual federal tax returns. Based on this review, staff concluded
that the documentation compiled to support a 22% increase in rent was reasonably accurate
and that calculations performed by the applicant in all material respects followed the
definition of the Ordinance for the calculation of net operating income.
During the meeting of February 8, 1994, the Panel approved a rental increase totaling 12.9%
to Soledad Trailer Lodge in a 3-2 vote, which the homeowner representatives and the
independent mediator supported. Two and nine tenths of one percent (2.9%) of the rental
increase was to be effective as of December 1, 1994, based on the original date of notice for
the rental increase, and the additional 10% of the rental increase was to be effective as of
March 1, 1995.
Three motions were considered by the Panel on February 8, 1995, of which the first two failed
in 2-3 votes. The first motion was for a rental increase of 19.1%, in addition to the 2.9%
granted to the Park by the Panel on December 14, 1994, This motion would have provided
the Park with a total rental increase of 22%, which was the original rental increase proposed
by the Park. This motion was made and supported by the park owner representatives. The
second motion was for a total rental increase of 8.1%, due to the CPI increases in rent that
were not administered to the Park. The total CPI percentages, since adoption of the
Manufactured Rent Stabilization Ordinance are as follows:
YEAR CPI
1992
4.1%
1993
3.5%
1994
2.9%
1995
1.7%
TOTAL 12.2%
In 1992, Soledad Trailer Lodge was granted a CPI rental increase of 4.1%, and although the
Park did not request rental increases for years other than 1992, the second motion made for
a rental increase of 8.1% is equal to the total CPI increases deemed reasonable by the
Ordinance, subtracting out for the 4.1% CPI increase granted to the Park in 1992. The third
motion, which was approved by a vote of 3-2, was for a total rental increase of 12.9%. This
motion was made by the mediator and was supported by the homeowner representatives of
the Panel. The total of a 12.9% rental increase was deemed reasonable by the Panel due to
both the written and verbal evidence presented to them over the four meetings of public
hearing. Over the course of these meetings, the residents submitted documentation and
provided testimony regarding the lack of maintenance of the property, while also discussing
negative personal experiences as residents of the Park under its current management system.
Contrarily, the Park manager submitted documentation and provided testimony regarding
the depressed financial status of the Park, regarding capital improvements performed on the
site since 1993, and regarding CPI increases granted to the owners of the Park since adoption
of the Manufactured Home Rent Stabilization Ordinance.
Pursuant to the Manufactured Home Rent Adjustment Panel's direction on February 8, 1995,
staff prepared Resolution No.MH95-001 tentatively approving an additional 10% rental
increase to the owners of Soledad Trailer Lodge to be effective March 1, 1995, in addition to
a 2.9% rental increase granted to the Park owners on December 14, 1994, to be effective as
of December 1, 1994, based on the original date of notice. Resolution MH95-001 was
presented to the Panel on March 8, 1995, with the Panel approving the resolution with minor
modifications to the language of the findings as stated in the document. Section 1(C3) and
Section 1(C4) were amended, with the Panel also requesting the addition of language in
Section 3(E) of the Resolution clarifying that the 12.9% rental increase was the increase
granted to the owners of the Park for the 1994 calendar year. This additional language
allows the Park owners to pursue a rental increase for the 1995 calendar year, with the
inflation rate for rental increases this year at 1.7%.
The amendments listed above were added to Resolution M1195-001, which was approved and
adopted by the Panel in a vote of 4-1. The mediator, the homeowner representatives, and one
parkowner representative voted to approve the resolution.
In the adoption of Resolution MH95-001, the Panel took into account all relevant factors of
the case presented before them, and approved findings substantiating their decision as stated
in Section .1(C) of the resolution. Resolution MH95-001 is attached for your reference.
RECOMMENDATION
The Manufactured Home Rent Stabilization Panel recommends that the City Council:
1) Deny both appeals of the Manufactured Home Rent Stabilization Panel's decision
(Resolution MH95-001), thus approving a total rental increase of 12.9% to be granted
to the owners of Soledad Trailer Lodge, of which two and nine tenths of one percent
(2.9%) is to be effective as of December 1, 1994, based on the original date of notice
of the proposed rental increase, with the additional ten percent (10%) of the rental
increase to be effective as of March 1, 1995; and,
2) Direct staff to prepare a resolution upholding the Panel's decision, for the Council's
consideration at the May 23, 1995, meeting.
ATTACHMENTS
Appeal Letters
Resolution MH -95-001
Manufactured Home Rent Stabilization Panel staff report(s)
Reading File available at City Clerk's office, including minutes of Panel meetings
GAC:RAH:JDR
co .61\a,94-W5..q
CITY OF SANTA CLARITA
NOTICE OF PUBLIC HEARING REGARDING THE DECISION OF THE
MANUFACTURED HOME RENT ADJUSTMENT PANEL OF THE CITY OF
SANTA CLARITA TO GRANT A TOTAL RENTAL INCREASE OF TWELVE AND
NINE TENTHS OF ONE PERCENT (12.9%) TO THE OWNERS OF SOLEDAD
TRAILER LODGE, 18300 SOLEDAD CANYON ROAD; SANTA CLARITA, CA
91351. THE APPELLANTS ARE CARL BOYER AND BILL REED.
PUBLIC NOTICE IS HEREBY GIVEN:
A Public Hearing will be held before the City Council of the City of Santa Clarita
regarding the decision of the Manufactured Home Rent Adjustment Panel of the City
of Santa Clarita to grant a total rental increase of twelve and nine tenths of one
percent (12.9%) to the owners of Soledad Trailer Lodge, 18300 Soledad Canyon Road,
Santa Clarita, CA. The appellants are Carl Boyer and Bill Reed.
The hearing will be held by the City Council of the City of Santa Clarita in the City
Hall Council Chambers, 23920 Valencia Blvd., 1st Floor, Santa Clarita, the 25th day
of April, 1995, at or after 6:30 p.m.
Proponents, opponents, and any interested persons may appear and be heard on this
matter at that time. Further information may be obtained by contacting the City
Clerk's office, Santa Clarita City Hall, 23920 Valencia Blvd., 3rd Floor, Santa Clarita.
If you wish to challenge this order in court, you may be limited to raising only those
issues you or someone else raised at the public hearing described in this notice, or in
written correspondence delivered to the City Council, at or prior to the public hearing.
Dated: April 5, 1995
Publish Date: April 10, 1995
Donna M. Grindey, CMC
City Clerk
rorres.phmobile
4,,3 10 4 49 �1'[ ' h
March 10, 1995
Donna Grindey, City Clerk
City of Santa Clarita
23920 Valencia Blvd.
Santa Clarita, CA 91355
Re: Appeal of Manufactured Home Rent Adjustment Panel's Decision of March 8, 1995
Dear Ms. Grindey:
I understand the Manufactured Home Rent Adjustment Panel has considered and heard on
several occasions a request from the Soledad Trailer Lodge to receive rent adjustments of 20%
and the 2.9% adjusted cost of living.
On March 8, the board took their final action by adopting Resolution No. MH -95-001, which I have
reviewed in its entirety.
This letter is an appeal of the Manufactured Home Rent Adjustment Panel's decision on behalf
of the residents living in the Soledad Trailer Lodge. I feel it is important that the City Council's
review this decision and that the residents of this trailer park have an additional opportunity to be
heard.
Thank you for your assistance in this matter.
Sincerely,
Carl Boyer
wakalhD yer.mh
SULCUAll TRAILER 1,M)Ut:
18300 Soledad Cyn. Roa
SantA Clarita, Ca. 91351
March 18, 1995
TO: The City Clerk
Members of the City Council
City of Santa Clarita
RE: Manufactured Home Rental G'`'+`_
Adjustment, Appeal # 94-005
The owners of Soledad Trailer Lodge hereby appeal the
decision of the Manufactured Home Rent Adjustment Board of
March 8, 1995.
The grounds for our appeal are as follows:
1. THE BOARD HEARING WAS UNFAIR TO OUR PARK
There were a total of five meetings at which this matter was
heard. At each meeting the speakers were allowed five
minutes to make there presentation. Our presentation of Park
information was complex and we only had two Park speakers so
we had a presentation time of ten minutes. Any resident
which wanted to speak, was also allowed five minutes to
speak.,There were at least five to ten residents who
spoke.,.Thus, our Park does not feel that we were given
adequate time to respond and present our information. The
Park speakers should have been given at a minimum amount of
time to speak equal to the sum of time of all the Park
resident speakers.
The Chairman of the Board allowed personal items unrelated
to the issue before the Board to be presented and did not
exercise proper control of the hearings.
One of the Board Resident Members attempted to mislead the
board related to our last appeal to the Board 1992. He made
untruthful statements to mislead the three new Board
Members in attempt to reduce the rent increase given by the
Board. When challenged The Board Chairman did not respond to
our request that the prior appeal information (which was
upstairs and could have been retrieved by staff in less than
10 minutes) was not reviewed to correct the misstatement by
this Board member. ---
THE CITY COUNCIL HAS FAILED TO RESPOND IN A
TIMELY MANNER TO THE KNOW VACANCY RATE WHICH
2. WOULD HAVE PERMITTED OUR PARK TO HAVE A NEEDED RENT
The bity had information as early as May 1995 that the
vacancy rate in mobile home parks was in excess of 5%, which
should ,have resulted in the suspension of this ordinance.
The City Council even with this knowledge chose to ignor
this constitutional fact, and when requested, failed to make
a timely declaration, resulting in the need for our small
Park to incur great expense to prepair for these hearings
and to delay our Parks deserved and needed increase. The
Council has not acted in good faith in this matter.
Verification of ,this data could .have been done in less than
two weeks.
3. THE RULES FOR APPEAL ALWAYS CHANGE AND ALWAYS WORK FOR
THE BENEFIT OF THE PARK RESIDENTS:
Our Park had only had one increase in five years. In '1992 we
noticed the residents that we were raising rents. The
Residents appealed, and our Park was forced to go to the
appeal process. We were granted only a 4% increase
although the data showed basis for an amount much greater
than the 4% amount. The 4% amount was the amount allowed to
all parks under the automatic CPI annual increase provision
of the ordinance.
Our Park was not satisfied with this determination by the
Rent Adjustment Board, but were told that the only appeal
was to the courts. Such an appeal is very costly when a
little Park takes on a big rich City. The owners of our Park
chose to live with there Boards unfair decision.
Now, when the Board has granted our Park an increase greater
than the 2.9% automatic allowed annual CPI increase given to
all Parks, the rules related to the appeal process
change. Now, when the Residents want to appeal the rules are
different. Now, for the Residents we are told that there is
an appeal to the City Council, and by the way it at no
cost to the Residents.
4.
The ordinance has a number of flaws which make an
unreasonable, and unfair burden on a Park Owner.
These flaws include:
The failure to provide a subsistute for Park Owner or
Resident representation when a conflict of interest occurs,
or a Owner Board Member wants to present a case for his own
Park.
The requirement that a Park Owner recast his financial
statement to comply with the special expense exclusions, and
amortization requirement.not consistent with GPA nor IRS
guidelines.
The design of the board representation results in one
person being the deciding vote due to the polarization of
Residents and Park Owners in the City. The board should
consist of three community members and one representative
from each side.
5.
F&
EI
N
TED IN FULL INCREASE.
The ordinance section 602.010 says that a Park Owner has a
right to maintain the business Net Operating Income which
was consistent with the NOI prior to rent control, and
related to industry averages. The rent increases granted to
our Park and our requested increase are:
* Our Park has had one increase in five years.
* If we had taken each year the annual automatic CPI
increases allowed under the City ordinance the current 1995
rental rate in our Park would be $ 267.98.
* The rental rate of the increase granted by the March
Rent Adjustment Board would result in a typical rate of
$250.00 per month, per space.
* The Parks NOI is below industry average, and below the
Parks average before rent control.
* If rent control were not in place we would have raised
rents regularly and our rent levels would have brought our
NOI to prior rent control levels.
* Our rent control levels today are typically $ 225.00 per
month. The lowest or near lowest in the area.
* The average rent in Santa Clarita is in the range of
$447:00 per month. Many Parks have better ammenities, we
agree" with one Rent Board Member that our Parks Market rent
level siiould be 25% below the average. This would mean a
rent level of $335.00 for our Park.
* Other typical Parks have increase rents over the five
years by an average of $100. - 140.
* Our requested 22% increase would have resulted in a five
year increase over the base rate of $ 6'L,.00
9
The adjustment amount provided to our Park was not
equal to the increase of CPI, government service cost in -
ceases and utilities.
Conclusion:
Therefore:
1. The Commission proceeded in excess of it's
juristiction and authority.
2. The Commission deprived the Park of a fair
trial.
3. The Commission failed to proceed in the
manner required by law.
4. The Commission committed a prejudicial
abuse of decision, and it's decision is
arbitrary and capricious.
5. -The decision must be reversed in the Parks
favor because the findings are not
supported by the findings.
6. Therefore the Commissions decision fails
to provide the Park with a Rental Rate
reflecting the general market conditions,
a fair NOI and an NOI equals other Regu-
lated Parks, and a reasonable Rate of
Return on Property.
7. The Commission decision impermissible
predicated exclusively upon the AD HOC
post rashional Commissions Council.
RESOLUTION NO.. MH 95-001
A RESOLUTION OF THE MANUFACTURED HOME RENT ADJUSTMENT
PANEL OF THE CITY OF SANTA CLARITA RELATING TO PETITION
NO. 94.005, GRANTING A TOTAL RENTAL INCREASE OF TWELVE AND NINE
TENTHS OF ONE PERCENT (12.9%) TO THE OWNERS OF
SOLEDAD TRAILER LODGE,
18300 SOLEDAD CANYON ROAD, SANTA CLARITA, CA 91351
WHEREAS, on September 15, 1994, the City received a petition (Petition 94-005)
("Petition") from nine residents of Soledad Trailer Lodge ("Park") with Mr. Donald Johnson
acting in a representative capacity, requesting a hearing with respect to a notice of rental
increase for the Park dated August 30, 1994 ("Notice"), which was to go into effect on
December 1, 1994; and
WHEREAS, Section 6.02.090 B of the Santa Clarita Municipal Code requires 60 days
of notice for a proposed rental increase, and the State of California mandates a minimum of
90 days of notice for a proposed rental increase; and
WHEREAS, the Petition raised issues relating to the amount of the rental increase
and to whether the rental increase was to be applied to a Space Rent after the subtraction
of separately stated utility charges; and
WHEREAS, "Space Rent" is defined in Section 6.02.020 Q of the Santa Clarita
Municipal Code to exclude utility charges which are separately billed; and
WHEREAS, pursuant to Section 6.02.120 A(1) of the Santa Clarita Municipal Code,
an adjustment of Space Rent equal to the lesser of a six percent increase or an increase equal
to the annual adjustment in the CPI is deemed reasonable; and
WHEREAS, the CPI adjustment for the period of January 1, 1994, to December 31,
1994, provides for a two and nine tenths of one percent (2.9%) increase; and
WHEREAS, pursuant to Section 6.02.120 B of the Santa Clarita Municipal Code, the
Panel shall determine whether an adjustment of Space Rent which exceeds increases deemed
reasonable as identified in subsection A of Section. 6.02.120 is reasonable under the
circumstances, taking into account all relevant factors, including the itemized standards
listed as numbers "1" through "9 of subsection B of Section 6.02.120; and
WHEREAS, the petitioners and the Park manager agreed to suspend the processing
of the case until a full Manufactured Home Rent Adjustment Panel ('Panel") was appointed;
and
WHEREAS, on November 9, 1994, a full Panel was appointed (including two
mobilehome owners, two mobilehome park owners and one neutral mediator) whose
responsibility is to determine reasonableness as applied to rental increases, protecting the
owners and residents of manufactured homes from unreasonable rent increases while at the
same time recognizing the need of park owners to receive a fair return on their property and
rental income sufficient to cover reasonable increases in the cost of repairs, maintenance,
insurance, employee services, additional amenities, and other costs of operation; and
WHEREAS, on November 9, 1994, the Panel held a hearing on the Petition; and
WHEREAS, the Panel received testimony and evidence, both oral and written
regarding the petition and found good cause to defer a decision.to the meeting of December
14, 1994, because the Panel had requested that the Park manager submit financial
information to the City for analysis in order for staff to be able to more accurately inform the
Panel on the financial status of the Park; and
WHEREAS, during the meeting of November 9, 1994, the Panel forwarded the
itemized list of the requested financial information to the Park manager which was required
for the review of the financial status of the Park and required the Park manager to submit
the documentation to the City by November 18, 1994; and
WHEREAS, also on December 14, 1994, the Panel received further testimony and
evidence, both oral and written regarding the petition, and granted the owners of Soledad
?railer Lodge a 2.9% rental increase to ensure that the Park owners received the increause
due to CPI deemed reasonable for 1994 by the Santa Clarita Municipal Code, retroactively
effective to December 1, 1994, based on the original date of notice; and
WHEREAS, on December 14, 1994, the Panel found good cause to continue the public
hearing to the date of January 11, 1995, because the financial information requested by the
Panel had not been forwarded to the City, so no determination could be made regarding the
financial status of the Park; and
WHEREAS, the City forwarded a letter on December 22, 1994, to the Park manager
reiterating the list of required financial information, and stating that when the listed
information was submitted, staff would allocate four days for the review of the
documentation, and, after this review, would continue with the appeal of the Park' s proposal
for a rental increase above the 1994 CPI of two and nine tenths of one percent (2.9%); and
WHEREAS, on January 11, 1995, the Panel received testimony and evidence, both oral
and written regarding the petition, and found good cause to continue the public hearing to
the date of February 9, 1995, in order to allow for the submission of additional evidence by
January 13, 1995, because the requested financial information that was submitted to the City
by the Park manager was incomplete according to the list of financial information which was
both given to the Park manager during the meeting of November 9, 1994, and forwarded to
the Park manager in the City's letter dated December 22, 1994; and
WHEREAS, on February 8,1995, the Panel received testimony and evidence, both oral
and written, as well as a videotape regarding the petition, and found good cause to continue
the public hearing to the date of March 8, 1995, because staff needed time to prepare the
documentation for approval..
NOW THEREFORE THE MANUFACTURED HOME RENT ADJUSTMENT PANEL
OF THE CITY OF SANTA CLARITA DOES HEREBY RESOLVE, DECLARE, FIND AND
' DETERMINE AS FOLLOWS:
SECTION 1. The Manufactured Home Rent Adjustment Panel of the City of Santa
Clarita does hereby make the following findings of fact:
A. Soledad Trailer Lodge ('Park") properly noticed a rent increase to the tenants
which provided for a 22% increase to be effective December 1, 1994.
B. The rent increase deemed reasonable for January 1, 1994, to December 31,
1994, based on the formula set forth in Section 6.02.120 A(1) of the Santa Clarita Municipal
Code is two and nine tenths of one percent (2.9%).
C. Section 6.02.120 B of the Santa Clarita Municipal Code sets standards
applicable to rent adjustments which exceed increases deemed reasonable as identified in
subsection.A of Section 6.02.120, and the Panel considered each of the factors listed as well
as all other relevant factors as follows:
No evidence was presented to demonstrate an increase in debt service costs
incurred by the Park.
2. According to City records, since adoption of the Ordinance in 1991, the rental
history of the Park includes one rental increase of four percent (4%) in
December, 1992.
3. Certain maintenance activities in the Park have been performed during the
past twelve months, including the replacement of a block wall, the replacement
of a backflow valve, tree trimming, and street repaving. However, based on
negative testimony provided at the hearing regarding the quantity, quality,
and timeliness of repairs since 1991, the Panel finds that the maintenance of
the park does not justify an increase in rent as great as the twenty two percent
(22%) proposed by the Park management.
4. Through testimony presented at the hearing, the Panel finds that the Park had
changed management services in 1991, and that services during the past
twelve (12) months appeared to be reduced, although other services appeared
to remaip at previous levels.
5. Documentation was provided that evidenced average space rents for comparable
spaces to other parks in the City, of Santa Clarita at approximately twenty
eight percent (28%) higher than those of the Park. However, testimony
established that the Park is not comparable to other parks within the City of
Santa Clarita because it has fewer amenities.
6. Documentation submitted by the Park manager that provided evidence of a
decrease in the Park's Net Operating Income over recent years was analyzed
by City staff and heard by the Panel, and showed a current Net Operating
Income of twenty eight and nine tenths of one percent (28.9%) for the Park, as
compared to a Net Operating Income for the Park of fifty three and six tenths
of one percent (53.6%) prior to the initiation of the Manufactured Home Rent
Stabilization Ordinance in 1991.
The Park manager submitted financial information regarding current
Industry Standards for mobilehome park Net Operating Incomes, Partnership
Tax Returns for the Park, Joint Consolidated Tax Returns for the Park,
documentation of the Park's -Reserve Replacement fund, an Amortization
Schedule, and a compilation report from a Certified Public Accountant, all of
which was considered by the Panel in determining the financial status of the
Park. The Panel determined that the Panel was not bound by the Industry
Standards for mobilehome park Net Operating Incomes submitted by the Park
manager but rather by the standards set forth in Chapter 6.02 of the Santa
Clarita Municipal Code.
8. The Park did not provide evidence demonstrating an increase in costs
associated with capital improvement, but did provide evidence demonstrating
Park incurred costs associated with capital replacement, including the
replacement of a backflow valve, tree trimming, and street repaving.
9. Civil Code section 798.41 provides that the management may bili a
homeowner separately for utility services assessed by the utility and that such
separately billed utility shall not be deemed to be included in the rent and
shall not be deemed to be a rental increase for purposes of any rent control
ordinance.
10. The total CPI increases permissible since 1991 equal an amount greater
than twelve percent (12%). The Ordinance did not govern rental increases
according to CPI rates until 1992. The total percentage of CPI rates since 1991
equals twelve and two tenths of one percent (12.2%). Further, the total CPI
increases deemed permissible by the Santa Clarita Municipal Code following
the last increase granted by the Panel in December of 1992 is eight and one
tenth of one percent (8.1%) of CPI.
SECTION 2. Based upon the foregoing facts and findings, the Manufactured Home
Rent Stabilization Panel hereby determines as follows:
A. The Panel considered all of the evidence placed before it and considered all
relevant factors and resolves that a twelve and nine tenths of one percent (12.9%) rental
increase is reasonable:
B. The twelve and nine tenths of one percent (12.9%) rental increase shall be
limited to the Space Rent and shall not be applied to any separately billed utility charge.
C. The documentation submitted to the City by the Park manager, which was
analyzed by City staff and heard by the Panel, provides evidence that the twelve and nine
tenths of one. percent (12.9%) rental ,increase administered to the Park will increase the
Park's Net Operating Income from twenty eight and nine tenths of one percent (28.9%) to
thirty seven and thirty six one hundredths of one percent (37.36%), and will increase the rate
of return on the property pro rated among the spaces of the Park.
D. Pursuant to the Panel's authority provided in Section 6.02. 110 of the Santa
Clarita Municipal Code to reasonably condition its allowance of an increase in any manner
necessary to effectuate the purpose of Chapter 6.02 of the Santa Clarita Municipal Code, the
Panel resolves that two and nine tenths of one percent (2.9%) of the rental increase shall be
effective as of December 1, 1994, based on the original date of notice, and the additional ten
percent (10%) of the rental increase shall be effective as of March 1, 1995, in order to avoid
substantial hardship to the residents and because the hearing has been continued to such a
late date in order to allow the Park manager to provide the Panel with sufficient information
and documentation.
E. The twelve and nine tenths of one percent (12.9%) rental increase shall be the
rental increase granted to the owners of the Park for the 1994 calendar year.
SECTION 3. The Manufactured Home Rent Stabilization Panel of the City of Santa
Clarita, California, hereby grants the owners of Soledad Trailer Lodge a rental increase of
twelve and nine tenths of one percent (12.9%), of which two and nine tenths of one percent
(2.9%) of the rental increase is to be effective as of December 1, 1994, based on the original
date of notice, and ten percent (10%) of the rental increase is to be effective as of March 1,
1995,
PASSED, APPROVED AND ADOPTED by the Manufactured Home Rental
Adjustment Panel of the City of Santa Clarita at a regular meeting heldtn the 8th day of
March, 1995.
AT FEST:
S CRETARY
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) SS
CITY OF SANTA CLARITA
I Donna M. Grindev, hereby certify that the foregoing Resolution was duly adopted
by the Manufactured Home Rental Adjustment Panel of the City of Santa Clarita at a regular
meeting thereof, held on this 8th day of 1larch , 199 5 � by the
following vote of the Panel:
AYES:
NOES:
ABSTAINING/
ABSENT:
current\ mhp94005.res
PANEL MEMBERS Robinson, Bowman, Off, Granlund
PANEL MEMBERS Surrell
PANEL MEMBERS hone) e
01SECRETARY
CITY OF SANTA CLARITA
INTEROFFICE MEMORANDUM
TO: Manufactured Home Rental Adjustment Panel - k, y
FROM: Lynn M. Harris, Director of Communi��vv Development � �
Richard A_ Henderson, City Planner/4
Kevin J_ Michel, Senior Planner,}Y'
PLANNER: Jennifer D. Reid, Planning Technician
DATE: March 8, 1995
SUBJECT: Manufactured Home Rental Adjustment Appeal No. 94-005
Soledad Trailer Lodge
BACKGROUND
Pursuant to the Manufactured Home Rent Adjustment Panel's direction on February 8, 1995,
staff has prepared Resolution No. MH95-001 tentatively approving an additional 10% rental
increase to the owners of Soledad Trailer Lodge ('Park") to be effective March 1, 1995, in
addition to a 2.9% rental increase granted to the Park owners on December 14, 1994, to be
effective as of December 1, 1994; based on the original date of notice.
I-OW6 u u UI : 0 ►I
Staff recommends that the Manufactured Home Rent Stabilization Panel:
1.) Review the Findings as stated in Resolution No. MH95-001;
2.) Revise the Findings as necessary; and
3.) Adopt Resolution No_ MH95-001, approving an additional 10% rental increase
to the owners of Soledad Trailer Lodge to be effective March 1, 1995, in
addition; to a 2.9% rental increase granted to the Park owners on December
14, 1994, to be effective as of December 1, 1994, based on the original date of
notice.
ATTACHMENT
Resolution No. MH95-001
Current\nihp59405.idr
CITY OF SANTA CLARITA
INTEROFFICE MEMORANDUM
TO: Manufactured Home Rental Adjustment Panel
FROM: Lynn M. Harris, Director of Community eve opment
Richard A Henderson, City Planner
Kevin J. Michel, Senior Planner
PLANNER: Jennifer D. Reid, Planning Technician
DATE: February 8, 1995
SUBJECT: Manufactured Home Rental Adjustment Appeal No. 94-005
Soledad Trailer Lodge
BACKGROUND
On November 9, 1994, the Manufactured Home Rent Adjustment Panel met in order to consider a 90 day
notice of rent increase filed by the property owner(s) of Soledad Trailer Lodge. Through the 90 -day notice,
the park proposed a rent increase of 22%, which is approximately 19% higher than the Consumer Price
idex of 2.9% set in January of 1994.
The meeting of November 9, 1994, was continued by the Panel to the meeting date of December 14, 1994,
at which time the Panel granted a 2.9% increase in rent to the owners) of Soledad Trailer Lodge,
retroactive to the month of October, 1994. During the December 14, 1994, meeting, the Panel also
determined that a continuance of Manufactured Home Rent Appeal #94-005 was appropriate, so that City
staff could review financial documentation submitted by park manager Bill Reed in order to assist the Panel
in determining whether the financial status of the park warrants an increase in rent as great as 22%. The
Manufactured Home Rent Adjustment Panel continued Appeal #94-005 to the date of January 11, 1995, at
which time the determination was to be made as to whether an additional increase in rent should be
granted to the owner(s) of Soledad Trailer Lodge.
In order to determine the existing financial status of the park, staff required that the park manager submit
legal documentation to the City for analysis. Staff had forwarded alist of information that was necessary
for an appropriate fiscal analysis of the park to park manager, Bill Reed. Mr. Reed had responded by
submitting documentation which contained a portion of the information requested. The information
submitted, though, was insufficient for the fiscal review of the park, thus, during the meeting of January
11, 1995, it was agreed upon -by the members of the Panel that after submission of the appropriate
information, staff would be given four days to review the documents,"and would then return to the Panel
on February 8, 1995, in order to more accurately inform the Panel on the financial status of Soledad Trailer
Lodge.
On the meeting of January 11, 1995, park manager Bill Reed had stated to the Panel that he would submit
the additional financial information toAe City for analysis by January 13, 1995. Due to circumstances
gond his control, the information was not forwarded until January 18, 1995, Nevertheless, a financial
analysis of the park was completed within the time frame originally requested by the Panel.
Per the Mobilehome Rent Stabilization Panel's request, staff performed a review of the additional financia-
information provided by Soledad Trailer Lodge. As part of the process, an analysis was made of net
operating income for calendar years 1991 through 1994, as defined in the Mobilehome Rent Stabilization
Ordinance. This included a review of financial documents which relate to the history of Soledad Trailer
Lodge's net operating income compared to industry standards. To verify information provided by the
applicant, amounts were compared to annual federal tax returns. Base on this review, staff concluded that
the documentation compiled to support a 22% increase is reasonably accurate and that calculations
performed by the applicant in all material respects followed the definition of the Ordinance for the
calculation of net operating income.
As a side note, Mr. and Mrs. Wiley Clark, residents of Soledad Trailer Lodge, forwarded a letter to the City
of Santa Clarita on January 17, 1995. In this letter, Mr. Clark states that there is confusion as to how the
retroactive rent increase of 2.9% is being applied to his specific place of residence. Staff requests that the
Panel analyze the information presented, and take an action deemed appropriate.
RECOMMENDATION
Staff recommends that the Manufactured Home Rental Adjustment Panel grant the owner(s) of Soledad
Trailer Lodge a rental increase of 19%.
ATTACHMENTS
Staff Report from 11-09-94
Staff Report from 12-14-94
Staff Report from 1-15-95
Letter from Wiley Clark, resident
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CITY OF SANTA CLARITA
INTEROFFICE MEMORANDUM
TO: Manufactured Home Rental Adjustment Panel
FROM: Lynn M. Harris, Director of Community Developpient
Richard A. Henderson, City Planner le )
PLANNER:. Jennifer D. Reid, Planning Technician
DATE: January 11, 1995
SUBJECT: Manufactured Home Rental Adjustment Appeal No. 94-005
Soledad Trailer Lodge
BACKGROUND
On November 9, 1994,, the Manufactured Home Rent Adjustment Panel met in order to consider a 90
day notice of rent increase filed by the property owner(s) of the Soledad Trailer Lodge. Through the 90 -
day notice, the park has proposed a 22% rent increase. The maximum allowable percentage is a gross
space rental income equal to the lesser of a six percent increase (6%) or an increase equal to the prior
January's annual adjustment in the Consumer Price Index (CPI) from the date of the notice of propose
rent adjustment. The CPI for January of 1994 was set at 2.9%, and the task of this Panel is to
determine what constitutes a fair and reasonable return under the circumstances, taking into account
all relevant factors to assure the park owners a reasonable return.
The meeting of November 9, 1994, was continued by the Panel to the meeting date of December 14,
1994, at which time the Panel granted a 2.9% increase in rent to the owner(s) of Soledad Trailer Lodge.
During the December 14, 1994, meeting, the Panel also determined that a continuance of Manufactured
Home Rent Appeal 94-005 was appropriate, so that City Staff could review the financial documentation
submitted by park manager Bill Reed in order to assist the Panel in determining whether the financial
status of the park warrants a 22% increase in rent. The Manufactured Home Rent Adjustment Panel
continued the item to the date of January 11, 1995, at which time the determination was to be made as
to whether an additional increase in rent should be granted to the owner(s) of Soledad Trailer Lodge.
The Panel had also suggested that both the residents and manager(s) initiate voluntary mediation,
which the residents have declined to participate in since they prefer a decision by the Panel.
In order to determine the existing financial status of the park, staff required that the parkmanager
submit legal documentation to the City for analysis. The information requested included:.
A). An audited financial report of a balance sheet and income statement, comparable for
two year time periods for each year that the manager is requesting a rent increase: If not
available, then a review report. If not available, a compilation report. The income
statement is to include gross income, components of the park's operating expenses, and
the park's Net Operating Income,
B). An amortization schedule for any Capital Improvement Projects by type, date, place,
and the term of amortization.
Q. A dollar figure for the amount of money that has been paid to any reserve
replacement fund for each year that the manager js requesting a rent increase.
D). Copies of property tax bills for each year that the park manager is requesting a rent
increase.
E). Tag returns of the business for each year that the park manager is requesting a rent
increase, such as a Partnership Tax Return or Corporate Tag Return.
F). A resource document for the industry standard, quoted by the park manager, in the
evidence submitted to the residents supporting the rent increase.
G). Documentation supporting the owners' performed labor in operating and/or
maintaining the Park, if included as part of the operating expenses.
It was agreed upon by the members of the Panel that after submission of the above information, staff
would review the documents in order to more accurately inform the Panel on the financial status of
Soledad Trailer Lodge.
The City of Santa Clarita found the documentation submitted by Mr. Reed for the financial review of
Soledad Trailer Lodge incomplete. A letter containing a list of the information that is required for the
fiscal analysis of the park, including an interpretation of the information which was supplied to City
staff, was forwarded to Mr. Reed on December 22, 1994. In the letter, staff stated that when the listed
information was submitted, staff would allocate four days for the review of the documentation. After
this review, the City would then continue with the appeal of Soledad Trailer Lodge's proposal for a 220
rent increase. It was also stated in the letter that staff would inform the Panel of the above-mentioned
request, and convene on January 11, 1995, for the continued Mobilehome Rent Stabilization Panel
meeting.
Due to the fact that the financial information which was submitted to the City was incomplete, staff
would like to recommend that the Panel continue the appeal of Soledad Trailer Lodge's proposal for a
22% rent increase to a date uncertain. This action would then permit property manager Bill Reed to
submit the necessary documentation, allow City staff to review the re -submitted documentation, and
enable the Panel to continue Manufactured Home Rent Adjustment appeal 94-005 after the necessary
review(s) have been undertaken.
RECOMMENDATION
Staff recommends that the Panel continue Manufactured Home Rent Appeal 94-005 to a date uncertain,
in order to allow for the submittal and review of the necessary financial documentation.
ATTACHMENTS
Staff Report from 11-09-94
Staff Report from 12-14-94
Letter to Bill Reed, Property Manager
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CITY OF SANTA CLARITA
INTEROFFICE MEMORANDUM
TO Manufactured Home Rental Adjustment Panel
FROM: Lynn M. Hares, Director of Community' t
Richard A. Henderson, City Planner /?W-
PLANNER:: Jennifer D. Reid, Planning Technician
DATE: December 14, 1994
SUBJECT: Manufactured Home Rental Adjustment Appeal No, 94-005
Soledad 'trailer Lodge
BACKGROUND
On November 9, 1994, the Manufactured Home Rent Adjustment Panel met in order to
consider a 90 day notice of rent increase filed by the property owner(s) of the Soledad
Trailer Lodge. Through the 90 -day notice, the park has proposed a 22% rent increase.
The maximum allowable percentage is a gross space rental income equal to the lesser of a
six percent increase (6%) or an increase equal to the prior January's annual adjustment in
the Consumer Price Index (CPI) from the date of the notice of proposed rent adjustment.
The CPI for January of 1994 has been set at 2.9%, and the task of this Panel is to
determine what constitutes a fair and reasonable return under the circumstances, taking
into account all relevant factors to assure the park owners a reasonable return.
Section 6.02.120 (A2)of the Mobilehome Rent Stabilization Ordinance refers to a pass
through adjustment of the increases in the cost of government required services. Mr.
Reed has stated that a portion of the rent increase is due to the increase in government
required services that have affected Soledad Trailer Lodge.
Section 6.02.120 (A3) of the Mobilehome Rent Stabilization Ordinance refers to a pass
through adjustment of any increases in utility costs where such utilities are included in
the space rent. Mr. Reed had originally provided the residents with documentation
quoting dollar amounts for the cost of utility usage at the park, and had stated that a
portion of the proposed rent increase is due to the increased cost in utility services for the
Soledad Trailer Lodge property.
Section 6.02.120 (133) of the Stabilization Ordinance refers to standards of reasonableness
to be applied to rent adjustments with regard to the physical condition of the mobilehome
space or the Park of which it is a pert, including the quantity or quality of maintenance
and repairs performed during the last twelve (12) months. The listed repairs in the 90 -
day notice include the resurfacing of the streets, improvements to the septic system, and
the construction of a block wall.
Mr. Reed stated in the 90 -day notice of rent, increase that a 22% increase is justifiable as
the park has not been granted rent increases for each calendar year since adoption of the
ordinance. During the meeting of November 9, 1994, staff -determined that the evidence
submitted to the residents of the Soledad Trailer Lodge was insufficient for determining
that the financial status of the park required an increase as substantial as 2270. In order
to determine the existing financial status of the park, staff required that the park
manager submit legal documentation to the City for analysis. The information requested
included:'
A). An audited financial report of a balance sheet and income statement,
comparable for two year time periods for each yeah that the manager is
requesting a rent increase. If not available, then a review report. If not
available, a compilation report. The income statement is to include gross
income, components of the park's operating expenses, and the park's Net
Operating Income..
B). An amortization schedule for any Capital Improvement Projects by type,
date, place, and the term of amortization.
C). A dollar figure for the amount of money that has been paid to any
reserve replacement fund for each year that the manager is requesting a
rent increase.
D). Copies of property tax bills for each year that the park manager is
requesting a rent increase.
E). Tax returns of the business for each year that the park manager is
requesting a rent increase, such as a Partnership Tax Return or Corporate
Tax Return.
F). A resource document for the industry standard, quoted by the park
manager, in the evidence submitted to the residents supporting the rent
increase.
G). Documentation supporting the owners' performed labor in operating
and/or maintaining the Park, if included as part of the operating expenses.
It was agreed upon during,the meeting of November 9, 1994, that after submission of the
above information, staff would review the documents in order to more accurately inform
the Panel on the financial status of Soledad Trailer Lodge,
Mr. Reed was required to submit the above information to the City by November 18, 1994.
This date would then give staff two weeks to review the documents and inform the panel
of the financial status of the park. After a complete review of the documents, staff was to
forward the information to the Panel regarding the status of the park, which would then
assist the Panel in determining whether or not a 22% rent increase could be considered
fair and reasonable. The above listed information was not submitted to the City, which
gave staff no time to review the documents. Therefore, staff feels that any direction given
to the Panel at this point regarding the financial status of the park would be premature
and misleading,
During the meeting of November 9, 1994, Mr.. Don Johnson, a resident of the Soledad
Trailer Lodge, discussed with the Panel issues regarding a leak in the gas lines at the
mobilehome park. There were discrepancies in the information provided by Mr. Johnson
and Mr. Reed regarding this issue, and thus the Panel gave staff direction to investigate
the matter. Staff has made contact with individuals involved with this matter from the
Southern California Gas Company, and from the State Contractor's Licensing Board, but
has been unable to contact either the California State Department of Housing and
Community Development, or the Public Utilities Commission. Upon contact with the
appropriate individuals from these two agencies, staff will inform the Panel as to the
situation at hand regarding the status of the gas lines at Soledad Trailer Lodge.
Due to the fact that the financial information presented to staff did not allow for an
adequate review period, staff cannot assist the Panel in making the determination that
the financial status of the park warrants a 22% increase in rent. Therefore, staff feels
that the only appropriate recommendation at this point is for denial of Soledad Trailer
Lodge's request for a 22% increase in rent. Mr. Reed was contacted on December 6, 1994,
was questioned about the submittal of the above referenced information, and was
informed that staffs recommendation to the Panel would be for denial of the 22% rent
increase.
RECOMMENDATION
Staff recommends that the Panel deny the request for a 22% rent increase as proposed by
the owner(s) of the Soledad Trailer Lodge.
ATTACHMENTS
Staff Report from 11-09-94
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CITY OF SANTA CLARITA
INTEROFFICE MEMORANjDUM'
TO: Manufactured Home Rental Adjustment Panel
FROM:: L_vnn M. Harris, Director of Communitz DevelopmerTt'
Richard A. Henderson, City Planner .f k{�•!.>
PLANNER: Jennifer D. Reid, Planning Technician
DATE: November 9, 1994
SUBJECT: Manufactured Home Rental Adjustment Appeal No_ 94-005
Soledad Trailer Lodge
BACKGROUND
On April 18, 1994, the City received a petition from nine residents of the Soledad Trailer Lodge, in
response to a 90 day notice of rent increase, which proposed a 2.9% increase in rent for the tenants
of the park. The 90 day notice of rent increase was deficient according to Section 6A2.090(B) of the
Rent Stabilization Ordinance, thus the appeal was withdrawn by the park manager in order to
fulfill the noticing requirements listed in the Ordinance.
On September 15, 1994 the City received a petition from Mr. and Mrs. Don Johnson and 8 other
tenants of the Soledad Trailer Lodge. The petitions are fled in response to the second proposed 90
day notice of rent adjustment dated August 30, 1994, served upon the tenants (attached).
All parties have filed this petition request forbearing with the City Clerk within 20 days of service
of the notice of proposed rent adjustment, according to Ordinance requirements. Mr. and Mrs.
Johnson have stated on their appeal application that they are acting as representatives for the other
residents who have filed petitions_ The petitions are attached.
Before proceeding with the processing of Appeal #94-005, it was necessary for the Mobliehome Rent
Stabilization Panel to have a full quorum. The election of a full panel, including a mediator, will
not be accomplished until the meeting of November 9th, 1994, thus the processing of this appeal
could not occur prior to the aforementioned date. Staff notified both the park manager and the
representatives of Soledad Trailer Lodge of this fact on October 11, 1994.
Mr_ J. William Reed, Property Manager, had originally expressed an interest in proceeding with
voluntary mediation services in order to settle any differences between the representatives of the
mobilehome park owner(s) and the tenants. 'It was agreed upon by all mobilehome park appellants,
though, that voluntary mediation was not an alternative that the tenants were willing to pursue.
ANALYSIS
Community Development Staff has determined that the following issue exists in regard to this
petition;:
1.) Standards of Reasonableness to Be Applied to Rent Adjustments under
Section 6.02.120
Standards of Reasonableness to be Applied to Rent Adiustments under Section 6 02 120 The
Ordinance states that the Panel shall determine what is a fair and reasonable increase under the
circumstances, taking into account all relevant factors to assure the park owners a reasonable
return. Through the 90 -day notice, the park is proposing a 22% increase, The maximum allowable
percentage is an adjustment of gross space rental income equal to the lesser of a six percent
increase (6%) or an increase equal to the prior January's annual adjustment in the Consumer Price
Index (CPI) from the date of the notice of proposed rent adjustment. The CPI for January of 1994
has been set at 2.9%.
Section 6.02.120 (A2) refers to a pass through adjustment of the increases in the cost of government
required services. Mr. Reed has stated that a portion of the rent increase is due to the increase in
government required services that have affected Soledad 'hailer Lodge, lending support to this
finding with documentation provided to the residents upon initial notification of the rent increase.
Section 6.02.120 (A3) refers to a pass through adjustment of any increases in utility costs where
such utilities are included in the space rent. Mr. Reed provided the residents with documentation
quoting dollar amounts for the cost of utility usage at the park, and has stated that a portion of the
proposed rent increase is due to the increased cost in utility services for the Sodedad Trailer Lodge
property.
Section 6.02.120(B3) refers to a standard of reasonableness to be applied to rent adjustments with
regard to the physical condition of the mobilehome space or the Park of which it is a part, including
the quantity or quality of maintenance and repairs performed during the last twelve (12) months.
The listed repairs in the 90 -day notice include the resurfacing of the streets, improvements to the
septic system, and the construction of a block wall.
Staff feels that some of the information provided by Mr. Reed is unclear. It states in the 90 day
notice of rent increase that the park is requesting a 22% rent increase, because the manager
believes that this amount is justifiable as the park has not been administered rent increases for
each calendar year since adoption of the Ordinance. The residents, though, claim that the park
tenants were issued a rent increase in December of 1992. An increase of 4.1% was administered
to the residents of Soledad Trailer Lodge in December of 1992, with the Panel determining that this
amount was fair and reasonable. Furthermore, according to the figures quoted on each individual
90 day notice of rent increase, the actual percentage of rent increase proposed is equal to
approximately 5.2%, as opposed to the 22% increase as originally stated by Mr. Reed.
The residents of the Soledad Trailer Lodge have concerns with issues not covered under the Santa
Clarita Mobilehome Rent Stabilization Ordinance. One of the issues raised by the residents
concerns the proposal to charge each individual tenant for their utility usage. The residents have
stated that the California Residency Law protects them from being individually charged for their
utility usage, because their contracts expressly state that the park shall provide for gas, water,
trash, and cable television. Mr. Reed has proposed to take the average utility charge for the entire
park for the previous twelve month time period, and subtract this average from the individuals'
rent. He would then begin to meter each mobilehome space individually, and charge the tenants
for their own utility usage. According to the State's Residency Law, Section 798.4 (a), the amount
of rent reduction (due to a break otit in utility charges) shall be equal to the average amount
charged to the park management for that utility service for that space during the 12 months
immediately preceding notice of the commencement of the separate billing for that utility service.
Furthermore, the residents of the Soledad Trailer Lodge have stated that tenants who moved to the
park after January of 1991 are billed separately for their utility usage. Thus, if the park manager
is taking a 12 month average for the utility usage of the park, then the utility charges for the
tenants who moved to Soledad Trailer Lodge after January of 1991 should be eliminated from the
average.
The final concern with regard to the break out of utility fees pertains to the order of any proposed
fee break out. The residents are concerned that Mr. Reed would first raise their rent, then
subsequently reduce their individual rent fees by an average for the park's utility usage. The
residents have stated that the park manager should first reduce their rent by an average, and then
increase their space rent by a percentage. By proceeding with the former action, Mr_ Reed would
be collecting a new, higher space rent.
The change -over of utility fees and charges for individual mobilehome parks is mandated by the
State of California. The City of Santa Clarita's Mobilehome Rent Stabilization Ordinance does not
address the issue of utility fee breakouts for mobilehome parks. Any issues regarding the change-
over of utility fees and charges for individual tenants areunder the jurisdiction of the State of
California, and must be administered through the necessarylegal channels.
Another concern of the residents pertains to the fairness of the administration of the rent increase.
It has been stated that only 21 of the 30 tenant spaces will be affected by the rent increase. Of the
unaffected mobilehomes, one is vacant and the other eight homes are owned by the park. The
residents feel that they are thus paying for the renovation and upkeep of the park -owned
mobilehomes. The Santa Clarity Mobilehome Rent Stabilization Ordinance does not govern whether
all tenants of a mobilehome park must be issued an equal rent increase, or if a park may issue a
rent increase only to selected tenants.
Staff feels that the evidence presented to the residents of the Soledad Trailer Lodge is insufficient
for determining that the financial status of the park requires an increase as substantial as 22%.
In order to determine the existing financial status of the park, staff would require that the park
manager submit legal documentation to the City for analysis. This information includes:
A). An audited financial report of a balance sheet and income statement,
comparable for two year time periods for each year that the manager is requesting
a rent increase. If not available, then a review report. If not available, a compilation
report. The income statement is to include gross income, components of the park's
operating expenses, and the park's Net Operating Income.
B). An amortization schedule for any Capital Improvement Projects by type, date
place, and the term of amortization.
C). A dollar figure for the amount of money that has been paid to any reserve
replacement fund for each year that the manager is requesting a rent increase.
D). Copies of property tax bills for each year that the park manager is requesting
a rent increase.
E). Tax returns of the business for each year that the park manager is requesting
a rent increase, such as a Partnership Tax Return or Corporate Tax Return.
F). A resource document for the industry standard, quoted by the park manager, in
the evidence submitted to the residents supporting the rent increase.
G). Documentation supporting the owners' performed labor in operating and/or
maintaining the Park, if included as part of the operating expenses.
Upon submitting the above information, staff would review the documents in order to more
accurately inform the panel on the financial status of Soledad Trailer Lodge.
A complete appeal packet submitted by Mr. and Mrs.. Don Johnson is attached for the panel's
review, Under Ordinance provisions, it is the decision of the Panel to determine what constitutes
a fair and reasonable return.
RECOMMENDATION
Staff recommends that the Panel
1.) Require the park manager to submit the requested financial documents to the
City of Santa Clarita by November 18, 1994.
2.) Continue Appeal #94-005 to the meeting of December 14, 1994, upon which time
the Panel shall determine what increase, if any, constitutes a fair and reasonable
return.
ATTACHMENTS
Petition Requests
Documentation provided to residents
Chapter 6.02
California Residency Law, Section 798
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