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HomeMy WebLinkAbout1995-06-13 - AGENDA REPORTS - RESO 95 64 RENTAL INCREASE MH (2)AGENDA REPORT ity Manager Appro Item to be pre ented by: A��� %h Henderson CONSENT CALENDAR DATE: June 13, 1995 SUBJECT: RESOLUTION NO. 95-64 APPROVING A TOTAL RENTAL INCREASE OF 12.9% TO BE GRANTED TO THE OWNERS OF SOLEDAD TRAILER LODGE MOBILEHOME PARK THE PROPERTY IS LOCATED AT 18300 SOLEDAD CANYON ROAD. PROJECT APPELLANT(S): CARL BOYER, AS A MEMBER OF THE COUNCIL; AND BILL REED, AS A REPRESENTATIVE OF THE MOBILEHOME PARK OWNERS. DEPARTMENT: Community Development Pursuant to the Council's approval, by a vote of 4-1 (Carl Boyer dissenting) at the May 23, 1995, meeting, staff has prepared Resolution No. 95-64 approving a 12.9% rental increase to be granted to the owners of Soledad Trailer Lodge Mobilehome Park. Two and nine tenths percent (2.9%) of the rental increase is to be effective as of December 1, 1994, with the additional ten percent (10%) of the rental increase to be effective as of March 1, 1995. Resolution 95-64 implements the Council's earlier decision to uphold the Panel's previous approval of a 12.9% rentalincrease. Staff recommends that the City Council: Adopt Resolution No. 95-64, upholding the Manufactured Home Rent Stabilization Panel's approval of a total rental increase of 12.9% to be granted to the owners of Soledad Trailer Lodge Mobilehome Park. Resolution No. 95-64 GAC:RH:JDR:Iep dopieu. �S— council \ ar394005. stl a Agen4ua f ter:_ RESOLUTION NO. 95-64 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA CLARITA RELATING TO MANUFACTURED HOME RENT STABILIZATION PETITION NO. 94-005, GRANTING A TOTAL RENTAL INCREASE OF TWELVE AND NINE TENTHS PERCENT (12.9%) TO THE OWNERS OF SOLEDAD TRAILER LODGE, 15300 SOLEDAD CANYON ROAD, SANTA CLARFPA, CA 91351 THE CITY COUNCIL OF THE CITY OF SANTA CLARITA DOES HEREBY RESOLVE, DECLARE, FIND AND DETERMINE AS FOLLOWS: SECTION 1. The City Council does hereby make the following findings of fact: a. 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. b. 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.. C. 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. d. "Space Rent" is defined in Section 6.02.020 Q of the Santa Clarita Municipal Code to exclude utility charges which are separately billed. 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. The CPI adjustment for the period of January 1, 1994, to December 31, 1994, provides for a two and nine tenths percent (2.9%) increase. £ Pursuant to Section 6.02.120 B of the Santa Clarita Municipal Code, the City of Santa Clarita's Manufactured Home Rent Stabilization Panel ("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. Section 2.04.100 A of the Santa Clarita Municipal Code, however, grants the right for persons to appeal the decision of an administrative body to the City Council if the determination of an administrative decision involves the exercise of administrative discretion or personal judgement exercised pursuant to any of the provisions of the Municipal Code. RESOLUTION NO. 95-64 PAGE 2 g. The petitioners and the Park manager agreed to suspend the processing of the case until a full Panel was appointed. 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. h. A duly noticed public hearing was held by the Panel on November 9, 1994, at 7:00 p.m. at the City Council Chambers, 23920 Valencia Boulevard, Santa Clarita, At this meeting, 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. 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. On December 14, 1994, the Panel received further testimony and evidence, both oral and written regarding the petition, and granted the owners of Soledad Trailer Lodge a 2.9% rental increase to ensure that the Park owners received the increase 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. At this meeting, the Panel also 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. k. 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 percent (2.9%). 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 8, 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. in. On February 8, 1995, the Panel received testimony and evidence, both oral and written, as well as a videotape regarding the petition, and considered three motions, 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% increase granted to the Park by the Panel on December 14, 1994. RESOLUTION NO. 95-64 PAGE 3 The second motion was for a total rental increase of 8.1%. The third motion, which passed by a vote of 3-2, was to grant a total rental increase of 12.9% to the owners of the Park The third motion was supported by the Panel's homeowner representatives and the neutral mediator. At this meeting, the Panel found good cause to continue the public hearing to the date of March 8, 1995, because of their direction to staff to prepare a resolution implementing the Panel's decision. n. On March 8, 1995, the Panel adopted and approved Resolution MH95-001, granting a total rental increase of twelve and nine tenths percent (12.9%) to the owners of the Park, of which two and nine tenths percent (2.9%) of the increase was to be effective as of December 1, 1994, with the additional ten percent (10%) to be effective as of March 1, 1995. At this meeting, the Panel approved the Resolution, implementing their decision of the previous meeting, by a vote of 4-1, subject to the modified findings of fact stated in Section 2(C) of the Resolution, The Panel modified language in the findings of fact regarding the Park's management services and the Park's maintenance activities. The Panel's resolution is incorporated herein by reference, and it and all the other evidence presented to the Panel was reviewed by the City Council. o. The Panel's approval was subsequently appealed by Carl Boyer, as a member of the City Council, and by Bill Reed, as a representative of the Park owners. P. A duly noticed public hearing was held by the City Council on April 25, 1995, at 6:30 p.m. at the City Council Chambers, 23920 Valencia Boulevard, Santa Clarita. At this meeting, the Council: 1) Continued the public hearing; and 2) scheduled a field visit to the Park for the study session of May 2, 1995. q. Mayor Darcy and three of the councilmembers toured the Park on May 2, 1995. During their tour, the Mayor and councilmembers in attendance, by a vote of 4-0 (Carl Boyer absent), closed the public hearing and continued the item, for action, to the regular Council meeting of May 23, 1995. r, The appeal was heard by the City Council as an unfinished business item on May 23, 1995, at 6:30 p.m. at the City Council Chambers, 23920 Valencia Boulevard, Santa Clarita. At this meeting, the Council approved a total rental increase of 12.9% to be granted to the owners of the Park, by a vote of 4-1 (Boyer dissenting), directing staff to prepare a resolution for the Council's consideration at the June 13, 1995, meeting. SECTION 2. Based upon the above findings of fact, oral and written testimony and other evidence received at the public hearing held for the project, and upon studies and investigations made by the City Council and on its behalf, the City Council further finds as follows: 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 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 City Council considered each of the factors listed as well as all other relevant factors as follows. RESOLUTION NO. 95-64 PAGE 4 1. 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. Certain maintenance activities in the Park had been performed during the twelve (12) months prior to the proposed rental increase, 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 Council 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 evidence presented at the hearing, the Council finds that the Park had changed management services in 1991, and that services during the twelve (12) months prior to the proposed rental increase appeared to be reduced, although other services appeared to remain at previous levels. Testimony also indicated that the general appearance and upkeep of the Park had improved over previous years. 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, 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 considered by the Council, and showed a current Net Operating Income of twenty eight and nine tenths percent (28.9%) for the Park, as compared to a Net Operating Income for the Park of fifty three and six tenths 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 were considered by the Council. The City Council considered the Industry Standards for mobilehome park Net Operating Incomes submitted by the Park manager, all the evidence and public testimony, and applied the standards set forth in Chapter 6.02 of the Santa Clarity Municipal Code in making their decision. 8. The Park did not provide evidence demonstrating an increase in costs associated with capital improvement, but did provide evidence demonstrating the Park incurred costs associated with capital replacement, including the replacement of a backflow valve, tree trimming, and street repaving. RESOLUTION NO. 95-64 PAGE 5 9. No evidence was presented on whether the Park received a fair return on the property pro rated among the spaces of the Park. 10. California State Civil Code Section 798.41 provides that the management may bill 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. 11. 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 1992 equals twelve and two tenths 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 percent (8.1%) of CPI. Per the Ordinance, this was a factor that could be considered in making a decision regarding rental rates. SECTION 3. Based upon the foregoing facts and findings, the City Council hereby determines as follows: a. The Council considered all of the evidence placed before it and considered all relevant factors and resolves that a twelve and nine tenths percent (12.9%) rental increase is reasonable. b. The twelve and nine tenths 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 considered by the Council, provides evidence that the twelve and nine tenths percent (12.9%) rental increase administered to the Park will increase the Park's Net Operating Income from twenty eight and nine tenths percent (28.9%) to thirty seven and thirty six one hundredths percent (37.36%), and will increase the rate of return on the property pro rated among the spaces of the Park. d. The Council resolves that the action of phasing the rental increase is appropriate, with two and nine tenths percent (2.9%) of the rental increase to be effective as of December 1, 1994, and the additional ten percent (10%) of the rental increase to be effective as of March 1, 1995, in order to avoid substantial hardship to the residents and because the hearing has been continued in order to allow the Park manager to provide the Panel and the City Council with sufficient information and documentation. e. The twelve and nine tenths percent (12.9%) rental increase shall be the rental increase granted to the owners of the Park for the 1994 calendar year. The next annual date for a potential rental increase for the Park is December 1, 1995. SECTION 4. The City Council of the City of Santa Clarita, California, hereby grants the owners of Soledad Trailer Lodge a rental increase of twelve and nine tenths percent (12.9%), of which two and nine tenths 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 this day of , 19 MAYOR ATTEST: CITY CLERK STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) § CITY OF SANTA CLARITA ) I, Donna M. Grindey, City Clerk of the City of Santa Clarita, do hereby certify that the foregoing Resolution was duly adopted by the City Council of the City of Santa Clarita at a regular meeting thereof, held on the day of 19_ by the following vote of Council: AYES COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: CITY CLERK council\res95-64.jdr